June Washington D.C. Preview

Quick Fix — There's a battle brewing between Senate Republicans over the Medicaid and Affordable Care Act provisions in the House megabill.   — The tech industry is hoping the decadelong moratorium on state artificial intelligence regulations that passed the House can survive the Senate’s arcane rules.   — The court battles over Trump's tariffs has prolonged the uncertainty felt by businesses. Agriculture — SNAP JUDGMENT: Now that the House has passed Trump’s “big, beautiful bill,” all eyes now turn to see what the upper chamber will decide to do with the massive budget package. The ag policy focus will be on how comfortable Senate Republicans are with the House plan to cut about $300 billion from the Supplemental Nutrition Assistance Program over the next decade while forcing states to contribute to it for the first time.   Democratic governors have already warned that their states can’t absorb the added SNAP costs and that the GOP plan would force them to cut benefits, raise taxes or both. There are some early indicators that Senate Republicans like Ag Chair John Boozman of Arkansas and Chuck Grassley of Iowa are cool to the idea, too, and that there could be major changes coming to the House proposal for cutting costs in the nation’s largest food aid program.   — Agriculture Secretary Brooke Rollins has been teasing a larger reorganization and deeper cuts inside the department, but that plan is on pause after a federal court temporarily blocked such moves at USDA and other agencies last month. More than 15,000 USDA workers have already left since Trump took office, but Rollins has said that she wants to move more of the department’s functions “out into the country where we can better serve the people that we're called to serve.” A vast majority of USDA employees already work outside of the Washington headquarters.   While it’s not yet clear whether or when the Trump administration will be able to move forward with the next phase of its government overhauls, the planned reorganization and reductions show that these efforts will live on even as Elon Musk prepares to step back from his role at the Department of Government Efficiency.   — Uncertainty around the president’s tariff policy continues to stoke unease among farmers. The Trump administration and the EU are still at loggerheads over a trade deal, with new threats from the White House to hike tariffs on all imported EU goods and Brussels digging in. And the administration seems to be acknowledging its wide-ranging negotiations with dozens of foreign countries are stalling as Trump prepares to take new unilateral action. Retaliatory tariffs and trade wars risk cutting off market access for farmers around the world, drawing the ire of farm groups like the American Farm Bureau Federation. — Jordan Wolman Trade — Trade negotiations with dozens of foreign countries were upended at the end of May by a dizzying series of court rulings raising doubts about the legality of President Donald Trump’s tariffs.   Three federal court decisions in a span of 24 hours struck down and then temporarily stayed the double-digit tariffs the president has threatened to hit leading trading partners with, sparking confusion but also, in some cases, giving foreign leaders hope they now have the upper hand in the talks.   “The decision has reduced the pressure on countries to cave in to U.S. demands,” one Filipino official, granted anonymity to speak candidly about negotiations, said of Wednesday’s ruling at the U.S. Court of International Trade, which said the president overstepped his authorities in setting tariffs of 10 percent and higher on dozens of trading partners. That decision was stayed temporarily, however, by an appellate court on Thursday afternoon, allowing the tariffs to take effect pending further litigation. The administrative stay is expected to remain in effect through mid-June, according to a schedule laid out by the judges.   — Another federal court, based in D.C., ordered an injunction Thursday morning against those tariffs, though it applies only to the two companies who filed the suit.   Although the D.C. court ruling directly affects only two educational toy companies — Learning Resources and hand2mind — Justice Department attorneys had urged him not to approve their request for an injunction, saying it would act like a “magnet” to attract thousands of other companies to challenge Trump’s tariffs.   Contreras, an Obama appointee who presides over the District Court for the District of Columbia, stayed his order for 14 days “so the parties may seek review in the Court of Appeals.”   — Several other court cases challenging Trump’s tariffs are still pending in the Court of International Trade and other federal courts, arguing Trump’s use of a 1977 emergency law does not allow him to set duties on foreign countries, a power granted to Congress in the Constitution. That legal question is expected to ultimately reach the Supreme Court.   In the meantime, the Trump administration is racing to reach new trade deals with major trading partners like Japan, South Korea and the European Union by a self-imposed July 8 deadline.   The added uncertainty surrounding those talks and the trajectory of Trump’s tariff agenda is adding to deepening pessimism in the business community about the economy. — Doug Palmer, Daniel Desrochers, Ari Hawkins, Kyle Cheney, Sam Sutton Health Care — In Congress: The Republican megabill heads to the Senate where its Medicaid and Affordable Care Act provisions are causing headaches for some key players. Sens. Josh Hawley (R-Mo.) and Susan Collins (R-Maine) have expressed reservations about cutting benefits to low-income families. At the same time, fiscal hawks, including Sens. Ron Johnson (R-Wis.) and Rand Paul (R-Ky.), are likely to balk at any change that raises the cost of the bill without significant offsets.   The House’s proposed Medicaid overhaul would result in roughly 8 million people losing coverage, according to the Congressional Budget Office. There are also new limits on how states can finance their Medicaid program, which is paid for with a mix of state and federal dollars. The policies are projected to deliver $800 billion or more in savings over the next decade.   — States, providers and insurers are on edge, worried that the legislation, should it become law, would leave them holding a multibillion dollar bag of problems.   States would likely see their uninsured rates spike, leading to a need to prop up hospitals, especially those that serve a disproportionate share of low-income patients. And the proposed crackdown on provider taxes could force states to cut benefits, raise taxes or cut other programs from their budget.   The GOP plan could also mean 3 million fewer enrollees in Obamacare, partly because of new rules around auto-enrollment and shortened re-enrollment windows. There is also a provision that penalizes insurers if they offer abortion as a benefit even in states where they are legally required to do so. That means insurers that participate in the Obamacare marketplace might be forced to rerate their plans with little time before open enrollment begins.   — In the court: The Supreme Court is expected to rule on a pair of health-related cases that could have sweeping impacts on health insurance and abortion access. The justices will decide whether recommendations from the U.S. Preventive Services Task Force are valid even though their members are not confirmed by the Senate or chosen by a Senate-confirmed agency head. Should the justices decide that the task force is invalid, insurers would no longer be required to cover services including depression screenings and HIV-prevention drugs without cost-sharing.   The high court will also decide whether South Carolina can exclude Planned Parenthood from the state’s Medicaid program. A decision in the state’s favor would likely allow other conservative states to expel reproductive and sexual health clinics from their Medicaid programs — shrinking the already narrow network of providers available to low-income patients. The Republican megabill also prohibits Medicaid from funding Planned Parenthood — including in states that have prohibited abortion, though it is not certain whether that provision will survive the Senate. — Pro Health Care Team Financial Services — Powell-Congress: Federal Reserve Chair Jerome Powell will address the House Financial Services Committee this month as part of his semi-annual monetary policy report to Congress. The hearing will be closely watched, with the economy in a precarious position and Trump’s trade wars at a pivotal point. Fed policymakers will also meet on June 17-18 to deliberate on the path of the economy, though they're not expected to make any changes to interest rates since they're still waiting to see how tariffs affect prices and employment.   — Musk’s clash with SEC: It has been four months since the Securities and Exchange Commission sued Elon Musk over his disclosures regarding the purchase of Twitter stock back in 2022. Now, just as Musk leaves the government, he’s finally due to respond by June 6.   — CFPB Fate: An appellate panel is expected to rule on whether the Trump administration can move forward with mass firings at the Consumer Financial Protection Bureau. An appeals court has upheld a district court’s ruling temporarily blocking plans to fire 90 percent of agency employees in a case brought by the employee union against acting Director Russ Vought. The bureau is at the center of Trump’s campaign to slash the federal bureaucracy, and the case marks one of the higher-profile legal challenges to its efforts.   — Inbound at the CFTC: Amid a swirl of high-profile departures from the Commodity Futures Trading Commission, Trump’s pick for chair, Brian Quintenz, is closing in on a long-awaited confirmation hearing before the Senate Agriculture Committee. If confirmed, he will take over the CFTC as the top U.S. derivatives regulator faces questions over what role it will play in policing crypto trading.   — Stress test shakeup: The Fed will release results from its annual assessment of how the nation’s biggest banks would fare in a hypothetical economic shock, even as it eyes an overhaul of the entire stress test process. The Fed has proposed averaging banks’ stress test results over two consecutive years and giving them more time to adjust to new capital requirements.   — Stablecoin-Bill: Republican leadership looks to continue momentum on stablecoins — crypto tokens tied to the dollar — through the summer. The Senate is expected to conduct a final vote on bipartisan legislation this month, and the House is hoping to pass stablecoin and market structure legislation by the end of July. — Mark McQuillan Tax — The Senate now gets to put its stamp on Trump’s "big, beautiful bill." Just how extensively the Senate might seek to change the megabill, or at least the tax portion, remains to be seen.   But some of the potential problem spots are already clear, while the Senate comes back into the process having budgeted itself far more for tax cuts than their House colleagues — more than $5 trillion, compared to the House’s $4 trillion.   Some Senate Republicans are also objecting to how abruptly the House bill would wind down green energy incentives that were enacted by Democrats in 2022.   Hard-line conservatives in the House pushed for an aggressive approach in the chamber’s final tax bill, particularly on wind and solar incentives, over the objections of other GOP lawmakers who have seen the clean energy preferences start to create jobs in their districts.   — Senate Republicans also will have to figure out how to approach limits for deducting state and local taxes. Speaker Mike Johnson negotiated raising the cap to $40,000 with a group of about a half-dozen blue-state Republicans.   The issue is that none of the 53 GOP senators represent a state where the SALT cap is a major issue, though they also understand how politically tricky the issue is on the other side of the Capitol.   That could lead Senate Republicans to seek to pare back the SALT cap, while also trying to be mindful about not upsetting the delicate balance in the House.   — Leading GOP senators, including Finance Chair Mike Crapo (R-Idaho), want to permanently revive a trio of business incentives that were limited or phased out as part of the 2017 tax law.   Bringing back those incentives would allow companies to immediately write off research costs, fully expense capital investments and use a more generous deduction for the interest on their debt.   House Republicans don’t seem to have any policy objection to making those permanent. But the issue might be the cost. The House plan was only able to bring those incentives back through 2029, which kept the overall tax cuts below $4 trillion. — Bernie Becker Energy — The clean energy industry will be looking to the Senate to save their tax credits.   The House-passed reconciliation bill guts many of the clean energy credits in Democrats’ landmark 2022 climate law, the Inflation Reduction Act. The changes could generate more than $550 billion in savings to help offset the costs of the Republican megabill, per Joint Committee on Taxation estimates, but clean energy developers and experts say they could render the credits largely unusable.   Senators are widely expected to moderate the rollbacks to the credits, which have generated billions in investment and tens of thousands of jobs in their states. But it’s no guarantee — dozens of House Republicans spoke out in defense of the IRA incentives but ultimately voted for the package.   Sens. Lisa Murkowski (R-Alaska), John Curtis(R-Utah), Jerry Moran (R-Kan.) and Thom Tillis (R-N.C.), who signed a letter backing the credits in April, are key senators to watch. Tillis vowed hours after the House passed the bill that changes would “undoubtedly” be made to the IRA sections. Sens. Kevin Cramer (R-N.D) and Shelley Moore Capito (R-W.Va.) have also balked at some of the House cuts.   — Senate Republicans are likely to take a closer look at the phase-out timelines for the clean electricity investment and production tax credits. Under pressure from hard-line conservatives, House leaders added language hours ahead of the vote that would require projects to “commence construction” within 60 days of the bill’s enactment and be placed in service by the end of 2028 — timelines that would disqualify all but a few shovel-ready projects.   The House bill would also impose severe restrictions on foreign entities of concern claiming the credits, barring companies with even peripheral links to Beijing or those using minor components from China. That could disqualify projects in a range of industries, including domestic production of critical minerals Trump has pledged to prioritize.   The bill would also make it harder to fund projects by targeting the ability for businesses to buy and sell clean energy credits — an option known as transferability. And it would repeal most credits for electric vehicles and clean hydrogen production at the end of this year.   — Among the winners in the House bill are the carbon capture and biofuels industries, which would see their IRA credits preserved and extended, respectively. And House leaders softened rollbacks of credits for nuclear reactors, another GOP-backed technology, at the last minute. — James Bikales Education — International students in limbo: A U.S. District judge at the end of May extended her block on the Trump administration’s attempts to stop Harvard University from enrolling international students. The administration gave Harvard 30 days to contest the decision to strip its status, but the federal judge said it wasn’t enough to give her confidence that the administration wouldn’t take other steps — such as holding up visas for Harvard students — in the meantime.   — Student loans: The final destination for the student loan portfolio is still up in the air, but this summer the Education Department will start to garnish wages for borrowers who are in default. About 5.6 million borrowers were in default at the end of 2024. Most federal student loan borrowers will go into default if they do not make a payment in more than 270 days.   The department already began involuntary payments in May through the Treasury Offset Program, which collects debts by intercepting payments such as tax refunds and Social Security benefits.   — Confirmation hearings: The Senate HELP Committee will meet on June 5 to consider two top Education Department nominees who will oversee K-12 programs and civil rights enforcement.   Penny Schwinn, nominated to serve as the deputy Education secretary, and Kimberly Richey, nominated to serve as the assistant secretary for civil rights, will testify in front of the committee. Schwinn is a former Tennessee schools chief and served as the Tennessee Education Department commissioner and held several roles at the Texas Education Agency. Richey has served as a senior chancellor in the Florida Department of Education and as the acting head of the Education Department’s Office for Civil Rights in the first Trump administration. — Rebecca Carballo Technology — STATE AI MORATORIUM: One of the largest stakes for the tech industry is whether a 10-year moratorium on state artificial intelligence regulations that passed the House can survive the Senate’s arcane rules.   Legal experts are skeptical the provision will survive the chamber’s so-called Byrd rule, which requires anything included as part of the reconciliation process to deal with budgetary issues like federal spending, revenues and the debt limit. Many believe the language amounts to a policy change, despite the fact many Senate Republicans are ultimately supportive of it.   It’ll be up to the Senate’s rules referee — the parliamentarian — to ultimately adjudicate the dispute between Republicans and Democrats as the process moves forward.   — SPECTRUM: House Republicans included a sweeping spectrum package in the reconciliation bill passed in May, which is meant to raise $88 billion in revenue by reauthorizing the spectrum auction authority of the Federal Communications Commission and directing the sale of 600 Megahertz of frequencies. It’s a boon for the wireless industry, which says these provisions will turbo-charge U.S. efforts to expand 5G and 6G networks, and appears to be to Trump’s liking.   The next few weeks will test how much the Senate GOP may try to change these provisions.   Key players to watch will be Republicans on the Senate Armed Services Committee, particularly veteran members Sens. Mike Rounds (R-S.D.) and Deb Fischer (R-Neb.). They told POLITICO they’re unhappy with the House language and want additional protections for bands used by the military — without these changes, they say Trump’s other big priorities, like the Golden Dome missile shield, could be at risk.   — PRIVACY: Oregon lawmakers passed a bill that would ban companies from selling personal information, including people’s location data, belonging to anyone under the age of 16. The bill, which is awaiting Gov. Tina Kotek’s signature, also prevents companies from using data from minors for targeted advertising.   It goes beyond the federal data protections set in the Children’s Online Privacy Protection Act, which only applies to children younger than 13. Oregon’s legislative session is expected to adjourn by the end of June. — TAXES: The Senate appears open to one of the biggest asks from the tech industry: allowing companies to permanently and immediately write off research and development costs.   The House allowed this immediate treatment of R&D expenses for five years, but stopped short of making it permanent.   —Another one to flag: House Republicans rebuffed an effort by Democrats to close a tax loophole that benefits venture capitalists, but President Donald Trump has repeatedly called for closing it over the years.   If Trump leans in on closing the “carried interest loophole,” Senate Republicans could be pressured to abide by the president’s wishes. It allows for favorable tax treatment for certain income accrued by private equity, venture capital and hedge-fund managers. — Alfred Ng, Anthony Adragna and John Hendel Defense — Defense bills begin to advance: The House will start the process this month of considering annual defense bills. Republicans on House Appropriations Committee this week plan to introduce and mark up their military construction bill, which funds Pentagon infrastructure projects. The defense appropriations bill, which includes most of the Pentagon budget, will follow next week.   But the Pentagon has yet to provide a detailed budget to lawmakers. The White House has released only the broad contours of its proposal, which would leave the Pentagon budget flat while relying on more than $100 billion from Republicans' megabill to reach Trump's goal of a $1 trillion defense budget.   It’s not clear whether appropriators, who have pressed Defense Secretary Pete Hegseth for a full budget, will have to adjust their schedule due to the delay. Senate appropriators have yet to set their markup schedule. The House and Senate Armed Services panels also have not teed up markups of their defense policy bills.   — Nominee logjam: The Senate will return from a weeklong recess to a backlog of Pentagon nominees. A total of 14 senior nominees — including picks to serve as the Pentagon's top weapons buyer and personnel chief — await final votes in the coming weeks. — Connor O’Brien Employment and Immigration — Pension Tension: House Republicans sprinted to lock in parts of the president's agenda by modifying the federal government’s pension program. Although GOP lawmakers removed from the chamber’s parly-line megabill a provision that would restructure government employees’ retirement payments, they left intact other elements aimed at generating billions in savings, including creating an at-will designation for workers and charging a fee for filings to the Merit Systems Protection Board.   The Senate will soon take up the package, which includes pension overhaul provisions that might rankle moderates opposed to the idea of tweaking the benefits of employees who are still working, a criticism leveled in the House by Rep. Mike Turner (R-Ohio). — Lawrence Ukenye Transportation — Summer travel heats up: Memorial Day is the official kick off to the busy travel season for every mode of transportation, but perhaps more than others aviation remains a top focus for the new Trump administration. Expect June to contain more split-screens of Transportation Secretary Sean Duffy talking up his agency's vague-but-ambitious plan to attempt to modernize the air traffic control system by frontloading spending Congress likely won't fund, along with Duffy simultaneously trying to handle ongoing — and concerning — problems with air traffic control communications and radar at Newark Liberty International Airport in New Jersey. — Kathryn A. Wolfe Cybersecurity — As the Trump administration continues to levy major cuts to funding and personnel at cyber agencies across the federal government, Congress is preparing for several confirmation hearings and legislative considerations this June — including the long-awaited confirmation hearing for Sean Plankey, Trump’s pick to head up the Cybersecurity and Infrastructure Security Agency.   The Senate Homeland Security Committee will hold Plankey’s nomination hearing on June 5, inching the Trump administration closer to installing a full-time leader at the nation’s top cyber defense agency. Currently, Madhu Gottumukkala leads the agency in an acting capacity. Still, a vote for Plankey’s confirmation may be a ways away as Sen. Ron Wyden (D-Ore.) has placed a hold on his nomination until CISA releases an unclassified 2022 report on issues within U.S. telecommunications networks.   — The hearing will likely also include Sean Cairncross, Trump’s pick for national cyber director. Plankey, a former Energy Department cyber official, is widely expected to glide through his nomination hearing. Cairncross served as deputy assistant to the president during the first Trump administration and was the chief operating officer of the RNC. Despite his lack of experience, cybersecurity experts have expressed cautious optimism about Cairncross’ abilities.   Lawmakers last month ramped up efforts to renew the 2015 Cybersecurity Information Sharing Act — commonly known as “2015 CISA” — which is set to expire in September. The law incentivizes companies to share cyber threats, like software vulnerabilities and malware findings, with each other and the federal government. There is bipartisan support in both chambers for its reauthorization, and both the Trump administration and the private sector have said legal safeguards from state and federal disclosure laws and federal antitrust exemptions are vital for information sharing to continue.   CISA’s mass layoff plan may be on pause after hundreds of personnel took offers of deferred resignation and early retirement last month. Several top cyber officials also departed the agency last week.   — At the Pentagon, the Defense Information Systems Agency will likely lose around 10 percent of its staff to resignations and cuts in the coming weeks — though Lt. Gen. Paul Stanton, the head of the agency, told lawmakers last month that the agency may need to rehire for some roles that have been cut. At U.S. Cyber Command, between 5 and 8 percent of personnel took the Trump administration’s offer of deferred resignation last month.   The State Department also announced plans to shake up its cyber postings. Secretary of State Marco Rubio last week submitted a formal plan to Congress that outlined the planned reorganization of the department, which was consistent with previous plans to split the policy efforts of the Bureau of Cyberspace and Digital Policy under three different undersecretaries.   We’ll be looking in the month ahead at how these shakeups and high-profile exits impact the country's top cyber agencies and cyber capabilities. — Dana Nickel