June Washington D.C. Update

June could offer the clearest picture yet of which parts of the Trump administration’s agenda are gaining traction. Major decisions are looming on taxes, trade, artificial intelligence, energy, transportation and federal spending, while Congress begins work on legislation that could reshape key sectors of the economy. Across Washington, POLITICO’s policy teams are tracking the debates, deadlines and decisions that will help shape the second half of the year. — IRS cuts and the administration’s $1.8 billion anti-weaponization fund are set to dominate Treasury Secretary Scott Besset's Hill appearances.   — The House transportation bill cleared committee with broad bipartisan support as a Sept. 30 funding deadline approaches.   — Congress will begin debating a federal privacy bill that would override more than 20 state data laws. Agriculture — Farm bill talks: Senate Agriculture Committee Republicans are moving closer to unveiling their version of the farm bill after the House passed its package — a major step forward for legislation that has been stalled for years.   Senate Agriculture Chair John Boozman (R-Ark.) is aiming to introduce text and mark up the bill in June. His proposal is expected to exclude some of House Republicans’ most controversial provisions in a bid to attract Democratic support, but it could still face obstacles over nutrition policy.   Democrats who criticized Republicans’ One Big Beautiful Bill Act for cutting $187 billion from the Supplemental Nutrition Assistance Program are seeking to delay new requirements that states cover part of the cost of benefits. The GOP megabill also included a $65 billion investment in farmer support programs, clearing the way for a budget-neutral farm bill this year.   The GOP-led House passed its farm bill 224-200 on April 30 after months of uncertainty over whether Republican leaders could secure enough support. The vote marked the farthest a farm bill has advanced in Congress since the most recent reauthorization was signed into law in 2018.   Farm-state Republicans have been pressing GOP leaders in both chambers to make progress on the package, which includes bipartisan updates aimed at helping farmers facing high production costs, rising bankruptcies and economic uncertainty.   — USDA shake-up: Agriculture Secretary Brooke Rollins is continuing to roll out details of the department’s sweeping reorganization plan, which would ask most Washington-area staff to relocate to five offices around the country and close several key USDA offices in the capital region.   USDA expects relocated employees to move this summer, Deputy Agriculture Secretary Stephen Vaden said earlier this year. The department is beginning to announce which agencies and offices will move to specific states, including the Food and Nutrition Service and employees working on food safety, economics and research.   The plan has already drawn resistance from Democrats and some Republicans in Congress, who warn the relocation could trigger a mass exodus of experienced USDA workers and researchers.   — Food price squeeze: Food costs remain elevated and a critical political pressure point ahead of November’s midterm elections.   Consumer prices in April rose at their fastest rate since May 2023, partly because of rising energy costs tied to the blockade of the Strait of Hormuz during the Iran war.   Several other pressures in the food and agriculture sectors are contributing to price stress, including higher costs for fertilizer, diesel fuel and packaging materials.   Farmers are also bracing for a super El Niño weather pattern that could bring extreme rains and drought, threatening supplies of U.S. agricultural goods.   The Trump administration is exploring policy changes it hopes will lower food costs as affordability remains a central concern for voters.   — Trade: Agriculture lobbying groups are continuing to press the Trump administration to prioritize new markets for U.S. farm goods as producers navigate trade uncertainty and volatile commodity prices.   Farm products were a key focus of President Trump’s recent visit to Beijing. The White House has said China will buy at least $17 billion in U.S. agricultural products annually over the next three years.   Farm groups will continue watching whether Trump can secure additional international market opportunities after months of market uncertainty and disruption from his tariff rollout. — Grace Yarrow Trade — Tariff talks intensify: The Trump administration’s trade negotiators face a busy month as several key July deadlines loom.   A delegation of U.S. officials will meet in India June 1 through 4 negotiators work towards finalizing an interim trade agreement, the next step after the two countries reached a framework agreement in February. As part of that deal, the Trump administration agreed to lower tariffs on some Indian goods and Prime Minister Narendra Modi committed to investing hundreds of billions of dollars in the U.S. energy sector.   — USMCA clock ticking: Meanwhile, Canadian trade negotiators will be in Washington this week as talks on the U.S.-Mexico-Canada Agreement heat up. The three countries are conducting a mandatory six-year review of the North American trade pact ahead of a July 1 deadline to extend it.   Most observers expect negotiations to continue beyond that date, leaving the USMCA in place while its long-term future remains uncertain.   The U.S. and Mexico have effectively acknowledged that reality — scheduling a third negotiating round in Mexico City the week of July 20, after wrapping up a first round last week. A second round of talks has been penciled in for June 16-7, according to the Office of the U.S. Trade Representative.   USTR is also closely monitoring developments in Europe, where the European Union is working to finalize legislation lowering tariffs on U.S. industrial goods and some agricultural products under an agreement struck last summer between President Trump and European Commission President Ursula von der Leyen.   Trump had threatened to hike tariffs on European cars if the EU does not lower the tariffs, as promised, by July 4.   The European Parliament's trade committee will vote on the legislative package on June 2, with the plenary vote expected on June 16 or 17. — Ari Hawkins, Emily Cadei Financial Services — Fed’s new era: The Federal Reserve's policy-setting committee will meet June 16-17 for its first interest rate decision under new Chair Kevin Warsh. President Donald Trump's hopes for a rate cut have likely been derailed by the war in Iran, which has pushed up oil prices and fueled inflation. Still, the post-meeting press conference will offer early clues of Warsh's vision for the institution.   — Prediction markets: The Commodity Futures Trading Commission is nearing the release of new guardrails for the fast-growing prediction markets industry. The agency recently submitted a proposal for White House review that is focused on the industry, a key step that suggests the plan could be released within weeks — if not days. The CFTC has not disclosed the proposal’s contents, but the agency previously suggested that it was exploring a range of concerns around the markets, including the threat of insider trading, what constitutes “gaming” and blockchain-based markets.   — Regulators on Hill: The Fed’s Vice Chair for Supervision Michelle Bowman, Comptroller of the Currency Jonathan Gould, National Credit Union Administration Chair Kyle Hauptman and FDIC Chair Travis Hill will testify before the House Financial Services Committee on June 4. The committee also plans a markup later this month, along with hearings on financial innovation and market fairness, financial crime, disaster recovery and other issues.   — Housing bill: A housing affordability package that passed the House overwhelmingly in May is awaiting Senate action once again after lawmakers made additional changes. The Senate could take up the measure as soon as this month, whether through an amendment, a floor vote or another legislative vehicle.   — Crypto bill: Senators are hoping to bring landmark cryptocurrency legislation to the floor as soon as this month. The measure would overhaul the regulatory framework for digital assets. The Senate Banking and Agriculture committees have already advanced their respective portions of the legislation, which must now be merged into a single package. GOP senators are still negotiating changes with key Democrats to secure the bipartisan support needed for passage. One key outstanding issue is an ethics provision that Democrats hope to put into the bill to address concerns about the Trump family’s crypto ventures. The timing of a floor vote remains uncertain.   — Capital proposal: Bank regulators this month will begin receiving comments on their Basel capital proposal, which are expected to highlight divisions within the industry. Regulators are also continuing to refine rules governing crypto assets and stablecoins. Meanwhile, banks are preparing for the next phase of the fight in the Senate over the CLARITY ACT, legislation aimed at establishing a clearer regulatory framework for cryptocurrencies and other digital assets in the United States. — Mark McQuillan Tax — Bessent’s big days: Treasury Secretary Scott Bessent will offer testimony on his department’s fiscal 2027 budget before the Senate Finance Committee on June 3, and to the House Ways and Means Committee the following day.   Democrats will likely continue skewering Bessent over the administration’s budget request for Treasury, which calls for budget reductions that could further hobble the IRS and its tax enforcement operations. Those proposed cuts which congressional Republicans support, have raised concerns among Democrats about whether the IRS will retain the resources needed to audit wealthy taxpayers, an effort that brings in outsized revenue for the agency.   But the hearings will also give Democrats an opportunity to press Bessent on a new issue that’s emerged since his last appearance before the Senate Appropriations Committee on April 22: the dismissal of President Trump’s lawsuit against the IRS and the creation of a $1.8 billion “Anti-Weaponization Fund” to settle claims from people say they were targeted by the federal government for political reasons, including individuals who participated in the Jan. 6, 2021 attack on the U.S. Capitol.   — On that lawsuit…: The legal headaches surrounding Trump’s IRS settlement are only growing. A federal judge is demanding answers to allegations that Trump used the lawsuit as a vehicle to engineer the $1.8 billion “anti-weaponization” fund, after 35 former federal judges urged the court to reopen the case and investigate whether it amounted to a “fraud on the court.”   The scrutiny extends beyond the fund itself. Critics have also zeroed in on an addendum signed by acting Attorney General Todd Blanche that bars the IRS from auditing Trump, his sons and their businesses in currently pending matters. Capitol Police officers assaulted on Jan. 6, watchdog groups and other plaintiffs have filed separate challenges seeking to block the fund, while tax experts continue to debate whether such an audit exemption is legally enforceable.   And the courts are already stepping in: A federal judge in Virginia on Friday temporarily blocked the administration from distributing any money through the fund and scheduled a June 12 hearing on whether the freeze should remain in place. Additional details could also emerge in the coming weeks about how Blanche and the administration intend to oversee — and ultimately distribute — the money.   — Think of the children: Trump Accounts — the tax-advantaged investment accounts for children born between 2025 and 2028 — will launch in July. Before that, the administration is expected to issue additional regulations and begin an education campaign explaining how the accounts, authorized as part of Republicans’ 2025 tax overhaul, will work. — Danny Nguyen Education — Funding fight ahead: Lawmakers are set to consider how much funding the Education Department should get in fiscal 2027.   The House is poised to unveil its proposal for the Labor-HHS-Education spending bill this month. The measure funds federal education programs, and the House Appropriations Committee is also scheduled to take it up.   President Trump wants to eliminate the Education Department, which is requesting $75.7 billion in new discretionary budget authority — a roughly $3 billion cut from fiscal 2026. Congress will ultimately determine the agency's funding levels, but it’s unclear how House Republicans will approach that task after proposing deep cuts to the department in recent years. The Senate hasn’t released its proposal to fund the department, and the two chambers will have to reconcile any differences between their bills.   — Student aid squeeze: Lawmakers will have to contend with a multibillion-dollar shortfall in funds for the Pell Grant, which helps students pay for college, and weigh the Trump administration’s proposal to consolidate K-12 funds.   — DEI funding fight: Lawmakers will also consider the Trump administration’s proposal to eliminate the Minority-Serving Institutions grant program, which supports colleges with significant enrollments of Hispanic, Black, Asian and Native students. The administration has determined these are unconstitutional race-based programs. But the GOP-led Congress approved increases for the MSI program in fiscal 2026.   — District leaders grilled: Elsewhere on Capitol Hill, the House Education and Workforce Committee is expected to question school district leaders over parental rights, alleged “legal abuses” and inappropriate content in schools. Loudoun County Public Schools Superintendent Aaron Spence and San Francisco Unified School District Superintendent Maria Su are set to appear before the panel this month. House Education Chair Tim Walberg (R-Mich.) also subpoenaed Chicago Public Schools CEO Macquline King to testify at the hearing. — Mackenzie Wilkes Defense — Pentagon spending debates incoming: Lawmakers will kick off work on annual defense policy and spending bills this month, marking the first major test of Trump's mammoth $1.5 trillion military budget.   The House Armed Services Committee will lead off on Wednesday with a marathon debate on its version of the $1.15 trillion National Defense Authorization Act.   Armed Services Chair Mike Rogers (R-Ala.) is betting the lower price tag will be more palatable to Democrats who have slammed the administration’s budget request as wasteful. The House measure does not include the $350 billion Trump is seeking through a separate party-line megabill.   Democrats are likely to push for amendments on a range of issues, particularly the war in Iran.   —Wicker’s balancing act: The Senate Armed Services Committee will follow with a closed-door session during the week of June 8. Chair Roger Wicker (R-Miss.) will need to balance pressure from defense hawks in his party, who favor higher military spending, with the need to secure enough Democratic votes to pass the bill.   — Spending bill rollout: House appropriators will also roll out their first effort at a Pentagon spending bill. They will mark up annual defense appropriations legislation at the subcommittee level on June 11, followed by full committee consideration on June 24.   — Reconciliation hurdle ahead: Trump's plans for a roughly 50 percent hike to military spending will depend on Republicans uniting around another reconciliation package.   GOP leaders are expected to continue negotiations over that measure after clearing separate legislation to fund immigration enforcement priorities.   Still, passing a bill that includes hundreds of billions of dollars in additional defense spending faces an uphill climb in an election year. — Connor O'Brien Health Care — Animal testing: Congress is closing in on a new law aimed at reducing the use of animals in testing new medical products. The House Energy and Commerce Committee unanimously approved the FDA Modernization Act 3.0, sponsored by Reps. Buddy Carter (R-Ga.) and Nanette Barragán (D-Calif.) on May 21, sending it to the full House.   The Senate passed a version of the bill, sponsored by Cory Booker (D-N.J.), by unanimous consent last year.   The bill would require the Food and Drug Administration to update its regulations to encourage alternatives to animal testing. They could include computer modeling or organic chips — microdevices containing human cells that can mimic how the body responds to a drug.   — MAHA priority: The bill is part of a broader push by Congress and the FDA to reduce reliance on animal testing, a priority for Health Secretary Robert F. Kennedy Jr.’s Make America Healthy Again movement.   Congress previously enacted the FDA Modernization Act 2.0 as part of a 2022 omnibus spending package. That law removed a longstanding requirement for animal testing in nonclinical drug studies, which are generally conducted before human trials.   Carter has argued the FDA did not fully implement that legislation, creating the need for a follow-up bill.   The FDA announced in April 2025 that it would begin phasing out animal testing requirements for certain drugs, including monoclonal antibody therapies that help the immune system fight disease.   — Doctor pay fight: A bipartisan group of House lawmakers is pushing to update a decade-old Medicare payment formula that routinely recommends cuts to physician reimbursement rates.   A discussion draft from Reps.John Joyce (R-Pa.), Greg Murphy (R-N.C.) and Kim Schrier (D-Wash.) would revise the formula to account for inflation's impact on the cost of providing care. The lawmakers believe the change would produce payment increases rather than cuts.   The annual effort to override the formula often requires Congress to identify additional Medicare funding. Lawmakers have not always done so, leaving physicians to absorb lower reimbursement rates. — Health Care Pro Team Transportation — Surface bill gets rolling: The House Transportation Committee last month advanced H.R. 8870, a $580 billion surface transportation reauthorization bill that includes a new fee for electric vehicles and plug-in hybrids along, along with rail safety language championed by the White House.   The vote marks the first steps toward enacting the five-year legislation into law before existing authorities expire on Sep. 30. The bill cleared committee on a bipartisan 62-2 vote — a notable outcome in a deeply divided House and an encouraging sign for Chair Sam Graves (R-Mo.), who is hoping to complete the measure before retiring at the end of the 119th Congress.   Graves said he wants to get the bill to the floor “as quick as we can” but is still working with House leadership on timing. The Senate has yet to release legislative text or announce plans for its version of the bill.   — Air safety worries: Staff-level negotiations are underway to reconcile competing House and Senate aviation safety bills drafted in response to the January 2025 midair collision over Washington that killed 67 people. But some observers, including victims’ families, worry a final agreement may not be reached before the end of the year.   Graves, who authored the ALERT Act, remains committed to his approach, while Senate Commerce Chair Ted Cruz (R-Texas) is standing by the central provision of his ROTOR Act.   Cruz’s bill would require many aircraft nationwide to install Automatic Dependent Surveillance-Broadcast In, or ADS-B In, technology by late 2031 — a requirement Graves has criticized.   — Sean Duffy’s road trip fallout: Senate Democrats are asking questions about Transportation Secretary Sean Duffy’s Great American Road Trip, a family excursion funded through a nonprofit backed by sponsors including Toyota, United Airlines and Boeing — companies regulated by the Transportation Department.   The top Democrat on the Senate Appropriations Committee, Patty Murray of Washington, tangled with Duffy during a hearing last month and later called on the inspector general of DOT to launch an inquiry into Duffy’s participation in the reality-show-style journey.   "The American people deserve to know who paid for what and what those sponsors got in return. If Secretary Duffy has nothing to hide, he should welcome this investigation,” Murray said in a statement to POLITICO.   The controversy could become Duffy’s most significant political challenge to date. — Chris Marquette Technology — Share your view on ‘The View’: June 22 marks the Federal Communications Commission’s deadline for initial public comments on whether ABC’s “The View” qualifies as a bona fide news program exempt from the agency’s equal-time rules.   Those longstanding rules require broadcast television programs to provide comparable airtime to rival political candidates. In January, FCC Chair Brendan Carr issued guidance removing exemptions for daytime and late-night programs, raising concerns about the implications for broadcasters ahead of the 2026 midterm elections.   The FCC opened an investigation into “The View” in February following its interview with Democratic Senate candidate James Talarico, arguing the program may not qualify for the exemption under the agency’s revised approach.   ABC, which is owned by Disney, has defended the show’s news status and warned that Carr’s approach could chill speech.   Disney is also battling the FCC on other fronts, including Carr’s recent move to require the company’s eight broadcast television stations to seek early license renewals years ahead of schedule.   — Kicking off privacy talks: The House Energy and Commerce Committee will hold its first hearing on a federal data privacy law.   The SECURE Data Act,led by Rep. John Joyce (R-Pa.) with the support of E&C Committee Chair Brett Guthrie (R-Ky.), would preempt more than 20 state privacy regulations. The measure borrows provisions from existing state statutes that allow consumers to request data deletion and direct companies to stop selling their personal information.   The hearing before the Commerce, Manufacturing and Trade subcommittee will be Democrats’ first opportunity to publicly weigh in on the legislation.   Joyce and Republican staffers who worked on the bill believe it can attract bipartisan support, though the committee’s ranking member Frank Pallone (D-N.J.) is critical of the legislation.   — House AI talks continue: Rep. Jay Obernolte (R-Calif.) is soon expected to introduce a framework for artificial intelligence legislation despite it facing major headwinds this year.   Obernolte told POLITICO in December that he was finalizing a bill that would codify aspects of President Trump’s executive order blocking state AI laws, and has since expressed frustration for the repeated delays.   Those delays have stemmed in part from negotiations with Rep. Lori Trahan (D-Mass.), as the as the lawmakers work toward a proposal that would preempt certain state laws aimed at regulating frontier AI developers and reducing catastrophic risks.   The affected laws include measures in California and New York that require leading AI companies to disclose information about new models and identify major safety or security concerns.   Trahan, a four-term member eyeing a leadership role next year, is eager to clinch a bipartisan accord despite not having the explicit backing from Democratic leaders. As talks continue, she will have to balance criticism from Massachusetts lawmakers, AI safety advocates and some voters against the political benefits of demonstrating bipartisan dealmaking credentials. — John Hendel, Alfred Ng and Gabby Miller Cybersecurity — What makes it into the AI EO? June could finally bring President Trump’s long-awaited executive order on artificial intelligence security. The biggest question is how much the directive has changed from a version Trump shelved last week following a last-minute intervention by a former adviser concerned about overly burdensome regulation.   The most contentious issue is whether — and for how long — the government should gain early access to Silicon Valley’s newest AI models to assess their safety risks.   The order could also include other provisions of significant interest to the national security community, including a new clearinghouse for identifying and triaging software vulnerabilities affecting critical infrastructure operators.   The White House may also revisit which agencies are responsible for implementing the order. A draft order obtained by POLITICO in late May placed the Treasury Department — rather than CISA — in charge of the clearinghouse and excluded the Commerce Department from the review process, despite its existing role in evaluating advanced AI models.   — Will FISA get punted again? A divisive surveillance authority is set to expire again June 12 after lawmakers failed earlier this year to reach consensus on reforms aimed at strengthening privacy protections.   Some lawmakers believe momentum is building for a long-term extension of Section 702 of the Foreign Intelligence Surveillance Act, which allows the government to collect communications data from foreigners located outside the United States.   Privacy advocates, however, argue the authority undermines Fourth Amendment protections because it can sweep in communications involving Americans who interact with surveillance targets overseas.   — What makes it into the defense policy bill? Lawmakers are preparing to negotiate the final version of the National Defense Authorization Act, the annual defense measure that has increasingly become a vehicle for cybersecurity legislation.   Key proposals include measures to strengthen U.S. cyber cooperation with allies and new Pentagon rules governing the deployment of AI technologies.   Lawmakers are set to begin negotiating the final version of the National Defense Authorization Act, the must-pass defense policy bill that has become a popular vehicle for advancing federal cyber measures. Key provisions include measures to strengthen U.S. cyber cooperation with allies and new AI deployment rules for the Pentagon. — John Sakellariadis