August Washington D.C. Preview

Congress may be on recess, but Washington isn't slowing down. Regulators are teeing up major decisions on media ownership, artificial intelligence, energy and cryptocurrency, while trade negotiations, defense funding and other high-stakes policy fights continue to shape the fall agenda. Across the administration, agencies are rolling out rules with broad implications for business, from health care and higher education to taxes and the power grid. Here's what POLITICO's policy teams will be watching in August. — The Federal Communications Commission votes Aug. 6 on scrapping the 39 percent national TV ownership cap, setting up a fight over the agency's authority.   — Fed Chair Kevin Warsh's speech at the Jackson Hole conference will be closely watched for signals on the path of interest rates.   — The National Defense Authorization Act, Pentagon appropriations and reconciliation funding all appear headed for the post-election lame-duck session. Agriculture — The Senate: Senate Agriculture Chair John Boozman (R-Ark.) plans to hold a farm bill markup on Aug. 6, the chamber’s last work day before its August break.   Boozman has had to account for the absence of Sen. Mitch McConnell (R-Ky.), who has been gone from Congress for over a month after being hospitalized and put in a rehabilitation center after a fall. McConnell’s absence erases Republicans’ one-vote majority on the committee.   McConnell's absence leaves Boozman needing Democratic support to advance the proposal. But reaching a compromise will be difficult, particularly over whether to delay a looming requirement that some states share the cost of Supplemental Nutrition Assistance Program benefits, a provision enacted in last year's GOP’s sweeping domestic policy law.   Boozman said he is continuing talks with Amy Klobuchar (D-Minn.), the Ag Committee’s ranking member, “to see if we can get a path forward.” Klobuchar said that “we're continuing to have productive negotiations, but there is a lot of work left to do.”   — The House: House Ag Chair G.T. Thompson (R-Pa.) introduced his long-awaited bill to overhaul the H-2A farm guest worker visa program, and potentially allowing year-round industries such as dairy to employ temporary foreign agricultural workers through the program for the first time.   Opening a legal employment pathway for some undocumented farm workers has sparked the ire of immigration hard-liners in the GOP, who disparage the proposal as a form of “amnesty” that runs counter to the Trump administration’s mass deportation campaign.   — USDA reorganization: More Agriculture Department employees are receiving reassignment letters, buyout offers and early retirement incentives. The Natural Resources Conservation Service plans to consolidate its four divisions and move employees in the Washington area to regional hubs by September 2027.   Democrats continue to raise concerns about the restructuring. Klobuchar and more than 20 lawmakers recently sent a letter to Deputy Agriculture Secretary Stephen Vaden expressing worry over the Rural Development mission area.   — Screwworm: The Agriculture Department lifted its ban on cattle imports from Mexico,announcing that the Douglas, Ariz., port of entry will reopen Aug. 24, as U.S. cases of the New World screwworm have continued to climb. USDA is taking operational steps to reopen two ports in New Mexico.   The decision came after Agriculture Secretary Brooke Rollins resisted pressure from ranchers and members of her own party to reopen the ports to mitigate soaring beef prices.   The Agriculture Department is committing $25 million toward a new sterile New World screwworm fly dispersal facility in Arizona. USDA remains well short of the sterile fly production needed to contain the parasite. — Rachel Shin Trade — Canada Tariffs: The president announced on July 20 that he would impose a 50 percent tariff on Canadian goods, but he delayed implementation for 30 days, meaning they are set to go into effect on Aug. 19. Trump argued the tariffs are needed to offset “the burden and disadvantage on U.S. commerce” from Canadian trade policies including dairy tariff-rate quotas, duties on U.S. cars and several provinces' ongoing boycotts of U.S. alcohol.   The move has intensified trade talks with Ottawa in hopes of avoiding the duties. Canada-U.S. Trade Minister Dominic LeBlanc and Chief Trade Negotiator to the U.S. Janice Charette met with Trump trade officials in Washington last week.   The discussions add yet more drama to the six-year review of the U.S.-Mexico-Canada trade agreement that Trump signed in his first term. The U.S. has so far held formal negotiations only with Mexico, while keeping Canada on the sidelines. The Trump administration has more talks lined up with President Claudia Sheinbaum’s government in September. — EU under scrutiny: The European Union, meanwhile, is waiting to see what comes of Trump’s threat to launch a Section 301 trade investigation into its digital policies, which he promised after the European Commission imposed a $1 billion fine on Google.   More than a week later, U.S. Trade Representative Jamieson Greer has yet to launch the formal investigation, which could ultimately lead to new tariffs.   But a USTR official, granted anonymity to discuss plans that have not yet been made public, told POLITICO the investigation will be initiated “soon.” — Oliver Ward, Daniel Desrochers, Mike Blanchfield, Stefanie Bolzen Financial Services — Jackson Hole: The uncertain economic outlook is putting pressure on Federal Reserve Chair Kevin Warsh to clarify his views on where interest rates are headed. Yields on long-term government debt jumped after he announced at a July 29 press conference that short-term borrowing costs would remain unchanged. Other policymakers like Dallas Fed President Lorie Logan have grown more vocal about the potential need to raise rates. Warsh is reluctant to offer so-called forward guidance, but his speech at the Kansas City Fed’s closely watched Aug. 27-29 conference in Jackson Hole, Wyo., could offer clues about his outlook.   — Job market: The low unemployment rate and steady payroll growth have been bright spots for GOP officials who are arguing the case for the president's economic agenda ahead of the midterm elections. But wages haven't kept pace with rising prices since the start of the Iran war and, absent a swift resolution to the conflict, there are risks that inflation could spread beyond the energy sector in the coming months. The Labor Department will release its monthly jobs report on Aug. 7, and the consumer price index for July follows on Aug. 12.   — Demographic dilemma: The Equal Employment Opportunity Commission will hold a hearing on Aug. 11 to gather public feedback on whether the agency should continue collecting annual demographic data from employers. EEOC regulations require private employers with at least 100 employees to submit data on their staff’s race and gender makeup every year. But an EEOC proposal published in July would rescind that requirement.   — Going to SCOTUS: Months of legal fights over who should regulate the booming world of prediction markets could soon reach the Supreme Court. New Jersey officials are facing a deadline in the coming weeks to petition the high court to review a federal appeals court ruling that Kalshi's sports markets fall exclusively under the Commodity Futures Trading Commission. States like New Jersey, Maryland and Nevada say that prediction markets are no different than traditional gambling platforms and should be regulated at the state level.   — Crypto bill: Senators are racing to strike a final deal on a landmark cryptocurrency bill this month. But Wall Street regulators aren’t likely to wait. Securities and Exchange Commission Chair Paul Atkins says that if Congress can’t enact the bill, the SEC is “ready, willing and able to come out” with its own rules. Watch out for the long-awaited innovation exemption, .a contentious proposal the agency describes as a stopgap intended to provide greater clarity on crypto trading oversight. — Mark McQuillan Tax — Summer vacation: With Congress on its August recess, lawmakers will be home with plenty of time to talk to voters. For Republicans, that could be an opportunity to improve public opinion of their One Big Beautiful Bill Act, which a recent POLITICO Poll found hasn’t made a strong impression — including among supporters of President Trump.   Nearly half of Americans can't explain the tax breaks Republicans passed last year in their signature legislation, the poll found. And those who can are more likely to say the law has helped the wealthy than themselves.   Republicans have spent the past several months attempting to rebrand the megabill as the “Working Families Tax Cuts Act” while touting its new deductions for things like tipped income and overtime wages. But 57 percent of Americans say the war in Iran has made things more expensive, overshadowing any impact from the law. Republicans face a challenging sales pitch as they take their tax message into the final stretch of the midterm elections.   On the Democratic side, Rep. John Larson (D-Conn.), a longtime member of the House Ways and Means Committee, is facing a competitive four-way primary on Aug. 11 as he seeks a 15th term in Congress. A loss would cost Democrats one of their most seasoned tax writers just as they are favored to retake the House.   — Regulations: The IRS is expected to issue further guidance on how the Treasury Department can accept stock donations for Trump Accounts, the administration’s tax-deferred investment program for children. SpaceX has pledged to donate shares through the program, and other public companies could follow. But the Treasury and IRS will have to navigate a provision in the One Big Beautiful Bill Act requiring all money in Trump Accounts to be invested in funds that meet certain criteria.   The White House Office of Management and Budget is also getting ready to approve regulations outlining federal minimum taxes on foreign earnings and determining a U.S. corporation’s foreign-derived deduction eligible income. — Danny Nguyen Education — Blocking the Education Department dismantling: At the end of July, the Senate HELP Committee advanced S. 5046, a bipartisan bill from Sens. Tim Kaine (D-Va.), Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska) that would prohibit the Education Department from transferring the offices of special education, Elementary and Secondary Education, Postsecondary Education and Indian Education to other federal agencies. It was the first significant legislative effort to block the Trump administration's moves to dismantle the department.   Meanwhile, House Republicans advanced a legislative package to make good on the president's campaign promise.   — Defining sex: House Education Chair Tim Walberg (R-Mich.) advanced a bill on a party-line vote that would define “sex” in federal education law as based on biological sex at birth. Past attempts to define sex in measures barring transgender athletes from women’s sports have tanked in the Senate during this Congress.   — Pell Grant shortfall: The Pell Grant, which helps over 6 million low-income students pay for college faces a multibillion-dollar shortfall. Rep. Robert Aderholt (R-Ala.), the top Republican overseeing the education spending bill, has said it is projected to hit $15 billion. The GOP’s much-criticized proposed solution is to eliminate subsidized student loans, which limit lower-to middle-income undergraduate students from accruing interest while in school and provide a grace period when they graduate. Democrats and education advocacy groups have slammed the proposal, arguing that the pay-for would shift the cost to students who will see their loans balloon faster due to the interest.   — Regulations: The Trump administration’s regulatory actions bear watching over the dog days of summer too.   The Education Department has self-imposed August deadlines to release a proposed rule that would make technical corrections to regulations on Impact Aid, which assists schools in places like military bases and Indian lands. Additionally, there are proposed measures addressing charter school program eligibility and amending regulations that implement disability education law.   The department is also expected to move to formally strip regulations that supported and created the Biden administration’s now-defunct Saving on a Valuable Education student loan repayment plan. The agency also intends to change regulations to clarify how it will implement Title VI, the federal law that bars race-based discrimination, as it relates to diversity, equity and inclusion programming. — Bianca Quilantan and Mackenzie Wilkes Defense — Pentagon priorities paused: Lawmakers have no shortage of defense priorities. But with the House and Senate out of session, they're all on hold until the fall.   Senators are likely to leave town without taking action on their version of the annual Pentagon policy bill, the National Defense Authorization Act. Democrats last month blocked the chamber from opening debate on the sprawling $1.15 trillion measure in part to protest the Iran war and demand new limits on the Trump administration. Leaders of the Senate Armed Services Committee have signaled the bill likely won't advance until after the midterms. House Republicans passed their version of the bill, but the chambers will need to reconcile the two proposals by year's end.   The Trump administration is also putting pressure on Senate Republicans to clear a House-passed budget framework that would include $60 billion for the Pentagon to cover the costs of the Iran war. But GOP defense hawks are pressing for significantly more military funding, making it unlikely the issue will be resolved before September.   The appropriations process is also stalled. Leaders of the Senate Appropriations Committee have yet to unveil a full-year Pentagon spending bill, and they remain at odds over how to divide defense and non-defense funding. The House, meanwhile, has advanced its own defense appropriations bill, but GOP leaders have not yet secured enough support to bring the measure to the floor. Both chambers are essentially out of time to enact a full-year funding bill before the midterms, lawmakers will need to pass a short term stopgap to keep the Pentagon and other federal agencies open until after the elections. — Connor O’Brien Health Care — Medicare subsidy’s demise: The Trump administration is ending a subsidy for some Medicare drug plans, a move expected to raise premiums next year.   The Centers for Medicare and Medicaid Services said July 28 it was ending a Biden-era voluntary pilot program that gave billions of dollars to insurers offering standalone Medicare drug plans to offset costs stemming from the Inflation Reduction Act.   CMS says insurers have had time to adjust to the IRA’s rules since they were enacted in 2022. Congressional Republicans, all of whom opposed the Inflation Reduction Act, have called the pilot a bailout to insurers that masked the law's failings.   The program was estimated to cost $9.8 billion for 2025 and 2026, according to the Government Accountability Office.   The roughly half of Medicare beneficiaries enrolled in Medicare Advantage, the privately run alternative to traditional Medicare, are not affected.   The pilot program prevented premiums for standalone Part D plans from nearly doubling in 2025, according to the GAO.   For 2027, the base premium is expected to rise 6 percent to $41.33.   CMS will announce the final Part D premiums this fall. Open enrollment starts on Oct. 15.   — Rare drugs approvals: The departure of Vinay Prasad from the Food and Drug Administration this spring doesn’t appear to be opening the floodgates for rare drug approvals.   Prasad drew criticism for setting a high bar for those approvals. An FDA advisory committee’s July 29 findings on a therapy from biotech firm Capricor Therapeutics on suggest that bar hasn’t gotten noticeably lower yet.   The panel voted 9-3 that the company had not provided substantial evidence that its therapy, deramiocel, was effective in treating cardiomyopathy, a form of heart disease, in patients with Duchenne muscular dystrophy.   The meeting was dominated by debate over the company’s statistical approach to evaluating the therapy.   Prasad’s replacement, Karim Mikhail, acting director of the Center for Biologics Evaluation and Research, said the FDA review team had not yet made a final determination.   But Mikhail said the high bar for approval would remain. “Our questions and discussions today are not about whether new treatments are needed for these young men — the answer is emphatically yes,” he said. “They are about whether the evidence before us meets the rigorous scientific and legal standard intended to protect the same patients who need the treatment.” — Health Care Pro Team Transportation — Can they get it done? Congress is increasingly resigned to extending current surface transportation programs beyond the Sept. 30 deadline rather than passing a full reauthorization this year. Senate Republicans have now unveiled a proposal to extend current authorities through Dec. 11 as part of a government funding stopgap. The Senate has yet to produce its version of the successor to the 2021 infrastructure law. A key unresolved issue is whether Ways and Means Committee will act on the legislation. The House Transportation Committee in May approved its portion of the bill by a wide bipartisan margin, but contentious rail safety language added during markup remains a sticking point. The extension would push the broader reauthorization fight into the post-election lame-duck session.   — Looking for a deal: National Transportation Safety Board Chair Jennifer Homendy is increasing pressure on lawmakers to strike an agreement on reconciling the competing Senate-passed ROTOR Act and the House cleared ALERT Act. Homendy called on Congress in a statement to “work through differences during this recess” — a reference to the August break — so lawmakers can hold a vote on a “final package” when they return to town. Cross-chamber staff talks have been happening, but whether they can hit that time frame remains to be seen. It is another transportation issue that could slip until the post-election lame-duck session.   — German auto giant faces upheaval: A bipartisan Senate bill targeting Chinese-linked connected vehicles could ensnare Mercedes-Benz because of its ownership structure, setting up a lobbying fight as the measure moves toward the floor. Even though the Senate Commerce Committee approved the bill, Chair Ted Cruz (R-Texas) has said it needs changes before it can pass. He has offered an amendment, which he withdrew at a markup, that would throw Mercedes-Benz a lifeline. The bill's fate may hinge on whether Cruz and its Republican sponsor, Sen. Bernie Moreno (R-Ohio) can reach a compromise. — Sam Ogozalek Technology — Media ownership spotlight: The FCC will vote Aug. 6 on removing the longstanding 39 percent cap on how much of the country any one TV broadcaster can reach, setting off a fight over the agency’s authority.   Chair Brendan Carr says the limit is outdated and hurts the financial well-being of local TV station owners. He already waived the limit for a $6.2 billion merger of Nexstar-Tegna earlier this year, though that deal is now on hold pending a court fight. He argues that TV station mergers that are in the public interest should be allowed to bypass the 39 percent cap. Broadcasters have long lobbied for the FCC to kill the cap, saying they need to scale up to better compete with rivals like online streaming companies.   Opponents — including cable companies, consumer advocacy groups and union — argue only Congress can modify the cap because a 2004 law directed the agency to set it at 39 percent. Senate Commerce Chair Ted Cruz (R-Texas) is the most prominent Republican to push back, saying in mid-July that he was skeptical of Carr’s authority to proceed.   — Washington AI moves: The Senate Commerce Committee pushed a highly anticipated markup for several artificial intelligence bills to September after struggling to reach bipartisan agreement. Although it’s still unclear which bills will make the final agenda, Chair Cruz told POLITICO he is considering a proposal that would address the “catastrophic risks” posed by AI.   The AI industry is also awaiting details on President Donald Trump’s June 2 executive order on AI safety and cybersecurity. The order sets an Aug. 1 deadline for the Trump administration to finalize a new a voluntary framework allowing the government to vet advanced AI models before their public release. Questions remains over which federal agencies will oversee the program and whether participation will truly be voluntary, given the White House’s heavy-handed approach to AI safety in the weeks since the order was signed.   — Kids online safety action: A month after the House passed its package of bills attempting to address kids’ online safety, the Senate is beginning work on its own package.   On Aug. 5, the Senate Commerce Committee will mark up the Kids Online Safety Act, which would require social media platforms to allow minors to disable addictive features, default to the strongest privacy settings and protect minors from dangers like suicidal ideation or sexual exploitation.   Critically, the Senate passed a similar version in 2024 before it was killed in the House over GOP leadership’s concerns over a “duty of care” provision that requires platforms to design products with an eye toward child safety.   Amid an intense lobbying campaign by Meta to squash the bill, House leaders argued the language would encourage platforms to over-censor content online to shield themselves from legal liability. When they passed their version of KOSA in June, it did not include this provision. The Senate version, however, does include the “duty of care” — a prerequisite for getting child safety advocates on board.   The dispute is expected to be a major sticking point as lawmakers decide whether they can pass legislation regulating minors' online experiences before year's end.   — GOP tackles data-driven pricing: The Senate Judiciary Subcommittee on Crime and Counterterrorism will hold a hearing on surveillance pricing on Aug. 4. The hearing will be led by subcommittee chair Josh Hawley (R-Mo.), who has challenged airlines about prices set by algorithms in the past.   The hearing signals growing bipartisan concern over companies use of personal data to set individualized prices. While Democrats and blue states have led the push, the hearing highlights growing Republican interest in the issue.   Four states have enacted laws banning surveillance pricing, citing fears that AI will use people’s personal data to raise prices and increase companies’ profits. Retailers and tech industry groups have pushed back against these bans, telling lawmakers that companies use personal data to offer discounts and these laws would increase costs for customers.   Lawmakers have also introduced bills targeting the practice, including the No Rigged Grocery Prices Act from Reps. Mike Lawler (R-N.Y.) and Josh Gottheimer (D-N.J.), which was referred to the House Energy & Commerce Committee in May. — John Hendel, Aaron Mak, Gabby Miller, Brendan Bordelon, Owen Dahlkamp, Alfred Ng Cybersecurity — Black hat and DEFON: The annual Black Hat and DEFCON conferences in Las Vegas run Aug. 4-9. Top Trump administration officials, including National Cyber Director Sean Cairncross and CISA Director Nick Andersen, are set to attend Black Hat alongside cyber industry leaders.   Hackers from around the world will gather at DEFCON shortly after to discuss the latest cyber vulnerabilities and test systems from all sectors, including at the annual Voting Village, where cyber professionals search for vulnerabilities in decommissioned voting equipment. This event is likely to be closely watched by leaders in Washington after President Trump claimed last month that U.S. voting machines were riddled with vulnerabilities. POLITICO reporters will be on the ground covering both conferences.   — AI safety push: While Congress is in recess, lawmakers and staff will continue preparing for action in September. Lawmakers spent much of July introducing legislation aimed at tightening federal oversight of advanced AI systems. These bills include the AI Kill Switch Act, introduced by Reps. Ted Lieu (D-Calif.) and Nathaniel Moran (R-Texas), which would give the Department of Homeland Security the authority to order the shutdown or pause AI models deemed too dangerous by the federal government.   Another proposal, the FRONTIER Act from Reps. Jay Obernolte (R-Calif.) and Lori Trahan (D-Mass.), would require AI companies to report security incidents involving frontier models to the federal government. Lawmakers told POLITICO that these bills are essential to rein in the rapidly evolving AI tech following OpenAI’s disclosure that its models escaped a testing environment and autonomously launched cyberattacks.   Congress could also hold hearings on the incident after lawmakers return in September.   — FISA Renewal: Jay Clayton’s confirmation as the next director of national intelligence has not yet cleared the way for Senate action to renew the critical spy law, as lawmakers originally hoped.   Instead, lawmakers and staff in the upper chamber will have to finalize a plan for renewing Section 702 of the Foreign Intelligence Surveillance Act when they are back from recess. That scenario was once viewed as a nightmare by the White House and congressional national security hawks. But the urgency has eased now that technology providers continue cooperating with the program even though its statutory authority has lapsed. The underlying statute expires in March, leaving Congress several more months to act. — Dana Nickel, Maggie Miller and John Sakellariadis.