Congress
Capitol agenda: The tax fights Trump has to settle
Senate Majority Leader John Thune and his tax writers will huddle with President Donald Trump at the White House Wednesday as Republicans race to resolve a growing list of tax policy disputes in their megabill.
Thune detailed what to expect in an exclusive interview with POLITICO:
BUSINESS TAX PERMANENCE: Thune emphasized that one of the biggest tax issues for him and other Finance Republicans is making key business tax incentives, such as full expensing for research and development costs, permanent.
“There’s a lot of interest in growth in the economy among our caucus,” Thune told Blue Light News. “Permanence, I have been told by a number of our members, is a red line for them.”
But it’s a costly ask, and senators have been cagey on how they’ll make the numbers work.
TAXES ON TIPS: One long-shot idea that could come up is from Sen. Thom Tillis (R-N.C.), who suggested to POLITICO that the $40 billion “no tax on tips” proposal could drop out of the bill and get passed later on a bipartisan basis.
Don’t expect Trump to jump at the idea. Trump campaigned on making tips tax-free, and it’s one of his top priorities in the megabill.
CLEAN-ENERGY CREDITS: Tillis also plans to raise concerns Wednesday about House Republicans’ plan to gut clean-energy tax credits, amplifying the warning he and GOP Sens. Lisa Murkowski (Alaska), John Curtis (Utah) and Jerry Moran (Kan.) previously delivered to GOP leaders that a full-scale repeal won’t fly in the Senate. Democrats are working to drive a wedge on the issue.
SALT: Some GOP senators are pushing back against the deal House GOP leaders struck with blue-state moderates to quadruple the state-and-local-tax deduction cap to $40,000. Thune signaled to Blue Light News that the Senate is likely to scale it back.
“It would be very, very hard to get the Senate to vote for what the House did,” Thune said.
But SALT Republicans are digging in. Rep. Nick LaLota (N.Y.) told Blue Light News Tuesday that such a move could “unwind many of the other connected policies” in the many interlocking deals Speaker Mike Johnson negotiated to muscle the first draft of the megabill through his narrower majority.
“It would likely stall the bill,” LaLota warned.
Meanwhile, Thune seems optimistic as he works to douse other flare-ups within his conference (Medicaid, food aid) and outside of it (hello, Elon Musk).
The majority leader also told Blue Light News he expects every committee to release its bill text by the end of next week as he pushes toward a pre-July 4 vote. Armed Services kickstarted that process Tuesday with draft text that increases funding for nuclear weapons, munitions production and new technology beyond what the House GOP proposed.
Blue Light News Pros can dive deeper into the full Thune Q&A.
What else we’re watching:
— Vought hits Blue Light News: OMB Director Russ Vought testifies Wednesday in front of House Appropriations on the OMB budget. Expect plenty of questions about rescissions, impoundments and other cuts to come as House Republicans prepare to vote next week on the $9.4 billion rescissions request Trump just sent over.
— In the DOGE-house: A House Oversight subcommittee will scrutinize fraud risk in the Defense Department during a hearing Wednesday morning, with testimony from a deputy Pentagon inspector general and an official from the Government Accountability Office. It comes after a GAO report found $10.8 billion in fraud within DOD for fiscal years 2017 through 2024.
— Trump’s attempt to reshape the courts: Nearly six months into Trump’s second term, the Senate will finally start to consider his nominees to fill vacancies across federal courts. On Wednesday, Senate Judiciary will consider picks for vacancies in Missouri and on the Sixth Circuit Court of Appeals.
Jordain Carney, Brian Faler and Hailey Fuchs contributed to this report.
The Senate Saturday confirmed Todd Blanche to be attorney general, following a weeks-long struggle with a handful of wary Republicans.
The Senate voted 50-49 to approve him, with GOP Sens. Susan Collins of Maine and Lisa Murkowski of Alaska joining with Democrats in opposition.
Blanche, President Donald Trump’s former personal attorney, has been serving as acting attorney general since Pam Bondi’s ouster in April. Questions about Blanche’s potential conflicts of interest from representing Trump, as well as his role in the creation of a $1.8 billion “Anti-Weaponization Fund” as part of Trump’s settlement this spring with the IRS, created headwinds to his confirmation among a key group of Senate Republicans.
Sen. Bill Cassidy, the Louisiana Republican who lost re-election after Trump endorsed a primary challenger, helped Blanche clinch his 50th vote Friday. He said Blanche wasn’t perfect but that he wasn’t sure Trump would pick someone better to lead the Justice Department.
“The choice is not between perfection and Mr. Blanche,” Cassidy said on the Senate floor. “It is between Mr. Blanche and another acting attorney general who may not run the department effectively under President Trump and who indeed may not be as good as Mr. Blanche.”
Cassidy’s support came after Blanche had already spent weeks negotiating with Sens. Thom Tillis of North Carolina and John Cornyn of Texas, who vetted his nomination as members of the Senate Judiciary Committee. Cornyn struck an agreement with Blanche Sunday for the DOJ to curtail the payout fund and rein in a deal to exempt Trump from IRS audits.
Cassidy’s support came hours after Murkowski announced that she would oppose Blanche’s nomination, putting it on the brink of potential failure. Between unified opposition from Democrats and Sen. Mitch McConnell’s absence for health reasons, Blanche could only lose two Republicans and still be confirmed.
Hours before Friday’s vote, Murkowski told reporters she spoke with Blanche multiple times but that she was “good with where I am.” She said there was no “one” thing that motivated her decision.
“If there was one thing, we might be able to go back to the White House and say ‘Hey, can we work on this one thing,’” she said. “But for me it was a compilation.”
She added that she believed the anti-weaponization fund is “pretty dead” but “what is not so clear” are the audit immunity provisions of Trump’s IRS agreement, “which I just think are viewed by so many in this country as kind of a special and sweet deal for the president and his family.”
The Senate passed a bill Saturday to fund the government beyond the midterm elections, putting the onus back on the House to head off a shutdown looming Oct. 1.
The Senate approved the measure in a bipartisan 90-6 vote, with Sen. Darline Graham of South Carolina voting present. The bill would fund federal agencies through Dec. 11 at current levels, with some exceptions. Senate leaders sped up consideration of the legislation as part of an agreement reached Saturday morning to allow members to leave for August recess.
The House and Senate have now each passed different bills aimed at averting a shutdown at the end of the fiscal year. The House bill would fund the government through Dec. 4.
The Senate legislation sets up a year-end standoff over the Trump administration’s controversial plan to put political appointees in charge of approving federal grants. The bill would block the administration from finalizing that rule during the length of the stopgap — and lawmakers are already expecting a December brawl over the issue.
Sen. John Kennedy (R-La.) said this week that he’s going to “fight like hell” in December to ensure Congress doesn’t further obstruct the grant overhaul.
But lawmakers on both sides of the aisle are resistant to the White House approach to grants. Senate Appropriations Chair Susan Collins (R-Maine) said she will “continue to oppose” the Trump administration plans “because I think they politicize the grants process, and I don’t want that to occur.” Sen. Patty Murray of Washington, the top Democrat on Senate Appropriations, said she too would “welcome the fight.”
The Senate rejected an amendment from Sen. Ted Budd (R-N.C.) intended to ensure that a ban on intoxicating hemp products kicks in come November, after Senate leaders at the White House’s urging included language in the funding bill to delay it.
The Senate bill includes language Democrats sought to ensure Immigration and Customs Enforcement and the Border Patrol don’t get any new funding under the patch. Republicans enacted $70 billion for those agencies along party lines earlier this year.
That prohibition could be contentious in the House.
Rep. John Rutherford (R-Fla.) said in an interview that the provision “could be a dealbreaker” and that he’s “not a fan” of the Senate version. Rep. Jeff Van Drew (R-N.J.) said Tuesday that he would say he’s undecided if GOP leadership whipped his vote on the Senate stopgap.
“I do not like the Senate language,” Van Drew said, noting the grant approval provision. “It’s one I would want to know what the president thinks.”
The White House issued a statement of administration policy in support of the Senate’s funding bill. No such memo was issued for the House bill, which did not include the funding increases and authorizations the White House requested.
“Every Member of Congress should support passage of this [continuing resolution] to keep the Government open as discussions on full year appropriations continue,” it reads.
Rep. Rosa DeLauro (D-Conn.), the top Democratic appropriator in the House, praised the Senate measure for including the grant and immigration enforcement language.
“This bill is a clear improvement over the House Republican continuing resolution, but we are still nearly two months away from the end of the fiscal year and should be working together to pass full-year funding bills,” she said in a statement.
Mia McCarthy and Jennifer Scholtes contributed to this report.
The Senate is aiming to leave Washington for a five-week recess early Saturday after Republicans cut a deal with President Donald Trump to punt some of their priorities, including a framework for a party-line spending plan.
The Senate is trying to lock in an agreement that would set up votes on a college sports bill, a stopgap government funding bill, Todd Blanche’s attorney general nomination and GOP voter ID legislation, according to a copy of an internal notice reviewed by Blue Light News.
The Senate would then leave Washington until mid-September.
Any one senator could object to the tentative deal, forcing it to be altered or dragging the Senate deeper into the weekend. Senators believe there are still objections to advancing the college sports bill. Democrats are also waiting to see if one of their own will prevent speeding up Blanche’s confirmation.
The breakthrough is a U-turn from earlier Friday evening, when Republican senators emerged from a closed-door meeting predicting they would have to spend Saturday trying to break a stalemate within the party about how to wrap final votes before recess.
Shortly after that meeting, Trump spoke by phone with Senate Republicans including Ron Johnson of Wisconsin, Rick Scott of Florida and Mike Lee of Utah about the path forward for the GOP’s lengthy to-do list.
During the call, according to Johnson, Trump agreed to punt a vote on a budget blueprint for a third party-line spending bill until later in the year. Lee, who has been pushing for action on the separate SAVE America Act, also agreed to drop his demand for a formal, roll call vote on adjourning given the understanding with the president.
“I think the conclusion of the conference – and we had a discussion with the president and he agrees – [is] don’t take the vote tonight,” Johnson said after the meeting in Thune’s office.
Republicans were in talks with the White House throughout Friday. A White House official granted anonymity said Friday evening that “we’re continuing to have productive conversations with senators to advance several legislative priorities.”
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