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Capitol agenda: The tax fights Trump has to settle

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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.

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Congress

Cornyn gets a big fundraising boost in Texas Senate primary against Paxton

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John Cornyn is not going down without a fight.

After months of polls showing the four-term Texas senator trailing in the Republican primary, a pro-Cornyn super PAC raised almost $11 million in the most recent fundraising period.

Texans for a Conservative Majority, the outside group supporting Cornyn in his primary challenge from Texas Attorney General Ken Paxton, will have over $12 million cash on hand after the current fundraising quarter. The group has raised over $10.9 million in the quarter after Paxton announced his primary challenge against Cornyn.

Cornyn has been consistently trailing polls in the Senate primary against Paxton, whose indictment and impeachment over corruption and bribery charges left him well regarded by conservative grassroots activists loyal to Donald Trump but viewed skeptically by Republican operatives worried about his reception among swing voters in a midterm election.

“This first report shows what the armchair pundits fail to realize — this race is only beginning in earnest,” Aaron Whitehead, the executive director of the outside pro-Cornyn group, told Blue Light News. “With eight months to go before the March primary, Texans for a Conservative Majority is well positioned to take the fight to Ken Paxton and independently support Senator John Cornyn’s re-election.”

Texas’ primary will be held on March 3, 2026.

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Capitol agenda: Murkowski slams brakes on megabill

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Senate Majority Leader John Thune’s ability to pass the “big, beautiful bill” is hinging on Sen. Lisa Murkowski.

The Alaska senator has been the subject of an intense whip effort by GOP leaders over the past couple of hours as they try to offer her reassurances on Medicaid and food assistance. Thune, Finance Chair Mike Crapo (R-Idaho) and Senate Majority Whip John Barrasso talked to Murkowski on the floor for roughly an hour overnight. Thune and Murkowski huddled briefly in his office, and they were mum on details when they emerged shortly before 4 a.m.

Just moments ago, the Senate parliamentarian ruled that proposed SNAP carve-outs for Alaska and other states are compliant with the Byrd rule. But Republicans have struggled to get approval for a Medicaid provision also aimed at Murkowski’s home state.

Murkowski is also among the Republicans who have been pushing an amendment to undo the rollback of clean-energy credits under the Biden-era climate law.

Thune insisted to reporters moments ago that senators were closing in on the end of their vote-a-rama.

“We’re close,” he said, adding that they have a few more amendments from senators and a final so-called wraparound amendment to come.

In a potential sign of just how dire Thune’s whip count was looking in the wee hours, the majority leader huddled in his office with Sen. Rand Paul (R-Ky.), who’s long said he would be a “no” on the bill over its debt-ceiling hike.

Another big unknown right now is where Sen. Susan Collins will fall. The Maine senator reminded us less than two hours ago that she’s “said all along that I have concerns with the bill” and also reiterated, when prompted by reporters, that she would have preferred breaking out the tax portion of the policy package on a separate track. Certainly not helping win Collins over: Her bid to boost money for rural hospitals went up in flames.

And major policy fights remain unresolved, including Sen. Rick Scott’s (R-Fla.) divisive amendment to scale back federal payments under the Affordable Care Act’s Medicaid expansion. Scott has leadership’s support on this one and said he expects it to pass. But several GOP senators have openly raised concerns with it.

What else we’re watching:

— Megabill goes to House Rules: Assuming the Senate passes the bill, the House is expected to bring the bill to the Rules Committee at noon on Tuesday, though two people with direct knowledge of the plans say it could get pushed amid delays with the Senate vote-a-rama.

— The next funding battle begins: Senate appropriators plan to move forward with marking up fiscal 2026 government funding bills starting next week. House Appropriations is scheduled to vote July 10 on the Commerce, Justice, Science bill and the Energy and Water Development bill. House Appropriations Chair Tom Cole (R-Okla.) wants to finish marking up all 12 funding bills by the end of July.

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Trump & Co. launch final megabill pressure campaign

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President Donald Trump and his top deputies have started their final public push to get the “big, beautiful bill” over the finish line as the Senate struggles to finish up the legislation.

Stephen Miller, Trump’s top policy aide, appeared on Fox News Channel’s “Hannity” Monday night, about 12 hours into the Senate “vote-a-rama,” to angrily rebut criticisms of the bill and fiercely defend its contents.

“I am sick and tired of the lies about this bill that have been perpetrated by the opportunists who are trying to make a name for themselves. This is the most conservative bill of my lifetime.”

Around that time, White House budget director Russ Vought took apparent aim at deficit hawks concerned about the expanding costs of the Senate version of the megabill in an X post. He embraced the Senate’s “current policy baseline” accounting, zeroing out the cost of extending the 2017 Trump tax cuts.

“Remember, those saying that the Senate bill increases deficits are comparing it to a projection where spending is eternal, and tax relief sunsets,” he said. “That is a Leftist presupposition, and thankfully the Senate refused to let the bill be scored that way.”

Shortly before midnight, Vice President JD Vance also weighed in on X, arguing that the megabill’s border security and immigration provisions alone made it worthwhile.

“Everything else — the CBO score, the proper baseline, the minutiae of the Medicaid policy — is immaterial compared to the ICE money and immigration enforcement provisions,” he wrote.

Then, at 12:01 a.m., Trump himself posted to Truth Social: “Republicans, the One Big Beautiful Bill, perhaps the greatest and most important of its kind in history, gives the largest Tax Cuts and Border Security ever, Jobs by the Millions, Military/Vets increases, and so much more. The failure to pass means a whopping 68% Tax increase, the largest in history!!!”

Meanwhile, the Senate kept voting, with no final deal yet in sight.

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