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The Senate confirmed Trump administration nominees and passed legislation to ban California auto-emissions rules (see below). The House passed a reconciliation package (see below).

The Senate and House will be on recess to celebrate Memorial Day. Both chambers will return on June 2.

One Big Beautiful Bill Update.

The overarching focus in Congress this week was House Republicans’ efforts to pass a big reconciliation package of President Trump’s priorities on taxes and spending. While there was plenty of sound and fury, they ultimately were able to get it through the House. They hope that passage in the House will provide momentum for the Senate to move forward with its version of the bill in June. However, the Senate process will be more complicated and more time-consuming. The Senate will work on their own draft of the bill rather than just taking and amending the House bill. Some details of the Senate bill will begin to trickle out next week. While the Senate will begin considering their version of the reconciliation bill on the Senate floor in June, we think the process likely will extend into July despite President Trump’s interest in seeing a bill signed into law by July 4^th. It will be important for Republicans to pass the bill by the August recess given that the reconciliation package includes a needed increase to the debt ceiling. Given the time crunch, we think that the bill the Senate passes may be the one to become law (there may not be time for the Senate and House to ping pong versions or engage in formal conference negotiations to iron out differences between their two bills). Pay close attention to the Senate debate as the upper chamber may have the final word.

State and Local Tax (SALT) Deduction.Ìý

One of the more contentious issues has been how to address the $10,000 SALT cap. Lawmakers from high tax states (including New York, New Jersey and California) believed they had the upper hand in negotiations as their votes were critical to getting the bill approved. They were able to get an increase in the cap to $40,000 (with an income limitation of $500,000) in the House bill. As the bill moves to the Senate, it’s worth noting that there aren’t any Republican Senators from these high-tax states. Republican Senators will look to lower the $40,000 cap, but they ultimately understand that this bill will need to pass the House again and that can’t happen without an increase in the existing SALT cap.

Stable Return.Ìý

The Senate this week made some progress in its efforts to pass a bill to establish a regulatory framework for stablecoins (digital assets issued by private entities but backed by other assets including fiat currencies like the dollar). The bill needs bipartisan support in order to advance in the Senate and received support from many Democrats in some procedural votes this week. Democrats had been pushing for changes to consumer protection, anti-money laundering and other provisions in the bill. Separately, some Senators see the stablecoin legislation as a potential vehicle to get votes on bills they are championing. These include a controversial bill to cap credit card interest rates at 10% and another aimed at credit card interchange fees that banks argue would harm consumer data security and curb rewards programs. These amendments are creating drama, but they are unlikely to get votes because they could jeopardize progress on the stablecoin bill. Senators continue to engage in negotiations on a path forward that would allow the bill to pass next month.

Russian Sanctions.

Congressional Republicans have used the Congressional Review Act (CRA) to rescind a number of the Biden administration’s energy and climate regulations. In the Senate, a CRA resolution has the procedural advantage of needing just a majority vote. With the deadline for using the CRA ending in early June, Senate Republicans took the controversial step of using the CRA to roll back a waiver issued by the Environmental Protection Agency (EPA) during the Biden administration that allowed states to enact emissions standards stricter than the federal government’s requirements. The measure would revoke a California program banning gas-powered cars by 2035. Senate Republicans moved ahead with the vote even though the Senate parliamentarian, a nonpartisan interpreter of the chamber’s rules and procedures, had ruled that EPA waivers are not eligible for repeal through the CRA. While Republicans maintain that California’s EPA waiver is a rule that is subject to the CRA, Senate Democrats criticized the move as setting a dangerous precedent going forward. It is yet to be seen if going against the Senate parliamentarian will become more frequent.

Rebuilding FEMA.

With the surge in multi-billion-dollar disasters and mounting pressure on federal response systems, the Trump administration has proposed a dismantling of FEMA. It would like to decentralize disaster response and shift more responsibility to state and local governments. The plan, which is spearheaded by Homeland Security Secretary Kristi Noem, has run into bipartisan resistance in Congress. Transportation and Infrastructure (T&I) Chairman Sam Graves (R-MO) and Ranking Member Rick Larsen (D-WA) have drafted legislation that would turn FEMA into an independent agency with more autonomy to respond to natural disasters and to penalize states that don’t try to mitigate disaster threats. The administration recently fired Cameron Hamilton, FEMA’s acting administrator, after he testified that he did not think FEMA should be abolished and expressed support for the legislation. With the administration’s opposition, this bill is unlikely to advance. With hurricane season only a couple of weeks away and with FEMA expected to run out of disaster relief funds in early summer, Congress may soon have a potential crisis to address in an already busy next few months.

Congressional Stock Trading Ban.

A bipartisan group of lawmakers is working to find consensus on a bill to ban congressional stock trading. A number of bills to prohibit lawmakers from personal trading have been introduced in both chambers over the years, but none have enough momentum to pass. Supporters of a ban want to pass something to convince the public that Washington leaders are not engaging in insider trading. The idea also has public support. However, there are disagreements over the scope of the ban and how to penalize lawmakers who don’t follow the ban. House Speaker Mike Johnson (R-LA) recently announced his support for a ban on lawmakers trading individual stocks. A bill is expected to be introduced in the coming weeks, but it is yet to be seen whether there is enough support to pass both chambers.

On Deck at the Supreme Court.

The Supreme Court heard its final case last week before adjourning for the summer. In June, the Supreme Court will announce decisions on cases it heard this term (October-May). The court’s caseload consists of a wide array of politically delicate issues, including religious rights, Trump’s executive authority, transgender rights, gunmaker liability and discrimination challenges. Other cases include one on free speech limits on the internet and another on a ban on funding for Planned Parenthood through Medicaid. The court will hand down decisions on a rolling basis throughout June on many if not all of these cases, with the most contentious decisions to be announced later in the month. While the docket may not have as many blockbusters as some recent terms, there still will be significant impact from many of these decisions.

2028, Right Around the Corner.Ìý

With Democrats struggling with their messaging against the Republican agenda, the 2028 shadow primary is beginning to be held less and less in the shadows. Democrats eyeing the White House are increasingly open about their 2028 ambitions, abandoning the old playbook of denials and no-comments in favor of early moves and visible positioning. These include Governors Andy Beshear (KY), Gavin Newsom (CA), JB Pritzker (IL) and Josh Shapiro (PA) as well as former cabinet officials Gina Raimondo and Pete Buttigieg. They are signaling interest with donor outreach, national travel, media presence and appearances in early primary states. Their urgency is fueled by the party’s leadership vacuum post-2024, poor polling and the high financial and organizational hurdles of modern presidential campaigns. With no clear heir apparent and pressure to define a post-Biden vision, potential contenders for 2028 are stepping up earlier and more visibly than in previous cycles.