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The Senate confirmed several Trump administration nominees and is working through the weekend to pass its reconciliation package (see below). The House passed two immigration enforcement bills, a resolution condemning the riots in Los Angeles, and the Military Construction-Veterans Affairs spending bill for fiscal year 2026.

The Senate plans on being out of session for the 4^th of July holiday once it completes its work on the reconciliation legislation over the weekend. The House will likely be in session early in the week to vote on the Senate-passed bill and then will be out of session (see below).��

Reconciliation Update.

A reconciliation bill has the procedural advantage of being able to pass the Senate with a simple majority, but this comes with strings attached. The Senate this week was consumed with the painstaking process whereby the Parliamentarian vetted the individual provisions in the “One Big Beautiful Bill” to ensure that they have a primary budgetary purpose. With the conclusion of this process later today, the Senate aims to begin consideration of the reconciliation bill tomorrow. It will work through the weekend in an effort to pass the bill. The Senate will need to work through various amendments on the Senate floor, and it’s possible that some could pass and further alter the bill before passage. Once the bill passes the Senate, we expect the House to be called back into session to pass it early next week so that President Trump can sign it into law by the 4^th of July. This plan is very ambitious, and there are still some outstanding issues that may face pushback on the House. Some moderate Republicans will be focused on the level of the state and local tax (SALT) deduction in the Senate bill, while fiscally conservative Republicans remain concerned with the ever-increasing cost of the bill. While the details of the bill are still shifting, there is still momentum to get it passed into law next week.

Byrd Bath.

The Senate Parliamentarian’s review led to dozens of provisions being rejected and being unable to be part of the bill. These include several Medicaid-related provisions (including a cap on states’ use of health care provider taxes to get more federal Medicaid funding and various measures dealing with Medicaid eligibility for immigrants). These were important sources of revenue for the overall bill. A provision on the sale of millions of acres of public lands and another to suspend certain agricultural supports also were struck. One provision that made it through was a 10-year moratorium on state laws on artificial intelligence. There are divisions among Republicans on this issue, so it’s survival in the final bill is still uncertain. The provisions rejected by the Parliamentarian would have provided hundreds of billions of dollars in budget cuts, so Republicans are left looking for cuts in other areas. Some measures struck down are being rewritten and reviewed again in the hope of getting them back into the bill. However, many will remain out of the bill, which likely will lead an increase in the overall cost of the bill.

Remittance Tax Update.��

We recently discussed the 3.5% excise tax on remittances in the House version of the bill. The intended purpose of the provision was to tax money sent by undocumented workers in the US back to their home countries. However, as written, the provision could capture a wider swath of cross border activity. Senators recognized that the House version had a number of unintended consequences and issued a draft that refines the proposal. This provision is still evolving, much like many other provisions of the bill. Money service providers like Western Union and MoneyGram have advocated for this provision to be eliminated. We believe a refined version will remain in the final bill unless the Senate Parliamentarian rules it out of order today as part of her ongoing review.

Approaching Tariff Deadline.

We are less than two weeks away from the July 9 deadline for negotiations to conclude on reciprocal tariffs. For months, the Trump administration has been conducting negotiations with trading partners with the goal of bilateral agreements, but it only has tentative agreements at this point with the UK and China (the latter is on a separate track and faces a deadline of August 12 for a potential ratcheting up of reciprocal tariffs). In cases where there has been meaningful progress in negotiations, the Trump administration may give some countries additional runway with an extension in the current pause on reciprocal tariffs. However, we expect a number of other countries to face an increase in tariffs. While all of this plays out, the legal underpinning of the reciprocal and other tariffs remains in question. A federal appeals court will hear the case at the end of this month, though whatever that court decides likely will be appealed to the Supreme Court (with a final decision unlikely to be made until well into next year). With all of that legal uncertainty, the administration also has been focused on the imposition of sectoral tariffs. It already has imposed tariffs on steel/aluminum and autos and it likely will impose additional tariffs on copper, lumber, semiconductors, pharmaceuticals, and other products in the coming weeks. While these give the Trump administration a tariff tool that rests on a stronger legal foundation, the sectoral tariffs have only complicated efforts at reaching bilateral deals.

Fed Chair Drama.

President Trump has long been a critic of Federal Reserve Chairman Jay Powell despite having nominated him to his leadership position. President Trump has called upon the Fed chairman to act more aggressively to cut interest rates. The Federal Reserve kept the current level of interest rates unchanged at a meeting last week. This week, Chairman Powell appeared before Congress as part of semiannual hearings. Powell indicated that the Fed is taking a cautious approach on rates in part because of the uncertainty regarding the administration’s plans on tariffs and the economic impact of those tariffs. Powell’s term as chairman expires in May of next year. President Trump has made no secret of his interest in replacing him and is actively considering candidates (including Treasury Secretary Scott Bessent and Kevin Hassett, Director of the National Economic Council). While there are legal protections in place that would prevent Powell from being fired without cause, Trump could name his pick well in advance of the expiration of Powell’s term (the nominee needs to go through the usual process of Senate confirmation regardless of when Trump announces his decision). Whoever occupies the position, the Fed chair likely will continue to be on the receiving end of pressure, ire, and blame from President Trump.

Iran Uncertainty.

As we noted last week, there are divisions among Republicans over President Trump’s decision to use military force in Iran. There are Republicans who support him, while there are others who are against US involvement, a view that Trump held when running for president. Meanwhile, Democrats also are opposed to Trump’s decisions. This week, they forced a vote in the Senate on a war powers resolution introduced by Senator Tim Kaine (D-VA). The resolution would direct the President to end the use of US military forces against Iran. The vote will occur Friday evening, but it likely will be opposed by all Republicans votes and therefore will fail. The maneuvering in Congress comes in the background of a fragile ceasefire between Israel and Iran, which was announced just two days after the US attacked Iran. While Trump’s aggressive actions continue to cause divisions within his own party, it remains to be seen at this point if they have given the US enough leverage to facilitate a diplomatic deal with Iran.

Impeachment Attempt.

Democrats found themselves in an unwelcome spotlight this week after Rep. Al Green (D-TX) forced a surprise impeachment vote against President Trump over his military strikes on Iran. Despite frustrations among Democrats over the president’s unilateral action, the timing and substance of Green’s resolution drew sharp internal rebukes. House leadership, including Minority Leader Hakeem Jeffries (NY), joined Republicans in rejecting the measure. Only 79 Democrats, largely from safe progressive districts, supported it. Many Democrats have privately warned that the resolution hands Republicans a political gift and distracts from mounting concerns over Trump’s broader foreign policy approach. This attempt highlights the enduring volatility of impeachment politics in Trump’s second term and the narrow path that Democratic leaders are navigating between the demands of the grassroots and general election realities.

TikTok Gets Another Reprieve.

While the clock continues to tick on TikTok’s US operations, President Trump this week issued another executive order further delaying enforcement of the mandated divestiture. Under a bipartisan law passed last year, TikTok was required to be sold to a US company by April 5 or face a nationwide ban. The legislation was animated by national security concerns over its Chinese ownership. While several acquisition proposals remain under discussion, none appear close to completion. Lawmakers from both parties are still urging swift action, while TikTok has vowed to challenge any forced sale in court. There also are questions about the legal viability of the recent delay. A deal remains possible, but the ongoing legal and political fights may drag the process well into next year.

The Messaging Minefield.��

The fight over President Trump’s One Big Beautiful Bill has gone national with both parties working to define the bill with voters. Trump and GOP leaders have branded the bill as a generational win that cuts taxes, slashes regulations, and advances immigration priorities. However, early polls show that voters remain skeptical, particularly over proposed Medicaid changes and tax breaks for higher earners. Democrats are leaning into those results, arguing the legislation mirrors past midterm liabilities like the 2017 tax law and could cost Republicans seats in 2026. The White House insists the public will come around once the benefits are felt, but history suggests swing voters often feel signature bills are an overreach by the party in power and make their feelings clear in the midterms. With no clear public mandate, each party is wagering that its framing will win the day in next year’s midterm elections.