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Gaming out reconciliation

Amazon to display tariff costs for consumers

Schatz moves quickly to lock up whip race

The Vault: McHenry lands at BGR Group

THE TOP

Gaming out reconciliation

Happy Tuesday morning. President Donald Trump will travel to Michigan today to mark his 100th day in office.

News: Democrats on the House and Senate Appropriations Committee say Trump and top administration officials are improperly holding up more than $430 billion in federal funding already approved by Congress and signed into law.

The blocked funding covers everything from medical research, COPS grants, disaster relief, aid to farmers, Head Start, school lunches and major infrastructure projects, according to Rep. Rosa DeLauro (Conn.) and Sen. Patty Murray (Wash.), the top Democrats on the House and Senate Appropriations panels.

“Just one hundred days into office, President Trump and Elon Musk are continuing their unprecedented assault on our nation’s spending laws, and it is families, small businesses, and communities in every part of the country who are paying the price,” DeLauro and Murray declared in a joint statement.

Appropriations Democrats have created a “tracker” to determine what funds are being withheld.

The reconciliation road ahead: House Republicans have a new, patriotic deadline for their bill enacting Trump’s domestic legislative agenda: the Fourth of July.

That timetable requires that everything goes precisely to plan.

In the House, Speaker Mike Johnson said the final four committees involved in reconciliation will hold markups next week. This includes the Agriculture, Energy and Commerce, Natural Resources and Ways and Means committees, though not all of those panels have settled on markup timing.

Johnson said the House Budget Committee would assemble the various committee pieces into a single reconciliation package during the week of May 12, teeing up a floor vote the week before Memorial Day.

But there are a lot of things that could derail the House’s one-month sprint or stall later Senate action. Let’s talk about how the GOP’s reconciliation rush could play out.

1) Offsets upset. Republicans’ warring views over slashing hundreds of billions of dollars in federal spending could devolve into a bitter standoff.

Massive cuts to spending on social safety net programs like Medicaid and SNAP may be a bridge too far for the competing factions within the House Republican Conference. That could derail things in the House. If not, the package might still prove irreconcilable in the Senate, where it’s going to be even harder to get the votes for deep spending cuts.

GOP conservatives view reconciliation as the chance they’ve been waiting for to slash $1.5 trillion-plus in federal spending. But cuts to critical programs put moderate Republicans in a terrible spot politically. These disagreements played out during a series of internal meetings on Monday afternoon. Moderates and the hardline House Freedom Caucus expressed concern over whether the bill will fit their preferred framework.

2) The tax bill goes awry. Overall, Republicans’ tax agenda is a uniting force in the reconciliation push. But efforts to address the SALT cap, claw back clean energy tax credits from the Inflation Reduction Act and find additional offsets for tax cuts could all spur standoffs.

Even if tax writers find revenue raisers that can pass the House, GOP senators could decide they’re unwilling to raise taxes of any sort. Any offsets also will spur a massive wave of lobbying designed to kill them.

Plus, Senate Republicans could run into trouble with the current policy baseline, the accounting method they’re using to make the 2017 tax cuts permanent in reconciliation. If the Senate parliamentarian issues any rulings that make it unworkable to use the baseline, Republicans’ plans would go off the rails.

3) The GOP gets a debt limit surprise. Treasury Secretary Scott Bessent said Monday that the department may have a better sense later this week or next of the “X date” when the federal government will hit its borrowing limit.

Republicans are adamant about addressing the debt limit in reconciliation to avoid having to cut a deal with Democrats. That makes the “X date” the real deadline for the GOP’s reconciliation package.

Bessent told reporters that tax revenue is on track to outpace what the federal government collected last year. If true, that’s a good sign for Republicans that they may have more time to get a debt-limit hike done.

But if the “X date” ends up hitting in early summer, that would complicate everything the GOP is working toward. Rushing the reconciliation bill through in time seems unlikely. Republicans don’t have an easy Plan B.

4) Trump being Trump. The president could deliver a shocker or last-minute demand that throws Capitol Hill into chaos. Sound familiar?

Trump already has a list of expensive tax cuts he wants. Some were born from campaign trail musings and will now become very real policies.

The president could toss out tax curveballs or nix spending cuts that Republicans want to include. This is Trump’s legislative agenda. If he changes his mind, Republicans have to listen.

5) Reconciliation clockwork. Republicans somehow dodge every political landmine and things go according to plan.

For this to happen, House and Senate Republicans will have to be closely aligned on the initial wave of policies that pass the House. The House GOP leadership has asked committees to work closely with Senate counterparts.

Johnson has proven a lot of doubters wrong getting House Republicans behind the reconciliation bill up to this point. The next few weeks present his biggest test.

— Laura Weiss, John Bresnahan and Jake Sherman

TODAY at 8:30 a.m. ET we’re discussing the news of the day and how the country is advancing with artificial intelligence with Rep. Laurel Lee (R-Fla.). You can still RSVP to join us!

SENATE DEMS

Schatz moves quickly to lock up whip race

Senate Democratic leadership elections for the next Congress are at least 19 months away. But these contests are few and far between. So it’s imperative to be ready and strike fast.

That’s Sen. Brian Schatz’s (D-Hawaii) strategy as he hopes to succeed Sen. Dick Durbin (D-Ill.) as Senate Democratic whip — and ultimately become his party’s leader in the chamber.

“I wouldn’t be a good whip if I didn’t get started as soon as the opening occurred,” Schatz told us when asked why he jumped in so soon after Durbin announced he wouldn’t seek reelection.

So far, Sens. Cory Booker (N.J.) and Martin Heinrich (N.M.) are the only Democratic senators publicly backing Schatz. But that will change in the coming days and weeks.

Schatz said that he’s simply “initiating conversations.” But in reality, the Hawaii Democrat has been laying the groundwork for this effort for years. Schatz’s leadership aspirations were far from a secret. And several Democrats told us last night that they believe Schatz would be great for the job, even if they’re not ready to formally endorse him.

Yet while Schatz’s aggressive play is cementing his status as the frontrunner, at least one potential rival is irked by the strategy.

Keeping the powder dry: Sen. Amy Klobuchar (D-Minn.) said Democrats need to be laser-focused on President Donald Trump, not an internal matter that’s way down the line.

“I truly believe that talking about something a year and a half from now — and we have no idea who’s gonna win the Senate, who’s going to get this — it’s a mistake,” Klobuchar told reporters.

For his part, Schatz said he doesn’t “begrudge” Democrats who want to prioritize other issues, while acknowledging that the whip race “shouldn’t crack the top 20 of things that Democrats have to deal with.”

“I certainly believe it is within every senator’s right to take their time,” Schatz said.

That’s exactly what the nearly dozen Democratic senators we spoke with Monday night said about the whip race. For some, declaring that they want to wait until the field is set was just a way to avoid answering the question directly.

But as Schatz gains endorsements, there will be additional pressure on Klobuchar and anyone else who might want to jump in the race.

— Andrew Desiderio and Max Cohen

The Vault: McHenry lands at BGR Group

News: Former Rep. Patrick McHenry (R-N.C.) is joining BGR Group’s advisory board, landing him another big role in Washington.

The former House Financial Services Committee chair and leadership ally will help guide the lobbying shop’s legislative strategy. McHenry, who retired last year, also serves in advisory roles at a16z, Lazard, Stripe and Ondo Finance.

“This keeps one toe in the workings of Washington, and I wanted to still have that practical touch point of what’s happening with the administration and our legislative branch,” McHenry said.

BGR lobbies for major financial services clients including BlackRock, Citigroup, Deutsche Bank and a16z. The move will also reunite McHenry with his former staff director, Matt Hoffmann, who’s a lobbyist at the firm.

McHenry’s new role at BGR comes as businesses navigate major economic turmoil amid new tariffs and recession fears. The GOP is also working to overhaul taxes via reconciliation and advance crypto legislation, a long-time focus for McHenry.

“It’s never boring. Washington has never mattered so much to the market and to the real economy,” McHenry said. “The president has a great economic team and long term we’ll see their strategic vision take hold and take shape.”

— Laura Weiss

THE CAMPAIGN

New AIPAC ad buy: AIPAC is launching a $500,000 ad buy this morning that pushes President Donald Trump to stay tough on Iran amid reports of a potential diplomatic deal over its nuclear program.

The ad calls for the “dismantling” of Iran’s nuclear program and features clips of Trump declaring that Tehran can “never” be allowed to get a nuclear weapon. The ad will run on broadcast TV — specifically on Fox — and social media.

Medicaid news: Inseparable Action, a national mental health organization, is launching a $250,000 ad campaign calling on vulnerable House Republicans to protect mental health initiatives and reject Medicaid cuts.

The pro-Medicaid appeals are targeting GOP Reps. Juan Ciscomani (Ariz.), David Valadao (Calif.), Young Kim (Calif.), Ken Calvert (Calif.), Gabe Evans (Colo.), Laurel Lee (Fla.), Don Bacon (Neb.), Tom Kean (N.J.), Mike Lawler (N.Y.), Nicole Malliotakis (N.Y.), Rob Bresnahan (Pa.) and Jen Kiggans (Va.).

We’ve reported how Republicans are getting hammered on the airwaves by an avalanche of Medicaid-related ads.

Senate news: The DSCC is running digital ads targeted at the U.S. Capitol that slam vulnerable Sens. Thom Tillis (R-N.C.) and Susan Collins (R-Maine) for “caving to Donald Trump and Elon Musk.”

— Max Cohen and Andrew Desiderio

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