What Dems want to knock out of reconciliation

IN THIS EDITION

The threats to Senate’s July 4 reconciliation rush

Rescissions package faces uncertain path in Senate

Hegseth to the Hill as Trump eyes possible Iran strike

GOP judge preps run against Cuellar

THE TOP

The threats to Senate’s July 4 reconciliation rush

Happy Wednesday morning

Vice President JD Vance pleaded with Senate Republicans on Tuesday to finish their work on President Donald Trump’s tax agenda before July 4. Vance said Trump wants the bill ready for his signature by the August recess.

Republicans have a lot working against them to meet that deadline.

First, Senate Republicans need to race through time-consuming reconciliation procedures that could throw a wrench into their plans. Behind the scenes, they’ll need to hash out all the complicated political challenges plaguing the bill. And they don’t have much room to lose votes in either chamber.

The Byrd Bath. The main procedural hurdle for Senate Republicans to clear is wrapping up the “Byrd Bath.” That’s when Democratic and GOP aides each argue their case to the Senate parliamentarian about whether provisions in the bill adhere to the chamber’s Byrd Rule, which governs the reconciliation process.

It’s Democrats’ big moment to try to force some policies out of the bill by arguing they violate the Byrd Rule. If Democrats succeed on major provisions, that could make things even harder for Senate Republican leaders as they struggle over their vote and deficit math.

The Senate Finance Committee’s text came out last so it’ll be the final panel to go through the process. Finance’s Byrd Bath is likely to start later this week and could extend into next week. Parliamentarian rulings on the committee’s text could still be rolling in around the middle of next week.

Here are some pieces of Republicans’ bill we expect Democrats to challenge:

— The current policy baseline. Senate Republicans previously side-stepped a ruling on the accounting tactic, but Democrats aren’t done fighting over its viability.

— Gun and silencer provisions in Finance’s text. In addition to cutting taxes on certain guns and suppressors, aka silencers, the bill eases licensing and registration requirements too.

— Social Security number requirements for tax benefits under Finance, which aim to exclude undocumented immigrants. On the child tax credit, a new provision would require at least one parent to have a work-eligible SSN in addition to their child.

— The Senate Commerce Committee’s language requiring states not to regulate AI if they want federal broadband funds. Some Senate Republicans already oppose this, including Sens. Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.).

— The Senate Judiciary Committee’s new limits on judges’ power to issue preliminary injunctions against the executive branch.

Senate problems. The Senate GOP leadership is lobbying groups of Republican holdouts to try to build a 51-vote coalition for the bill. Senate Majority Leader John Thune and Majority Whip John Barrasso met on Tuesday with conservatives pushing for steeper spending cuts.

That’s one group that Republican leaders will need to get on board. But the problem is that the deeper spending cuts conservatives are seeking could further alienate GOP moderates, particularly on Medicaid.

Several GOP senators, including Hawley, Lisa Murkowski (Alaska) and Jim Justice (W.Va.), are already raising concerns that Medicaid cuts in the Senate bill go too far.

“I’ve got major concerns, that’s all there is to it,” Justice said. The freshman GOP senator wants to go back to the House language on provider taxes in order to help rural hospitals. “It’s an aggressive timeline, that’s for sure.”

Vance’s message to Republicans on Tuesday seemed to be tailored to conservatives seeking more spending cuts. Here’s how Sen. Kevin Cramer (R-N.D.) described Vance’s plea at Republicans’ closed-door lunch:

We’ve heard this a lot from Senate Republican leaders — that failure can’t be an option because the consequences are simply too dire. That includes being forced to negotiate with Democrats on the debt limit and the expiration of the 2017 Trump tax cuts at the end of this year.

Senate GOP leaders are banking on the pressure getting to the GOP holdouts at the later stages of the reconciliation debate. That clearly hasn’t happened yet.

House negotiations. If Senate Republicans don’t work out problems with the House now, they risk delaying the bill even further.

GOP senators are well aware that they have a big problem when it comes to SALT. They don’t want to spend the money on SALT relief that a handful of blue-state House Republicans are demanding. But the SALT backers insist they’ll hold the line and bring down the reconciliation package if necessary.

To work out the SALT impasse and other House concerns, there will have to be a lot of negotiating. And fast.

— Andrew Desiderio, Laura Weiss and John Bresnahan

Join us on Tuesday, July 8, at 8:30 a.m. ET for a conversation with Sen. Mike Rounds (R-S.D.). Punchbowl News Founder and CEO Anna Palmer will sit down with Rounds to discuss the news of the day, financial services innovation and payments security. RSVP here!

THE SENATE

Rescissions package faces uncertain path in Senate

The House-passed rescissions package has smacked right into the realities of the Senate: it faces an uphill battle on a condensed timeline.

Senate Majority Leader John Thune is sending the measure through the Senate Appropriations Committee, whose chair — Sen. Susan Collins (R-Maine) — is a leading skeptic of the package. We’re told that the panel could hold a hearing on the bill as soon as next week.

Collins and several Senate GOP colleagues have raised some objections to the measure, which would rescind a mix of public broadcasting and foreign aid funds totaling $9.4 billion. Congress has already approved the funding. But by using a special process, Republicans can jam through the cuts on an expedited basis while avoiding a Democratic filibuster.

Yet time isn’t on Thune’s side. With reconciliation as the priority, rescissions will be a post-July 4 task. Congress needs to send a recessions package to President Donald Trump’s desk by July 18. After that, the White House must spend the funding as approved by Congress and signed into law.

Collins declined to comment specifically on how her committee would handle the bill. But Collins reiterated her opposition Tuesday to the proposed cuts to PEPFAR, a high-profile global HIV/AIDS prevention program started under the George W. Bush administration.

“I’ve made very clear that I do not like the cuts to global health programs like PEPFAR,” Collins said.

Other GOP senators, including Sen. Mike Rounds (R-S.D.), have raised concerns about the cuts to public broadcasting. Rounds noted there are Native American reservations in South Dakota relying on radio stations that receive federal funding. Rounds said they’d have “no place else” to get funding.

The process: If the Appropriations Committee hasn’t reported the rescissions bill to the floor by July 7, any senator can make a motion on the floor to discharge it from the committee.

If the bill hasn’t been amended in committee, there could be an effort to amend it on the floor, including offering a wholesale substitute. If the Senate revises the measure, it has to back the House for another vote.

Sen. Eric Schmitt (R-Mo.), the lead Senate sponsor of the rescissions package, told us he’s planning to meet with senators, including Collins, to address potential concerns.

“I think broadly there’s a lot of agreement that we need to move forward on it. But I respect the process,” Schmitt said. “I think there’s been a lot of misunderstanding about [PEPFAR cuts] in particular that we’re going to try to work through with Sen. Collins. She and I have a great relationship.”

— Andrew Desiderio

WASHINGTON X THE WORLD

Hegseth to the Hill as Trump eyes possible Iran strike

Defense Secretary Pete Hegseth returns to Capitol Hill on Wednesday as the war between Israel and Iran rages on and the world waits to see what President Donald Trump will do.

Hegseth is appearing for an FY2026 budget request hearing in front of the Senate Armed Services Committee. Gen. Dan Caine, chair of the Joint Chiefs of Staff, will also be testifying. While the topic is Pentagon funding, many lawmakers want to talk about the conflict in the Middle East — and any potential U.S. involvement.

On Tuesday, Trump stepped up his rhetoric on the burgeoning war. Trump floated the prospect of assassinating Ayatollah Ali Khamenei and claimed that the United States has control of Iranian airspace. U.S. warplanes haven’t been involved in the attacks on Iran — at least not openly.

Trump also called for Iran’s “UNCONDITIONAL SURRENDER” as he met with national security officials, part of his more warlike tone over the last few days. U.S. refueling aircraft that could be used in a bombing raid on Iran have been moved to Europe. A second aircraft battle group has been ordered to head to the region as well.

Iran “has prepared missiles and other military equipment for strikes on U.S. bases in the Middle East should the United States join Israel’s war against the country,” the New York Times reported, citing American officials who have seen intelligence assessments.

As we reported Tuesday morning, most lawmakers were supportive of Trump’s initial posture of staying out of the conflict. So it will be important to see how senators react to Trump’s saber rattling over Iran.

Sen. Jack Reed of Rhode Island, the top Democrat on the Armed Services panel, has been one of the party’s fiercest critics of Israel’s attack on Iran. Reed told us he’s looking for the latest update from Hegseth on the conflict.

“There’s a tendency to take a short-term view, when in fact, we’ve discovered to our chagrin that it’s easier to break things in the Middle East than to put them together,” Reed said.

Overnight, the Israel Defense Forces said they struck “a centrifuge production site and multiple weapon manufacturing facilities in the Tehran area, key elements of Iran’s nuclear weapons and missile programs.” More than 50 Israeli planes took part in the attacks.

Iran fired more than 20 ballistic missiles at Israel, but most of those were apparently intercepted by Israeli air defenses.

Resolution watch. Sen. Tim Kaine’s (D-Va.) privileged War Powers Resolution — which requires a Senate vote on whether the United States “engages in hostilities” against Iran — ripens next week. Kaine told us he hopes the Senate will vote on the resolution before leaving next week for the July 4th recess.

“When it comes to Congress and the Senate Democrats, if necessary, we will not hesitate to exercise our authority,” Senate Minority Leader Chuck Schumer said.

A sign of where things stand with Democrats — Sen. Mark Warner (D-Va.) called for Hegseth to resign or be fired on Tuesday.

– Max Cohen and John Bresnahan

2026 WATCH

GOP judge preps run against Cuellar

News: Webb County Judge Tano Tijerina is inching closer toward his long-awaited bid to oust embattled Democratic Rep. Henry Cuellar in South Texas.

Tijerina, a former Democrat who switched to the Republican Party on national television last year, announced Wednesday that he’s opening an exploratory committee to prepare for a possible run.

GOP recruiters are excited about Tijerina, a former minor league baseball player who was drafted by the Milwaukee Brewers. Tijerina is the top elected official in Webb County, which includes Cuellar’s hometown of Laredo.

In a statement, Tijerina acknowledged the district’s shift to the right since 2020: “For decades, South Texas has gotten little in return for its loyalty to the Democratic Party.”

Tijerina also took a shot at Cuellar, who was indicted last year on federal bribery and corruption charges, calling him “more focused on protecting himself than protecting this district.”

“And while our communities fight for federal resources,” Tijerina said, “he’s been too preoccupied with his trial.”

Tijerina is one of several Republicans considering challenging Cuellar. Texas’ 28th District is a top target for Republicans.

More recruitment news: Bridget Brink, a diplomat who resigned as U.S. ambassador to Ukraine to protest President Donald Trump’s policies, announced a bid for Congress in Michigan against GOP Rep. Tom Barrett.

Brink’s launch video is more than three minutes and prominently features the war in Ukraine. She will likely face former Navy SEAL Matt Maasdam in a Democratic primary.

Virginia State Sen. Tara Durant, a Republican, is launching a run today against freshman Democratic Rep. Eugene Vindman in Virginia. Durant’s announcement touts her appreciation for Virginia GOP Gov. Glenn Youngkin and Trump. Former Vice President Kamala Harris won the district by just 3 points in 2024.

– Ally Mutnick

…AND THERE’S MORE

AI rules freeze: The AFL-CIO is leading more than 25 unions in opposing a provision in the Republican reconciliation bill that would withhold broadband funds from states unless they agree not to regulate artificial intelligence.

Labor’s now weighing in alongside Democrats, consumer groups and state officials, who are all pushing back against the idea. Businesses big and small want the freeze to deal with contradictory rules. Republicans are split on the issue.

The letter — also signed by unions for teachers, nurses, actors and steelworkers — said AI “has the potential to cause great harm to workers and the broader public if left unregulated.” They cited concerns about AI threatening jobs, fair hiring and safety.

Endorsement news: 314 Action, the Democratic group dedicated to electing STEM professionals, is endorsing Annie Andrews in South Carolina’s Senate race, Christina Bohannan in Iowa’s 1st District and Amy Acton in the Ohio governor’s race.

Separately, Sen. Ruben Gallego (D-Ariz.) is endorsing Democratic Rep. Chris Pappas’ New Hampshire Senate bid: “We need fighters like Chris in the Senate focused on getting things done.” This follows endorsements from Gallego for Rep. Haley Stevens (D-Mich.) and Angie Craig (D-Minn.), who are running for Senate in their respective states.

– Ben Brody, Max Cohen and Ally Mutnick

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