NEWS: GOP considers delaying explosive Medicaid cut

IN THIS EDITION

Breaking: Senate GOP eyes delaying key Medicaid cut

Mamdani’s rise makes vulnerable House Dems uneasy

Tech: GOP resistance to AI moratorium intensifies

Johnson doles out checks at Capitol Hill Club event

Rogers up big in internal Fabrizio poll

THE TOP

Breaking: Senate GOP eyes delaying key Medicaid cut

Happy Thursday morning.

News: Senate Republicans are considering delaying a politically explosive Medicaid cut as they look for ways to win over GOP moderate holdouts threatening the massive reconciliation bill.

The discussions come as Senate Republican leaders are trying to ratchet up the pressure on wavering GOP senators to fall in line and meet their self-imposed July 4 deadline for sending a bill to President Donald Trump’s desk.

Several Republican senators are quietly pitching their leadership on delaying the implementation timeline of the Senate’s stricter crackdown on Medicaid provider taxes. Paired with a stabilization fund for rural hospitals, this could help win over enough of the half-dozen or so wavering senators.

To be sure, Senate GOP leaders have a ton working against them right now beyond Medicaid problems. For one, the “Byrd Bath” for key portions of the reconciliation bill isn’t finished yet. And Republican senators demanding additional changes have said they won’t vote to begin the floor process until they see final legislative text.

All of that could change dramatically once Senate Majority Leader John Thune makes his first procedural move, with Trump at the ready to help him finish the job.

Rural hospitals. The provider tax crackdown and its impact on rural hospitals continues to be the most precarious problem for GOP leaders. Sen. Thom Tillis (R-N.C.), who faces a tough reelection next year, said he wants to learn more about how each state’s rural hospitals will be impacted before moving forward. Those analyses won’t come quickly.

“I don’t have a problem with the [provider tax] scale-down,” Tillis said. “I’m just asking some questions so all members know programmatically how this will be dealt with in the states… You need to do a scenario analysis for every single one.”

The changes under discussion could give a political break to Tillis and other senators up in 2026, especially Sen. Susan Collins (R-Maine), although they’ll still be hammered by Democrats over Medicaid cuts.

Right now, harsher provider tax limits would hit Medicaid expansion states starting early in 2027, right after the 2026 elections. A later timeline would give more breathing room.

That’s on top of the rural hospital stabilization fund that GOP leaders are planning to include in the bill and likely to sweeten.

Thune is still holding out hope for an initial procedural vote Friday, followed by an overnight vote-a-rama rolling into a final vote on Saturday. The expedited floor process for reconciliation allows Republicans to begin the vote-a-rama as soon as 10 hours after the first procedural vote.

But some GOP senators told us they now expect this to be a weekend exercise, at the earliest.

House problems. The Medicaid changes under consideration won’t necessarily appease deep opposition from House GOP moderates. House conservatives are also wary of any change the Senate makes to scale back spending cuts.

Plus, the Senate still needs a path forward on SALT. Sen. Markwayne Mullin (R-Okla.) and Treasury Secretary Scott Bessent met with the House SALT holdouts Wednesday. The two sides are expected to keep talking.

The Trump factor. Thune can’t lose more than three Senate Republicans on any vote. With Trump back in Washington following the NATO summit, Thune — who’s been in constant contact with the president — can deploy his biggest asset. Or, as Thune calls Trump, “the closer.”

Trump is hosting an event at the White House today expected to feature personal stories touting the proposed benefits of the GOP reconciliation bill. This fits in neatly with Republican leadership’s desire to more aggressively sell the upside of the complex package. Most congressional Republicans have spent this week talking about the shortcomings.

Thune has always banked on Trump and outside pressure to help seal the reconciliation deal. But choosing when exactly to kick off the floor process for the bill could be Thune’s biggest gamble yet.

GAO wipeout news: The Government Accountability Office (GAO) – the independent investigative arm of Congress – could lose more than 2,200 of its roughly 3,500 employees under a FY 2026 House GOP spending proposal, the head of GAO warned in a new letter to House appropriators. This scale of layoffs would decimate GAO.

House Republicans are calling for a $396 million cut to GAO’s budget, or roughly 49%, as part of the FY2026 Legislative Branch funding bill, which is set to be marked up by the full House Appropriations Committee today.

This would leave only “skeletal staffing” while costing federal taxpayers potentially tens or hundreds of billions of dollars in lost savings for waste, fraud and abuse, something GAO roots out very well, per Gene Dodaro, the comptroller general. Democrats are adamantly opposed to House GOP funding levels, as is the Senate.

— Andrew Desiderio, Laura Weiss, John Bresnahan and Jake Sherman

The Big Mad Index! Our very own Haley Talbot did something great on X when she was at CNN and NBC – whip lists for big bills.

Introducing The Big Mad Index. Follow the ups and downs and ins and outs of big bills with this living document that we will update in real time. Check it out here.

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 now!

THE BIG APPLE

Mamdani’s rise makes vulnerable House Dems uneasy

It’s a rough time to be a battleground Democrat in New York.

State Assemblyman Zohran Mamdani, an avowed Democratic socialist, is the likely Democratic nominee in the New York City mayoral race. Republicans have vowed to tie vulnerable Democrats to some of his most controversial policy positions.

Among them: Mamdani has called for defunding the police and the abolition of prisons. He’s also been harshly critical of Israel and called the New York State Assembly a “bastion of Zionist thought.”

“In talking to some of my colleagues, they’re very concerned about it. I’m not going to lie,” said Rep. Greg Meeks (D-N.Y.), who is also chair of the Queens Democratic Party. “That concerns me also, because we need to be in the majority right now here. Our nation is at stake.”

The stakes. For the past three cycles, New York has been the key to the House majority. That will remain true for 2026. The House GOP campaign arm is targeting Democratic Reps. Tom Suozzi, Laura Gillen, Pat Ryan, Josh Riley and John Mannion. And it needs to defend GOP Rep. Mike Lawler.

These races could easily determine whether Democrats can reclaim the House majority and break up Republicans’ unified control of Washington.

“It’s clear from last night that Democrats are still pissed about 2024, and pocketbook issues top all others,” Rep. Josh Gottheimer (D-N.J.) said. “But, far left policies, antisemitic rhetoric, and higher taxes will not help us win our frontline seats in 2026.”

Jeffries speaks. In an interview, House Minority Leader Hakeem Jeffries said that he hadn’t talked to DCCC Chair Rep. Suzan DelBene (Wash.) or Frontline members about Mamdani’s election.

Two of those members, Gillen and Suozzi, distanced themselves from Mamdani. Gillen wrote that Mamdani had “a deeply disturbing pattern of unacceptable antisemitic comments.”

“I have my own brand of being the kind of Democrat that represents my district well,” Gillen said.

But many of their fellow New York swing-seat colleagues refused to weigh in. “I’m only talking about mayors in my district,” Ryan said before we even asked him a question.

A number of other Democrats refused to comment or literally ran away from reporters’ questions.

If Mamdani becomes mayor of New York City, he’ll take a starring role in House Republicans’ TV ads. Mamdani will have a bully pulpit in the biggest media market in the country. That becomes hard to ignore.

“They need to make very clear whether or not they embrace and support him,” Lawler said. “This isn’t a situation where they can be ambiguous about it.”

Behind the scenes. Democratic leaders have tried to emphasize what they see as the positives from Mamdani’s campaign. In a closed-door House Democratic whips meeting Wednesday, Jeffries highlighted Mamdani’s economic message and compared it to House Democrats’ focus on rising costs, according to attendees.

Jeffries also noted that Mamdani’s successful campaign focused much more on policy than on President Donald Trump — as did the campaign of Rep. Mikie Sherrill (D-N.J.), who just won the Democratic nomination in New Jersey’s gubernatorial race.

“Assemblyman Mamdani focused relentlessly on an economic message that had to do with the high cost of living. Donald Trump is crashing the economy in real time,” Jeffries told us. “[Trump] is not making life more affordable for the American people. Democrats will.”

Here’s an important detail to remember: New York doesn’t always follow national political trends. In 2022 when Democrats outperformed across the country after the fall of Roe v. Wade, they lost seats in New York amid concerns about crime.

– Ally Mutnick, John Bresnahan, Jake Sherman

Tech: GOP resistance to AI moratorium intensifies

Republican opposition to the effort to stop states from regulating artificial intelligence in the GOP reconciliation bill is getting much louder.

Republican senators wrote to Senate Majority Leader John Thune on Wednesday asking him to yank the AI provision from the reconciliation package.

Sen. Marsha Blackburn (R-Tenn.) led the letter, which was also signed by GOP Sens. Rand Paul (Ky.) and Josh Hawley (Mo.). Blackburn has been quietly pushing back on the measure, which she worries will overrule her state’s approach to likeness rights in AI.

“Let’s take this out now and not have to deal with it on the floor,” Hawley told us.

There’s more Republican opposition too. Sen. Kevin Cramer (R-N.D.) told us he’s also against Sen. Ted Cruz’s (R-Texas) proposal, which would make states choose between regulating AI or accepting federal funding for AI infrastructure.

What’s next. Sen. Richard Blumenthal (D-Conn.) said he expects Hawley and Sen. Maria Cantwell (D-Wash.) to co-sponsor an amendment with Blackburn to strip the AI provision when the GOP reconciliation bill hits the floor. If they stick together, Hawley, Blackburn, Cramer and Paul plus all 47 Senate Democrats would be enough to defeat the measure on the floor.

Other GOP senators haven’t yet committed to the provision either.

Sen. Rick Scott (R-Fla.) has expressed reservations about restricting states’ ability to regulate AI. Sen. Jim Banks (R-Ind.) told us he’s still “torn” on the issue. And Sen. John Curtis (R-Utah.) also said he “fundamentally” doesn’t like restrictions on states, but hasn’t decided if he supports the AI proposal.

States’ rights. Both red and blue states have been pushing lawmakers to reject the AI provision. Hawley told us he spoke with Missouri Attorney General Andrew Bailey on Wednesday, who called to push for the provision’s removal.

“This means that we won’t be able to go after child pornographers, guys who are violating copyright laws,” Hawley said Bailey told him.

Cruz has pushed back on some of these concerns, and on Wednesday appeared to take direct aim at Blackburn’s opposition to the AI provision.

“The text as written does not impact in any way the ELVIS Act in Tennessee,” Cruz said, referring to the state’s law prohibiting the unauthorized AI reproduction of musicians’ voices.

Outside pushback. We also got the scoop on some new positions on the bill. DuckDuckGo CEO Gabriel Weinberg is calling Cruz’s provision “dangerous” in a blog post.

Meanwhile, the American Edge Project, a coalition allied with Big Tech, told us they’ll be going up on cable and digital platforms with a seven-figure ad buy in several states and D.C. to support Cruz’s provision.

And the National Venture Capital Association is telling Thune they need the regulatory certainty of the freeze. VC firms are major funders of small and medium-sized AI companies.

— Diego Areas Munhoz, Ben Brody, Andrew Desiderio and Kenzie Nguyen

THE GAVEL

Johnson doles out checks at Capitol Hill Club event

News: Speaker Mike Johnson hosted an event Tuesday in which he distributed $6.5 million in campaign checks to House Republican incumbents.

The checks came from Johnson’s Grow the Majority joint fundraising committee. And the average check size was $213,000 – not a small chunk of change.

Members who picked up checks at the Capitol Hill Club event included: GOP Reps. Brian Fitzpatrick (Pa.), Derrick Van Orden (Wis.), Ken Calvert (Calif.), Nick Begich (Alaska), Gabe Evans (Colo.), Mike Lawler (N.Y.), Tom Barrett (Mich.), Tom Kean (N.J.), Young Kim (Calif.), Mariannette Miller-Meeks (Iowa);

Zach Nunn (Iowa), Dave Schweikert (Ariz.), Ryan Mackenzie (Pa.), Rob Bresnahan (Pa.), Don Bacon (Neb.), Nick LaLota (N.Y.), Juan Ciscomani (Ariz.), Scott Perry (Pa.), Jen Kiggans (Va.), Eli Crane (Ariz.), David Valadao (Calif.) and Jeff Hurd (Colo.).

Johnson announced earlier this week that he would transfer $17.5 million to House Republicans this quarter. Johnson has sent more than $10.5 million to incumbents through his JFC, which his team says is the most ever for a GOP speaker through two quarters. Johnson has given $14 million to the NRCC so far this cycle.

– Jake Sherman

IN THE MITTEN

Rogers up big in internal Fabrizio poll

News: President Donald Trump’s pollster, Tony Fabrizio, is getting involved in Michigan’s Senate race, polling for a pro-crypto group that’s backing former Republican Rep. Mike Rogers.

Rogers trounced his possible competition, Rep. Bill Huizenga (R-Mich.), in Fabrizio’s poll, 48% to 20%, with another 32% undecided. The survey was commissioned by First Principles Digital, a new super PAC that backs Republicans who support crypto. Trump’s approval rating in the poll is positive at 92/7.

This is significant for a few reasons. First, Rogers is backed by Senate GOP leaders and they are very eager to see Trump endorse him. In the absence of that, Huizenga is inching toward a run.

First Principles Digital is led by Jason Thielman, the 2024 executive director of the Senate Republican campaign arm who played aggressively in primaries. Fabrizio’s work for the group is a good sign for Rogers, who also has Chris LaCivita as a senior adviser to the campaign.

As we reported, top Trump consultants often run their prospective clients by the White House and give the president and his team a chance to waive them off signing certain candidates.

This survey of 600 likely GOP primary voters was conducted from June 17-19 and has a margin of error of 4 percentage points.

These numbers are good for Rogers — but not as good as another recent poll from the Detroit Chamber of Commerce that Rogers led 61% to Huizenga’s 17% among registered voters.

– Ally Mutnick

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