As Trump and Musk Feud, Republicans Barrel Ahead on Tax Bill

Happy Friday! Here's your evening update to close out a wild week.

As Trump and Musk Feud, Republicans Barrel Ahead on Tax Bill

The aftershocks from Thursday's Republican-rattling public feud between President Donald Trump and Elon Musk were relatively minor. Trump spoke with a series of reporters at ABC News, Fox News and CNN and showed little sign that he wanted a truce, saying that Musk "has lost his mind."

"I'm not even thinking about Elon," Trump told CNN. "He's got a problem. The poor guy's got a problem." Asked if he had spoken with Musk, Trump said he hadn't - and wouldn't. "I won't be speaking to him for a while I guess, but I wish him well," Trump said.

Musk also signaled that he was willing to cool what had been a very heated social media spat. In response to an X user's Thursday night post that the two men should "Cool off and take a step back for a couple days," Musk said it was good advice and walked back a threat to decommission a SpaceX spacecraft used to transport crew to and from the International Space Station.

Republicans may welcome any sign of an emerging public détente but they largely stood by Trump and the massive bill that Musk sought to kill because it would add to the national debt. The Congressional Budget Office estimated that the package as passed by the House would add $3 trillion to deficits over 10 years.

Republicans have disputed cost estimates of the package from the CBO and independent budget watchdogs, arguing that their policies will boost economic growth enough to more than offset the cost of the bill. Officials also insist that upcoming spending bills will provide additional opportunities for savings.

GOP leaders still face challenges in ensuring that they'll have the support they need to pass the tax and spending plan. Fiscal hawks in the Senate are demanding additional spending cuts and pushing back on a House deal to raise the limit on state and local tax deductions (SALT). Other senators are raising concerns about cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps.

And some House members who approved the bill are warning the Senate against making changes on the issues they prioritize, from those SALT deductions to clean energy tax credits.

House Speaker Mike Johnson told reporters he remains confident that the bill will get to Trump's desk by Independence Day. "We're going to pass this legislation on our deadline," he said Friday.

He also had a warning for sorts for Musk: "I'll tell you what, do not doubt and do not second-guess and don't ever challenge the president of the United States, Donald Trump," Johnson said. "He is the leader of the party. He's the most consequential political figure of this generation and probably the modern era."

May Job Growth Was Solid, With Signs of Slowing

U.S. payrolls grew by 139,000 in May, a better-than-expected result in a closely watched jobs report that helps ease concerns - at least for now - about the potentially negative economic effects flowing from President Trump's tariff policy.

The unemployment rate held steady at 4.2%, the Department of Laborreported, and worker pay grew at a higher-than-expected 0.4% rate on a monthly basis and 3.9% over the last year.

At the same time, previous monthly data were revised downward, indicating that growth has been a bit weaker than originally thought this spring. The job growth numbers for April and March were trimmed by 95,000, bringing the average growth rate down to 135,000 per month from March through May. The total labor force shrank, as well, and the prime-age participation rate fell by two-tenths of a percentage point.

Digging into the details, healthcare was the big winner, with the sector adding 62,000 jobs in May, higher than the 44,000 per month average over the last year. The leisure and hospitality sector added 48,000 jobs, and social assistance employment grew by 16,000.

On the other side of the ledger, employment in the federal government dropped again, by 22,000, and is now down 59,000 since January. As the report notes, "Employees on paid leave or receiving ongoing severance pay are counted as employed," so many of the layoffs driven by the Trump administration's DOGE cost-cutting initiative may still not be in the federal data.

Trump calls for rate cuts: While he celebrated the solid job growth numbers, the president also complained Friday morning about Federal Reserve chief Jerome Powell's decision to leave interest rates unchanged in recent months. "'Too Late' at the Fed is a disaster!" Trump said on his social media platform, using his nickname for Powell. "Despite him, our Country is doing great. Go for a full point, Rocket Fuel!"

The jobs report, however, is unlikely to change minds at the Fed. The numbers provide no clear sense of how the economy may be shifting one way or another, and instead likely point to the Fed holding steady on interest rates until more decisive data comes in.

"I would rather wait and move quickly to play catch-up if I really don't know what the right next move is," Beth Hammack, president of the Federal Reserve Bank of Cleveland,saidthis week. "And right now, I really don't know what the right next move is based on all of the information and policies that we're responding to."

**What the experts are saying:**Economists were relieved to see no signs of serious deterioration in the labor market but warned that problems could be brewing under the surface.

"A big relief to see a big nothingburger" of a report, said University of Michigan economist Justin Wolfers incommentson social media. "The economic expansion is still on, albeit at a somewhat slower rate." However, Wolfers noted some signs of distress in the details of the report, saying the lower three-month growth average represents a "notable slowing" for the labor market.

Most experts agree that much depends on how Trump's trade war and other policy moves play out. "Cracks in the façade of labor market resilience are now starting to show and the longer the tariff uncertainty and government spending cuts continue the worse the labor market reports are bound to be," said Scott Anderson, chief U.S. economist at BMO Capital Markets.

Carl Weinberg, chief economist at High Frequency Economics, said companies are making moves to prepare for what may be coming. "Employers have been 'hoarding labor' in the face of massive corrosive uncertainty," hesaid, per Bloomberg. "It costs money to fire workers, and we believe firms have been reluctant to lay off workers until they saw the extent of the Trump tariffs."

Bessent, Lutnick to Hold Trade Talks With China, Trump Says

U.S. officials will meet with Chinese government representatives in London on Monday to pursue a trade deal, President Donald Trump announced Friday. In a post on his social media site, Trump said that Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer will handle the trade negotiations. "The meeting should go very well. Thank you for your attention to this matter!" Trump wrote.

The meeting comes after Trump had what he described as a "very good" phone call Thursday with Chinese President Xi Jinping that "resulted in a very positive conclusion for both Countries."

In a deal announced last month, Trump agreed to lower his 145% tariff on imports from China to 30% and Beijing dropped its tariffs on U.S. goods from 125% to 10%. A week ago, the president said in a social media post that China had "totally violated" the agreement. "So much for being Mr. NICE GUY!" Trump wrote.

Fiscal News Roundup

• Buildup to a Meltdown: How the Trump-Musk Alliance Collapsed – New York Times
• The MAGA Faithful Celebrate the End of the Trump-Musk Bromance – Washington Post
• Trump Administration Races to Fix a Big Mistake: DOGE Fired Too Many People – Washington Post
• Senate Banking Forges Ahead With Potentially Problematic Budget Package – Politico
• 13 House Republicans Urge Senate to Save Green Credits – Politico
• Freedom Caucus Warns It Will ‘Not Accept’ Senate Changes on Green Energy Tax Credits – The Hill
• Two House Republicans Issue Megabill Threats as Senate Ponders Changes – Politico
• Greene Says She May Vote No on ‘Big, Beautiful Bill’ – The Hill
• Senate GOP Seeks to Cut Off Funding Source for Top Consumer Watchdog – The Hill
• Problems Proliferate in Senate for Trump’s ‘Big, Beautiful Bill’ – The Hill
• White House Request for Funding Clawbacks Up in the House Next Week – Politico
• 4 in 10 Republicans Worried Medicaid Cuts Would Hurt Their Communities: Poll – The Hill
• Nearly 100 House Democrats Urge RFK Jr. to Restore Millions in Family Planning Grants – The Hill
• Trump’s $12 Billion Tourism Wipeout – Bloomberg
• GOP Senators Question Cost of Army’s Parade Spectacle – Politico

Views and Analysis

• The Ugliest Part of the Week Wasn’t the Musk-Trump Breakup – Washington Post Editorial Board
• The Alarming Part of the Musk-Trump Dispute – Michelle Goldberg, New York Times
• 7 Republicans Stuck in the Middle of the Trump-Musk Divorce – Aaron Pellish, Politico
• Elon Musk and Donald Trump Are Splitsville, Until They Aren’t – David Streitfeld, New York Times
• The Elon-Trump Feud Is Oligarchy in Action – Ryan Cooper, American Prospect
• This Idea Explains a Lot About What Has Happened in Trump 2.0 – Nathan Levine, New York Times
• Signs of a Weaker Labor Market – Wall Street Journal Editorial Board
• Trump Wants a Manufacturing Boom. The Industry Is Buckling – Sam Sutton, Politico
• Manufacturing Jobs Are Never Coming Back – Steven Rattner, New York Times
• America’s Data Disaster Is Already Here – Tracy Alloway and Joe Weisenthal, Bloomberg