Good evening from a sweltering New York City, where the temperature reached 99 degrees in Central Park for the first time since 2012, just as residents were heading to the polls to cast their votes in a scorcher of a mayoral primary. The results in that race may not be known for some time.
Meanwhile, President Trump traveled to The Hague on Tuesday for an annual NATO summit, where much of the focus will be on a historic new pledge by U.S. allies to raise their defense spending to 5% of GDP by 2035.
Here's what else is happening.
Senate Tax Cuts Would Cost $4.2 Trillion: JCT
The tax package in the Senate version of the reconciliation bill would reduce revenues by $4.2 trillion over 10 years, according to a preliminary analysis from the nonpartisan Joint Committee on Taxation published late Monday.
The cost estimate comes in far higher than the one released this past weekend, which, as we told you yesterday, was scored on a "current policy" baseline, as requested by Senate Republicans. Using that baseline - which assumes that extending current policies has no cost, even if some policies such as the 2017 tax cuts are scheduled to expire at the end of the year - the cost of the tax provisions in the reconciliation bill comes in at $442 billion over 10 years.
Democrats asked the JCT to score the bill on a more conventional "current law" baseline, and doing so produced the $4.2 trillion estimate. That number could move higher by hundreds of billions of dollars if Senate Republicans raise the cap on the state and local tax deduction, as demanded by Republicans in the House.
A "rigged" estimate: Democrats rejected the current policy baseline analysis upon its release and lauded the new analysis based on current law as more reasonable.
In a joint statement, Senate Minority Leader Chuck Schumer and Finance Committee Ranking Member Ron Wyden said that "anybody with two eyes, a calculator and a basic understanding of taxes" could understand that the current policy baseline amounts to a "rigged" analysis that seeks to hide nearly 90% of the cost of the Republican plan.
"Republicans claim their plan costs only $440 billion, but this new analysis shows it actually costs nearly 10 times that much - more than $4.2 trillion," the lawmakers said. "The Republicans want to rig the process and flout the rules, but Congress cannot operate in a world where one plus one equals whatever the Republican chairman of the Senate Budget Committee says it does."
Thune pushing ahead: Majority Leader John Thune is pushing ahead with the Senate version of the Republican megabill and reportedly plans to start voting on the legislation Friday, part of an effort that could stretch through the weekend, with the aim of sending the bill to the White House by July 4.
"I think we get on it, and then we will plow through, and we'll get into vote-a-rama and grind it out until - until whenever," Thune told Axios.
Thune may not have the 51 votes he needs just yet but says he's confident Republicans will fall in line. "Right now, everybody's unhappy on both sides, which tells you we're probably close," he said. "Nobody wants to give up leverage until you have to finally vote on it."
Thune may face challenges in the House, as well. Some House Republicans have declared that they will not vote for the Senate bill if it fails to raise the SALT deduction cap, which the House set at $40,000 but the Senate moved down to $10,000. Other Republicans have indicated that anything over $4 trillion in tax cuts is too much, raising questions about whether party leaders can hold their caucus together to push the bill through Congress.
President Donald Trump called on lawmakers to finish the bill, writing on his social media platform, "To my friends in the Senate, lock yourself in a room if you must, don't go home, and GET THE DEAL DONE THIS WEEK. ... NO ONE GOES ON VACATION UNTIL IT'S DONE."
Fed Chief Says Uncertainty Around Tariffs Warrants Caution
Federal Reserve Chair Jerome Powell told lawmakers Tuesday that he remains in a holding pattern on interest rate policy as he waits for more data showing how high tariffs are affecting the U.S. economy.
Appearing before the House Financial Services Committee, Powell said the tariffs imposed by President Donald Trump create a "highly uncertain" path for the U.S. economy, which otherwise remains solid, even as the inflation rate continues to register above the Fed's 2% target.
"We do expect ... tariff inflation to show up more," Powell said. "But I want to be honest, we really don't know how much of that's going to be passed through to the consumers. We just don't know. And we won't know until we see it. It could be lower than we expect; it could be higher. We have to wait and see, which is kind of what we're doing."
Powell also noted that Trump's tariff policy continues to change, adding to the uncertainty. "The effects of tariffs will depend, among other things, on their ultimate level," he said.
Trump attacks: Ahead of Powell's appearance, President Donald Trump continued to insult the Fed chair and pressure him to lower interest rates immediately.
"I hope Congress really works this very dumb, hardheaded person, over," the president said on his social media platform. "Europe has had 10 cuts, we have had ZERO. No inflation, great economy - We should be at least two to three points lower."
Asked if Trump's pressure campaign and insults were working, Powell said no. "They're having no effects," he said. "We're doing our jobs."
Consumer Confidence Resumes Downward Slide
Americans have been feeling somewhat gloomy about the economy this year, due in large part to fears of job loss and inflation resulting from President Trump's still-developing trade war. Consumer confidence started sliding in January, and after a brief jump higher in May, the downward slide continued in June, according to data released Tuesday.
The Conference Board's consumer confidence index fell 5.4 points in June, disappointing expectations. The decline was seen in all age and income groups, and across political parties.
"Consumer confidence weakened in June, erasing almost half of May's sharp gains," said Stephanie Guichard, a senior economist at The Conference Board. "Tariffs remained on top of consumers' minds and were frequently associated with concerns about their negative impacts on the economy and prices."
Tariffs have fluctuated as Trump announced new ones and then suspended some of them. According to an analysis by the Yale Budget Lab, the effective tariff rate has fallen from a peak of more than 25%, but still registers nearly 15%, the highest since the 1930s.
Heather Long, chief economist at Navy Federal Credit Union, said in a note that in an uncertain environment, consumers are waiting to see how things play out. "They are sitting on the sidelines and only buying homes, cars and appliances if they absolutely must," she said. "This is an 'abundance of caution economy.'"
Fiscal News Roundup
- Senate GOP's Tax Cuts Projected to Cost $4.2T - With Costly SALT Deal Pending – Politico
- Thune Plans Make-or-Break Weekend Votes on "Big, Beautiful Bill" – Axios
- Mike Johnson Urges Republicans to Stay in Town for Megabill Vote – Politico
- Trump Amps Up Pressure on GOP Holdouts on His Massive Tax Bill – Bloomberg
- Republican Move to Mask $3.8 Trillion Tax-Cut Cost Rings Alarms – Bloomberg
- Senate GOP to Offer $40,000 SALT Cap With Lower Income Threshold – Bloomberg
- Senate Parliamentarian Approves Tweaked SNAP Cost-Share Plan – Politico
- Hassett Says Trade Deals Coming After Megabill Passes – Politico
- Trump Administration Scrambles to Rehire Key Federal Workers After DOGE Firings – CNN
- Trump Takes Middle East Ceasefire to Trade War Strategy – Politico
- Health Secretary RFK Jr. Questioned About Vaccine Policy, Transparency in House Hearing on Funding Request – PBS News
- Cassidy, Breaking With Kennedy, Calls to Delay a Meeting of Vaccine Advisers – New York Times
- Balkanization of Vaccine Policy Raises Concerns About Vaccine Uptake, Insurance Coverage, Experts Warn – STAT
- RFK Jr. and Dr. Oz Say Health Insurers Will Cut Red Tape on 'Prior Authorizations' – NPR
- The Plan to Vaccinate All Americans, Despite RFK Jr. – Washington Post
- NATO Leaders Are Set to Agree on a Historic Defense Spending Pledge, but the Hike Won't Apply to All – Associated Press
- Germany to Spend Record Amount on Its Military and Infrastructure – New York Times
Views and Analysis
- The Education Department Is Paying Us Millions Not to Work – Sheria Smith and Brittany Coleman, Washington Post
- Why Elon Musk Failed – Washington Post Editorial Board
- The Mystery of How Many People Are on Medicaid – Drew Altman, KFF
- Medicaid Cuts Will Hurt Nearly Half of America's Kids – Lisa Jarvis, Bloomberg
- A Closer Look at the Medicaid Work Requirement Provisions in the "Big Beautiful Bill" – Elizabeth Hinton, Amaya Diana and Robin Rudowitz, KFF
- Democrats Don't Know Which End Is Up – Thomas B. Edsall, New York Times
- NATO Leader's Aim? Give Trump What He Wants: A Win on Military Spending – Steven Erlanger, New York Times
- NATO Wants Allies to Spend 5% of GDP on Defense: This Chart Shows How Hard It Could Be – Holly Ellyatt, CNBC
- High Tariffs Give Trump Less Room for Error in Iran – Matt Egan, CNN
- Florida Could Be Flying Blind This Hurricane Season – Mark Ellen Kass, Bloomberg