
Happy Tuesday! President Trump hosted Philippine President Ferdinand "Bongbong" Marcos Jr. at the White House today and announced a new trade deal calling for 19% tariffs on goods from the Philippines. The meeting between the two leaders also included a Q&A session with reporters, during which Trump deflected a question about Jeffrey Epstein by launching into conspiracy theories about President Obama and the 2016 election, baselessly accusing the former president of treason and urging the Justice Department to "go after people."
The Epstein saga also continues to create headaches for House Republican leaders, who decided to leave for August recess a day earlier than planned to escape bipartisan pressure to hold a vote on releasing Epstein-related documents. Here's what you should know.
Republicans Shut Down the House Early to Avoid Epstein Vote
Speaker Mike Johnson announced Tuesday that the House will be starting its summer break one day earlier than planned after legislative action in the chamber ground to a halt as Republican leaders sought to avoid votes on releasing information in the case of convicted sex offender Jeffrey Epstein.
The furor over the Epstein case and calls for the release of related files continue to embroil and frustrate President Donald Trump and top congressional Republicans, despite their efforts to distance themselves from the subject.
The early recess comes after Democrats pushed to force another procedural vote calling for the release of files in the Epstein case. Congressional Republicans have been divided on the issue, caught between a president furiously trying to shift the public's focus and a base of voters angrily demanding action. When Democrats pressed to force another vote calling for the release of the Epstein files, some Republicans on the House Rules Committee balked at the idea of taking another perilous vote on the issue. The result was essentially paralysis. Republican leaders decided to punt on Thursday's planned votes and head out Wednesday until September.
Johnson criticized what he called "Democrats' endless efforts to politicize the Epstein controversy and the whole investigation" and said that lawmakers must be sure to protect innocent victims in the case. "What we refuse to do is participate in another one of the Democrats' political games," Johnson told reporters at a Tuesday news conference. "This is a serious matter. We are not going to let them use this as a political battering ram."
Why it matters: "Mr. Johnson's decision to shut down the House early was the latest example of how the speaker has in many ways ceded the chamber's independence in order to please or avoid angering Mr. Trump," Annie Karni and Michael Gold write in The New York Times. "In the case of the Epstein files, House Republicans are once again surrendering their institutional autonomy to appease a vengeful president. Afraid to cross Mr. Trump, but equally fearful of right-wing supporters who are demanding the release of the material, they chose to simply pack up and go home. In doing so, they also undermined their own agenda, punting what were to have been their last substantive votes before the summer break."
What's next: House committees will still be working through the week, but House floor action will be done after Wednesday. The pending House adjournment early means that any move to require the release of Epstein-related files won't reach the House floor until September - if ever. Republican leaders may be hoping that a five-week-long break will relieve some of the pressure to push for that release. But the furor over the case hasn't died down and isn't likely to, given the pressure from many Republicans, Democrats and the MAGA base. Lawmakers may be hearing a lot about the issue from constituents back home.
Rep. Thomas Massie, an obstreperous Kentucky Republican who often breaks from Trump and GOP leadership, and Democratic Rep. Ro Khanna are still looking to force a vote compelling the release of Epstein files via a discharge petition.
Johnson was clearly frustrated by Massie's effort. "Some people seem to enjoy trying to inflict political pain on their own teammates," the speaker said. "I try to follow Ronald Reagan's 11th commandment: 'Never speak evil of another Republican.' My gosh, it's hard to do sometimes around here. I also try to follow the scripture: 'Bless those who persecute you.' So, let me just say about Thomas Massie, could you just accept my Southern, 'Bless his heart?' I don't know what else to say about it."
Republicans Plan to Slash IRS Funding Again
A House Appropriations subcommittee advanced a bill late Monday that would provide $9.5 billion for the IRS in fiscal year 2026 - a reduction of more than 20% from the current funding level of $12.3 billion.
The Financial Services and General Government Subcommittee advanced the measure that would cut $2.8 billion from the current IRS budget on a 9-6 party-line vote.
Overall, the FSGG bill would provide $23.3 billion in funding in fiscal year 2026, $410 million less than in 2025, covering a wide variety of agencies, including the Department of the Treasury, the executive office, the judiciary, and the Small Business Administration.
"Taxpayers demand legislation that responsibly addresses critical needs while systematically eliminating waste," House Appropriations Committee Chair Tom Cole, an Oklahoma Republican, said this week. "This measure exemplifies that approach and further demonstrates steady and consistent progress in cutting federal spending."
The largest cut at the IRS would focus on enforcement, which would see funding fall from $5.4 billion in fiscal 2025 to $3 billion.
Democrats blasted the plan, saying the cuts will benefit cheaters and make it harder to collect money owed to the IRS.
"On the heels of a massive $4.5 trillion giveaway to billionaires and corporations in the Big Ugly Bill, this bill guts the Internal Revenue Service," said Appropriations Committee Ranking Member Rosa DeLauro. "An underfunded IRS means slower processing of Americans' tax returns - and delays to crucial benefits like the Child Tax Credit - but it also means that those with the most resources, like billionaires and powerful corporations, can escape scrutiny, and avoid paying taxes, when the IRS cannot afford to ensure they are meeting their obligations."
DeLauro noted that money spent on tax audits more than pays for itself, with average audits producing about $2 in revenue for every dollar spent, and audits of the wealthiest households producing $6 for every dollar spent.
The bottom line: The Republican funding bill marks another moment in the party's effort to shrink the IRS. Democrats provided an additional $80 billion over 10 years for the IRS through the Inflation Reduction Act of 2022, with the goal of modernizing and strengthening the tax agency, but Republicans have steadily chipped away at that funding. If this House bill becomes law, it would reduce IRS funding to its lowest level in more than 20 years.
Number of the Day: $1.26 Billion
The U.S. government has reportedly awarded a $1.26 billion contract for the construction and operation of a tent camp that would serve as an immigrant detention center at Fort Bliss, an Army base in El Paso, Texas. The contract went to Virginia-based Acquisition Logistics Company, Bloomberg reports, adding that the base would be turned into a deportation hub with 5,000 beds, making it the largest immigration detention facility in the country. "The Fort Bliss contract's reliance on tents for detention is concerning to immigrant advocates, who say such facilities are unlikely to meet federal standards," Bloomberg notes.
Quote of the Day: Taxes and Resentment
"At an abstract or conceptual level, people say they like progressive tax systems more than flat or regressive tax systems. But when you look at public attitudes toward specific taxes, people's views flip upside down. People say federal and state income taxes are unfair, but they say sales taxes, which are very regressive, are fair. Their attitudes on individual taxes are the opposite of what their overall commitments are."
− Andrea Campbell, a political scientist at MIT, summarizing her new book, Taxation and Resentment: Race, Party and Class in American Tax Attitudes.
Campbell found that anger about loopholes in the tax code plays an important role in hostility to taxes overall in the U.S. "People think it's unfair because they look at all the tax breaks the rich get and think, 'I don't have access to those,'" she said in an MIT interview about her book. "Those breaks increase complexity, undermine people's knowledge, heighten their anger, and of course are in there because they help rich people pay less."
Campbell also found that hostility to taxes does not break down neatly along partisan or class lines, and that people can oppose taxes for different reasons. "There are so many factors and components of public opinion around taxes," Campbell says. "Many political and demographic groups have their own reasons for disliking the status quo."
Fiscal News Roundup
- Johnson Cuts Short House Session to Avoid Vote on Releasing Epstein Files – New York Times
- White House Leads Push to Block Watchdog's Inquiries Into Spending Cuts – New York Times
- Trump Looking at Removing Capital Gains on House Sales – Wall Street Journal
- Trump Signals He Could Let Powell Serve Out His Term as Federal Reserve Chair – Washington Post
- U.S. Office of Personnel Management Shedding a Third of Its Staff – New York Times
- Spending Bills Reject Trump Plans for DOJ Overhaul – Roll Call
- Elizabeth Warren Vows to Fight Government Funding Bill – Politico
- House Members to Get More Funding for Protection Back Home – Politico
- Trump Says Philippines Will Pay 19% Tariff While U.S. Pays No Tariffs Under Deal With Leader Marcos – Associated Press
- IMF Warns of Global Imbalances That Trump's Tariffs Won't Fix – Bloomberg
- Bessent Sees China Tariff Truce Extended in Sweden Next Week – Bloomberg
- GM Profit Shrinks After $1.1 Billion Tariff Hit – Wall Street Journal
- AstraZeneca Pledges $50bn in US Investment as Trump Pharma Tariffs Loom – Financial Times
- Growing Share of Retirees Lean Heavily on Social Security, AARP Says – CBS News
- Efforts to Shrink Social Security's Phone Wait Times Are Putting a Strain Elsewhere – NPR
- Cuts to Food Benefits Stand in the Way of RFK Jr.'s Goals for a Healthier National Diet – KFF Health News
- Scoop: The Overlooked Data Trump Economists See Predicting a Boom Ahead – Axios
Views and Analysis
- Are 5 Million Nondisabled Medicaid Recipients Watching TV All Day? That's Unsupported – Loreben Tuquero, PolitiFact
- Is Medicaid Rife With Fraudsters? One Man Explains Why He Breaks a Rule – Katheryn Houghton, NPR
- Meet the Medicaid Double-Dippers – Wall Street Journal Editorial Board
- Countdown Clock Begins for Giant Health Insurance Premium Increases – David Dayen, American Prospect
- Lisa Murkowski Suddenly Realizes She Got Played on Trump Budget Bill – Edith Olmsted, New Republic
- Democrats Should Get Tough and Quit Negotiating Spending Bills – Bill Scher, Washington Monthly
- Oops, Turns Out Trump's Megabill Actually Increased the Deficit – Charles P. Pierce, Esquire
- Young Workers Could Lose $110,000 in Lifetime Earnings to Keep Social Security Solvent – Romina Boccia and Ivane Nachkebia, CATO Institute
- It's Not Too Late to Spare This Crucial Intelligence Agency – Ellen McCarthy, Washington Post
- "You Feel Like Your Life Is Over:" Abusive Practices at Three Florida Immigration Detention Centers Since January 2025 – Human Rights Watch