Senate Dems Block $1.15 Trillion Defense Bill to Protest Iran War

Senate Minority Leader Chuck Schumer (Sipa USA)
By Yuval Rosenberg and Michael Rainey

Happy Tuesday! Perhaps we should call it TACO Tuesday, after President Trump backtracked on the threat he made yesterday to impose a 20% fee on cargo ships passing through the Strait of Hormuz. Trump's plan had raised many questions and drawn widespread skepticism and pushback. In a social media post this morning, the president said that, based on conversations he'd had with leaders in the Middle East, he decided to replace his proposed toll with trade deals that would have the Persian Gulf states make "MASSIVE" investments in the United States.

Senate Dems Block $1.15 Trillion Defense Bill to Protest Iran War

In an extraordinary vote Tuesday, Senate Democrats blocked a $1.15 trillion annual defense policy bill, opposing the measure as part of an ongoing partisan showdown over defense spending levels and in protest against President Trump's handling of the war with Iran.

The National Defense Authorization Act, the must-pass measure setting military policy for fiscal year 2027, failed to advance in a 50-46 vote that fell almost entirely along party lines, coming up short of the 60 votes needed to advance. Democrats John Fetterman and Alex Padilla and Republicans Jim Justice and Mitch McConnell missed the vote. Republican Senate Majority Leader John Thune changed his vote from "yes" to "no" to be able to bring up the motion again at another time.

The vote came amid continued tension among top appropriators, who have failed to reach a deal on topline spending levels for fiscal year 2027. It also follows a re-escalation in the Iran conflict, after a shaky ceasefire collapsed, leading Trump to notify Congress this past weekend that the country is again at war.

"Trump started this war without authorization, without a strategy and without an exit," Senate Democratic Leader Chuck Schumer said before the vote. "So, now the White House has formally notified Congress that hostilities have resumed, and American strikes are underway again, and our forces remain positioned for more. Yet Republicans want the Senate to take up the NDAA, the defense bill, as though none of this is happening - as though Congress can debate the nation's central national security bill while ignoring the nation's most urgent national security crisis. We cannot."

Schumer went on to say that Trump isn't leveling with the American public about the cost of the war, the mission or the endgame. "The NDAA cannot become a permission slip for that recklessness that we see occurring in Iran," he said.

The NDAA typically passes with strong bipartisan support, but it has faltered in both chambers of Congress this year as Democrats and Republicans clash over the war and other political priorities. Democrats in both chambers have pushed back on Republican efforts to boost defense spending to $1.5 trillion, including a $350 billion boost via a partisan GOP bill, without similar increases in non-defense spending. And late last month, House Republican hard-liners blocked a procedural rule that would have set up votes on a slate of bills, preventing the NDAA from advancing.

The GOP rebels were maneuvering to pressure the Senate to pass the SAVE America Act, the package of voter ID and other election restrictions that Trump has prioritized. House GOP leaders only managed to break the logjam and set up debate on other legislation today, after a weekslong standoff.

Republican Sen. Roger Wicker, the chairman of the Senate Armed Services Committee, reportedly slammed Democrats over their blockade on Tuesday. His committee had advanced the NDAA last month in a bipartisan 18-9 vote that demonstrated opposition from some Democrats.

"It's unprecedented not to pass the motion to proceed on the NDAA and it reflects a decision and a mindset on the part of Sen. Schumer not to cooperate at all because so much of this has been done on a bipartisan basis," Wicker said, according to The Hill. "It really is a new low."

The bottom line: This year's NDAA has been derailed because of political clashes stemming largely from the war in Iran, which Trump launched without congressional authorization - and which the administration now says can continue without such approval for another 60-day period that began July 7. It's not at all clear how or when the Senate will be able to begin debate on the annual defense bill, which Congress has passed for 65 straight years.

Pentagon Official Tells Senate He Does Not Have Iran War Cost Update

Jules "Jay" Hurst III, President Trump's nominee to serve as the Pentagon's comptroller, frustrated Democratic lawmakers Tuesday when he told a Senate panel that he does not have an updated estimate of the cost of the Iran war.

As acting Pentagon comptroller, Hurst told lawmakers in May that the war had cost $29 billion up to that point, but that estimate did not include the significant potential costs of repairing damage from Iranian attacks on U.S. bases in the Persian Gulf region.

More recently, unofficial estimates peg the cost of the war north of $100 billion.

Hurst was nominated in May to serve as Pentagon comptroller on a permanent basis.

Asked at a confirmation hearing Tuesday for the Defense Department's latest cost assessment, he said that he does not have an updated number because he stopped performing the duties of acting comptroller once he was nominated for the permanent job. If confirmed, he said, he would work to get lawmakers the updated number.

Democrats expressed irritation at that response.

"Mr. Hurst, I'm unpersuaded by your professions of ignorance about the cost of the war. You were the acting comptroller, chief financial officer of the Department of Defense until May 20th. That's about seven weeks ago. And to sit here today and say, 'Well, I don't really know and I'm not in the position' - come on, you had to know this question was going to come up at this hearing today. How much has the Iran war cost the American people?"

Hurst responded that the cost was $29 billion at the time he left the acting comptroller position and that he felt it was inappropriate to ask for an updated estimate because that is not his current role at the Pentagon.

"I think it's very frustrating to the American people that we can't get a straight answer on what this war is costing, not to mention what it is costing and has cost the American people at the gas pump and in other costs."

Sen. Kirsten Gillibrand told Hurst that the American public is concerned about the lack of transparency and accountability regarding the war.

"The amount of spending is astronomical," Gillibrand said, adding that the American public would prefer to see the $67 billion that the Pentagon has requested for the war go toward other uses. "If they had a choice, they'd rather $67 billion fund Medicaid and their healthcare. They'd rather have [a] $67 billion fund to get the cost of groceries down, to get the cost of fuel down."

Sen. Jack Reed, the top Democrat on the committee, complained that the Pentagon has failed to provide requested information.

"We have had problems getting information from you and from the Department of Defense," he told Hurst. "I can't emphasize enough, and you know from your position, if we don't know what is going on, then we're not in a position to make judicious decisions. So it's absolutely essential, and this has been a consistent hallmark of the department, not giving us the information we're legally entitled to in a timely fashion."

During his testimony, Hurst said that, if confirmed, he would work toward having the Pentagon pass a clean audit by 2028, better budget for the evolving nature of warfare and modernize the department's financial systems and processes. He also argued that the Defense Department requires a generational investment by Congress to update decades-old systems.

Inflation Eased in June, but There's More in the Pipeline

Inflation decelerated in June as oil prices tumbled following a ceasefire agreement in the Middle East, but the return to hostilities in recent days suggests that the relief could be short-lived.

The Consumer Price Index rose by 3.5% on an annual basis in June, the Bureau of Labor Statistics said Tuesday, a decline from the 4.2% rate recorded in May. On a monthly basis, prices actually fell, dropping 0.4%, the largest decline since 2020.

The biggest factor in the reduction in inflation was the drop in energy prices, with the energy index falling 5.7% from May to June as gas prices dropped nearly 10%. Prices for car insurance, apparel, medical care and used cars and trucks also fell during the month, though to a smaller degree. The price indices for food, recreation, household furnishings and personal care rose.

Factoring out volatile food and fuel prices, the core CPI rose 2.6% on an annual basis, down from the 2.9% rate recorded in May. On a monthly basis, core inflation was basically flat, with prices holding steady from May to June.

Good news, with some catches: The core numbers suggest that if it weren't for the Iran war, inflation would be much closer to normal levels as it falls toward the Federal Reserve's 2% target rate.

"This reading is very much in the camp that the inflation we've had this year is transitory," said Michael Metcalfe, head of macro strategy at State Street Markets, per the Associated Press. "Yes, gas prices went up, but nothing else did, more or less."

That doesn't mean, however, that inflation has been any less painful for millions of people. "It's still tough for middle-class and moderate-income Americans," Navy Federal Credit Union Chief Economist Heather Long said on social media. "Inflation is wiping out wage gains for many. Grocery prices also continue to rise."

As the war between the United States and Iran picks up again, there's a good chance inflation numbers will get worse in the coming months. On Monday, Brent oil futures rose 9.6% to close at $83.30 per barrel, the biggest jump since May 2020, and those higher oil prices will likely ripple through the economy.

Patrick De Haan, an analyst at GasBuddy, said higher gasoline prices are pretty much baked in at this point. "I've seen enough and believe the national average price of gasoline will again reach $4/gal in the next 7-10 days, if not sooner," De Haan said on social media.

With no end to the conflict in sight, many analysts are betting that inflation will get worse, not better, over the next few months. "I wouldn't bet on these more modest inflation readings continuing for the remainder of the year," said Mike Reid, head of U.S. economics at RBC Capital Markets, per The Wall Street Journal.

Warsh urges caution: Appearing before the House Financial Services Committee, new Federal Reserve chief Kevin Warsh said the central bank must remain vigilant against inflation.

"There might be some that look at this morning's data and say, mission accomplished, everything is swell," Warsh told lawmakers. "That is not my view."

Warsh again called for a "regime change" in policy to defeat inflation, which has remained elevated since the Covid pandemic. "The members of our committee have no tolerance for persistently elevated inflation," Warsh said. "And we share a resolute commitment to restoring price stability. ... If we get policy right - and we will - the inflation surge of the last five years will be a thing of the past."

Still, the soft inflation data for June likely gives Warsh some breathing room on making policy changes and reduces the pressure to raise interest rates.

Andrew Sacher and Troy Durie of Bloomberg Economics said the June inflation report "leaves Warsh with the best of both worlds: He can continue to sound hawkish without having to raise rates." Sacher and Durie added that the June numbers "take a July hike off the table and support our view that the [Federal Open Market Committee] will stay on hold for the rest of the year."

Supreme Court Justices Say They Need Millions More for Security

In rare testimony before the House and Senate appropriations committees, Supreme Court Justices Elena Kagan and Amy Coney Barrett told lawmakers Tuesday that they need millions more in funding for security in an environment shaped by rising threats against the high court and members of the justice system.

The Supreme Court is seeking $228 million for operations in fiscal year 2027, about $20 million more than in 2026. That request includes $14.6 million for expanded security provided by the Supreme Court Police. Currently, each justice is assigned between four and eight officers for protection, and the added funding would allow up to six more officers per justice.

Noting that "threats have come very close" to the justices in recent years, Kagan said the additional funding would be almost entirely for security. In addition to more security officers, court officials want to build a facility to screen visitors and to hire engineers to bolster cyber defenses.

Barrett told lawmakers the threats to her safety have prompted security officials to give her a bulletproof vest, an item of clothing she has struggled to explain to her 12-year-old son.

The court police expect the volume of threats to rise 38% in the current year, on the heels of a 57% increase in 2025. According to data cited by CBS News, there have been 370 threats to judges this year, with the Marshals Service conducting 512 investigations.

Lawmakers seemed receptive to the justices' message. Democratic Rep. Steny Hoyer said "the very real threats by our judiciary are in our minds," adding, "Congress must provide sufficient funding to ensure the safety of all judicial personnel."

Senators Propose Social Security Reform Process

A bipartisan group of senators introduced a bill Tuesday that aims to kick off a reform process for Social Security, the popular retirement program that faces a funding shortfall and a possible 22% cut in benefits starting in 2032.

The Protecting Retirement Opportunities and Maintaining Income Security for Everyone Act, also known as the PROMISE Act, would create a new independent advisory committee that aims to ensure that Social Security is funded for at least the next 50 years. The committee would transmit a bill to Congress, following a legislative path laid out by the PROMISE Act.

"The longer Congress waits, the more difficult it will be to address the program's financial shortfall," Democratic Sen. Dick Durbin said in a statement. "We were elected to solve problems - we owe it to our kids and grandkids to protect and strengthen this critical program."

Durbin was joined by Democratic Sen. Tim Kaine, independent Sen. Angus King and outgoing Republican Sens. Bill Cassidy, John Cornyn and Thom Tillis in introducing the bill. Democratic Sen. Chris Coons and Republican Alan Armstrong also signed onto the bill.

US Refunded $49 Billion in Tariff Fees in June

The federal government issued $49.2 billion in tariff refunds in June, the Treasury Department reported in its monthly statement released Monday.

The refunds issued surpassed the $23.6 billion in customs duties collected in June, resulting in a $25.6 billion deficit for the month. The Trump administration has reported that it collected $166 billion in tariffs that could be subject to reimbursement.

The tariff deficit contributed to an overall budget deficit of $120 billion for the month. The total deficit for the first nine months of the 2026 fiscal year, running from October 2025 to June 2026, came to nearly $1.4 trillion.

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