Principals

1. Megabill’s mystery billion
2. Another ‘beautiful bill’?
3. Trump v. California
4. US-China trade progress
5. Bessent faces questions
6. McConnell v. Hegseth
7. Moderate Dem’s roadmap
8. Hawkeye fight

PDB: World Bank offers bleak projection for global economic growth

Musk says he regrets some Trump attacks … Appeals court allows tariffs to stay in place … Dow futures ⬇️ 0.15%

Senators mystified by $1B in megabill

Senate Republicans are stumped by new language in the Banking Committee’s portion of the GOP’s tax-and-spending bill that would spend $1 billion under a law that lets the president mobilize key sectors during emergencies, Semafor’s Burgess Everett, Eleanor Mueller and Shelby Talcott report. A White House official said the Defense Production Act money was for “critical energy projects that have a defense nexus,” and a Senate aide said Chair Tim Scott’s office briefed aides last week on all the provisions in the bill, including the $1 billion. Still, multiple senators told Semafor Tuesday that they wanted more information. “It’s hard to be supportive of it if we don’t know what it’s for,” Sen. Kevin Cramer, R-N.D., said. Said Sen. Mike Rounds, R-S.D.: “If you want a billion dollars, I want to know what it’s being used for.”

Graham says he’ll do another big bill

What happens if Republicans have to drop some of President Donald Trump’s tax priorities or are unenthused about the level of spending cuts in their party-line megabill? Senate Budget Chair Lindsey Graham has a backup plan, and is floating more party-line bills later in the year if things end up on the cutting-room floor. “There’s some things that the president wants, like no tax on tips and overtime. All this may be hard to fit in completely. So let’s have as big a bill as the market will bear, but realize that more is coming,” Graham told Semafor’s Burgess Everett. GOP leaders are resolute that some version of Trump’s tax priorities will stay in the bill despite worries they don’t generate the same growth as corporate tax provisions. But don’t be surprised if they leave the door open for more party-line legislation later this year.

Clampdown on ICE protests continues

As Trump’s clampdown on protests in Los Angeles enters its fourth day, his battle with state officials is escalating. Gov. Gavin Newsom asked for an emergency intervention by a judge to limit Trump’s deployment in Los Angeles, while Mayor Karen Bass declared a curfew in downtown. In DC, Defense Secretary Pete Hegseth suggested that immigration agents could soon be backed up by troops beyond California: “ICE ought be able to do its job, whether it’s Minneapolis or Los Angeles,” he told a congressional panel. Meanwhile, the Trump administration is considering cutting federal education funding for California, Politico reported. Trump is banking on reaping political benefits from his crackdown, but that may not be guaranteed: A YouGov survey found a plurality disapproved of the president’s decision to send Marines to LA. In a primetime speech Tuesday night, Newsom urged Californians: “Do not give in to him.”

US-China framework heads to Trump, Xi

The US and China said they agreed to a framework to get a trade truce back on track after marathon meetings in London. Details were sparse, but both sides essentially described an agreement to implement the Geneva pact that led Trump to ease his China tariffs in May. Beijing agreed to resume the flow of rare earth exports to the US, The New York Times reported, while the US said it would ease some export controls targeting China imposed since Geneva — an unusual use of the tool to exact concessions. Trump and Chinese leader Xi Jinping still need to sign off, and Commerce Secretary Howard Lutnick told The Wall Street Journal he expects Trump to approve it as soon as today. US futures were down Wednesday despite the news, though Hong Kong’s Hang Seng Index rose on the news.

Bessent faces Hill questioning

Scott Bessent will face lawmakers hungry for answers about the administration’s economic strategy today and tomorrow. The Treasury secretary is slated to testify on Capitol Hill before the House Ways and Means Committee this morning, before moving to the Senate side.

Expect topics to stretch far beyond the president’s budget request: The government is slated to release inflation data for May at 8:30 am, teeing up bigger questions about the administration’s economic agenda. That includes the GOP’s tax-and-spending bill and trade talks with China, as well as recent reports that Trump could tap Bessent to chair the Federal Reserve. It’s a rare oversight opportunity for Democrats: Rep. Brad Schneider, D-Ill., said he plans to grill Bessent today on messaging around the deficit and tariffs. Rep. Suzan DelBene, D-Wash., said she wants answers on the administration’s plans for financial data.

— Eleanor Mueller

McConnell gets his chance at Hegseth

Mitch McConnell didn’t vote for Pete Hegseth to lead the Defense Department, but they will still see plenty of each other. That all starts later today, when the former GOP leader gets the chance to grill Hegseth about one of his top legacy priorities: boosting defense spending. McConnell now chairs the Appropriations subcommittee that oversees defense funding, a position that gives him wide latitude over the money Hegseth needs to do his job. McConnell is expected to point out that the administration’s budget request lags behind other recent spending levels when factoring in inflation, and that the $150 billion infusion proposed in Trump’s party-line bill won’t solve the country’s long-term defense needs, according to a person familiar with his thinking. It’s a key moment for the Kentucky Republican, who still has 18 months left in office — and some unfinished business on national security.

— Burgess Everett

New Dems push to revamp their party

Rep. Brad Schneider has a vision for how moderate Democrats can help their party climb out of the wilderness: “Move fast and fix things.” The chair of the New Democrat Coalition told Semafor’s Eleanor Mueller that he is pushing for a leading role as the party’s center seeks to reorient Democrats away from the progressive surge of the last five years. He wants to provide a road map for how Democrats can coalesce around wedge issues like Israel’s war in Gaza, immigration, the national debt, and cryptocurrency in order to win back control of Congress in 2026. “Our message is about moving the country forward together, all Americans, and doing it in a way that isn’t promising castles and clouds like Bernie Sanders likes to do, but just saying, ‘How do we build from the ground up, step by step?’” Schneider said.

Democrats line up to challenge Ernst

Iowa state Sen. Zach Wahls officially jumped into the Democratic primary to challenge Sen. Joni Ernst (R-Iowa), after Semafor scooped news of his plans. “I’ve got a proven track record of standing up to powerful interests, willing to challenge my own party when necessary,” he told Semafor. Wahls, 33, led his party in the state Senate until colleagues ousted him over his firing of two staffers. He joins mechanic Nathan Sage and state Rep. J.D. Scholten in a race that piqued Democrats’ interest after Ernst dismissed a constituent’s fear of Medicaid cuts by saying, “We are all going to die.” Republicans believe they can paint any nominee as an out-of-touch liberal; they’ll all “fight to see who supports males in women’s sports and opposes the deportation of violent illegal immigrants the most,” said National Republican Senatorial Committee spokesman Nick Puglia.

— David Weigel

On the ground at Cannes — starting next Monday, the Semafor Media team will launch a free pop-up Cannes newsletter, your ultimate guide to navigating the panels, parties, and yachts on the Côte d’Azur. Get the scoop on key moments, influential people, and big ideas of the festival. Whether you’re attending or just curious about the deals and connections being made, Semafor Cannes is your go-to resource.

Sign up for free.

Blindspot: Fetterman and the GOP

Stories that are being largely ignored by either left-leaning or right-leaning outlets, curated with help from our partners at Ground News.

What the Left isn’t reading: Sen. John Fetterman, D-Pa., chastised other Democrats for not taking issue with some protesters’ destructive conduct in Los Angeles.

What the Right isn’t reading: Most of the 50 GOP lawmakers surveyed by Politico do not plan to stay in town for President Trump’s military parade this weekend.

Beltway Newsletters

Punchbowl News: The White House is making the case to Hill Republicans that polling shows they have a winning message about tax cuts and the imposition of tougher work requirements for Medicaid in their tax-and-spending bill.

Playbook: California Gov. Gavin Newsom is positioning himself “as the leader of America’s anti-Trump opposition” — and some Democrats are loving it.

WaPo: The shutdown of nearly 100 Job Corps sites as part of cost-cutting is dismaying both Republicans and Democrats on the Hill.

Axios: Treasury Secretary Scott Bessent will tell the House today that despite cuts at the IRS, tax receipts came in higher in April and May than last year.

White House

• During a speech at Fort Bragg, President Trump said he plans to restore the original names of several military bases, including one named for Confederate leader Robert E. Lee.
• President Trump is preparing to transfer at least 9,000 migrants to Guantánamo Bay. — Politico

Congress

• Lawmakers in both parties traded stocks as President Trump rolled out his “Liberation Day” tariffs, and the most active were two members who have called for congressional stock trading bans in the past. — WSJ

Outside the Beltway

• New Jersey Democrats nominated Rep. Mikie Sherrill for governor on Tuesday, while Republicans nominated former state legislator Jack Ciattarelli, who narrowly lost to Gov. Phil Murphy four years ago.

Polls

• About one-third of US adults say religion is increasing its influence on American life, according to Gallup, an increase from one-fifth a year ago.

Economy

• Global economic growth is set to fall sharply this year, according to the World Bank, which cited rising trade barriers and market uncertainty amid the Trump administration’s shifting tariff agenda.
• The Energy Department projected that US domestic crude oil production would decline next year.

Environment

• The Justice Department cleared the Trump administration to abolish national monuments enshrined by prior administrations, which would “take the administration into untested legal territory.” — WaPo
• The administration will propose undoing Biden-era power plant emissions regulations as soon as today. — Bloomberg

Courts

• Rep. LaMonica McIver, D-N.J., was indicted on federal charges of allegedly assaulting and interfering with immigration officers during a confrontation near a Newark detention center.

National Security

• During the Biden administration, a handful of government agencies kept tabs on foreigners visiting Elon Musk who “might have been trying to influence him.” — WSJ

Foreign Policy

• China is inviting US influencers to take part in a “10-day, all-expense paid trip through the country this July, as part of Beijing’s efforts to boost people-to-people exchanges and showcase the ‘real China.’” — Bloomberg
• An independent state for Palestinians will probably not happen “in our lifetime” and is no longer a goal of US policy, Mike Huckabee, the US ambassador to Israel, said. — Bloomberg

Media

• ABC is cutting ties with anchor Terry Moran over his spat with Stephen Miller.

Principals Team

Edited by Morgan Chalfant, deputy Washington editor

With help from Elana Schor, senior Washington editor

And Graph Massara, copy editor

Contact our reporters:

Burgess Everett, Eleanor Mueller, Shelby Talcott, David Weigel

Brett Guthrie is a Republican congressman from Kentucky who chairs the House Energy and Commerce Committee. Elana will sit down with him later this morning at Semafor’s Powering our AI Future forum. You can watch it live here.