Washington Edition

This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, congressional correspondent Erik Wasson outlines where things stand with the Republican tax cut plan. Sign up here and follow us at @bpolitics. Email our editors here.

Still a Slog

Now comes the hard part.

President Donald Trump said the final details of a massive GOP tax and spending cut package are “coming together rapidly.” But there are some pretty tough sticking points still to be resolved: cuts to Medicaid and food stamps, the state and local tax deduction and the president’s promise to eliminate taxes on tips and overtime pay.

Right now, the action is focused on the House. Republicans there want to cut a deal among themselves on those items in the next few days. But first they want to make sure they aren’t suddenly hung out to dry by Trump, who has a history of shifting positions with little notice.

The compromise is bound to cause pain, both for hardline conservatives who want $2 trillion or more in spending cuts and GOP moderates who like tax breaks but are very reluctant to cut the safety net for their low-income constituents.

Among the biggest fears for both groups is that they come up with a deal that Trump then repudiates, leaving them politically vulnerable.

To head off that possibility, Speaker Mike Johnson and his top lieutenants on the package met Trump privately today to make sure he is on board with Medicaid changes in particular.

Johnson, center, and Trump at White House prayer event today. Photographer: Al Drago/Bloomberg

Trump has said he will veto any “cut” to Medicaid but wants to target “waste, fraud and abuse.” That leaves a lot open to interpretation. Republican leaders are aiming to impose new work requirements for able-bodied adults while reducing the federal contribution to state Medicaid programs. The party spending hawks have their own ideas about how to cut costs and how much.

Johnson indicated the meeting had gone well and claimed the House is now on track to complete the bill “on a very aggressive schedule” — by the end of May.

Key committees are aiming to release their proposals on entitlements and tax issues, like how to raise the cap on the SALT deduction, next week. If Trump backs the proposals, Johnson’s job in getting them across the finish line will be infinitely easier.

Then attention will turn to the Senate where the appetite for spending cuts is much less and where a long, hot summer of legislative wrangling looms. — Erik Wasson

Don’t Miss

Trump said he’ll nominate Michael Waltz, his current national security adviser, to be US ambassador to the UN, sidelining a top aide in the wake of a scandal that saw sensitive war plans shared with a journalist.

The US is weighing a potential easing of restrictions on Nvidia sales to the United Arab Emirates, and Trump could announce the start of work on a bilateral chip deal during his upcoming trip to the Gulf.

A Trump-appointed federal judge ruled that the president improperly invoked a 227-year-old wartime law to deport accused Venezuelan gang members, potentially setting up yet another Supreme Court battle.

The Trump administration sued Michigan and Hawaii seeking to block the states from suing oil companies for damage caused by climate change.

The president said he would impose secondary sanctions on nations or companies buying Iranian oil, ratcheting up pressure on Tehran as nuclear talks with the US hit a snag.

Defense Secretary Pete Hegseth wants the Army to shed outdated weapons and vehicles and increase its use of drones as part of a broad overhaul of the military’s largest service.

Applications for unemployment benefits jumped last week more than forecast partly on a spike in claims in New York, where some school workers are allowed to apply during winter and spring breaks.

Trump is vacillating between telling Americans to be patient in the face of bad economic news and blaming his predecessor for it, leaving him vulnerable to losing voter support.

He’s slept in the Lincoln Bedroom, raided a White House freezer for Haagen-Dazs ice cream and played video games from his West Wing office. Even Elon Musk seems a little bemused about his role leading Trump’s government cost-cutting initiative.

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kailey Leinz interviewed Representative Suzan DelBene, head of the House Democrats’ campaign arm, about the Republican budget bill and what her party needs to do to regain the majority in the chamber.

On the program at 5 p.m., they talk with Claudia Sahm, chief economist at New Century Advisors, about the president’s tariff policy and what that means for the economy.

On the Odd Lots podcast, Bloomberg’s Tracy Alloway and Joe Weisenthal talk with Joe Dowling, the former head of Brown University's endowment who is now global head of multi-asset investing at Blackstone, about why college endowment funds have been pouring billions of dollars into private equity and hedge funds and how that strategy is working. Listen on iHeart, Apple Podcasts and Spotify.

Chart of the Day

US tariff revenue, while still relatively small compared to other sources such as individual and corporate income taxes, is surging as Trump raised duties. In April, the US brought in more than $17 billion in customs and certain excise taxes, according to data from the Treasury Department’s daily statement. That's a record and more than twice as much as a year earlier. Trump has suggested funds collected from tariffs could replace income taxes, though most economists say the math doesn’t add up. Tariff collections were a primary source of income for the federal government before Congress passed the income tax in 1913. — Alex Tanzi

What’s Next

The April jobs report will be released tomorrow.

Factory orders for March also are released tomorrow.

The nation’s trade balance in March will be reported Tuesday.

The Federal Reserve next meets next Tuesday and Wednesday.

March data on consumer credit will be released on Wednesday.

Treasury Secretary Scott Bessent testifies about the state of the international financial system before the House Financial Services Committee Wednesday.

Wholesale sales and inventories for March will be reported next Thursday.

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