Senate Battle Looms Over Trump’s Megabill

Summary

WSJ What’s News: Senate Battle Looms Over Trump’s Megabill

Release Date: June 30, 2025
Host: Luke Vargas
Producer: Daniel Bach
Supervising Producer: Sandra Kilhoff

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Introduction

In the June 30, 2025 episode of WSJ What’s News, host Luke Vargas delves into the escalating Senate showdown over President Trump's ambitious Tax and Spending Mega Bill. The episode also explores the European Union's considerations to bolster defense spending by purchasing American arms, and updates on Canada’s recent policy shift affecting U.S. tech companies amidst ongoing trade negotiations.

Senate Republicans Advance Trump's Mega Bill

The episode opens with Vargas outlining the critical developments surrounding President Trump's Tax and Spending Mega Bill. Senate Republicans have narrowly advanced the measure in a procedural vote over the weekend, securing support from 51 of the 53 Republican senators. Notably absent from the vote were Kentucky’s Rand Paul and North Carolina’s Thom Tillis, both expressing reservations about key provisions of the bill.

Key Points:

• Rand Paul criticized the proposal to raise the debt limit by $5 trillion, stating, “That doesn’t sound at all conservative to me, and that’s why I’m a no.”
• Thom Tillis voiced concerns over cuts to Medicaid spending and the winding down of clean energy tax credits essential for job growth in his state. This stance led to significant public backlash from President Trump, who threatened to meet with Tillis's potential primary challengers. By Sunday, Tillis announced he would not seek re-election.

Vargas mentions that the Senate is set to begin a "Vote a Rama," a process allowing unlimited amendments that could lead to extended voting sessions. Senate Democratic Minority Leader Chuck Schumer views this as an opportunity to force Republicans to commit to various provisions of the bill.

Notable Quotes:

• Richard Rubin, Tax Policy Reporter: “[00:46] If Republicans succeed, proceed and follow Donald.”
• Luke Vargas: “[00:59] Trump over the cliff with this bill.”
• Richard Rubin: “[02:27] Tied to their ankles like an anvil.”

Breakdown of the Mega Bill

The bill introduces several significant measures:

• State and Local Tax (SALT) Deduction: Increasing the cap to $40,000 until 2030.
• New Tax on Renewable Energy Projects: Imposing taxes on certain wind and solar initiatives.
• EV Tax Credits: Abrupt termination of tax credits for electric vehicle purchases starting September.
• Medicaid Reforms: Introducing new work requirements for recipients and limiting provider taxes to secure more federal funding.

Richard Rubin emphasizes the precarious nature of Republican control in the Senate:

“[03:19] When the bill is at this slim a majority, everybody is a key vote. You've got conservative Republicans Ron Johnson, Rick Scott and Mike Lee who want deeper spending cuts. You've got moderates like Lisa Murkowski and Susan Collins who are concerned about the bill. You've got two Republicans, Rand Paul and Thom Tillis, who are opposed to the bill.”

Rubin points out that Vice President Vance may need to break any potential ties, allowing the bill to pass. However, he cautions that the House’s acceptance remains uncertain.

EU’s Defense Spending and U.S. Arms Sales

Vargas transitions to international affairs, highlighting the EU's consideration to purchase American arms as it scales up defense spending. This move is part of a broader strategy to deter Russian aggression and modernize European military capabilities.

Lawrence Norman, a Journal correspondent, provides insight into the EU’s strategic needs:

“[00:45] European armies have a lot of work to do over many years to get battle ready and to be able to deter in particular Russia. So this equipment from the US is undoubtedly on the top of the list of some of what they need.”

The EU’s decision to buy American arms aims to support the transatlantic alliance and potentially ease trade tensions between the U.S. and Europe. Antonio Costa, head of the European Council, suggests that this approach could mitigate the ongoing trade war by channeling funds into U.S. defense manufacturers.

Implications:

• European Defense Sector: Norman emphasizes the need for a robust European defense industry, cautioning that excessive reliance on U.S. arms could hinder Europe's capability to defend itself independently.
• Strategic Technology: The EU requires advanced technologies like missile defense systems and modern fighter jets, areas where U.S. manufacturers currently lead.

Canada Abandons Digital Services Tax Amid Trade Negotiations

Shifting focus to North American trade dynamics, Vargas reports that Canada has decided to drop its proposed digital services tax on American tech companies. This decision comes as a strategic move to salvage ongoing U.S.-Canada trade talks.

Details:

• Original Tax Proposal: Canada’s Finance Department was set to implement a 3% tax on revenue from digital services provided by U.S. tech firms, alongside taxes on sales of Canadian user data.
• President Trump's Response: Trump expressed frustration, stating, “Canada has been a very difficult country to deal with over the years... economically, we have such power over Canada.”
• Canada’s Reversal: Prime Minister Mark Carney announced the pause on collections and proposed legislation to rescind the tax, aiming for a comprehensive trade agreement with the U.S.

Luke Vargas notes that stock futures responded positively to Canada’s announcement, with markets anticipating the resumption of trade talks on July 21st.

US-Iran Relations: Potential Diplomatic Shifts

In the latter part of the episode, Vargas introduces a segment on the fraught relationship between the U.S. and Iran. Following recent U.S. and Israeli strikes on Iran, the geopolitical landscape remains tense.

Thomas Grove, a Journal correspondent, discusses Iran’s isolation and its reliance on traditional allies like China, Russia, and North Korea. However, recent events have strained these relationships, as allies have been hesitant to provide immediate support in the wake of military actions against Iran.

Key Insights:

• Defensive Strategies: Iran faces the challenge of rebuilding its military capabilities while adhering to its nuclear program ambitions, necessitating significant financial and technological support from its allies.
• Allied Hesitation: Despite historical ties, allies have shown restraint, potentially due to their own geopolitical concerns and the unpredictable nature of President Trump’s administration.

Thomas Grove elaborates:

“[10:17] We didn’t see quite the same level of support as maybe you would expect from an alliance like NATO... there was no military aid on the table.”

Grove highlights the complexities Iran faces in securing reliable support amid increasing isolation and the unpredictability of its partners’ willingness to engage without risking their own relationships with the U.S.

Conclusion

The episode of WSJ What’s News provides a comprehensive overview of key political and economic developments shaping markets and international relations. From the critical Senate negotiations over Trump's Mega Bill and the EU's strategic defense purchases to the thawing of US-Canada trade tensions and the precarious state of US-Iran relations, Vargas delivers an insightful analysis essential for understanding the current global landscape.

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Notable Quotes with Timestamps:

• Rand Paul: “[00:45] That doesn't sound at all conservative to me, and that's why I'm a no.”
• Richard Rubin: “[02:27] Tied to their ankles like an anvil.”
• Donald Trump: “[06:55] Canada has been a very difficult country to deal with over the years...”

Transcript

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[Luke Vargas]

The Senate readies for battle on President Trump's Tax and Spending Mega bill Plus, despite calls to invest locally, the EU mulls buying American as it scales up defense spending.

[Lawrence Norman]

European armies have a lot of work to do over many years to get battle ready and to be able to deter in particular Russia. So this equipment from the US Is undoubtedly on the top of the list of some of what they need.

[Luke Vargas]

And stock futures rise as Canada drop attacks on tech in a bid to salvage U.S. trade talks. It's Monday, June 30th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. It is shaping up to be a key day for President Trump's tax mega bill after Senate Republicans narrowly advanced the measure in a procedural vote over the weekend, securing the backing of 51 of the 53 Republicans in the chamber. Not among was Kentucky's Rand Paul, who criticized a proposal to raise the debt limit by $5 trillion. That doesn't sound at all conservative to me, and that's why I'm a no. And North Carolina's Thom Tillis, who expressed concern over cutting Medicaid spending and winding down clean energy tax credits he says are crucial to jobs in his state. That drew strong public backlash from the president, who said he would meet with Tillis's potential primary challengers. And by Sunday, Tillis said he wouldn't run for reelection. Next up next is a so called Vote a Rama set to begin this morning in which lawmakers can propose unlimited amendments likely leading to hours of votes. Senate Democratic Minority Leader Chuck Schumer said that would allow his party to put Republicans on the record on a lot of the bill's provisions.

[Richard Rubin]

If Republicans succeed, proceed and follow Donald.

[Luke Vargas]

Trump over the cliff with this bill.

[Richard Rubin]

Tied to their ankles like an anvil.

[Luke Vargas]

They will not only doom their own.

[Richard Rubin]

Communities, they will doom their political fortunes.

[Luke Vargas]

We've left a link in our show notes on what is in the mega bill, but some new measures that are worth highlighting include raising the state and local tax or SALT deduction cap to $40,000 until 2030 a new tax on certain wind and solar projects, as well as an abrupt end to tax credits for purchasing EVs in September and on Medicaid, new work requirements for recipients and limits on provider taxes imposed by states in order to secure more federal funds. With Republicans commanding only a narrow majority in the Senate, Journal tax policy reporter Richard Rubin said that today's votes could put a number of lawmakers in the driver's seat.

[Richard Rubin]

When the bill is at this slim a majority, everybody is a key vote. You've got conservative Republicans Ron Johnson, Rick Scott and Mike Lee who want deeper spending cuts. You've got moderates like Lisa Murkowski and Susan Collins who are concerned about the bill. You've got two Republicans, Rand Paul and Thom Tillis, who are opposed to the bill. And it's a chance for Republicans. If there are blocks of Republicans who want to change things in the bill, this is their chance to do it. So they're trying to find the right mix of policies that can get 50 votes out of the 53 Republicans. You get Vice President Vance to come break the tie, and then it will pass. And then obviously this has to go back to the House, and there's no guarantee that the House just accepts this.

[Luke Vargas]

As is, President Trump has set a July 4 deadline for Congress to get the bill to his desk. We are reporting that NATO's new 5% defense spending target could help to defuse the transatlantic trade war because much of the money will go toward US Arms. That's according to a journal interview with the head of the European Council, Antonio Costa, and comes as EU and US Negotiators race to reach a deal before Trump's tariff pause ends on July 9th. The Journal's Lawrence Norman says that while that buy American concession will allow the White House to argue that its trade imbalance with Europe is set to improve, it raises a pair of issues for the continent.

[Lawrence Norman]

The US has begun to use arms sales as a form of leverage in what it wants from Europe and from other countries. And the other issue is actually frankly by far the bigger one, which is that in order for Europe to be able defend itself, particularly in a crisis situation where the US Was engaged in a conflict with China and needed everything for its own military, the Europeans would be left very vulnerable.

[Luke Vargas]

Lawrence said that the path to reducing that vulnerability isn't clear cut. While the likes of French President Emmanuel Macron have argued European industries should benefit as much as possible from increased military spending, American manufacturers still provide unique capabilities.

[Lawrence Norman]

The first step of making Europe able to defend itself is to have a European defence sector that is big and strong enough. If all of the money goes to the US Industry, the European defence sector will not expand and that expansion is necessary. But there is simply no question that Europe needs US arms manufacturers, the F35s. I mean, Europe does have some fighter jets, but they're nowhere near in terms of production, some would say in terms of quality. The other thing that Tony Acosta mentions is some kind of missile shield for Europe which would defend from missile attacks. Again, the technology, the patriots. The US Is really a leading force in that.

[Luke Vargas]

Meanwhile, stock futures are gaining after Canada announced late last night that it's dropping a digital services tax on American tech companies and the trade Talks with the U.S. will resume on July 21st. That's after President Trump said on Friday that the U.S. was walking away from discussions. Canada's Finance Department was set to collect billions of dollars from U.S. tech companies beginning today with a 3% tax on revenue for selling digital services to Canadians and sales of Canadian user data. Speaking in the Oval Office on Friday, Trump said the US Held all the cards in its talks on a new economic and security pact between the two countries.

[Donald Trump]

Canada has been a very difficult country to deal with over the years. You know, we hear Canada, we have a great relationship with the people of Canada, but it's been very difficult. And they put a, they were a little bit early. We found out about it. So. And we have all the cards. We have all, every single one. We don't want to do anything bad, but they have, economically, we have such power over Canada, I'd rather not use it.

[Luke Vargas]

In a statement yesterday, Prime Minister Mark Carney's government announced it would pause collections and introduce legislation in Parliament to rescind the tax, saying it was doing so, quote, in anticipation of a mutually beneficial comprehensive trade agreement with the United States. White House didn't immediately respond for comment. And despite reaching a trade agreement with the US in early June, China's manufacturing activity is continuing to decline. With the Manufacturing Purchasing Managers index for June remaining in contraction territory despite improving from May, the world's second largest economy began to lose momentum three months ago when President Trump introduced sweeping tariffs. Coming up, as the US And Iran disagree over their next diplomatic steps, we'll look at what could emerge as a key factor if and when they return to the negotiating how much support Iran can count on from its long standing allies. We've got that story after the break.

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[Luke Vargas]

Bruised by US And Israeli strikes, where can Iran turn for help? Tehran for years leaned on its ties with China, Russia, and North Korea to prop itself up economically and militarily. But as journal correspondent Thomas Grove is here to discuss, Washington's entrance into the conflict has raised the risk for those countries helping out Iran as it looks to rebuild. Thomas, Iran of late has looked pretty isolated diplomatically, I think it's fair to say. We will get to that more in just a minute. But as you and your colleagues Austin Ramsey and Tim Martin report, this has not always been the case for Iran, especially when it comes to its ties with China, Russia, and North Korea.

[Thomas Grove]

So these countries really are the most important partners that Iran has, you know, in terms of its economy, in terms of its military sales, arms sales, and its nuclear program. So China helped develop Iran's uranium mining industry. When you turn to Russia, it built basically Iran's only atomic power plant and also provides the country and that plant with enriched uranium. If you're looking at North Korea, it's more about helping them design underground nuclear sites. They're very good at building tunnels. Apparently, these three partners of Iran, with Iran included, come together as what we've come to know as the Krink Alliance. It's a term that a lot of Western officials throw around whenever we're talking about China, Russia, Iran and North Korea.

[Luke Vargas]

And yet when Israeli and American bombs were falling on Iran, those allies didn't exactly rush to Iran's side, did they?

[Thomas Grove]

We didn't see quite the same level of support as maybe you would expect from an alliance like NATO, for example. No, I think you basically had phone calls between Iran and Russia, for sure, and strongly worded statements from North Korea and China condemning the bombing, even though they didn't call Trump out by name. And most importantly for Iran, you had the foreign minister coming to Moscow. Russia obviously received him, and Putin was very clear about Russia's own condemnation, but there was no military aid on the table. And so it basically left Iran to kind of figure things out for itself when it came to the United States, and it was Israel.

[Luke Vargas]

And Iran has a lot to figure out going forward.

[Thomas Grove]

Sure it does. I mean, it's at a point where it has to rebuild a lot of its military and it wants to stay on this nuclear track. So obviously, it's going to need to turn to its partners for a lot of this. And most importantly here, looking at the kind of funds and money that's going to be needed for that, it's very important that China buys 90% of Iran's.

[Luke Vargas]

Oil, which, Thomas, is what President Trump has said is going to be permitted here. And speaking of Trump, we've been hearing some mixed signals from Washington about whether there will be more talks with Iran on its nuclear program, should those eventually move forward. I imagine information that maybe only Iran has at this point about how much enriched uranium it was able to salvage, the true extent of damage to its facilities. That's going to be a big guide in terms of its thinking going forward on the nuclear front. But so to the kind of support it can count on from its allies.

[Thomas Grove]

I think that would be very important going forward. I mean, whether or not they can actually rebuild the facilities to continue enriching uranium is a big open question. So that's what Iran's thinking about. As for these other countries, as for Iran's partners, they have a whole set of considerations to think about, and they have to weigh how important Iran is for them and how much they don't want to get stuck in the eye of Hurricane Trump. So if you're looking at North Korea, of course there's a relationship between Kim Jong Un and Trump. I don't know if this is the time for him to really get caught out in that relationship with Trump. When we're looking at China, this is a country that's in the middle of a trade war, and they may not want to have another, you know, minus on their balance sheet going forward with Washington. And I think Russia here may have the most to lose. Trump has been very patient with Putin in regards to the Ukraine war and negotiations, peace negotiations that really haven't gained any traction. If there were to be another negative in that relationship, it wouldn't be hard to imagine that Trump could start sanctioning Russia, which is something that. But Putin would rather not happen, of course.

[Luke Vargas]

That was the Journal's Thomas Grove. Thomas, thank you so much for the update.

[Thomas Grove]

Thank you.

[Luke Vargas]

And that's it for what's news for this Monday morning. Today's show was produced by Daniel Bach. Our supervising producer was Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.