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

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.

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...”