Morning Report — Rifts stall House GOP budget momentum 

In today’s issue:  

• House GOP ISO budget cohesion 
• How Trump can broker peace in Ukraine
• Which Democrats star in 2028 chatter?
• Canada’s Carney, Trump talk trade this week at White House 

House Republicans aim this week to narrow substantial budget disagreements to eventually pass President Trump’s legislative agenda. It’s slow going. 

GOP infighting means key policy decisions are up in the air amid debates about offsetting the cost of tax cuts, Medicaid changes, clean energy tax credits and whether to make the pesky state and local tax deduction known as “SALT” more generous, to highlight a few prominent examples. 

The New York Times: Congress’s fight over Trump’s agenda runs through Alaska.

Republicans in high-tax blue states say they want to hike the SALT deduction. Deficit hawks are opposed because Democratic states are not their concern, and larger breaks for tax filers in New York, New Jersey and California siphon revenues that conservatives say are needed for other priorities.

NBC News: The growing GOP fight over the SALT tax deduction complicates the Trump agenda bill. 

The budget-building process will test Trump’s hold over Republicans in both chambers, who say they’re eager to defend Congress’s power over the federal government’s purse. What is anathema in a conservative House district may be popular in a swing district, and vice versa. 

The 2026 elections loom large for the GOP’s narrow majorities, and members of the president’s party are nervously measuring Trump’s sagging poll numbers on the economy, particularly tariffs and inflation. The president, interviewed last week by NBC’s “Meet the Press” for broadcast Friday and Sunday, downplayed the risks of recession.

“Look, yeah, it’s — everything’s OK. What we are — I said, this is a transition period. I think we’re going to do fantastically,” Trump said, speaking about his long-term expectations.

▪ Bloomberg News: Trump on Sunday escalated the trade war to include the entertainment sector for the first time by ordering a 100 percent tariff on movies produced overseas. "This is a concerted effort by other Nations and, therefore, a National Security threat. It is, in addition to everything else, messaging and propaganda," Trump wrote on social media.

▪ The Wall Street Journal: Investors have pushed back expectations for when the Federal Reserve will lower interest rates. The Fed is almost certain to leave rates on hold at its meeting this week.   

Markups initially scheduled this week by the House Energy and Commerce and Ways and Means committees were postponed to give leaders more time to line up sufficient GOP support to nudge a mammoth measure, which would encompass Trump’s ambitious policies on taxes, immigration, defense spending, energy and shrinking the size and reach of the federal bureaucracy. 

Trump “shows an openness” to imposing new Medicaid work requirements for adult beneficiaries, House Ways and Means Committee Chair Jason Smith (R-Mo.) told “Fox News Sunday”. Congressional Republicans are considering steep cuts to Medicaid in their search for federal savings. A federal Medicaid work requirement could lead to as many as 5.2 million adults aged 19 to 55 losing eligibility, according to an analysis by the Urban Institute, a nonprofit research organization. 

"The president has been very clear he does not want to cut benefits for individuals on Medicaid and Medicare. He wants to create efficiencies and reforms. He shows an openness to work requirements," Smith said. 

Republicans eyeing Medicaid changes are considering federal “per capita caps” for the health coverage program for the poor that’s shared with the states. That change would shrink federal funding without technically “cutting” benefits, reports The Hill’s Nathaniel Weixel. 

Trump has vowed not to touch Medicare and Social Security benefits, adding Medicaid to his promise during his interview with NBC: “We’re not cutting Medicaid, we’re not cutting Medicare and we’re not cutting Social Security.”

Placing a cap on the federal commitment to Medicaid is controversial because it would upend the foundation of the program’s federal-state cost-sharing, expanded by a majority of states under the Affordable Care Act. Forty-one states and Washington, D.C., expanded their programs while 10 did not.

Meanwhile, the president sent Congress his own budget blueprint with guidance for the fiscal year that begins in October. Office of Management and Budget Director Russ Vought on Friday argued proposed funding for homeland security, veterans, seniors, law enforcement and infrastructure would be protected. 

▪ The Hill: Five things to know as the president backs $25 billion in new spending for a U.S. Golden Dome missile defense shield. Trump wants to hike Pentagon spending by $150 billion.

▪ Government Executive: Which agencies would see the most significant spending reductions in Trump’s proposed budget?

▪ USA Today: Meet five Republicans in Congress who defined Trump’s first 100 days.

SMART TAKE with NewsNation’s BLAKE BURMAN    

The U.S. labor market remains resilient, adding 177,000 jobs in April as the unemployment rate held steady at 4.2 percent. Despite signs of resiliency, concerns persist — particularly among small business owners.  

I asked Neil Bradley, executive vice president of the U.S. Chamber of Commerce, what he’s telling small business owners who want to know how to position themselves. 

“I think you can't assume anything about the future, so we can have hope about the resolution of these tariffs, but it does seem that some of the tariffs may be here to stay for a while,” Bradley said.   

The White House argues the impending tax cut legislation Republicans are trying to hammer out will bring relief, but Bradley noted how much of this will be an extension of the current tax code. Will that be enough to assuage small business owners nationwide? 

Burman hosts “The Hill” weeknights, 6p/5c on NewsNation.

3 THINGS TO KNOW TODAY

▪ Reminder: Wednesday is the deadline to have state-issued REAL ID licenses. Travelers can check the Transportation Security Administration for information or check out tips from The Hill and NewsNation. 

▪ Multiple refineries say they plan to shutter Golden State operations, leaving Californians uncertain about future fuel supplies and impacts on prices at the pump. 

▪ Starting Monday, student loan borrowers in default will face government-backed involuntary collections after years of pauses and delays.

LEADING THE DAY 

© Associated Press | Manuel Balce Ceneta