Morning Brew Daily - Senate Passes Trump's Megabill & The AI Band Blowing Up On Spotify

Episode Date: July 2, 2025

Episode 617: Neal and Toby have the latest on the Senate passing Trump's megabill and what it means for your taxes. Then, California repeals an environmental law that impacted suburban growth. Next up the guys chat about the AI band taking over Spotify and why AMC is adding more ads before movies. Then finally, the headlines you need to know. Head to https://www.tacobell.com/morning-brew to learn more about Taco Bell’s new Refrescas! Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewerdaily. That's aflac.com slash morning brewdaily. Good morning, Brew Daily Show. I'm Neil Fryman.

And I'm Toby Howell. Today, the GOP's mega bill is one step closer to being law after the Senate approved it 51 to 50. Then a key California environmental law was just scaled back that could lead to more housing being built. It's Wednesday, July 2nd. Let's ride. Good morning and happy July 4th Eve, Eve. Heads up before we dive into the news. Toby and I recorded this pod yesterday afternoon

so we could hop on the road to see friends and family and hope you're able to clock out of work soon if you haven't already. The slip and slide awaits. As for the rest of the week, we have two great episodes for you to listen to while you're lathering on the sunscreen. Tomorrow is a first half in review show where Neil and I hand out some H1 awards

and also make some bold predictions for the rest of the year. Then on Friday, we have an interview episode with a personal finance whiz that will have you rethinking your attitude towards saving, spending, and whether to buy one or two dozen hot dogs for your grill out. Perfect lakeside listening, but also we won't fault you if you save them for a post-holiday treat. Speaking of holiday treats, here's a word from our sponsor, Taco Bell. Neil, something feels off, almost like I'm...

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Taco Bell.com slash morning dash brew. Legal disclaimer at participating Taco Bell locations for a limited time only while supplies last. Agua refreshkas are made with artificial colors and natural fruit flavoring and contain less than 1% juice. Rockstar Energy Refrescas contain 200 milligrams of caffeine and are not recommended for children, pregnant, or nursing women or person sensitive to caffeine. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting $179 like the next grill three burner gas grill.

Or get $50 off a select Weber Spirit. grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th, Exclusion supplies to homedipo.com slash price match for details. Well, they did it. Republicans narrowly passed President Trump's sweeping tax and spending bill in the Senate by a razor-thin 51 to 50 margin with Vice President J.D. Vance casting the tie-breaking vote. The marathon 24-hour voting session clears the way for Trump's second term agenda that focuses on extended tax cuts, new tax breaks, reductions in Medicaid spending, and more money for border enforcement and defense.

On the tax front, it would extend the large cuts put in place during his first term, avoiding the politically disastrous scenario of taxes rising across all income brackets. It also introduces new spending on the military and immigration enforcement. To justify the extended tax breaks, the bill aims to make deep cuts to Medicaid spending, the clean energy industry, student loans, and food stamp programs. The cuts, however, are not nearly enough to cover the bill's massive cost, with the Congressional Budget Office, estimating that a previous version of the bill released over the weekend

would add $3.3 trillion to the national debt over the next 10 years. Republicans also made a number of last-minute changes to the bill to get it across the finish line, including delaying nutrition aid cuts for certain states, doubling a rural health fund to $50 billion, in scrapping the more aggressive wind in solar tax. Now the bill heads back to the House for another vote before hitting Trump's decks ahead of its dire July 4th deadline.

But the bill lives Neil. This is a monumental moment that will ripple through the American economy for years to come. In championing this bill, Senate Majority Leader John Thune, a Republican, said that the bill would deliver on the promises Trump had campaigned on no taxes on tips, no tax on overtime, lower taxes for seniors for social security recipients as well. One thing to know about the particular tax changes of this bill is that 62% of households would see a tax cut from the tax measures passed in this Senate bill. That's according to this tax foundation analysis, which was released on Tuesday. It also, according to pretty much every independent analysis, would be a

regressive on net tax on Americans, which means that The benefits would accrue mostly to people in the top 20% of income, while the people in the bottom 20% of income in the United States would see their wealth actually dinged. According to the Yale Budget Lab, here's some numbers. This act would reduce income by 2.9%, which is about $700 for the bottom 20% of households. And then for the top 20%, it would raise income by $2.2, $5,700. So that is where a lot of the criticism from Democrats and even some of the Republican holdouts, there were three, is directed at where you're seeing a tax cut for the rich while you're burdening and rolling back social safety spending on the bottom 20%.

The lawmakers that backed this legislation, they see it as a chance to boost economic growth and also, you know, continue the agenda of cracking down on immigration. But the people who opposed the bill, mostly Democrats said that this is a wealth transatlish. from low-income households to the wealthiest Americans. And one of those low-income households that Democrats are focusing on that will lose some benefits are people who are on food stamps who are also potentially losing health insurance. The bill's on track to cut 20% of spending on food stamps. That's the SNAP program that you've heard of. And they think that it could cut Medicare for 12 million people. And there's a ton of overlap here. 30 million of the 30

38 million people receiving SNAP in 2022 were also enrolled in Medicaid. So that is one of the potential hangups for the Democrats here where they're saying that this is going to impact adversely the bottom percentile of Americans when it comes to income. What didn't get into the bill is worth is of note for the business community. In a previous version of the bill, there was a moratorium on states regulating artificial intelligence. This measure was endorsed by most of the Silicon Valley leaders and companies that you've heard about, Open AI and Microsoft. But early Tuesday morning, senators voted 99 to 1 against this measure delivering a win for advocates of AI safety and regulation. So a big loss for Silicon

Valley in terms of the fact that this AI regulation moratorium was stripped out of the bill before it was passed. And then speaking of Silicon Valley, one, person kind of tangent to Silicon Valley who is really upset about this is Elon Musk. He thinks that this bill is fiscally irresponsible. He went on a little bit of a tirade on X, saying every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame. He said that he's going to do everything in his power to make those lawmakers lose their primary. He said that if it's the last thing I do on this earth and then even floated the idea of starting a new political party called the America

Party. So that bifurcation between the Trump camp and the Elon Musk camp is only growing wider after this bill was passed. And in response to that, Trump said he might look into deporting Elon Musk back to South Africa. So those fissures that emerged at the beginning of the debate of this bill are only growing wider. What happens next? This bill has to go to the House to get approved and then it will go to President Trump's desk, but a monumental moment for tax policy for the economy of the United States that will ripple for years to come.

Okay, remember that public toilet in San Francisco that took four years to make and had an original budget of $1.7 million, a symbol of California's dysfunction and bureaucracy when it came to actually building things? The state is trying to turn a new page. In a major announcement late Monday, California leaders rolled back a strict environment,

law that critics say was needlessly hamstring development projects, fueling the state's soaring housing prices and homelessness crisis. The California Environmental Quality Act, better known as SICWA, was signed into law in 1970 by none other than Governor Ronald Reagan. It was intended to safeguard sensitive habitats by requiring extensive public disclosure of the potential environmental impacts of new developments. But opponents say it grew into a monster that stifled the building of pretty much anything. That's because, because CEQA allows any individual or group to sue to stop a project if they show the environmental assessment to not be detailed or thorough enough. In recent years, it's resulted in the delay of a

new bike path in San Francisco, ostensibly what environmentalists would want and block the construction of a new dorm at UC Berkeley over concerns of social noise pollution. Developers say they are hesitant to build anything due to the open-ended threat of CEQA lawsuits. Democratic Governor Gavin Newsom heard these concerns and dismantled Seaco requirements for urban infill developments in the state, meaning that most new apartment buildings in California will no longer face the risk of endless environmental litigation. Toby, a huge win for the YIMBY movement, yes in my backyard. Yeah, and a big loss for the environmental movement. It just shows how the priorities have shifted in California and how much voters and now the lawmakers are looking at affordable housing as

the core issue right now that is affecting so many people. And you see that in the wider, quote-unquote, abundance movement that is emerged over the last few months. That, of course, is tied to Ezra Klein and Derek Thompson's book that was released with the title, Abundance. Essentially, this idea is you approach problems by planning for the abundance of things people need rather than regulating from a scarcity mindset and that they think it's a big shift for the Democratic Party in these blue states. pulling back from Sequa is exactly that thing of ditching the scarcity mindset because it caused less housing to be built. So it is a win for this new worldview that is a win for this new worldview that is taking over specifically the Democratic Party right now. And they need to build

housing in California. There is no question. Nine of the 10 least affordable cities in the country are located in California. That's according to a mayor report by Wallet Hub. And the heart of the problem here is that they're just not able to build perhaps because of Sequa or any other types of regulations. The state needs 3.5 million units to be built to fulfill all the demand. Only about 100,000 units are built annually. Gavin Newsom has sort of taken the mantle here and said, we really need to address this. After years of letting it language and having this major homelessness crisis, people are moving out of the state because it's become simply too unaffordable. He has sort of taken the abundance mantle and even name-checked that particular book.

It's been so influential in driving democratic discourse. and saying we need to roll back regulations here. We need to start building stuff. Let's move on. The hot new band Velvet Sundown is gaining a following on Spotify, racking up half a million monthly listeners with their twangy country rock vibe and hits like dust on the wind and drift beyond the flame.

The only issue is Velvet Sundown isn't real. Yep, we got ourselves another AI controversy on our hands. Velvet Sundown's mix of classic rock with a dash of auto tune doesn't immediately set up alarm bells if a song came up on your playlist. The lack of any real identifiable information on the group's Spotify page is what eventually got listeners' spidey senses tingling.

First, the band has four members which don't appear to exist outside of the band's own social media handles, handles that are filled with clearly AI-generated images of the band. Things got even murkier when the band's fledging X account posted a thread claiming they were very much real, prompting many to wonder

if this was all just some big Nathan Fielder experiment. Whatever their origin story, Velvet Sundown have found their way onto a mysteriously large number of user-created playlist which helped boost its listenership and set off a renewed round of debates around AI's place in the music industry. Spotify happily accepts AI generated music and has no rules requiring a listening to reveal if it was created using AI. But for real living, breathing artist, Neil, it can be very frustrating to see something like Velvet Sundown rip off half a million streams while you've been toiling away for years. I mean, some of the details here are quite hilarious as at their, you know,

their band bio on Spotify. They had this quote attributed to Billboard that said, they sound like the memory of something you never lived and somehow make it feel real. After that was called out, the Billboard mentioned got stripped out. The description of their bandmates says, vocalist and melaton's sorcerer Gabe Farrow, guitarist Lenny West, bassist, synth alchemist, Milo Raines,

and free-spirited percussionist, Orion Rio Del Marr. These sound AI made up. I mean, even if you've used chat GPT or any other LLM, it seems very much in line with what you would expect if I input,

make up some bandmates for me. This is kind of exactly what it would spit out. So not a surprise that it raised some alarm bells. And a lot of the band's Instagram is flooded with comments calling out the use of AI, but a lot of people are saying, wait, there's nothing inherently wrong with wanting to listen to AI generated music. You can go on YouTube right now and listen to full playlist of AI generated music, but the frustration comes from the fact that people should know it is AI rather than a band posing as real and actually

being AI. But that line is only getting a blurrier in blurrier, especially because Spotify doesn't have any labels right now. They have no real fact-checking that says a song as AI or not. So it's really the mechanism of how it's being delivered that has people up in arms, not necessarily the fact that the music is AI generated itself. But some of the biggest names in music are fully leaning into AI, even as many human musicians are criticizing it. So Timbaland, who is this Godtier producer, a few weeks ago said that he signed the first non-human artist to his AI record label, which is called stage zero. This non-human artist is named Tata. And Timbaland is full bore on AI. He says that the new artist, human artists, now we have to distinguish between the two,

that are coming out now are completely boring and completely soulless to him. And he feels like AI is the next frontier for music. This is a huge name that is fully leaning into artificial intelligence as perhaps the future of music. So Velvet Sundown, if you're looking for a weird kind of soulless soundtrack to, you know, keep your Fourth of July weekend. company. Up next, we're going to talk about a controversial AMC change. Good sleep is everything. That's why Ali's science back support is made with a blend of melatonin and L-theonine for both kiddos and grown-ups. So when your mind won't switch off, you've got something that can help. You're racing thoughts and restless nights won't stand

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Don't just dream about the trip. Book it with Priceline. Download the Priceline app or visitpriceline.com. Actual prices may vary, limited time offer. Before you watch any movie at an AMC theater, you hear Nicole Kidman say dramatically, we come to this place for magic. Well, it needs an update. We now come to this place for commercials.

As of Tuesday, AMC has begun placing ads right before the movie starts, what's known in the industry as the Platinum Spot. The deal announced with ad company National Cinemedia last month will give AMC a much-needed short-term boost in revenue, but could dent its brand over the long term as audiences are, forced to sit through an even longer period of trailers and ads before the feature begins. AMC features a disclaimer on its website stating that movies start 25 to 30 minutes after showtime. That could be extended with the new ad slot.

Stuffing more ads into the pre-movie experience is also a 180 from six years ago when AMC got on its high horse and said it wouldn't do this. In 2019, Regal and Cynamark struck a deal with Cine Media to include as much as five minutes of commercials after a movie start time. a 30 to 60 second ad in that platinum spot. At the time, AMC said it flatly rejected the offer from Cintamedia, predicting U.S. moviegoers would react quite negatively to the concept. Fast forward to 2025, it seems that's a reputational risk AMC is willing to take.

Yeah, because they looked at their competitors and realized that, wait a second, they haven't really seen any direct impact in their attendance that was related to this additional ad spot. But that's not to say there aren't downsides. For one, movies are supposed to be that escapism that Nicole Kidman talks about at the beginning of AMC featured presentations, which is why they should not be a place for a commercial. They're supposed to feel different from your couch. You're supposed to feel different from just sitting there and being inundated like ads like most of us are when we're watching normal TV. It's part of the reason why IMAX has done so well in recent years is because it does feel like it's spectacle. It is very much different from your couch experience.

So that is one of the long-term reputational risks that AMC was trying to avoid, you know, a few years ago. But they kind of went to the sirens called Little Extra Ad Revenue because they do need it right now because the box office is down. And according to industry experts, this is a very lucrative and very attractive ad spot because you have a very much captive audience because if you take out your phone, people are going to look at you, askance. And, you know, you're fully tuned in to a particular screen. a way that most people are not anywhere outside of the movie theater. AMC does need the revenue. It had a really bad Q1 in its first quarter financial report. It said that the industry had its worst start to a year since 1996, excluding the COVID-19 pandemic. Does seem like box office has picked up over Memorial Day weekend. We had that record setting box office numbers over MDW.

So things are picking up. AMC is still in a tight financial spot. And it's going to take all the money it can get, it looked to its rivals, Reagle and Cinemark and didn't see much of a negative impact, so it's willing to take that gamble. I do think a funny trickle-down effect of this is that they did finally put in writing exactly how long after the preview start, the movie actually comes on, which is that, you know, 25 to 30-minute window. Everyone kind of knew this. Like, everyone knows you don't have to show up directly on time, but nowhere has it actually been codified down on their website and AMC did it this time. So next time you are running late,

remember you have that 30 minute buffer at least. People are already being trained to do this. So far this year, 42% of moviegoers in Los Angeles were in their seats in time to see every trailer. That's compared to 55% last year, so a huge plunge. And New York, we're also learning,

but not as much as New York. 42% of moviegoers were in their seat for the first trailer this year compared to 47% last year. were already kind of hip to what was going on. Let's sprint to the finish with some final headlines. Records are falling across Europe as a heat wave is gripping the continent with no signs of letting up. In France, temperatures topped 104 degrees Fahrenheit. Portugal set an all-time high for June clocking 115.9 degrees in Mora and Seville, Spain saw 109. Extreme heat can be especially

brutal and dangerous in Europe, where many households don't have air conditioning and not. neither do public spaces. Half of Paris's metro system doesn't even have AC. Meanwhile, just be thankful you're not playing at Wimbledon. The tennis tournament in London set a temperature record for its opening day on Monday with the thermometer topping 90 degrees on the grounds. Yeah, the temperatures in southern France were specifically so high over the weekend that they shut down their nuclear reactor because they didn't want to discharge the heated water into an already very hot river. That would endanger the wildlife. So it just shows you how intense these temperatures are right now. And specifically, a statistician at the London School of Hygiene and Tropical Medicine called out

to Politico that this heat wave could cause more than 4,500 excess deaths between June 30th and July 3rd. So it's not just an annoyance. It is a public safety issue, especially in a region where air conditioning is not very common. Amazon is getting extremely close to a pretty insane milestone. there are almost as many robots working in its warehouses as humans. The e-com giant said that there are more than 1 million machines active at its fulfillment centers, making sure your meat thermometers are arriving in time for your 4th of July cookout. It's been a remarkable scaling up of its robotic workforce, one that Amazon says now helps with 75% of its global deliveries,

helping productivity and relieving some of the strain on human workers. Now, you might be thinking, hmm, relieving strain. That's an interesting way of framing workforce cuts, and you're partially right. Robots are helping Amazon slow hiring, bringing the average number of employees per facility down to just 670 last year, the lowest in 16 years. But Amazon says it's also creating new jobs in the process like robot technicians, which require less manual neighbor. Neil, one million robots is a lot of robots.

It's so much, and it really is improving efficiency when you look at the staff. the number of packages that Amazon ships per employee each year has jumped from 175 in 2015 to nearly 4,000 today. They are deploying robots at a very fast pace across their fulfillment centers. 75% of Amazon's global deliveries are assisted in some way by robotics. Of course, you have to wonder what does this mean for Amazon's workforce, which is the second largest workforce in the entire country. Amazon's going to say that they're moving to higher paying jobs, overseeing the robots.

Critics would say that they are going to eliminate those jobs. And Amazon CEO, Andy Jesse, said a few weeks ago that eventually, ultimately, Amazon's workforce will be less than it is now. But whenever you talk about Amazon, it's sort of a canary in the coal mine. It's a harbinger of things to come because it's deploying technology the fastest. So as Walmart, as any other retailers looking at what Amazon's doing with these insane levels of robot deployment, you know, that's going to come to other workplaces as well. Hope you're hungry because Burger King, Japan is rolling out a new burger that could fill you up

for weeks and keep you in the bathroom for even longer. As part of a partnership with the Japan's Sumo Association, Burger King unveiled a 1900-calorie behemoth of a sandwich with five beef patties, four slices of bacon, and four slices of cheddar cheese. It weighs 668 grams or about one and a half pounds and costs $18. Toby, you've never met a challenge you haven't faced head on. Can I interest you in a 1900 calorie burger? Absolutely not.

The thing I want less of is fast food burger patties here. And this burger has five of them stuffed into one. I do think it's a fun promotion though. You know, associating yourself with sumo-sumos obviously have to eat a lot. And Burger King does like to do these big marketing swings. This is not their first collab this year. They also released a pickle. bowl burger earlier in collaboration with the pickleball Japan Federation. So they're clearly trying

to make inroads in different markets in the international space. But I do encourage you to look up this burger. It's even taller than you could possibly imagine five patties. That is too many patties. If you're playing the Toby mentions pickleball game, take a drink. Take a bite of your burger. Speaking of lots of cheese, I regret to inform you that it might be giving you nightmares. No, not nightmares on the toilet. Actual bedtime. nightmares that could be messing with your sleep, according to a new study in the Journal of Frontiers in Psychology. Researchers surveyed sleep habits and dreams in conjunction with eating habits, and a key finding

was that the worst symptoms of lactose intolerance people had, the more intense their nightmares were. It may not be anything specifically in the cheese that is causing you to have the recurring nightmare of your teeth falling out. The researcher said it's probably just the anxiety that comes from gastrointestinal stress that are causing you to have intense dreams. Put more plainly, your tummy aches from eating too much dairy are stressing you out, which is in turn causing you to run in slow motion while an axe killer chases you.

So, Neil, unfortunately, no Burger King Sumer burgers for you before bed. No, I know at bed, at breakfast, at lunch, I will happily pass on that. The idea that cheese eating late at night leads to nightmares actually has been around for over a century. in 1904, the American newspaper comic strip, Dream of the Rare Bit Fiend, showcased this character who had a nightmare of bizarre dream after consuming Welsh Rarebit, which is this cheese sauce, served on toast.

So this has been a part of the American imagination for a very long time. Finally, some scientists are doing something about it, and we're learning a little more nuts and bolts. I just can't believe that my cheese, like I do love cheese, and it's giving you those tummy aches, essentially, that are causing you to have like these micro wakeups that are interrupting your sleep.

I think a lot of people anecdotally have probably experienced this because if you go to bed with your stomach hurting, you're not going to sleep very well. But it turns out that if you do have lactose intolerance, it could be leading to those wacky and crazy dreams that you are having. Who is eating cheese before they go to bed? I've done it. Is that? A little charcutory board before bed?

Come on. Live a little deal. I can't tell if you're being serious. I have done that. I really have. Yeah, it seems to me like the last thing you'd want to eat before. or you go to bed, whether you have nightmares or any other issues. Okay, that is all the time we have.

Thanks so much for starting your morning with us. Have a wonderful Wednesday and safe travels if you're hitting the road. If you have any thoughts on today's episode, send an email with questions, comments, or feedback to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Our associate producers are Olivia Graham and Olivia Lake.

Hair and makeup is selling two tickets for the Velvet Sundown Show at Red Rocks. If you're interested, send them an email. Devin Emery is our president and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Aw. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history.

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