WSJ What’s News - Trump’s Tax and Spending Megabill Goes to House Ahead of July 4 Deadline

Episode Date: July 1, 2025

P.M. Edition for July 1. After an all-night session of dealmaking, Senate Republicans pushed through the bill, which addresses many of President Trump’s priorities. Now, as WSJ tax policy reporter Richard Rubin tells us, the bill heads to the House, where GOP leaders will have to move quickly to meet their July 4 deadline. Plus, Federal Reserve Chair Jerome Powell said solid economic activity is allowing the Fed to keep its wait-and-see stance. And the companies behind popular snack brands are adding more, smaller packaging sizes. We hear from reporter Jennifer Williams about the upsides and potential downsides of the move. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

No Frills delivers. Get groceries delivered to your door from No Frills with PC Express. Shop online and get $15 in PC Optimum Points on your first five orders. Shop now at nofrills.ca. The Senate passes Trump's big, beautiful tax and spending bill. Now, can Speaker Mike Johnson help move it through the House? Johnson really had been urging the Senate not to make a bunch of changes, and they made a bunch of changes.

Plus, why your favorite snack makers are betting on smaller packaging. And big tech and Hollywood face off over copyrighted material. It's Tuesday, July 1st. I'm Alex Osler for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Republicans squeaked President Trump's tax and spending mega bill through the Senate today, capping a long night of dealmaking to win over holdouts and ending with a tie-breaking

vote from Vice President JD Vance. WSJ tax policy reporter Richard Rubin joins us from the Capitol. So Richard, what is the bill that just passed? How much actually changed? Really, the big changes were designed to get the last vote they needed, which was Lisa Murkowski of Alaska.

And so there were a few things that Republicans did in order to sway her. One, they delayed the effective date of some changes to nutrition assistance programs for Alaska and a bunch of other states. Oddly, it's for states that have high error rates. They were initially trying to punish states with higher error rates and now they're helping them. Two was some changes to the clean energy provisions. There was an excise tax that the Senate had proposed

that it took out. And then the third thing is they bumped up a rural health care fund to make up for some of the problems that the Medicaid cuts would cause. And so they took that from 25 billion to 50 billion. So Republicans' priorities going into this, tax cuts, new tax breaks, reductions in Medicaid spending, more money for border enforcement and defense. That all made it in? Yeah, that all made it in. And one of the things Murkowski talked about after the vote with some of us was she said, look, I really like the tax cuts. I really think they've been helpful and I want them to continue.

There's air traffic control funding in this bill that she's really in support of. And so she says she was very torn about this vote and struggled with it, but she and others have a fair amount of agreement on what they want to do here. Well, now the bill goes back to the House. What happens next? So House leaders immediately put out a statement saying, we're going to take this up immediately and we're going to send it to the president by July 4th.

We'll see how that goes. There are multiple factions of House Republicans who are quite cranky. Remember, they can only lose three House members. And then you've got a bunch of fiscally concerned members who had constraints on the House bill that limited the gap between tax cuts and spending cuts to about $2.5 trillion. This Senate bill does not comply with that. And so they've said that's a red line for them. We're about to find out.

Okay. So it could take a while then in the House, is what I'm hearing. You know, it could or it couldn't. We've seen over and over and over this year how Speaker Mike Johnson pulled the rabbits out of the hat and find ways to get majorities for things that seem like if you listen to people complain about them, that they're not going to happen. That said, Johnson really had been urging the Senate not to make a bunch of changes and they made a bunch of changes. The bills are broadly similar, but they're not the same. House members really have some tough choices in the next couple of days.

The July 4th deadline is also not real. There's political urgency, there's pressure that they're going to feel, but there's not actual legislative urgency. That was WSJ Tax Policy reporter Richard Rubin. Thank you, Richard. Yeah, yeah, thank you. Federal Reserve Chair Jerome Powell kept his options open today when he said steady economic activity was giving the central bank time to study the effects that tariff increases

have on prices and growth before resuming interest rate reductions. Speaking at a conference in Portugal hosted by the European Central Bank, Powell repeated his earlier wait and see stance. As long as the U.S. economy is in a solid shape, we think the prudent thing to do is to wait and learn more and see what those effects might be. And again, they haven't really shown up. And, you know, so we're for now we're waiting. Powell said the Fed would likely have continued to gradually lower rates this year, if not for concerns that tariffs might derail officials' recent efforts to subdue inflation. Major U.S. indexes ended the day mixed. The Dow rose about 0.9 percent, the S&P 500 dipped about 0.1 percent, and the Nasdaq fell

roughly 0.8 percent. Shares of Tesla dropped more than 5 percent after Elon Musk's dispute with Trump over the tax and spending bill reignited, with Trump saying today he might look at deporting Musk. U.S. Manufacturing Activity U.S. manufacturing activity contracted for the fourth straight month in June, though the rate of contraction slowed overall, indicating continued uncertainty among companies about tariffs and their effect on costs.

The Institute for Supply Management said today that its Purchasing Manager's Index of Manufact of manufacturing activity rose to 49 in June from 48.5 in May. A reading of 50 or above indicates expansion. Meanwhile, sales reports from General Motors, Ford Motor, Toyota, and most other automakers today indicate that new vehicle retail sales appear set to dip in June to the slowest pace in a year. This is a reversal from early spring, when consumers raced to buy up cars before Trump's tariffs kicked in. Analysts say the muted pace could continue as car buyers face hurdles such as higher prices, economic uncertainty, high interest rates, and a reduced supply of new cars and trucks.

Coming up, why some of your favorite snacks are now coming in smaller packages. That's after the break. Consumer goods companies are making a big push to boost sales by making their products smaller. Brands like Lays Potato Chips, Goldfish Crackers, and Milka Chocolate Bars are selling their goods in a wider variety of packaging sizes, including increasingly smaller sizes available for a lower price point. I'm joined now by journal reporter Jennifer Williams with more. Jennifer, I actually did just run out to get a snack right before this call and I am curious how this differs from shrinkflation which I feel like we were just hearing it non-stop for years. This is different, right?

Yes, this is different from shrinkflation which frustrated many shoppers. That is the idea of getting less but paying the same price essentially. This is not holding the price at the same. They're adding more variety in terms of pack size so that you can pay as little or as much as you want for chips, cookies, and whatever else. Companies are doing this as part of the evolving methods they're looking at to keep consumers in their brands

while we're stretched and trying to spend less in the grocery store. Are there any potential downsides here? Well, one you've already touched on is just avoiding the perception of shrinkflation. Another is that companies don't want to add to their packaging costs. And so they're thinking through how could you add to the product lineup while also potentially keeping your prices for those packages the same or even reducing them by mixing up what goes into each box or making

sure that they're more efficient when you load them up on a delivery truck. And then the last one is just that companies have been talking for at least a couple of quarters about retailers de-stocking, meaning they are looking to have fewer items in their stores and on the shelves. And so if you are adding to your lineup of chips and let's say you want six bags, well at the same time retailers are looking to have less on their shelves, there's a bit of attention there that companies, the brands have to work through. That was WSJ reporter Jennifer Williams. Thanks Jennifer. Thank you.

The White House is set to issue its Artificial Intelligence Action Plan, which could influence how U.S. copyright rules are applied to training large language models. But Hollywood is pushing back on AI companies using copyrighted work without permission. WSJ Tech Policy reporter Amrit Ramkumar is here to tell us more. Amrit, what is the significance of this fight? This battle was really fascinating. On one side, you have the biggest tech companies in the world and some national security and White House officials who are saying that

we need access to this copyrighted material for our AI models, otherwise China is going to beat us and there are going to be national security consequences. On the other hand, you have Hollywood and any creative industry, which includes authors, musicians, many others, and they're all saying, you can't just train on our work and create potentially millions of almost replicas or millions of output products that would then compete in our own industry and make our careers much less valuable. So both sides feel like they have the upper hand in terms of why they're correct, and it will likely come down to decisions made in courtrooms and in Washington as to where this goes next.

You mentioned that a lot of this will have to be decided in the courts, but it's already happening. Last week, judges sided with Meta and Anthropic in two separate cases, finding that using copyrighted material to train AI models is fair use in some cases when the material is transformed into something dramatically different. Does that have bearing here? Yes, those two cases were generally pretty good for tech companies at that high level. But as usual with these things, there will be appeals and there are also nuances in both of those decisions.

So people are bracing for this long-term fight that is pretty grueling and takes a long time to get clarity on. So yeah, there likely won't be a clean decision or a clean one-side wins for a very long time. That was Wall Street Journal tech policy reporter, Amrit Ramkumar. Thanks Amrit. Thanks so much for having me.

The tiny Himalayan kingdom of Bhutan has earned a new Thanks so much for having me. The tiny Himalayan kingdom of Bhutan has earned a new reputation as a crypto pioneer. According to cryptocurrency platform Arkham, Bhutan now boasts a stash of bitcoins worth $1.3 billion, roughly 40% of the country's gross domestic product, and the third largest stockpile held by governments. Bhutan amassed its crypto fortune by mining for Bitcoin, which it began doing in 2020. South Asia correspondent Sean Lee told our tech news briefing podcast how they did it. The key factor that made it economically viable is the cheap electricity from the hydropower.

They have vast amounts of electricity and that's basically the core ingredient for Bitcoin mining. Because to mine Bitcoin, you basically end up using tons of energy. These racks of servers use up tons of energy to solve essentially mathematical puzzles in order to mine Bitcoin. And that's what Bhutan had. And that was the key ingredient that made Bitcoin mining viable. To hear more from Sean, check out tomorrow's episode of Tech News Briefing. And that's what's news for this Tuesday afternoon.

Today's show is produced by Pierre Bienneme and Anthony Bansi, with supervising producer Michael Kosmides. Additional support by Coleman Standifer. I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.