Senate Begins Putting Its Stamp on Giant Trump Tax, Debt Limit Bill

Political

Economic

Summary:

The House Republicans’ top tax writer, Representative Jason Smith, on Friday said that senators must leave most of the bill untouched in order to ensure it can pass the House in the end.

Significant changes are in store for President Donald Trump’s signature $3.9 trillion tax-cut bill as the Senate begins closed-door talks this week on legislation that squeaked through the House by a single vote.

Senate Republican leaders intend to make permanent many of the temporary tax cuts in the House bill, a move that would increase the bill’s more than $2.5 trillion deficit impact. But doing so risks alienating fiscal hawks already at war with party moderates over the bill’s safety-net cuts.

It amounts to a game of chess further complicated by the top Senate rules-keeper, who will decide whether some key provisions violate the chamber’s strict rules. Jettisoning those provisions — which include gun silencer regulations and artificial intelligence policy — could sink the bill in the House.

The House Republicans’ top tax writer, Representative Jason Smith, on Friday said that senators must leave most of the bill untouched in order to ensure it can pass the House in the end.

“I would encourage my counterparts, don’t be too drastic, be very balanced,” he said.

Trump worked the phone as Republican senators returned to work in Washington Monday after a one-week holiday break. Josh Hawley of Missouri said in a mid-afternoon social media post that he “just had a great talk” with the president on the legislation and they agreed no Medicaid benefits would be cut.

Hawley, who has been a vocal supporter of preserving Medicaid benefits, didn’t specify if he believes the House bill — projected to cut health care coverage coverage for about 7.7 million people by changing eligibility requirements — reduces benefits.

Trump also spoke with Senator Ron Johnson, a GOP holdout who has demanded $5.5 trillion to $6.5 trillion in cuts over the next decade, and pressed him to support the bill, the Wisconsin Republican told reporters.

Johnson said he’d sit down with Trump’s economic team to review the numbers and would be open to something similar to the House bill with assurances of legislation later that makes deeper cuts.

“I want to work with the president,” Johnson said.

Trump also met Monday with Senate Majority Leader John Thune.

GOP wrangling imperils Republicans’ goal of sending the “Big, Beautiful Bill” to Trump’s desk by July 4. But the real deadline is sometime in August or September, when the Treasury Department estimates the US will run out of borrowing authority.

The House bill would raise the government’s legal debt ceiling by $4 trillion, which the Senate wants to increase to $5 trillion in order to push off the next fiscal cliff until after the 2026 congressional elections.

That’s just one of the major changes the Senate will weigh in the coming weeks. Here are others:

Permanent Business Breaks

Senate Finance Chairman Mike Crapo’s top priority is making permanent the temporary business tax cuts that the House bill sunsets after 2029. These are the research and development tax deduction, the ability to use depreciation and amortization (EBITDA) as the basis for interest expensing, and 100% bonus depreciation of certain property, including most machinery and factories.

Senate Republicans plan to use a budget gimmick that counts the extension of the individual provisions in the 2017 Trump tax bill as having no cost. That gives them room to make the additional business tax cuts and possibly extend some of the new four-year individual cuts in the House bill like those on tips and overtime.

Deficit hawks could demand new offsets, however, either in the form of spending cuts or ending tax breaks like one on carried interest used by private equity.

SALT

The House expanded the state and local tax deduction limit from $10,000 to $40,000 to get blue-state Republicans behind the bill. But SALT isn’t an issue in the Senate, where high-tax states like California, New York and New Jersey are represented by Democrats.

“I can’t think of any Senate Republicans who think more than $10,000 is needed and I can think of several who think the number should be zero,” said Rohit Kumar, a former top Senate staffer now with PWC.

That includes deficit hawks like Louisiana’s John Kennedy, who has balked at the House’s SALT boost.

Senators could propose keeping the current $10,000 SALT cap as a low-ball counter, forcing the House to settle from something in the ballpark of a $30,000 cap, Kumar said.

The Senate could also change new limits on the abilities of passthrough service businesses to claim SALT deductions.

Green Energy

Moderate Republicans in the Senate are objecting to provisions in the House bill that gut tax credits for solar, wind, battery makers and several other clean energy sectors.

Senator Lisa Murkowski of Alaska said she’s seeking to soften aggressive phaseouts of tax credits for clean electricity production and nuclear power. She has the backing of at least three other Republicans, giving her enough leverage to make demands in a chamber where opposition from four GOP senators would kill the bill.

Their demands will run headlong into ultraconservatives, who already think the House bill doesn’t get rid of tax benefits for clean energy fast enough.

Medicaid, Food Stamps

Senators Rand Paul of Kentucky, Rick Scott of Florida, Mike Lee of Utah and Johnson of Wisconsin say they’re willing to sink the bill if it doesn’t cut more spending.

“I think we have enough to stop the process until the president gets serious about reductions,” Johnson said recently on CNN.

They haven’t made specific demands yet, but they could start off where the House Freedom Caucus fell short — cutting the federal matching payment for Medicaid for those enrolled under Obamacare and further limiting federal reimbursement for Medicaid provider taxes charged by states.

Conservatives’ demands are in stark contrast to Republican senators already uncomfortable with the new Medicaid co-pays and state cost-sharing for Medicaid and food stamps in the House bill. Senators Susan Collins of Maine, Jim Justice and Shelley Moore Capito of West Virginia and Hawley join Murkowski in this camp.

Bolstering their case is Trump, who told the Freedom Caucus to stop “grandstanding” on more Medicaid cuts.

Regulatory Matters

There’s an extensive list of regulatory matters in the House bill that could be struck if they are found to break Senate rules for averting a filibuster and passing the legislation by a simple majority.

Provisions likely to be challenged for not being primarily budgetary in nature include a repeal of gun silencer regulations, preemption of state artificial intelligence regulations, staffing regulations for nursing homes and abolishing the Direct File program at the Internal Revenue Service.

The House bill’s provisions limiting the ability of federal judges to hold administration officials in contempt, ending funding for Planned Parenthood, requiring congressional review of new regulations and easing permitting of fossil fuel projects are also vulnerable.

The biggest Senate rules fight will be over using the “current policy” budget gimmick to lower the cost of the bill. Senate Republican leaders could explore bypassing rules keeper Elizabeth MacDonough if she finds the accounting move breaks the rules.

Battles over these provisions could take weeks.

“I think it would be very difficult to get it out of the Senate quickly,” said Bill Hoagland, a former top Republican Senate budget staffer now with the Bipartisan Policy Center.

Spectrum Sales

A major auction of the government radio spectrum that would generate an estimated $88 billion in revenue is another unresolved fight.

Ted Cruz of Texas, the Senate Commerce chair, backs the spectrum sale but Senator Mike Rounds of South Dakota has vowed to protect the Defense Department, which has warned auctioning off its spectrum would degrade its capabilities and cost hundreds of billions for retrofits.

The proposal would free up key spectrum for wireless broadband giants like Verizon and Elon Musk’s Starlink.

Estate Tax

Thune and 46 other Republican senators back a total repeal of the estate tax, which would likely cost several hundred billion dollars over a decade, benefiting the heirs of the richest 0.1%. That could make it too pricey for the Senate to include. The House bill permanently increases the estate tax exemption to $15 million for individuals and $30 million for married couples, with future increases tied to inflation.

Source: Bloomberg

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Cryptocurrency

Tether and Bitfinex transferred 21,000 Bitcoins (BTC) to designated wallets on June 2, completing their agreed contributions to Twenty One Capital.

Tether CEO Paolo Ardoino wrote that Bitfinex sent 7,000 BTC, while Tether Group moved 14,000 BTC.

Furthermore, Tether moved 4,812.22 BTC as prefunding for Twenty One’s convertible-equity raise.

The holdings matched a May 13 8-K filing that disclosed Twenty One bought the coins at an average price of $95,319.83 each in connection with its business-combination agreement with Cantor Equity Partners.

Venture structure and broader deal

Reports on April 23 indicated that Cantor Fitzgerald planned to launch a $3 billion digital asset platform called Twenty One Capital, with a Bitcoin seeding from its founding partners.

An April 24 announcement confirmed Twenty One Capital as a Bitcoin vehicle for capital markets to access BTC. The firm’s lead is Jack Mallers, CEO of Strike, who will guide both companies.

The deal’s framework consisted of Tether supplying roughly $1.5 billion in BTC, SoftBank adding $900 million, and Bitfinex providing $600 million.

The venture also intends to raise an additional $550 million, divided into $350 million through convertible senior secured notes and $200 million in private equity, to finance further Bitcoin purchases. Copper and Anchorage Digital will handle custody and collateral.

June 2 transfers move the parties closer to closing the private-investment-in-public-equity financing tied to the Cantor special purpose acquisition company (SPAC) merger.

The private investment in public equity (PIPE) allocates $385 million in convertible notes and $200 million in common equity, with an option for an extra $100 million in notes within 30 days of the initial deal.

Net proceeds target further Bitcoin acquisitions and operating capital for Twenty One, which aims to offer bitcoin-backed financing products to institutional clients.

SoftBank has yet to publish wallet details for its planned contribution, and Twenty One still must finalize regulatory approvals for the business-combination transaction.

Source: Cryptoslate

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Economic

China–U.S. Trade War

President Donald Trump and Chinese leader Xi Jinping will likely speak this week, White House press secretary Karoline Leavitt said on Monday, days after Trump accused China of violating an agreement to roll back tariffs and trade restrictions.

Leavitt is the third top Trump aide to forecast an imminent call between the two leaders to iron out differences on last month's tariff agreement in Geneva, among larger trade issues.

It was not immediately clear when the two leaders will speak.

U.S. Treasury Secretary Scott Bessent told CBS' "Face the Nation" on Sunday that Trump and Xi would speak "very soon" to iron out trade issues including a dispute over critical minerals and China's restrictions on exports of certain minerals.

Trump said on Friday he was sure that he would speak to Xi. China said in April that the two leaders had not had a conversation recently.

On Saturday, the U.S. Trade Representative's office announced it would continue to exclude certain solar manufacturing equipment and other products from existing tariffs on Chinese goods until August 31, opens new tab, offering a three-month extension while talks with Beijing continue.

Bessent led negotiations with China in Geneva last month that resulted in a temporary truce in the trade war between the world's two biggest economies, but progress since then has been slow, the U.S. Treasury chief told Fox News last week.

The U.S.-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks. But it did nothing to address the underlying reasons for Trump's tariffs on Chinese goods, mainly longstanding U.S. complaints about China's state-dominated, export-driven economic model, leaving those issues for future talks.

A U.S. trade court on Wednesday ruled that Trump overstepped his authority in imposing the bulk of his tariffs on imports from China and other countries under an emergency powers act. But less than 24 hours later, a federal appeals court reinstated the tariffs, saying it was pausing the trade court ruling to consider the government's appeal. The appeals court ordered the plaintiffs to respond by June 5 and the administration to respond by June 9.

Source: Reuters

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Bond

Forex

Treasuries began June on the back foot with 30-year bond yields testing the 5% level as concerns over President Donald Trump’s tariff policies resurfaced at the start of a data-heavy week for assessing the health of the world’s largest economy.

Benchmark yields were trading four to seven basis points higher across the curve and yields resumed climbing after a brief pullback in response to weaker-than-expected US ISM manufacturing data for May that was accompanied by higher prices paid. The ISM remains in contraction territory below 50.

Following their first monthly decline of 2025 in May as measured by a Bloomberg index, US Treasuries — particularly longer-dated maturities — continue to face pressure amid persistent concerns over the nation’s fiscal outlook.

Longer-dated bonds led Monday’s declines, driving yields on 10-year debt up more than 6 basis points to a session high near 4.47%, while the 30-year bond briefly poked above 5%. The spread between five- and 30-year yields climbed to within a whisker of 100 basis points, a level it last closed above in 2021. A gauge of the dollar approached its lowest level since 2023.

“There is a general view that the curve should steepen” ahead of US employment data due Friday that is followed by sales of 10- and 30-year Treasuries next week, said Tom di Galoma, managing director at Mischler Financial Group.

Even with the long-end back near 5% and around former cycle peaks of 2007, large bond investors generally remain underweight and favor owning shorter-dated areas of the market around the five-year sector.

“Our strongest conviction has been staying underweight long-term US Treasuries,” BlackRock Investment Institute said in its latest weekly note. Amid persistent deficits and sticky inflation, the asset manager is watching to see whether Congress passes a budget bill that could push the US deficit higher, and “impact foreign investors and drive term premium even higher.”

The weakness in longer-dated bonds saw the 20-year yield briefly drop below that of the 30-year, the most in almost four years. Since Treasury revived 20-year bond sales, nearly five years ago, the benchmark has been unpopular among investors and traded at a discount with its yield above the 30-year.

“We can certainly see why the long end of safe haven curves are unloved,” said Rabobank strategists including Richard McGuire, adding the US policy outlook is too cloudy to attract buyers for long-dated Treasuries.

That reflects the risk of further trade salvos from the US president, after Trump announced he would be increasing tariffs on steel and aluminum to 50% from 25% to help protect American workers. He also said China had violated its trade agreement with the US.

What Bloomberg strategists say...

“A buyers’ strike in bonds coupled with Monday’s inflation outlook means investors’ steepeners, a heavily subscribed trade since mid-April, has staying power.” — Alyce Andres, MLIV Rates Strategist, Chicago

A slate of labor market reports due this week could play a key role in shaping the next moves in Treasury yields and the Federal Reserve’s interest rate path. Traders now anticipate two quarter-point rate cuts in 2025, down from expectations of three earlier in May.

One of the Fed officials speaking on Monday, US Chair Jerome Powell didn’t comment on the outlook for interest rates. Elsewhere, Chicago Fed President Austan Goolsbee said the central bank can proceed with interest-rate cuts if uncertainty around trade policy is resolved.

Speaking earlier, Dallas Fed President Lorie Logan said the US central bank can remain patient as it assesses risks to both inflation and unemployment.

Source: Bloomberg

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Economic

Political

The European Commission said on Monday it would make a strong case this week for the United States to reduce or eliminate tariffs even after Donald Trump said he would double import duties on steel and aluminium to 50%.

European Trade Commissioner Maros Sefcovic will meet U.S. Trade Representative Jamieson Greer at an OECD gathering in Paris on Wednesday, while Commission technical teams will be in discussions with counterparts in Washington this week.

White House press secretary Karoline Leavitt told reporters that the EU was "negotiating in good faith" with U.S. officials and the Trump administration remained "hopeful and optimistic" that a deal could be struck with Brussels.

The Commission, which oversees trade policy for the 27-nation European Union, said it was prioritising negotiations to resolve the conflict.

"We don't want to go down the route of tariffs. Rather than have them increase, we want them to decrease and where possible eliminate them," a Commission spokesperson told a press conference on Monday.

"That remains the case, that remains our priority. We will be making that case strongly both at technical level and at political level this week."

The EU has said it strongly regrets the planned doubling of steel tariffs.

The decision "adds further economic uncertainty on both sides of the Atlantic," Olof Gill, the European Commission's spokesperson for trade, said on X, adding that both sides had agreed to accelerate their negotiations.

EU officials had no immediate comment on news that the Trump administration was asking trading partners to present their best offers on trade by Wednesday, news first reported by Reuters.

The EU currently faces 25% tariffs on steel and cars and for Trump and "reciprocal" tariffs on most EU goods, which were provisionally set at 20% for the EU but is being held at 10% during a 90-day pause until July.

The EU imposed, but immediately suspended, a first set of counter tariffs on 21 billion euros ($24 billion) of annual U.S. imports package in response to U.S. metals duties.

It is also weighing a response to the U.S. car and broader tariffs that would hit up to 95 billion euros of U.S. imports.

The Commission said that, in the absence of a mutually acceptable solution, these countermeasures would take effect automatically on July 14, or earlier if circumstances require.

Source: Reuters

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Cryptocurrency

JPMorgan Chase reported an improvement in Bitcoin mining profitability in May, with 13 tracked companies seeing significant financial gains.

The increase in market value underscores broader implications for the cryptocurrency sector, potentially affecting investment and operational strategies.

May Sees 19% Growth in Miner Market Value

In May 2025, JPMorgan Chase analysts observed a rise in Bitcoin mining profitability. The market value of 13 U.S.-listed mining companies increased by about 19% from April, accompanied by a 36% rise in average daily gross profit. JPMorgan's report highlighted Bitdeer's market value rise of 43%, while Greenidge encountered a 5% decline. Bitcoin mining spaces noted a noteworthy change as network hashrate grew by 2% to an average of 885 EH/s in early May. Analysts highlighted a 13% rise in "hashprice," indicating improved miner revenue.

The mining profitability report drew no direct executive comments from JPMorgan leadership, including CEO Jamie Dimon. Reginald Smith and Charles Pearce provided the analysis, noting a 13% increase in daily profitability during the first half of May. Market dynamics reflected these changes, though major statements from government or leading industry figures remain absent.

"We estimate miners earned approximately $100 daily block revenue per/s during the first two weeks of the month, marking a 13% increase from the previous month and a 3% rise year-over-year." — Reginald Smith, Analyst, JPMorgan Chase

Bitcoin Price and Miner Revenue Trends in Focus

Did you know? Bitcoin mining profitability historically climbs with price increases or reduced network difficulty, often aligning with BTC's spot price trends.

Bitcoin's current price stands at $104,433.72, with a market cap of $2.08 trillion and market dominance of 63.48%, according to CoinMarketCap. Over 60 days, Bitcoin's price increased by 27.46%, despite a 0.55% dip in the past 24 hours. Trading volume reached $43.73 billion, reflecting a 20.96% change.

The Coincu research team indicates potential economic and technological advancements as profitability improves. Increases in miner revenue may enhance network resilience, attracting further investment and innovation. No significant regulatory or technological shifts directly link to this profitability surge.

Source: Coincu

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Political

Commodity

Russia told Ukraine at peace talks on Monday that it would only agree to end the war if Kyiv gives up big new chunks of territory and accepts limits on the size of its army, according to a memorandum reported by Russian media.

The terms, formally presented at negotiations in Istanbul, highlighted Moscow's refusal to compromise on its longstanding war goals despite calls by U.S. President Donald Trump to end the "bloodbath" in Ukraine.

Ukraine has repeatedly rejected the Russian conditions as tantamount to surrender.

Delegations from the warring sides met for barely an hour, for only the second such round of negotiations since March 2022. They agreed to exchange more prisoners of war - focusing on the youngest and most severely wounded - and return the bodies of 12,000 dead soldiers.

Turkish President Tayyip Erdogan described it as a great meeting and said he hoped to bring together Russia's Vladimir Putin and Ukraine's Volodymyr Zelenskiy for a meeting in Turkey with Trump.

But there was no breakthrough on a proposed ceasefire that Ukraine, its European allies and Washington have all urged Russia to accept.

Moscow says it seeks a long-term settlement, not a pause in the war; Kyiv says Putin is not interested in peace. Trump has said the United States is ready to walk away from its mediation efforts unless the two sides demonstrate progress towards a deal.

Ukrainian Defence Minister Rustem Umerov, who headed Kyiv's delegation, said Kyiv - which has drawn up its own peace roadmap - would review the Russian document, on which he offered no immediate comment.

Ukraine has proposed holding more talks before the end of June, but believes only a meeting between Zelenskiy and Putin can resolve the many issues of contention, Umerov said.

Zelenskiy said Ukraine presented a list of 400 children it says have been abducted to Russia, but that the Russian delegation agreed to work on returning only 10 of them. Russia says the children were moved from war zones to protect them.

RUSSIAN DEMANDS

The Russian memorandum, which was published by the Interfax news agency, said a settlement of the war would require international recognition of Crimea - a peninsula annexed by Russia in 2014 - and four other regions of Ukraine that Moscow has claimed as its own territory. Ukraine would have to withdraw its forces from all of them.

It restated Moscow's demands that Ukraine become a neutral country - ruling out membership of NATO - and that it protect the rights of Russian speakers, make Russian an official language and enact a legal ban on glorification of Nazism. Ukraine rejects the Nazi charge as absurd and denies discriminating against Russian speakers.

Russia also formalised its terms for any ceasefire en route to a peace settlement, presenting two options that both appeared to be non-starters for Ukraine.

Option one, according to the text, was for Ukraine to start a full military withdrawal from the Luhansk, Donetsk, Zaporizhzhia and Kherson regions. Of those, Russia fully controls the first but holds only about 70% of the rest.

Option two was a package that would require Ukraine to cease military redeployments and accept a halt to foreign provision of military aid, satellite communications and intelligence. Kyiv would also have to lift martial law and hold presidential and parliamentary elections within 100 days.

Russian delegation head Vladimir Medinsky said Moscow had also suggested a "specific ceasefire of two to three days in certain sections of the front" so that the bodies of dead soldiers could be collected.

According to a proposed roadmap drawn up by Ukraine, a copy of which was seen by Reuters, Kyiv wants no restrictions on its military strength after any peace deal, no international recognition of Russian sovereignty over parts of Ukraine taken by Moscow's forces, and reparations.

UKRAINE TARGETS RUSSIAN BOMBER FLEET

The conflict has been heating up, with Russia launching its biggest drone attacks of the war and advancing on the battlefield in May at its fastest rate in six months.

On Sunday, Ukraine said it launched 117 drones in an operation codenamed "Spider's Web" to attack Russian nuclear-capable long-range bomber planes at airfields in Siberia and the far north of the country.

Satellite imagery suggested the attacks had caused substantial damage, although the two sides gave conflicting accounts of the extent of it.

Western military analysts described the strikes, thousands of miles from the front lines, as one of the most audacious Ukrainian operations of the war.

Russia's strategic bomber fleet forms part of the "triad" of forces - along with missiles launched from the ground or from submarines - that make up the country's nuclear arsenal, the biggest in the world. Faced with repeated warnings from Putin of Russia's nuclear might, the U.S. and its allies have been wary throughout the Ukraine conflict of the risk that it could spiral into World War Three.

A current U.S. administration official said Trump and the White House were not notified before the attack. A former administration official said Ukraine, for operational security reasons, regularly does not disclose to Washington its plans for such actions.

A UK government official said the British government also was not told ahead of time.

Zelenskiy said the operation, which involved drones concealed inside wooden sheds, had helped to restore partners' confidence that Ukraine is able to continue waging the war.

"Ukraine says that we are not going to surrender and are not going to give in to any ultimatums," he told an online news briefing.

"But we do not want to fight, we do not want to demonstrate our strength - we demonstrate it because the enemy does not want to stop."