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This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, White House correspondent Gregory Korte looks at the Trump administration’s latest budget maneuvers. Sign up here and follow us at @bpolitics. Email our editors here.

Rescission Time

A middle-of-the-night Senate vote to claw back $9 billion in already approved spending Thursday puts Congress on track to use the old-school budget maneuver known as “rescissions” for the first time in decades.

The win for President Donald Trump was achieved with Republican votes only – and that’s a good thing, according to White House Budget Director Russ Vought. A “more partisan” appropriations process can deliver better results, he told reporters.

Vought talks to reporters outside the White House on Thursday.  Photographer: Jim Lo Scalzo/EPA

That may sound like heresy in Washington, but Vought argues that no one ever went into the voting booth with budget compromise as their top issue. More partisanship, he said, is the only way to break the cycle of omnibus bills, continuing resolutions and last-minute shutdown threats.

To do that, Vought said the president needs a stronger hand. One tool is something Vought calls a “pocket rescission,” which he said would allow Trump to cancel certain funds simply by proposing to cut them and then waiting out the clock at the end of the fiscal year. Trump has also vowed to challenge the bedrock law of modern budgeting — the Congressional Budget and Impoundment Control Act of 1974 — by arguing that he doesn’t have to spend money just because Congress tells him to.

Congress holds the power of the purse, but that power “is a ceiling, it is not a floor,” Vought said. “It is not the notion that you have to spend every last dollar.”

A Senate standoff over Vought’s plans raises the risk of a government shutdown as soon as Oct. 1 when current funding runs out.

Vought, a key architect of the Project 2025 manifesto to restore presidential powers lost in post-Watergate reforms, wouldn’t identify targets for a future rescission bill. But he said the White House was conducting “programmatic reviews” of Department of Education funding — often a precursor for holding back spending.

His hardball approach is already drawing pushback — and not just from Democrats. Senator Lisa Murkowski of Alaska, one of two Republicans to vote against the rescission package, said she took Vought’s comments as a personal challenge to strike bipartisan deals.

But Senator Chris Murphy, a Connecticut Democrat, said Vought’s strategy will make it harder to get Democratic votes. If the president can cancel funding at will, he said, budget agreements “aren’t worth the paper they are printed on.”

Don’t Miss

US retail sales rebounded in June in a broad advance, potentially tempering some concerns about a retrenchment in consumer spending.

Kevin Warsh, a candidate to be the next Federal Reserve chair, said the central bank’s independence is “essential” but criticized it for straying into policy areas where it lacks authority.

San Francisco Fed chief Mary Daly said the central bank shouldn’t wait too long before cutting interest rates. 

Trump’s tariffs haven’t yet bumped up US consumer prices the way many feared they would, but economists still expect a boost to inflation later this year.

Trump asked the Supreme Court to turn away a challenge to his tariffs, with his lawyers arguing that lower courts should be allowed to rule on the issue first. 

Trump is upending US export controls on tech, telling Nvidia Corp. it can resume some sales to China, and spurring talk that he’s seeking a grand bargain with Beijing.

White House doctors diagnosed Trump with chronic venous insufficiency but said the president is in “excellent health,” according to Press Secretary Karoline Leavitt.

“Plumbing poverty” is on the rise in some of the richest US cities, which are seeing an increase in the share of households without access to clean running water. 

Wind and solar projects on federal land face a new review process, under a Trump administration directive that could slow project approval. 

Watch & Listen

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Kailey Leinz and Tyler Kendall interviewed Representative Mike Flood, a Nebraska Republican, about the Trump administration’s approach to the Fed and the progress of crypto legislation.

On the program at 5 p.m., they speak with Joseph Lavorgna, counselor to Treasury Secretary Scott Bessent.

On the Odd Lots podcast, Bloomberg’s Tracy Alloway and Joe Weisenthal speak with Joel Wertheimer of Wertheimer Fleder LLP, a civil rights law firm, about the economics of being a lawyer and the impact of artificial intelligence on the profession. Listen on iHeart, Apple Podcasts and Spotify.

On the Trumponomics podcast, host Stephanie Flanders is joined by Bloomberg’s Christine Harper and Katanga Johnson to discuss Trump’s efforts to deregulate traditional finance and move crypto further into the mainstream.
Listen on Apple PodcastsSpotify or wherever you get your podcasts.

Chart of the Day

ICE removal flights are ramping up, according to data compiled by US Immigration and Customs Enforcement tracker Thomas Cartwright. ICE carried out a record 209 removal flights last month, the most since the tracking began in January 2020. That's up nearly 50% from a year ago. The surge follows limited increases earlier this year, and underscores the Trump administration’s desire to shift US migration patterns. It included a steep rise in deportations to Central America, while on the US end the most frequently used departure sites were Alexandria, Louisiana, and  Harlingen and El Paso in Texas. Cartwright’s tracker monitors departures from domestic ICE Air locations to international removal destinations. The agency itself doesn’t disclose the data. -- Alex Tanzi.

What’s Next

Housing starts and building permits for June will be published tomorrow.

The University of Michigan’s preliminary reading of consumer sentiment in July will also be out tomorrow.

Sales of existing homes during June will be reported July 23.

New home sales in June will be reported July 24.

Durable goods orders for June will be released July 25.

Trump’s latest round of tariff increases are due to take effect on Aug. 1.

Seen Elsewhere

Democratic Party leaders are testing a new social media strategy to counter Trump, which involves cursing more and using edgier insults, according to the Washington Post.

The megadrought that’s ravaged farms and fueled wildfires across the US Southwest may have decades to run, according to scientists who’ve studied another dry spell 6,000 years ago, the New York Times reports.

Iconic diamond firm De Beers is battling a surge in popularity of much cheaper lab-grown versions of the precious stone, which its CEO calls a “huge con,” according to the Wall Street Journal.

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