How the Reconciliation Bill Favors Tax Breaks Over Family Policies

Happy Friday! More than 350 years after French diplomat Jean Nicot first introduced tobacco to France, the country is taking its strongest stance against smoking since a 2007 indoor ban: Effective July 1, France will prohibit smoking outdoors in areas where children may be present, including beaches, parks, public gardens, and sports venues. However, puffing on Gauloises will still be permitted on café terraces, naturellement. 

Quick Hits: Today’s Top Stories

• A federal appeals court on Thursday temporarily paused a ruling from the U.S. Court of International Trade issued the day before that blocked most of the tariffs issued by President Donald Trump. The panel of judges ruled on Wednesday that the federal law under which Trump justified his sweeping tariffs, the 1977 International Emergency Economic Powers Act (IEEPA), does not permit the president to “impose unlimited tariffs on goods from nearly every country.” The White House appealed the decision and, on Thursday, a federal appeals court temporarily stayed the ruling, allowing the tariffs to take effect until the broader merits of the case are heard. In response to the ruling, White House trade adviser Peter Navarro said, “Even if we lose, we will do it another way.”
• Meanwhile, in a separate court case, U.S. District Judge Rudolph Contreras on Thursday ruled that IEEPA “does not authorize” Trump to issue his full tariff agenda. Contreras ordered that, beginning in two weeks, the government cannot charge Trump’s tariffs enacted through IEEPA to two plaintiff companies: Learning Resources Inc., and hand2mind Inc., companies that manufacture educational resources and classroom supplies. The 14-day pause, Contreras wrote, was to allow the parties time to pursue options for appeal. 
• U.S. District Judge Allison Burroughs again on Thursday temporarily halted the Trump administration’s plans to block Harvard University from enrolling international students, extending the temporary restraining order she issued last Friday. Secretary of Homeland Security Kristi Noem last week notified Harvard that she would revoke the school’s certificate permitting the enrollment of foreign students at the university, citing Harvard’s refusal to immediately provide records of international students—which included information on potential “misconduct and other offenses”—that the administration had requested. While a separate notice the government sent Harvard on Wednesday gave the university 30 days to comply, Burroughs nonetheless extended the temporary suspension. In response to the ruling, White House press secretary Karoline Leavitt said, “If these judges want to be secretary of state or the president, they can run for office themselves.” 
• The Supreme Court ruled 8-0 that an independent federal agency, the Surface Transportation Board, had sufficiently taken into account the environmental impacts posed by an 88-mile railway construction proposal in Utah, reversing an August 2023 federal appeals court ruling. While that appeals court ruled that the board had failed to consider that railway construction would likely increase oil production upstream and downstream from the railroad, Justice Brett Kavanaugh wrote in the majority opinion that those concerns were “separate in time or place from the construction and operation of the railroad line.” Justice Sonia Sotomayor, in a narrower concurring opinion joined by Justices Elena Kagan and Ketanji Brown Jackson, wrote that the board had no obligation to consider the potential of increased oil production. Justice Neil Gorsuch recused himself from the case. 
• Chinese officials on Thursday criticized the Trump administration’s plan to “aggressively revoke” visas for Chinese students enrolled at U.S. colleges and universities, with China’s Ministry of Foreign Affairs spokesman Lin Jian castigating the move as “fully unjustified.” Secretary of State Marco Rubio announced a day earlier that the State Department, working with the Homeland Security Department, would particularly target students with connections to the Chinese Communist Party or those “studying in critical fields.” Rubio added it would revamp visa criteria for applications from China and Hong Kong to “enhance scrutiny.”
• Moderna, the pharmaceutical company, announced Thursday that the Department of Health and Human Services canceled a contract to develop vaccines to protect humans against influenza viruses, including the H5N1 avian influenza (bird flu).  Moderna CEO Stéphane Bancel said in a statement that the company will seek “alternative paths” to complete the vaccine development program. The Biden administration had awarded Moderna a $176 million grant in July 2024 and followed up with a $590 million grant in mid-January.
• U.S. District Judge Indira Talwani ruled on Wednesday that the Trump administration must resume processing applications for migrants temporarily residing in the U.S. legally under federal “parole” programs. Those programs, created by former President Joe Biden, granted temporary two-year legal status on a “case-by-case basis for urgent humanitarian reasons or significant public benefit” to migrants from countries including Afghanistan, Cuba, Haiti, Nicaragua, Ukraine, and Venezuela. The Trump administration had paused application processing in February, but Talwani—explaining in her opinion that a court examining the merits of the case would likely find the White House’s decision to be “arbitrary and capricious”—issued a preliminary injunction temporarily reversing the administration’s pause. 
• President Donald Trump issued a total of 17 official pardons and eight commutations on Wednesday and Thursday, including to Lawrence Duran, who was serving a 50-year sentence for attempting to defraud Medicare of $205 million; former GOP Reps. Michael Grimm and John Rowland, convicted on charges including tax fraud and conspiracy to defraud the U.S., respectively; and reality television stars Todd and Julie Chrisley, who were convicted on charges including bank fraud and tax evasion. Trump also commuted several life sentences for Larry Hoover, a Chicago gang co-founder, though he will remain in prison to serve a 200-year state-issued sentence for the murder of a 19-year-old drug dealer in 1973. 
• A landslide destroyed 90 percent of the Swiss village Blatten on Wednesday, triggered by the partial collapse of a nearby glacier. One man is currently missing, though the village’s 300 residents had been evacuated last month as the glacier first showed signs of collapse. Local officials also said glacier debris has blocked the bed of a nearby river, posing potential “risk that the situation could get worse.”

No Taxes on Tips Trumps a Baby Bonus 

As a candidate, Donald Trump had made overtures to both a new-right contingent that sought government support to incentivize family formation and a working-class cohort eager for tax breaks. While the interests of these two groups sometimes overlap, their central policy priorities usually clash. As the One Big Beautiful Bill Act worked its way through the House of Representatives, both groups waited to see which policies would win out. 

The former group hoped that the bill would include direct financial support for families, rather than more traditional Republican measures such as tax cuts or tax credits. While proponents of family policy counted some wins in the sprawling legislation that passed the House on May 22, it did not go as far as they had hoped.

“It’s closer to a hybrid of traditional Republican approaches to some of this stuff with a dose of some, sort of, characteristic Trumpy populist stuff,” Patrick T. Brown, a fellow at the Ethics and Public Policy Center who studies family policy, told TMD.

Early in the campaign, Trump flirted with the idea of a baby bonus, which would give a direct payment to parents upon the birth of a new child. Last month, the president said a one-time payment of $5,000 for a new baby “sounds like a good idea to me.” But Trump gave more priority during the campaign to proposals geared toward working-class voters in swing states, such as removing taxes from tips, overtime, and Social Security. “To those hotel workers and people who get tips, you are going to be very happy, because when I get to office we are going to not charge taxes on tips, people making tips. … We’re going to do that right away, first thing in office,” he said at the Nevada rally in June where he announced the tax-free tips policy.

The stakes were high for each side. The reconciliation bill represents much of Trump’s agenda, and just how much signature legislation the president will attempt to push through the 119th Congress is unclear given his reliance on executive power thus far.

Ultimately, the populist priorities won out, with tax deductions for tips and overtime, and a write-off for senior citizens—meant to fulfill Trump’s pledge of no tax on Social Security—being included. 

Baby bonuses, however, were not. While one part of the bill has been heralded as a type of baby bonus, it’s not the same thing. Republicans included a provision that would create what were originally called Money Accounts for Growth and Advancement, or MAGA accounts, for children born between the the beginning of 2025 and the beginning of 2029. Renamed “Trump Accounts” in the version the House passed, they would provide $1,000 to parents who could then invest the money in the stock market and further contribute up to $5,000 a year. Their child could use the value the fund accrued to pay for college, buy a home, or start a business upon turning 18. A true baby bonus is meant to provide immediate relief to parents to help them deal with the initial expenses that come with an infant. The House bill would delay that financial assistance for nearly two decades.

“Giving somebody a little bit of a nest egg and locking it up until they turn 18 doesn’t actually do anything to help parents who are trying to put food on the table that day or that week or that month,” Brown said.

He added that giving families even $1,000 immediately would “make a big difference” in helping them deal with the cost of a new birth. Instead, the Trump accounts are “a little bit of a flashy kind of way of trying to show that they’re concerned about parents and family affordability.”

But some back-of-the-envelope math shows how the House bill prioritizes more populist proposals over family policy. The Committee for a Responsible Federal Budget projects that eliminating taxes on tips would cost about $12 billion annually over 10 years. A $5,000 baby bonus for each of the over 3.6 million babies born in 2024 would have cost $18.1 billion—a good bit more than the current taxless tip proposal. But lower the baby bonus to $4,000 per infant and you get a more comparable sum of $14.5 billion. A $3,000 baby bonus would cost $10.8 billion.

Pro-family advocates are likely to get some wins in the bill, notably an increase in the child tax credit (CTC) to $2,500. That is not exactly an innovation that signals a change in conservatives’ thinking on social policy, however. Republicans introduced a $500 CTC in 1997 before doubling it to $1,000 in 2001. The 2017 Tax Cuts and Jobs Act further raised it to $2,000. (Democrats increased it to $3,600 in President Joe Biden’s 2021 American Rescue Plan Act, but only for one year.) Making the CTC $2,500 just helps keep up with inflation since the first Trump administration.

Beyond the CTC, there are a few other items that make social conservatives happy. The bill would prohibit Medicaid payments to clinics that perform abortions (outside of the cases of rape, incest, and threats to the life of the mother), effectively defunding Planned Parenthood, something that Republicans have tried to do for years. There are also other provisions, such as an expanded tax deduction for businesses that give their employees child care benefits, as well as a tax credit for people who donate to educational scholarships.

But family policy advocates also have a complaint about the bill’s failure to correct a marriage penalty that exists in the tax code. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples, doubled to avoid a person paying more taxes once he or she marries. However, there is also a standard deduction for a head of household. Single parents with dependents often take advantage of this tax break, which sits at $22,500. An unmarried couple filing individual returns would have deductions totalling $37,500 but that would drop to $30,000 if they wed.

“You could imagine situations where a single parent marries their partner if they’ve been unmarried, and what ends up happening is the size of their total standard deduction, if they’re unmarried, is larger than if they are married. What this does is lead to a higher tax burden if you end up getting married,” Josh McCabe, director of social policy at the Niskanen Center, told TMD. He added that one way to eliminate this marriage penalty could be to increase the standard deduction for single and married filers but not for heads of household. Instead, the bill would increase the deductions across the board until 2028—an increase of $1,000 for single people, $1,500 for heads of household, and $2,000 for married couples.

The Senate will have its say in the final version of the legislation, and it remains unclear whether it will eliminate the marriage penalty or include further family financial support. But senators would need to balance those provisions with the populist priorities that Trump campaigned on.

Whatever passes the Senate must also get through House Speaker Mike Johnson’s unruly majority. He is encouraging the upper body to make minimal changes, but Trump has given senators the green light to alter it.

“I want the Senate and the senators to make the changes they want,” Trump said Sunday. “It will go back to the House and we’ll see if we can get them. In some cases, those changes may be something I’d agree with, to be honest. … I think they are going to have changes. Some will be minor, some will be fairly significant.”

Today’s Must-Read

Toeing the Company Line

Worth Your Time

• Writing in Foreign Affairs, Victor Cha observes that “the Trump administration has paid little attention to North Korea even as the rogue dictatorship has grown stronger and more provocative. Just this year, North Korean leader Kim Jong Un has conducted nine missile tests, stolen $1.5 billion in cryptocurrency, sent more troops to support Russia’s brutal war of aggression in Ukraine, and unveiled his military’s largest modern missile destroyer, a 5,000-ton warship equipped with state-of-the-art armament.” These actions should not be ignored, Cha argues. “Leaving North Korea to its own devices will not end well. Left unchallenged, the country could perform more nuclear tests; strengthen its ties with China, Iran, and Russia; and build more advanced weapons that could credibly threaten the U.S. homeland. The Trump administration needs to restart dialogue with North Korea to arrest these developments,” he writes. “The international community’s failure to stop North Korea’s arms proliferation since the last attempt at an agreement collapsed in 2009 has allowed Pyongyang to acquire a modern arsenal of this size and scope. Kim has more cards and more leverage than ever before.”
• In the Washington Post, Andrew Jeong and Brian Murphy reflect on Harrison Ruffin Tyler, 10th President John Tyler’s grandson who died earlier this week at age 94. “‘My grandfather was born in 1790,’ Mr. Tyler said in a 2012 CBS interview. ‘My father was born in 1853. And I was born in 1928.’” However, being the grandson of a former president didn’t spare him from hard times. “During the Great Depression, Harrison’s family struggled. He woke up early to chop wood for fires to heat the home, and clothing was made from burlap sacks.” Later in life, Tyler worked to preserve American history. “In 1996, Mr. Tyler purchased Fort Pocahontas, less than two miles from Sherwood Forest, and it later served as the grounds for Civil War reenactments. The fort was the site of the first major clash between Black Union troops and those serving under Confederate Gen. Robert E. Lee in 1864, according to the fort’s website. The site ‘remained virtually untouched’ for more than a century after it was abandoned in 1865, until Mr. Tyler purchased and restored it.”

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Seven of the cited sources don’t appear to exist at all.

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In the Zeitgeist

Benny Goodman, the clarinetist who became so popular in the big band music genre that he was dubbed the “King of Swing,” would have turned 116 years old today. 

Goodman’s rendition of “Sing, Sing, Sing (With A Sing),” written by fellow swing legend Louis Prima, in 1982 earned an induction into the Grammy Hall of Fame. The instrumental lineup for that recording is stacked—Goodman is joined by Harry James on the trumpet and Gene Krupa on drums, both of whom would later become household names themselves. 

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