Washington: What to Watch Now is a regular column that analyzes only those political and regulatory issues that could potentially affect investors. For more, listen to the WashingtonWise podcast on Apple Podcasts.

Hurdles remain as the Senate prepares a revised version of the One Big Beautiful Bill Act. The Senate is continuing to work behind the scenes to develop its version of the massive tax and spending bill that passed the House of Representatives by a single vote on May 22nd. The Senate is going to make changes to the bill—it's just a question of how significant those changes will be. The more significant they are, the tougher it will be to pass the revised bill through the House when it goes back there. The Senate is eyeing the week of June 23rd for debate and a marathon series of votes on the bill.

But there are still a lot of issues to be resolved. The bill's overall impact on the deficit and national debt is a concern. Some senators think the spending cuts in the House-passed bill are not deep enough; others think the cuts are too deep. There are also struggles over the state and local tax (SALT) deduction; the repeal of green-energy tax incentives; cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps; business tax provisions; the no-taxes-on-tip-income provision, and more. The Senate Finance Committee, whose jurisdiction includes taxes and Medicaid, is expected to release its proposed revisions by the end of the week, which should provide a good sense of how things are going. We continue to expect the megabill to be adopted, though it could take beyond July 4th to get everything resolved.

The House is expected to vote this week on rescinding $9.4 billion in spending. Lawmakers will vote on a "rescissions package" that claws back $9.4 billion in spending that Congress has already allocated. The rarely used procedure was triggered by the White House, which is asking Congress to rescind $8.3 billion in foreign aid and $1.1 billion in funding for the Corporation for Public Broadcasting, which helps to fund National Public Radio and the Public Broadcasting Service. Under the rules, Congress has until July 18th to act on the request. The package cannot be amended or changed—each chamber simply gets an up-or-down vote on the whole package. If it does not pass, then the funds are not rescinded, and the president cannot make a second request in the future regarding those funds. It is not clear whether this package can pass both chambers, as there is some Republican grumbling about some of the funding that is being eliminated. The first test will be in the House this week.

Stablecoin bill to get Senate vote this week; House committee to consider crypto market structure legislation. The Senate will vote this week on legislation that would regulate stablecoins, which are cryptocurrencies pegged to the dollar. The bill would require stablecoins to be backed 1-to-1 with high-quality, low-risk assets like short-term Treasuries. Issuers would have to report monthly on their holdings. The bill is expected to get a strong bipartisan vote.

Meanwhile, the House Financial Services Committee will meet to consider new legislation that creates a regulatory framework for cryptocurrency. The Digital Asset Market Clarity Act was introduced in late May. It delineates the regulatory oversight responsibilities of the Securities and Exchange Commission and the Commodity Futures Trading Commission, establishes a registration regime for digital asset exchanges, brokers and dealers, and sets standards for digital asset custodians, among other things. It is a complicated piece of legislation whose introduction is likely to begin a lengthy debate over the specifics. The stablecoin bill is on a much faster track.