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The Latest: Rubio will testify before Congress for the first time since the start of the Iran war

Secretary of State Marco Rubio will face a litany of questions Tuesday about the Trump administration’s fragile or stalling diplomatic efforts around the world when he appears for back-to-back hearings on Capitol Hill for the first time since the Iran war began.

Senate Republicans will meet Tuesday to discuss next steps after the Justice Department said it would comply with a court order pausing the implementation of a $1.776 billion settlement fund designed to compensate President Donald Trump’s political allies.

Acting Attorney General Todd Blanche is also set to return to Capitol Hill on Tuesday for a hearing before the House Appropriations Committee. The hearing was scheduled for discussion of the Justice Department’s budget, but lawmakers will almost certainly focus their questioning on the settlement fund.

The Latest:

A Pentagon policy illegally banned transgender troops from military service, a divided panel of federal appeals court judges ruled on Monday in another legal setback for President Donald Trump’s sweeping agenda.

The majority opinion — by a three-judge panel from the U.S. Court of Appeals for the District of Columbia circuit — held that the Trump administration’s policy was designed to exclude people from the military based on their gender identity.

The ban remains in effect. The U.S. Supreme Court allowed the Pentagon to start enforcing it last year, as litigation continues to play out.

The panel’s new ruling would keep the military from kicking out current service members named in the lawsuit, but wouldn’t allow new transgender recruits to join. The judges put their decision on hold, though, to let the administration seek further review.

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For a state that’s home to Hollywood, there isn’t much star power in California’s gubernatorial race. It’s a somewhat different story in Los Angeles, where a reality television personality is running for mayor as the city prepares to host the Olympics.

More primaries are being held on Tuesday as well. Democrats are banking on a rare chance to regain ground in Iowa, a rural state that has repeatedly eluded them in recent years. Republicans, meanwhile, are grappling with a New Jersey congressman whose unexplained absence could put their already slim majority at risk.

▶ Read more about what to watch as voters in California, Iowa, Montana, New Jersey, New Mexico and South Dakota cast ballots

In another of a series of moves restricting media access at the Pentagon, the Defense Department has declared that its press office is now a classified space inaccessible to journalists.

On X, acting Pentagon press secretary Joel Valdez confirmed the move, saying there was “nothing controversial” about it and that it came because speechwriters, who use classified material, were now occupying the space.

“The Pentagon Press Office has been redesignated as a Sensitive Compartmented Information Facility due to speechwriters from the Office of the Secretary of War sharing the facility,” Valdez wrote.

“These speechwriters routinely handle classified material … as a result, journalists will no longer be permitted to enter the office space. There’s nothing controversial about that.”

The latest move, first reported by The Washington Post, took place against a backdrop of escalating tensions between the U.S. media and the second Trump administration, which has played out both in the public arena and at times in the courts.

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Senate Republicans will meet Tuesday to discuss next steps after the Justice Department said it would comply with a court order pausing the implementation of a $1.776 billion settlement fund designed to compensate Trump’s political allies.

GOP senators who revolted against the settlement before leaving for a Memorial Day recess two weeks ago say they want more information from the administration about the future of the fund, which could potentially go to Trump supporters who beat police and attacked the Capitol on Jan. 6, 2021. Meanwhile, Trump is reconsidering whether to move forward with it at all, according to a person familiar with his thinking.

Caught in the middle is legislation that would fund Trump’s immigration enforcement agencies for three years. Republicans abruptly left town without passing it after Democrats said they would offer amendments to scrap or scale back the judgment fund, forcing Republicans to go on the record for or against it and endangering the money for Immigration and Customs Enforcement and Border Patrol.

By Mary Clare Jalonick, Kevin Freking and Seung Min Kim

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Secretary of State Marco Rubio is set to face a litany of questions Tuesday about the Trump administration’s fragile or stalling diplomatic efforts around the world when he appears for back-to-back hearings on Capitol Hill for the first time since the Iran war began.

The Republican former senator will sit before House and Senate committees to make the State Department’s annual budget request. But the focus is likely to shift quickly to the already unsteady ceasefire between Washington and Tehran, which has been further tested in recent days by back-and-forth attacks.

Cabinet members, including Rubio, have defended Trump’s decision to launch the conflict despite promises over the years not to engage in “forever wars” in the Middle East. That work has been made more difficult by Trump’s shifting goals for the conflict.

In the two months since the war began, a small but growing faction of Republicans have joined Democrats in questioning the astronomical price tag and overall economic consequences of the conflict as they head into midterm elections in the fall.

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Muhammad Ali’s family reflects on the champion boxer’s legacy 10 years after his death

LOUISVILLE, Ky. (AP) — Muhammad Ali’s legacy extends beyond his stinging right jab, world titles and Olympic gold medal, to the heart and compassion he showed long after he left the ring, his wife Lonnie Ali said.

“He transcended boxing into every space you can imagine,” she told The Associated Press this week ahead of the 10-year anniversary of Ali’s death on June 3, 2016, after a long battle with Parkinson’s disease.

“Muhammad lived by this mantra: service to others is the rent we pay for our room here on earth,” Lonnie Ali said during an interview at The Muhammad Ali Center in Louisville, Kentucky. “He showed up every day with kindness and empathy in his heart for people who are in need.”

Ali, known as the “Louisville Lip” in his hometown, rose to prominence as a trash-talking world champion boxer in the 1960s and began speaking about civil rights issues as his star was rising. He is widely regarded as the most famous and influential boxer of all time, winning the heavyweight title three times.

The Ali Center is sponsoring a “Day of Compassion” on Wednesday, the 10th anniversary of his death, to promote acts of service and caring. Lonnie Ali, who serves as the center’s lifetime director, said the hope is an expanding annual event to highlight works of service and volunteering.

The day will focus on one of “the core values that made up Muhammad Ali” in an increasingly divided country, she said.

“Today, we are in a place where we are losing touch with our humanity and with each other,” she said. “It’s causing rifts, not just in families and communities, but in this nation. We’re becoming increasingly polarized and separated, and sort of retreating to people who think like us, look like us, and not really reaching out.”

She also challenged political leaders to lead with compassion, noting the recent weakening of the 1965 Voting Rights Act by the Supreme Court.

“We should always be thinking about how we can uplift a community, not how we can make it harder for them,” Lonnie Ali said. “We want equal representation in this country. You can’t have equal representation when you’re denying people voting rights, you can’t do that.”

But there is hope, she said, and she saw that when the city of Louisville came together for a weeklong celebration of Ali’s life in 2016. The week was capped by a funeral procession through the city and past her late husband’s modest childhood home near downtown Louisville. Former President Bill Clinton and actor Billy Crystal spoke at his funeral, and Will Smith, who portrayed Ali in a 2001 movie, was a pallbearer.

The outpouring of love for Ali at his hometown funeral service was livestreamed to millions around the world. A decade later, Ali’s face graced a U.S. Postal Service stamp for the first time, showing his enduring influence.

“We’re talking about people who traveled thousands of miles to come here, who had never met the man, never laid eyes on him personally, but wanted to … give their last respects to him: kings, princes, presidents, heads of state, celebrities, sports figures,” Lonnie Ali said.


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Iran’s inflation hits World War II levels, deepening economic pain

DUBAI, United Arab Emirates (AP) — Year-on-year inflation in Iran reached a level in May unseen since World War II, underlining the economic pain average Iranians face as the Islamic Republic worries about the war with Israel and the United States restarting.

A report Monday by Iran’s Central Bank represents the first official acknowledgment of what Iranians shopping, paying for a taxi or visiting a medical clinic already know: The rial currency is battered by the war and uncertainty around it resuming.

Meanwhile, longtime problems of economic mismanagement and government corruption also appear to be dragging down Iran’s oil-backed economy as it remains under a U.S. naval blockade.

Economic pressure in the past has sparked nationwide protests, something Iran’s theocracy has been trying to avoid since a crackdown on demonstrators in January killed over 7,000 people, according to activists’ estimates.

But even as hard-liners hold gun-handling workshops and organize marriages under the shadow of a ballistic missile to bolster spirits, experts note that new demonstrations could emerge if people find themselves priced out of feeding their families.

“I have no doubt that if Trump leaves (Iran without a formal peace deal) … most probably, we will see something like January by the end of summer because of the economic and social situations,” analyst Mohsen Jalilvand said in a video published by Iran’s Fararu news website.

Iran’s Central Bank said the consumer price index, which measures a basket of goods and services, reached 77.2% in May compared to the year before. It added the rate is 8.5% higher than in April. Inflation in daily and general needs — like medicine, taxi fares, tobacco and communication fees — rose 113.8% from the year before.

Iran only saw worse inflation in 1942 during World War II, sparked by the British and Soviets invading the country and taking over its railway, disrupting food supplies. The lack of food, worsened by a poor harvest, sparked hyperinflation and a famine. Hunger and a typhus outbreak killed many.

A private economic think tank in Iran, the Bamdad Institute of Economic Studies, described the current figures as “an unprecedented rate since World War II.” Iran’s Central Bank did not acknowledge the significance of the figures.

Airstrikes this year have greatly damaged Iranian businesses and its oil industry, Meanwhile, the U.S. blockade has been targeting Iranian crude oil shipments trying to reach the international market, a key source of hard revenue. Tax revenues have been depressed by businesses struggling even after the fighting paused.

The rial, which traded at 32,000 to $1 in 2015, now trades at over 1.7 million to $1.

“We will definitely have higher prices,” Iranian President Masoud Pezeshkian warned in May. “We are fighting and we must accept this hardship.”

In 2017 into 2018, rising food prices sparked demonstrations that killed over 20 people and saw hundreds arrested. An increase in government-subsidized gasoline prices caused protests that saw over 300 people reportedly killed.

Then came the protests over the rial at the start of this year, the most intense demonstrations to shake the Islamic Republic since its 1979 revolution and chaotic years that followed.

Tehran-based economist Saeed Leilaz, speaking to The Associated Press, warned that annual inflation in Iran could reach 80%.

“Iran’s society cannot tolerate above 25%” annual inflation, he said.

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Karimi reported from Tehran, Iran.


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Blanche is set to return to Capitol Hill as Trump reconsiders plans for his $1.8 billion fund

WASHINGTON (AP) — Acting Attorney General Todd Blanche is set to return to Capitol Hill on Tuesday after the Trump administration signaled it was pausing contentious plans to move forward with a nearly $1.8 billion fund that could compensate allies of President Donald Trump who believe they have been unjustly investigated and prosecuted.

The hearing before the House Appropriations Committee was scheduled for discussion of the Justice Department’s budget, but lawmakers will almost certainly focus their questioning on the creation of a fund that has provoked outrage over the mere possibility that violent pro-Trump rioters who stormed the U.S. Capitol on Jan. 6, 2021, could be eligible for payouts.

The Republican president is now reconsidering whether to move forward with the fund established to resolve his lawsuit against the Internal Revenue Service over the leak of his tax returns, a person familiar with his thinking said on Monday, in the face of Republican backlash and legal setbacks. The Justice Department also said Monday it would comply with a Virginia court temporarily blocking the administration’s “Anti-Weaponization Fund,” effectively agreeing to pause the plan for at least two weeks.

Another judge in Florida raised the prospect of reopening the IRS lawsuit because of “grievous allegations” of improper dealing made against the administration by settlement critics.

The Trump administration has defended the fund as an appropriate measure to make up for what officials insist was a weaponized Justice Department during President Joe Biden’s Democratic administration, a claim the Biden administration strongly denied. Though some Trump supporters, including participants in the Capitol riot, have celebrated the announcement, the reaction among Republicans in Congress has been decidedly more hostile, forcing Blanche to try to assuage a GOP constituency that generally operates in close alignment with the administration.

The furor has especially complicated matters in the Senate, where Republicans defiantly left town 10 days ago without passing legislation to fund Trump’s immigration enforcement agencies. Republicans who returned to Washington on Monday said they won’t have the votes to pass the Homeland Security spending bill until the White House works with them to place parameters on the fund. Many have pushed the administration to impose limits or scrap the idea altogether.

At a Senate budget hearing last month, Blanche refused to rule out the possibility that those who carried out violence on Jan. 6 could be eligible for payouts and has repeatedly said in interviews that anyone who feels persecuted by the criminal justice system is free to apply. Payouts will be decided by a five-member commission appointed by Blanche.

But he has apparently struck a more conciliatory tone in private when confronted by Republican anger.

Blanche encountered a groundswell of opposition last month at a tense private meeting with GOP senators, with more than half raising concerns, including by shouting at the Justice Department’s top official, Republican Sen. Ted Cruz of Texas said in a recent episode of his podcast.

“There were fireworks at an epic level — and I’ve got to say, it’s one of the roughest meetings I’ve seen in my entire time in the Senate,” Cruz said.

Behind closed doors, Blanche was “adamant” that no one who assaulted police at the Capitol would receive compensation, according to Cruz.

“He said not just ‘no,’ but ‘hell no,’” the senator recalled.


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Sticker shock meets gridlock: LA motorists keep driving at any price

By Lisa Baertlein

LOS ANGELES, June 2 (Reuters) – If you thought soaring pump prices since the onset of the Iran war might help clear the notoriously clogged highways of Los Angeles, think again. Drivers in the often-gridlocked city – where regular unleaded gasoline prices are well over $6 per gallon – appear accustomed to sticker shock, according to data provided to Reuters by government officials.

The California Department of Transportation (Caltrans), in an exclusive analysis for Reuters, found that major Los Angeles-area freeways overall showed no significant declines in vehicle miles traveled since the U.S. and Israeli attacks on Iran on February 28. 

That analysis, covering roughly eight weeks ended April 23, examined traffic data from freeways including Interstates 405, 10 and 5. Those are some of the nation’s busiest, and part of the nation’s cultural fabric due to Hollywood films and viral national news events like O.J. Simpson’s slow-speed police chase in 1994.  

While traffic on most major freeway sections moved only slightly up or down, some showed increases of nearly 9% or declines of almost 3% during the period analyzed.

“I think we’re immune,” said Los Angeles resident Marco Falcon, 44, who shrugged when told about the finding.

The data supports more than two decades of research showing that U.S. demand for gasoline is mostly inelastic – meaning drivers are either unwilling or unable to change their habits even when prices spike.

Indeed, a paper published by the National Bureau of Economic Research in 2006 found that drivers changed their habits much less during gasoline price surges in the 2000s than they did during the oil shock of the 1970s. 

The average price for a gallon of regular gas in Los Angeles was $6.07 on Monday, up almost 28% from a year ago and 36% above the national average, according to data from automobile club AAA.

While nobody likes paying more for gas, Falcon said, Los Angeles drivers understand the nation’s highest gas prices are just part of living in car-obsessed California.

“You just gotta figure out what your priorities are,” said Falcon, who continues to drive because using lower-cost buses would take three to four times longer.

“Time is money for me.”

Total weekday bus and train ridership was up 1.6% year-on-year for the combined months of March and April, while passenger miles rose 0.8%, according to data from the Los Angeles County Metropolitan Transportation Authority (LA Metro).

While high gas prices may have contributed to the gains, the network also has added new stations and expanded to new areas, an agency spokesperson said.  

“People don’t change their behavior much,” said Brian Taylor, a research fellow at the Institute of Transportation Studies at the University of California, Los Angeles.   

If traffic sometimes seems lighter in Los Angeles, Taylor said, it is because small reductions in vehicles on the city’s near-capacity freeways create outsized changes in flow.  

“A 10% drop in traffic can result in a 40% or 50% drop in delay,” Taylor said.  

(Reporting by Lisa Baertlein; Editing by Andrea Ricci )


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How Trump has used the presidency to benefit himself and his allies

WASHINGTON (AP) — President Donald Trump tried to create a near $1.8 billion fund that could be funneled to his supporters as a means of settling a lawsuit he filed against his own government — even arguing that he “gave up a lot of money in allowing” it.

After drawing outcry in Congress and the courts, however, the White House is reconsidering the fund. That potentially means the suit — and the possibility that the president could still cash in — might be back on.

Trump hasn’t been shy about turning the presidency into a major source of personal benefit, involving everything from merchandising deals to crypto ventures to high-dollar political and official events at his properties.

Asked about possible self-dealing by the president, the White House called such suggestions “the same, tired narrative that Democrats have pushed against President Trump, his family, and his administration for a decade.”

“President Trump only acts in the best interests of the American public — which is why they overwhelmingly re-elected him to this office, despite years of lies and false accusations against him and his businesses from the fake news media,” spokesperson Anna Kelly said in a statement. “There are no conflicts of interest.”

Here are some key ways Trump has reaped rewards for himself, his children and allies in his second term:

Last year, the president submitted a claim seeking $230 million in compensation from the Justice Department for a FBI search of his Mar-a-Lago estate in Florida as part of an investigation into whether he took classified records from the White House.

In January this year, Trump, his two eldest sons and the family’s business, the Trump Organization, filed a $10 billion lawsuit against the IRS and Treasury Department after a former IRS contractor illegally leaked Trump’s tax returns.

In an attempt to resolve those cases, Trump’s government agreed that $1.776 billion in taxpayer funds be distributed to people who believe they were targeted by past administrations for prosecution for political purposes — including the Trump supporters imprisoned for attacking police while overrunning the U.S. Capitol in 2021.

After blowback from even some congressional Republicans, the Justice Department now says it will comply with a ruling temporarily blocking the fund.

But there was less clamor about another part of the deal allowing the government to drop pending IRS audits into Trump and his relatives.

Separately, the Air Force has agreed to purchase interceptor drones from Powerus, a Florida-based company linked to Trump’s family. And ProPublica reported that direct intervention from the White House preceded the Pentagon agreeing to loan $620 million to Vulcan Elements, a North Carolina startup linked to Donald Trump Jr.

Trump Organization spokesperson Kimberly Benza denied any ethical conflicts between the White House and the family business.

“The Trump Organization operates completely separate from the presidency and is in full compliance with all ethics and conflict-of-interest laws,” Benza said in a statement.

As for Powerus, Benza said Eric Trump was “a passive investor in a vehicle that, among many others, holds an interest” in the company, but wasn’t involved in its decision-making or management.

Trump has traded stocks and bonds in unprecedented ways for a sitting U.S. president.

Office of Government Ethics filings show Trump made more than 3,600 stock trades in the first quarter of 2026 alone — transactions far exceeding $100 million in value.

Many of those trades involved sizable purchases of shares of technology and artificial intelligence giants like Nvidia, Dell, Oracle and Palantir before Trump’s administration took policy actions favoring those firms.

Similar disclosures last year show that Trump bought up more than $300 million in bonds issued by companies, states and municipalities even as he repeatedly pressed the Federal Reserve to lower interest rates — a move that could help drive up the value of his holdings.

Trump’s family has raked in big profits in the crypto sector since he was reelected. A key driver has been the $TRUMP meme coin, announced the day before Trump took office. Some 220 of the top investors were invited to a subsequent, private reception with the president.

Trump’s family also has a controlling stake in World Liberty Financial, a crypto firm co-founded with the president’s special envoy Steve Witkoff and run by his son Zach. It has its own stablecoin, USD1, and got a major boost when, just before Trump took office, an investment fund linked to the United Arab Emirates bought a large stake in it.

An Abu Dhabi state-backed investment firm, MGX, subsequently pledged to use $2 billion worth of USD1 to purchase a stake in Binance, the world’s largest cryptocurrency exchange — a move that further bolstered World Liberty Financial.

Beyond the digital realm, scores of companies pay to license the president’s name for physical products, from Bibles, guitars and sneakers to watches, fragrances and a gold-hued cellphone.

Trump has promoted many such goods on social media, particularly during his 2024 campaign, but they’ve also made conspicuous appearances at the White House.

When French President Emmanuel Macron and Ukrainian President Volodymyr Zelenskyy visited last summer, Trump showed them a merchandise room off the Oval Office stocked with goods for sale on his website. A few months later, video emerged of Trump at the White House spraying Syrian President Ahmad al-Sharaa with bottles of his “Victory 47” cologne and perfume, which he gave him as a gift.

The president displayed hats emblazoned with “Trump 2028” on the Resolute Desk while meeting with congressional Democrats last year. And, during a televised Cabinet meeting in May, at every seat was a red hat commemorating America’s 250th anniversary.

Each hat sells for $55 on Trump’s website.

The Republican National Committee and various political groups associated with Trump and the GOP have held fundraisers and political events at Mar-a-Lago, as well as Trump’s estate in Bedminster, New Jersey, and his golf clubs in Doral, Florida, and Sterling, Virginia.

The LIV Golf league, controlled by the Saudi Public Investment Fund, which is helmed by Crown Prince Mohammed bin Salman, has held events at Doral. Trump will host the G20 summit there in November.

That means world leaders, support staff, business executives, journalists and the bevies of others involved will be paying the Trump Organization, which purchased Doral in 2012, to attend. The president has already tried to head off criticism of self-dealing around the summit, saying that government attendees will be billed “at-cost” and “We will not make any money on it.”

Meanwhile, conservative groups and Republican committees have spent at least $26 million at Trump properties since 2015. The actual figure is likely higher since some groups don’t have to detail their spending.

Qatar gave Trump a $400 million jet that he intends to employ as Air Force One, then store at his presidential library after he leaves office. The gift has undergone extensive taxpayer-funded rebuilding and security upgrades that lawmakers estimate may exceed $1 billion.

Trump has also ordered up scores of renovation projects meant to leave his mark on Washington while passing on the costs to taxpayers.

He long insisted that wealthy donors would pay for the $400 million ballroom he demolished the White House’s East Wing to build — only to seek $1 billion in federal funding for security upgrades he says the military and Secret Service have sought as part of the project.

At least $15 million in public funds is going for the ceremonial arch Trump wants built at an entrance to the nation’s capital. The National Park Service is also paying a contractor $13.1 million to carry out the Trump-directed renovation of the Lincoln Memorial Reflecting Pool.


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US fund management firms back 401(k) alternative assets proposal, but others worry about risks

By Suzanne McGee

PROVIDENCE, Rhode Island, June 2 (Reuters) – The U.S. fund management industry has thrown its weight behind a proposal to open up retirement plans to alternative assets like private credit and cryptocurrencies to direct a slice of the estimated $14.2 trillion now in 401(k) and other mass-market products into those vehicles. 

More than 33,000 letters from individuals and institutions, including Wall Street and investor advocacy groups, offered a myriad of opinions on the proposed new rule by the Department of Labor by the time the comment period for the proposal drew to a close on Monday. 

Some raised concerns that it would open up workers to excessive risks and high fees on their retirement savings, while others saw opportunities for investors and funds to benefit. 

“Including those funds and assets should alleviate certain regulatory burdens and litigation risk that interfere with the ability of American workers to achieve, through their retirement accounts, the competitive returns and asset diversification necessary to secure a comfortable retirement,” wrote Jennifer Han, chief legal officer of the Managed Funds Association, a trade group that represents the alternative assets industry.

But many others questioned whether the proposal would really benefit individual investors or just favor asset managers trying to tap a large new source of capital.

‘SAFE HARBOR’ FROM INVESTOR LAWSUITS

The proposed rule change would give employers a legal “safe harbor”, or protection from investor lawsuits, as long as they “objectively, thoroughly, and analytically consider, and make determinations on factors including performance, fees, ​liquidity, valuation, performance benchmarks, and complexity” before making the investment, the Labor Department said when announcing the proposal in late March. 

At that time, a Labor Department official said the rule was not intended to direct providers to invest or not but rather give them “the toolkit so that they can follow an analytical, thorough and objective process.”

The review period has now ended, according to the Labor Department’s website. 

The department will now review the thousands of comments it received, may revise the rule, and must complete a White House review before any final rule can be published. That may happen rapidly, since the process now underway was sparked by an executive order from President Donald Trump last August. 

MODEST ALLOCATIONS SUGGESTED

The Investment Company Institute (ICI), which represents asset managers that have been forming new partnerships in anticipation of such a policy change, generally applauded the move. It suggested “modest private market allocations” within the target-date funds that are the default investments for most employer-sponsored 401(k) plans would be the best approach.

Some financial advisers said it would benefit savers. 

“The American economy increasingly lives in private markets and most workers have no access to it,” wrote financial adviser Jarrod Winkcompleck, CEO of Gap Financial Services in Austin, Texas, as he urged policymakers to forge ahead with the proposal.

About 57% of all working Americans who are not covered by government plans have some kind of employer-sponsored retirement savings account, such as a 401(k) plan, according to the Bureau of Labor Statistics. The ICI calculated that as of last year, that pool of capital totaled $14.2 trillion.

SKEPTICISM ON BENEFITS 

The CFA Institute, an investment industry education association, said that while institutions get access to the lowest-fee, highest-quality vehicles because of their market clout, retirement savers will lack “direct control over manager selection, deal access, valuation, liquidity terms or fee arrangements.” 

Indeed, several of the comment letters reviewed by Reuters emphasized their authors’ concern about the structure of the funds to which they will have access.

Michael McCormick, chief investment officer at Centric Wealth Management in Chicago, said that alternative asset vehicles, such as interval funds, “often promise more liquidity than their underlying assets can actually support, a mismatch that becomes dangerous in a market downturn.”

(Reporting by Suzanne McGee in Providence, Rhode Island; Editing by Megan Davies and Jamie Freed)


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Republican senators want more answers on $1.8 billion settlement fund as Trump considers its future

WASHINGTON (AP) — Senate Republicans will meet Tuesday to discuss next steps after the Justice Department said it would comply with a court order pausing the implementation of a $1.776 billion settlement fund designed to compensate President Donald Trump’s political allies.

GOP senators who revolted against the settlement before leaving for a Memorial Day recess two weeks ago say they want more information from the administration about the future of the fund, which could potentially go to Trump supporters who beat police and attacked the Capitol on Jan. 6, 2021. Meanwhile, Trump is reconsidering whether to move forward with it at all, according to a person familiar with his thinking.

Caught in the middle is legislation that would fund Trump’s immigration enforcement agencies for three years. Republicans abruptly left town without passing it after Democrats said they would offer amendments to scrap or scale back the judgment fund, forcing Republicans to go on the record for or against it and endangering the money for Immigration and Customs Enforcement and Border Patrol.

Returning to Washington on Monday evening, Senate Majority Leader John Thune said he wasn’t sure if the immigration spending bill would move this week.

“To be determined,” he told reporters.

The extraordinary standoff comes after Trump announced the fund with no heads up to lawmakers as part of a settlement to resolve his lawsuit against the IRS over the leak of his tax returns. When word of the settlement broke, the Senate was navigating tricky passage of the immigration legislation with an added $1 billion in White House security costs — including for Trump’s ballroom project.

Furious, Senate Republicans jettisoned the White House security money from the bill and made clear they would not pass the legislation at all unless the White House made major changes to the settlement.

“I do think the best way to handle it is if the administration decides to shut it down themselves,” Thune told reporters Monday, referring to the fund.

He said Republicans will have a better idea of how to proceed after they meet for their weekly conference lunch on Tuesday.

The Justice Department said it would comply with a ruling Friday from U.S. District Judge Leonie Brinkema, who temporarily halted the fund for two weeks. The judge scheduled a June 12 hearing for arguments on whether to extend her order.

The department said in a statement that it strongly disagrees with the ruling but would comply.

Republican senators weren’t satisfied. They said Monday evening that they need more detail from the administration on what happens after that deadline before deciding next steps.

“It’s pretty clear that the president has to say very explicitly that there’s not going to be a weaponization fund,” said Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa.

Oklahoma Sen. Jim Lankford said Trump administration officials “need to say what they actually mean.”

“They need to say, we’re setting this whole thing aside,” Lankford said.

Alaska Sen. Lisa Murkowski said that if the settlement is “completely pulled, then I’m satisfied. But I haven’t heard anybody say that.”

Republican Sen. John Kennedy of Louisiana said the administration already has to abide by the court decision, “that’s in the Constitution. I have to know more about their position.”

“Right now, the reconciliation bill looks like a broken arm with the bones sticking out,” Kennedy said. “It won’t move this week, in my opinion, unless we have some resolution on the weaponization account.”

The outrage of the fund came to a head last month at a closed-door meeting between senators and acting Attorney General Todd Blanche that Republican Sen. Ted Cruz of Texas described on a recent episode of his podcast as “one of the roughest meetings I’ve seen in my entire time in the Senate.”

GOP senators had been discussing several ways that they could curb the fund, including limiting who can receive payouts, changing the makeup of the commission in charge of settlement decisions, adding some sort of judicial review for applicants or scrapping the fund altogether.

Amid the backlash, a person familiar with the matter, who insisted on anonymity to discuss the president’s thinking, said Monday that Trump was reconsidering whether to move forward with the fund. But the president has not said publicly what he intends to do.

Also complicating matters is Trump’s campaign-year push to defeat GOP lawmakers whom he sees as disloyal, including some of Thune’s most reliable Republican votes in the narrow 53-47 Senate. Sens. Bill Cassidy of Louisiana and John Cornyn of Texas both lost reelection bids in May after Trump endorsed their primary opponents, and it’s unclear how supportive they’ll be of the president’s agenda going forward.

“I think it’s hard to divorce anything that happens here from what’s happening in the political atmosphere around us,” Thune said before the Senate left town.

___

Associated Press writers Joey Cappelletti and Eric Tucker contributed to this report.


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Democrats redrew California’s map to counter Trump. The primary tests whether it pays off for them

California Democrats persuaded voters to let them redraw the state’s congressional map so the party could potentially gain five seats in the U.S. House to counter GOP redistricting in Texas. Tuesday’s primary will be the first indication of whether that will pay off.

The state’s unusual primary system, in which the top two vote-getters advance to the general election regardless of party, means Democrats have a chance of effectively missing out on a pickup in the San Diego suburbs, where Republican Rep. Darrell Issa’s district was redrawn to give it a slight Democratic lean.

Issa retired, and a Republican San Diego County supervisor, Jim Desmond, stepped in to run. So did an avalanche of nine Democrats — so many that some fear the Democratic vote will be split among them, leaving Desmond and the only other GOP candidate, Jim O’Neil, as the top vote-getters. Under that scenario, Democrats would be locked out of the November general election.

“After millions of dollars and a nationwide effort to redraw these districts in response to Texas, Democrats being shut out would be a nightmare,” said Ammar Campa-Najjar, a former Obama administration official who is one of the Democrats running.

California has been the bright spot for Democrats in a redistricting war kicked off by President Donald Trump to help his party retain control of the House. After Texas redrew its map to make as many as five more seats winnable for the GOP, California voters allowed Democrats to suspend their state’s own independent redistricting commission and create a new map in retaliation.

But when Virginia Democrats tried to replicate that, they were blocked by their state Supreme Court. Meanwhile the conservative majority on the U.S. Supreme Court gutted a key provision of the Voting Rights Act, letting Republicans eliminate some majority-Black congressional districts in the South.

Campa-Najjar, San Diego City Councilwoman Marni von Wilpert and investor Brandon Riker, who is financing his own campaign, are the most prominent Democrats in the race for the seat vacated by Issa. Many Democrats are optimistic their voters will coalesce around one candidate and set up a competitive election against Desmond in the fall.

The 48th district would not be the only competitive fall race for Democrats.

In the Central Valley, they redrew the seat held by Republican Rep. David Valadao to make it even more Democratic. Valadao is a survivor of several targeted Democratic campaigns and one of two remaining Republican House members who voted to impeach Trump after the Jan. 6, 2021, attack on the U.S. Capitol.

He’s expected to make it to the general election, so the primary will determine which Democrat faces him — state Assemblywoman Jasmeet Bains, a moderate backed by the Democratic Congressional Campaign Committee, or Randy Villegas, a political science professor at College of the Sequoias and a school board member who represents the party’s liberal wing.

The schism between establishment Democrats and a younger, insurgent progressive wing is a defining characteristic of many of this year’s primaries.

In a safe Democratic district in San Francisco, Scott Wiener, a state lawmaker and former member of the San Francisco Board of Supervisors, is considered likely to make the November race to replace retiring former House Speaker Nancy Pelosi. The suspense is over whether he will face Saikat Charkrabati, a wealthy former technology entrepreneur who supported Rep. Alexandria Ocasio Cortez’s insurgent primary in 2018, or Supervisor Connie Chan, who was endorsed by Pelosi.

In Sacramento, city council member Mai Vang is challenging 81-year-old Rep. Doris Matsui, who succeeded her late husband after his death in 2005.

Rep. Brad Sherman, whose Southern California district stretches from the San Fernando Valley to Malibu, is being challenged by Democrat Jake Levine, a 42-year-old lawyer who argues that it is time to move on from the 15-term congressman.

And in a redrawn district that stretches from Napa Valley into conservative Northern California farming communities, 14-term Democratic Rep. Mike Thompson has drawn a younger challenger, former venture capitalist Eric Jones.

California’s congressional primaries also will determine the fate of Republicans targeted in the Democratic redraw.

In Southern California, sitting Republican Reps. Ken Calvert and Young Kim, were drawn into the same conservative district and are battling over their pro-Trump credentials.

In the Sacramento suburbs, Rep. Kevin Kiley, who left the GOP to become an independent and a critic of partisan gerrymandering, hopes to survive in one of the two Democratic-leaning districts where his more conservative district’s voters were scattered.

Meanwhile in the San Francisco suburbs, six Democrats and two Republicans are running for the seat formerly held by Democratic Rep. Eric Swalwell, who resigned and ended his gubernatorial bid amid sexual harassment allegations. The top two vote-getters advance to the November ballot to fill the seat starting in 2027, while a special election will be held June 18 for the remainder of Swalwell’s current term.


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California holds crowded primary in race to replace Gov. Gavin Newsom

SACRAMENTO, Calif. (AP) — California’s gubernatorial primary comes to a close Tuesday as voters choose from an extensive field of candidates hoping to replace termed-out Democratic Gov. Gavin Newsom.

The end of the voting period, which began in early May, concludes a chaotic contest without a clear front-runner. Candidates tried to elbow each other out in the final stretch as each sought to convince voters that they were best prepared to lead the most populous state and one of the world’s largest economies.

California puts all candidates on a single primary ballot regardless of party, and the top two finishers advance to the November general election. About 60 candidates were on the ballot, most of them largely unknown to the state’s roughly 23 million voters.

On the Democratic side, top contenders include Xavier Becerra, a former state attorney general and U.S. health secretary; Tom Steyer, a billionaire climate activist; Katie Porter, a former member of Congress; and Matt Mahan, the mayor of San Jose.

The two most prominent Republicans are conservative commentator Steve Hilton and Riverside County Sheriff Chad Bianco.

The Democrats campaigned on fighting Trump administration attacks on the state’s liberal policies, while Republicans vowed to bring change after more than 15 years of Democratic leadership in Sacramento. But the through line of the race was how to tackle the state’s notoriously high cost of living.

Drivers were paying $6.08 per gallon at the pump as of the end of May, $1.65 higher than the national average, according to AAA. Meanwhile the nonpartisan Legislative Analyst’s Office has estimated that the typical home is about $775,000, more than double the national average. And Californians pay the second-highest residential electricity rates behind Hawaii, according to the U.S. Energy Information Administration.

Some candidates proposed suspending the state’s gas taxes, which total roughly 70 cents a gallon, while others floated subsidizing in-state tuition at public colleges. A few of the Democrats said they would eliminate private health insurance in favor of a government-run system with no premiums, while the Republicans vowed to increase oil and gas production and reduce regulations.

“The truth is that we’ve gone off track — we’ve got one-party rule,” Hilton said at a debate in May. “The results have been such a disappointment. It is time for some balance.”

Earlier in the race, Democrats worried about possibly being locked out of the general election even though they count 45% of the state’s registered voters compared to Republicans’ 25%.

The concern was that their relatively crowded field of candidates could split the Democratic vote enough for the two Republicans to advance under the single primary system, which was first used at the statewide level in 2014.

Two candidates from the same party have never made the general election in a California governor’s race, though it happened twice for U.S. Senate elections in 2016 and 2018.

Recent developments, however, have diminished Democrats’ fears as a few candidates emerged as leading contenders. In the race’s final days it was Hilton warning that Republicans could be locked out if they failed to coalesce behind him.

Democratic Rep. Eric Swalwell’s resignation and withdrawal from the race after sexual assault allegations were made against him left an opening for Becerra, who previously had struggled to gain traction.

Highlighting his long political resume, Becerra started raising more money and won the endorsements of powerful labor groups and Latino legislative leaders.

But that momentum also made him a target, and his rivals criticized his leadership as health secretary including his handling of an influx of unaccompanied migrant children at the U.S.-Mexico border in 2021, when Becerra’s Department of Health and Human Services was responsible for shelters where they were housed. Some of them were criticized as having inadequate living conditions, and there were also concerns about authorities failing to thoroughly vet sponsors with whom some children were placed.

“The secretary has never met a crisis that he couldn’t ignore,” Mahan said at a debate in April.

Steyer’s campaign spent or booked more than $203 million in ads for broadcast TV, cable and radio, according to tracker AdImpact. On the campaign trail, he was attacked over past investments in fossil fuels and private prisons at a hedge-fund he founded in the 1980s and left more than a decade ago. And some accused him of trying to buy the election.

“This race will come down to those who’ve earned it versus those who are trying to buy it,” Becerra told CNN in April.

Republicans, for their part, never coalesced behind a strategy to send both Hilton and Bianco to the general election, and the two fought to consolidate support. President Donald Trump’s endorsement in April of Hilton, a former political adviser to a conservative British prime minister, likely boosted him among GOP voters and diminished Bianco’s chances of advancing.

Trump on Monday evening again urged people to vote for Hilton, saying Democrats have done an “absolutely horrendous job” running the state.

“Steve can turn it around, before it is too late, and, as President, I will help him to do so!” Trump posted on his social media platform.

All California voters receive a mail ballot, and election officials count those that are received up to a week after Election Day so long as they are postmarked by then. That often results in a drawn-out count, with no winners declared until days or even weeks later.

It is the first time in over two decades that there has not been a political superstar in the governor’s race. In 2003, A-list actor and Republican Arnold Schwarzenegger rocketed into office in a recall election that ousted then-Gov. Gray Davis; in 2010, former Democratic Gov. Jerry Brown cemented a political comeback by winning nearly three decades after his first two terms; and in 2018, Newsom had already established a national profile after stints as lieutenant governor and San Francisco mayor and won easily.


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