Washington, DC

1. Funding talks pick up
2. Ambassadors MIA in Middle East
3. Trump disputes munitions shortage
4. Lawmakers urge Balkan sanctions
5. Kalshi’s big question

Oil ▲ 3% on news of a draft plan that would ban US and Israeli ships from the Strait of Hormuz.

Senate negotiations intensify on recess deal

After GOP senators lunched with Vice President JD Vance, the contours of a deal to finish the Senate’s summer business started becoming clearer. “There’s some movement in the right direction,” Sen. Katie Britt, R-Ala., told Semafor. Republican leaders are close to finishing the government spending bill, which may involve giving Sen. Ted Budd, R-N.C., a vote on scrapping a delay to a government ban on hemp products. “There’s just one issue, the hemp issue,” said Senate Appropriations Chair Susan Collins, R-Maine. Senators are also trying to finalize the Russia sanctions bill, which may mean amendment votes narrowing President Donald Trump’s tariff authority. Republicans also want to finish a nominee package. But attorney general nominee Todd Blanche is still short of 50 votes, Democrats aren’t ready to vote on cryptocurrency legislation, and finishing the college sports bill this week looks challenging.

— Burgess Everett and Nicholas Wu

Middle East ambassadorships vacant amid Iran war

As Trump relies on special envoys to conduct diplomacy in the Middle East, ambassadorial posts in the region remain vacant, reports Semafor’s Lauren Morganbesser. The conflict with Iran has ensnared a dozen Middle Eastern countries that have normalized relations with the US, and half of them lack a Senate-confirmed US ambassador. Former ambassadors who have served in administrations of both parties told Semafor that they fear the vacancies have made it more difficult for the US to communicate with allies during a rapidly evolving war. “If you take the countries most affected by the war,” said Barbara Leaf, who served as US ambassador to the UAE, “none of them have ever been confronted with a situation where there were so few people to reach in … who could tell them what’s going on or through whom they might convey their concerns.”

Trump disputes weapons shortage reports

In a series of social media posts, Trump called reports that the US is running low on key munitions “unfounded rumors,” threatened to jail “leakers,” and defended Defense Secretary Pete Hegseth. Earlier this week, Reuters reported that the Pentagon has used “virtually all” of the military’s long-range precision missiles in the war with Iran. And today, The Washington Post reported that Trump, feeling misled about the state of the weapons stockpile, confronted Hegseth at Camp David last week. Trump said publicly on Monday that he had held back from launching a fresh round of attacks on Iran in order to clear the way for a deal in the coming days to reopen the Strait of Hormuz and wind down the war. But the Post cited the weapons shortage as the reason for his decision.

Lawmakers urge Trump to impose Balkan sanctions

A bipartisan group of senior lawmakers is calling on the Trump administration to impose sanctions on Bosnian Serb officials after Republika Srpska authorities interrogated the authors of a recent report on genocide denial. “We are deeply concerned by reports that current and former employees and associates of the Srebrenica Memorial Center have been summoned for questioning,” said Senate Foreign Relations ranking member Jeanne Shaheen, D-N.H., in a statement shared first with Semafor, along with Senate Armed Services Chair Roger Wicker, R-Miss., Senate Judiciary Chair Chuck Grassley, R-Iowa, and ranking member Dick Durbin, D-Ill., plus Reps. Bill Keating, D-Mass., and Mike Turner, R-Ohio. They urged the Trump administration to comply with this year’s annual defense legislation, which required officials to impose sanctions on anyone the president determines “threaten[s] the security, stability or territorial integrity of any areas of state in the Western Balkans.”

How Kalshi can shake its casino reputation

Heading into last week’s Federal Reserve meeting, Wall Street’s favored betting parlor — the Fed funds futures market — put two-thirds odds that the central bank would hold rates steady. Over at Kalshi, the prediction market, the chances were as much as 10 points higher. They were both right; the Fed held steady. But Kalshi was a lot righter. That gap matters because Kalshi is trying to shed its casino reputation, win over politicians, and position itself as a serious player in financial markets. The case rests on several questions, but one is key: Are prediction markets accurate? Wall Street investors who are Kalshi-curious won’t settle for being directionally correct. They need perfection. The closer Kalshi gets, the better its odds of becoming a dues-paying member of high finance.

White House

• President Trump signed executive orders attempting to deny citizenship to children born in the US as part of “birth tourism.”
• Trump privately told donors to back Vice President JD Vance in the 2028 presidential election. (He denied to reporters Thursday that it was his official endorsement, saying it was “way too early.“) — WaPo

Congress

• Republicans on the Senate Homeland Security and Governmental Affairs Committee voted to hold Anthony Fauci in contempt of Congress.
• Sen. Jon Husted, R-Ohio, called for Ohio Rep. Max Miller to “step aside as a candidate and resign from Congress” over allegations of domestic abuse.
• Sen. Mitch McConnell, R-Ky., said in a statement that he’s been discharged from the hospital and he’ll continue to recover at home and follow an intensive physical therapy regimen. He said he is in touch with his staff on “important Senate business,” but he did not estimate when he might return to Congress in person.
• Four Republican senators proposed repealing California’s vehicle emissions waivers, aiming to block the state from enforcing stricter emissions and EV rules than federal standards.

Courts

• The Justice Department’s watchdog offices have lost significant staff during the Trump administration, leading to fewer misconduct investigations despite a record number of complaints. — Reuters

National Security

• China has so far declined to invite Pentagon policy chief Elbridge Colby to Beijing, despite his efforts to have Pentagon officials raise the issue with their Chinese counterparts. — Politico

World

• Two Israeli soldiers were killed in an explosion in southern Lebanon, the first Israeli deaths since June’s ceasefire.
• Ukraine hit more Russian oil facilities.

Housing

• Fraudulent GI Bill trade schools exploited housing benefits to steal millions from taxpayers. — WaPo

Technology

• Meta said its AI model hacked another company during cybersecurity testing.
• Oregon Sen. Ron Wyden, the top Democrat on the Finance Committee, proposed taxing data centers and ending key tax breaks for their construction.

Education

• The Trump administration announced a plan to overhaul the early education Head Start program.

— Sen. Mitch McConnell, R-Ky., in a statement.

Laura McGann, editor

With help from Elana Schor, senior Washington editor, and Morgan Chalfant, Washington briefing editor

Graph Massara and Lauren Morganbesser, copy editors

Contact our reporters:

Burgess Everett, Eleanor Mueller, Shelby Talcott, Nicholas Wu, David Weigel