🐪 It’s Wednesday. It’s a quiet day in Washington (and yes, my friend confirmed the Capitol is currently a ghost town 👻). But there’s plenty unfolding on the campaign trail. Here’s what’s happening today:

• Harris takes flak from both sides over "no taxes on tips" pitch.

• Annual inflation dips below 3 percent.

• Progressive Omar survives primary challenge.

• Walz goes solo on cross-country blitz.

• Trump handed another loss in hush money trial.

I’m Miranda Nazzaro, filling in for Cate, with a quick recap of the morning and what’s coming up. Send tips, commentary, feedback and cookie recipes to cmartel@thehill.com. Did someone forward this newsletter to you? Sign up here.  

© GIPHY/The Democrats

Vice President Harris is under scrutiny from both sides of the aisle after she endorsed a “no tax on tips” plan first floated by former President Trump. The proposal would exempt tips for service and hospitality workers from taxes.

Caught off guard: Democrats and progressives, who once called the idea “bogus,” told The Hill’s Alexander Bolton the vice president “blindsided” them with the endorsement.

❓Key Democratic lawmakers and progressive activists are concerned about the proposal’s substance, fearful it would leave out many lower- and middle-income workers who don’t work for tips. Some worry employers could use the tax-free tips as a reason not to raise base-level wages.

Policy experts, meanwhile, question how the plan would unfold without significantly affecting economic behavior.

“It’s not something I saw coming,” one senior Senate Democratic aide said. “I did not expect her to go on the tipped-wage thing. I did not see it as a serious proposal from Trump, and it doesn’t become a serious proposal now.”

“I don’t know how I would draft it to exclude my plumber or my maid. Are those service workers? If they are employees … will the employer, ask for the employees to be compensated more by tips going forward? We already have too many people asking for tips,” Steven Rosenthal, a senior fellow at the Tax Policy Center, told The Hill.

The Harris campaign doesn’t agree with the criticism and urged The Hill to reach out to labor unions that support the idea.

Plus: The White House said President Biden would “absolutely sign legislation” for the proposal. (The Hill)

READ: Harris blindsided Democrats with ‘no tax on tips’ plan

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The Trump campaign quickly hit back, calling her endorsement a “full plagiarizing” of the former president's plan, which he floated to GOP lawmakers in June.

“Copy Cat Kamala is a dishonest, fraudulent failure. She won’t sit down and answer questions about why she stole President Trump’s No Tax on Tips proposal,” Steven Cheung, Trump campaign spokesperson, wrote in an email this week.

• Why Trump and Harris both say ‘no tax on tips’ (BBC News)
• No tax on tips: Why politicians love it, and economists don’t (NPR)
• Both Trump and Harris want to eliminate taxes on tips. This is how it could affect workers. (CNN Politics)
• Harris campaign launches $90M media blitz for end of August (The Hill)
• Harris is Set to Lay Out an Economic Message Light on Detail (The New York Times)

*Screams "finally" into the void*

The Labor Department handed down some good news Wednesday morning! The consumer price index slowed to a 2.9 percent annual increase last month, falling below 3 percent for the first time since March 2021.

💡 Why it matters: The low level of year-over-year inflation is the latest sign the price spikes are on their way out the door. The inflation reading tees the Federal Reserve up for long-awaited interest rate cuts next month, when it meets for the last time before November’s election.

The Hill’s Taylor Giorno reports borrowing costs have stayed at a 23-year high since last July, when the Federal Open Market Committee hiked rates to a range of 5.25 percent to 5.5 percent.

Hold your horses 🐎: Sorry to be the bearer of not fun news, but while inflation rates are down and the unemployment rate ticks up, concerns over a possible recession are back, per Giorno. Read more here.

President Biden celebrated the news, saying the data marks the progress the administration has made to tackle inflation.

"We have more work to do to lower costs for hardworking Americans, but we are making real progress, with wages rising faster than prices for 17 months in a row," the president wrote in a press release, shared by the White House.

"Prices are still too high. Large corporations are sitting on record profits and not doing enough to lower prices. That’s why we are taking on Big Pharma to lower prescription drug prices. We’re cutting red tape to build more homes while taking on corporate landlords that unfairly increase rent. And we’re taking on price gouging and junk fees to lower everyday costs from groceries to air travel."

He also blasted GOP lawmakers for what he argued were policies that would cut taxes for billionaires and big corporations.

"While they try to take us back, we will fight for the future," he wrote.

The news comes as former President Trump is set to give remarks at a rally in Asheville, N.C., Wednesday, focused on the economy. The Trump team is seeking to link Vice President Harris — now the Democratic nominee — to policies he says have plagued the Biden administration.

Democrats have also warned Harris to solidify her own economic messaging.

Before Biden’s withdrawal from the race last month, the economy was the dominant issue for voters.

© GIPHY/GIPHY News

Rep. Ilhan Omar (D-Minn.) came out on top in Tuesday’s primary for Minnesota’s 5th Congressional District, handing House progressives a much-needed boost after two of her fellow “squad” members lost their primaries.

Proof’s in the pudding: Omar defeated her challenger, former Minneapolis City Council member Don Samuels, 56.2 percent to 42.9 percent, per Decision Desk HQ. The progressive lawmaker also outspent her opponent, raising $6.8 million to his $1.4 million.

👀 Looking ahead: Omar is the favorite to win reelection in November in her solid-blue district.

Read more of The Hill’s reporting

The Hill’s Jared Gans breaks down the gist from last night’s other races:

Here are the top takeaways:

1. The last of the outstanding major Senate matchups is set.
2. Dems win big in Wisconsin.
3. Trump-backed GOP candidate wins nomination for former Rep. Mike Gallagher (R-Wis.)’s seat
4. Business owner Rebecca Cooke to face off against Rep. Derrick Van Order (R-Wis.)

Read the details here.

Democrats tapped former Houston Mayor Sylvester Turner (D) to serve as the party’s nominee for the upcoming election following the death of Rep. Sheila Jackson Lee (D-Texas). (The Hill)

Jackson Lee died last month at the age of 74 after battling pancreatic cancer. 

Texas Gov. Greg Abbott (R) set a special election to fill her seat for the same day as the general election: Nov. 5. Turner, however, is not expected to run in that race.

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✈️ Minnesota Gov. Tim Walz (D), Harris's running mate, is crossing time zones on the campaign trail today, with stops in Denver and Boston as part of his first solo fundraising swing.

🥊The fighting gloves are off: The governor played defense in his first solo speech Tuesday, hitting back at Trump's running mate Sen. JD Vance (R-Ohio), who accused him of being insincere about his military record.

What Walz said: “I am damn proud of my service to this country. And I firmly believe you should never denigrate another person’s service record.”

Remember: Vance is also a veteran and was deployed to Iraq as a public affairs officer in the Marine Corps. He didn’t see combat in his four years of service.

Read more from The Hill’s Alex Gangitano.

*Cues "On the Road Again’ by Willie Nelson":🚌 Harris and Walz and their respective spouses will kick off a bus tour next week ahead of the Democratic National Convention, The Hill reports.

Former President Trump was dealt another loss in his hush money case this morning after New York Judge Juan Merchan refused for the third time to recuse himself. The former president has repeatedly pushed for Merchan to step aside over his daughter’s work with Democrats, but he doesn’t buy it. The Hill’s Zach Schonfeld has the details.

Hush money recap: Trump’s New York trial took place this spring and ended in a jury finding him guilty on all 34 counts. He was accused of lying in business records to conceal a hush money payment made to adult film star Stormy Daniels. Sentencing is slated for next month.

At least two major polls released this morning were not good news for the former president. It follows weeks of Harris rising in the polls and narrowing the once-comfortable lead Trump had when Biden was still on the ticket.

This morning’s Cook Political Report survey showed Harris is leading or tied with Trump in six of seven battleground states. Harris leads in Arizona, Michigan, North Carolina, Pennsylvania and Wisconsin, while they are tied in Georgia. The former president's only lead is in Nevada. (The Hill)

Harris, meanwhile, also has the advantage over Trump when it comes to honesty and discipline, per a new Associated Press/NORC Research Center survey. Nearly half of Americans would describe Harris as “committed to democracy” and “disciplined,” compared to about 30 percent for Trump, The Hill’s Lauren Sforza explains.

🍊 Celebrate: Today is National Creamsicle Day!

🤳 Pic of Trump’s X Spaces call goes viral: X users are posting #relatable content with a pic of former President Trump looking down at his phone when technical issues delayed his interview with tech billionaire Elon Musk. 🎤 “Watching the dominos pizza tracker,” one user wrote, while another said, “me after firing off a banger in the group chat but no one is haha’ing it.”

😔 Swifties are sad: Taylor Swift devotees are #bigsad after Wembley Stadium said all unticketed fans for her five-night stint are prohibited from gathering outside the venue after an uncovered terrorist plot canceled her Vienna shows last weekend.

• What they said: 📝 “leave it up to the terrorists to ruin all our fun :((” one fan said. Another fan's comments: “Thank you terrorists for ruining what Ticketmaster couldn’t for fans...smh.”
• Haters gonna hate: 💰 Others accused the superstar and her team of being greedy: “They said no poors,” per one user.

The House and Senate are out. President Biden and Vice President Harris are in Washington. (all times Eastern)

• 1:45 p.m. White House press secretary Karine Jean-Pierre briefs reporters. 💻 Livestream

• 2:00 p.m. Vance campaigns in Byron Center, Mich. 💻Livestream

• 2:20 p.m. Walz speaks at a campaign reception in Denver.

• 3:15 p.m. Biden calls with Panamanian President José Raúl Mulino.

• 4:00 p.m. Trump campaigns in Asheville, N.C. 💻Livestream

• 4:00 p.m. Biden receives the daily briefing.

• 8:10 p.m. Walz campaigns in Boston.

🥔 Because you made it this far, you HAVE to see Potato the dog try swimming for the first time. It’s an A+ from me.

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