Morning Brief: Newsom Eyes 2028, Inflation Data, SCOTUS Okays Education Dept Downsizing

With 2028 in his sights, Gavin Newsom goes on offense – attacking red states and defending his leadership in California. Inflation ticks up fueling President Trump’s calls for an interest rate cut. And, Trump gets the go-ahead for layoffs at the Department of Education.

It’s Wednesday, July 16, and this is the news you need to know to start your day.

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Newsom Eyes 2028

Topline: Democrat Governor Gavin Newsom seems to be ramping up for a presidential run, while his state of California continues to battle a number of crises.

Last week, Governor Newsom visited South Carolina for a two-day tour, meeting with local Democrat leaders and voters. He said he was there to discuss federal health care cuts, but it’s clear this was political — South Carolina might be a red state, but it will be the first state on the schedule in Democrats’ 2028 presidential primaries.

“[Republicans are] banning speech, in classrooms, but also in the boardrooms,” Newsom told South Carolina voters in what, to an outsider observer, sounded very much like stump speech. “DEI, ESG, CRT – anything with three letters they seem to ban … what we’re experiencing is America in reverse; they’re trying to bring us back to a pre-1960s world, on voting rights, on civil rights, LGBTQ rights, women’s rights.”

Since 2024, Newsom has launched his own podcast and invited several prominent right-of-center guests on his show, including Trump loyalists Charlie Kirk and Steve Bannon, in what appears to be an attempt to reach younger voters and appear more moderate. Newsom has also proposed limiting free health care coverage for illegals, and suggested he’s not totally on-board with males who identify as transgender in female sports. More recently, he appeared on “The Shawn Ryan Podcast” – which is generally viewed as right-of-center. During the 4 hour-long episode, Newsom said he was directing an “objective review” of California COVID policies. California had some of the strictest lockdown orders in the nation.

However, Newsom has been a very vocal critic of the Trump administration and has sparred with the president on numerous issues – from disaster response to immigration enforcement to environmental policies. Newsom has also defended the policies of California and other Democratic strongholds, balancing attempts to appeal to centrist voters with the need to defend his progressive record and anti-Trump bonafides.

“[California] provided $83.1 billion more than we received from the federal government,” Newsom told Ryan. “Texas took $71.1 billion. I’m not saying that to bash Texas, but you know what? Pretty proud of my godd*** state.”

California is the most populous state in the country and it has an economy larger than almost every other nation on Earth – its population is roughly the size of Canada’s and its economy is twice as large. That being said, despite being home to ~12% of the U.S. population, California accounts for ~25% of America’s homeless, and has the highest cost of living of any state. Gas prices in particular are the highest in the country – this July, Californians are paying ~$4.52 per gallon compared to the national average of $3.15.

Inflation Up, Interest Rates … Down?

Topline: Inflation ticked up slightly last month, as President Trump continues to pressure the Federal Reserve to cut interest rates.

When President Trump took office, economists offered apocalyptic warnings that his trade policy — specifically tariffs — would cause inflation to spike. Month after month, though, inflation fell significantly below expectations.

But on Tuesday, the latest report showed rates going ever so slightly up. Consumer prices were up 2.7% compared to a year earlier, while core inflation was at 2.9%. The goods most impacted were natural gas, coffee, and beef — all of which were up 10% compared to last year. While gasoline, televisions, and smartphones were all down ~10% on average.

“I would say that in general, the inflation numbers have been absolutely fantastic,” Joe Lavorgna, a senior adviser to Treasury Secretary Scott Bessent, told The Daily Wire. “They’ve been much lower than virtually everybody, perhaps outside the administration, had thought. There’s really been no noticeable impact of tariffs at all.”

Critics say this uptick is just the beginning — they believe companies are trying to hold off on price increases until the president sets his final tariff rates in September, at which point prices could really take off. They argue there’s no way for businesses to pay double digit tariffs for imports without passing at least some of that cost on to consumers. To that point, last month, furniture, toys, and clothing all saw relatively significant price increases — those are all items particularly sensitive to tariffs.

Context: Year-over-year inflation hit a 40-year peak under Biden in 2022, and the Biden administration oversaw an average annual rise in prices of ~4.95% per year, compared to the 2.46% average during Trump’s first term.

Downsizing The Department Of Education

Topline: The Supreme Court says President Trump can move forward with mass layoffs at the Education Department.

The court voted 6-3 along ideological lines on Monday to block a lower court’s order — a federal judge in Boston said in May that about 1,400 employees of the Education Department must be allowed to return to work after they were fired in mass layoffs earlier this year. Now the Trump administration will be able to fire them, at least while the rest of the legal challenge plays out.

“The Federal Government has been running our Education System into the ground,” Trump said in a celebratory post to Truth Social. “But we are going to turn it all around by giving the Power back to the PEOPLE. America’s Students will be the best, brightest, and most Highly Educated anywhere in the World.”

In her dissent, Justice Sonia Sotomayor blasted the conservative majority, describing their decision as “indefensible.” Sotomayor argued that Trump is trying to illegally shutter the department without congressional approval. During his 2024 campaign, Trump pledged to shutter the Department of Education, but eliminating the department entirely would require an act of Congress – his executive order dismantles it as much as possible in the meantime. The other two liberal justices, Ketanji Brown Jackson and Elena Kagan, joined Sotomayor’s dissent.

Critics have pointed out that the Education Department doesn’t do much educating. Though it spends $80 billion in taxpayer dollars each year, it has no say over public school curriculums, which are decided at the state and local levels. Instead, it doles out $18.4 billion annually for Title I, the low-income school district program, and $15.5 billion for special education. It also enforces certain Title IX civil rights laws and sets the rules for colleges to participate in the $1.6 trillion federal student loan program. The Trump administration says other departments are better equipped to manage these programs.

And … under the Trump administration, the Education Department has terminated over $600 million in grants for training teachers in “divisive ideologies” including social justice activism, anti-racism, and recruiting teachers based on race.