Spiegel Stuff: The Hill's Morning Report - Democrats call for labor secretary’s resignation following new evidence of lenient prosecution a decade ago | Acosta defends prosecutorial judgment in Epstein sexual predator case; Trump lauds his secretary | McConnell draws reelection challenge from McGrath, but Democrats face steep climb in Kentucky | Biden to ramp up schedule, release policy proposals amid struggles | Tom Steyer announces 2020 bid, brings Dem field to 25 candidates | House Dem tensions over border put defense bill in peril | House Dems wonder: to do comprehensive immigration reform or not? | Trump administration reboots after drug pricing rule blocked in court

Welcome to The Hill’s Morning Report. Happy Wednesday! Our newsletter gets you up to speed on the most important developments in politics and policy, plus trends to watch. Co-creators are Alexis Simendinger and Al Weaver (CLICK HERE to subscribe!). On Twitter, find us at @asimendinger and @alweaver22.

The phrases “sex offender,” “underage girls” and “lenient prosecution” in news coverage involving President Trump’s former friend Jeffrey Epstein and his labor secretary, former Miami prosecutor Alexander Acosta, sparked the kind of Washington damage control on Tuesday that often leads to a resignation heading into an election year.

Senate Democrats stampeded to microphones to urge the president to fire Acosta or ask him to step down after a Miami Herald investigation and evidence gathered by federal prosecutors in New York resulted in Epstein’s arrest this week. Events stirred a national uproar about how a multimillionaire cut a lenient plea deal with Acosta a decade ago in a case involving the molestation of dozens of teenage girls, some as young as 14.

Epstein pleaded not guilty this week to any new criminal activity and remains in custody. Acosta defended his 2008 decisions as U.S. attorney in Miami and tweeted that Epstein’s crimes “are horrific.” And Trump hastened to say he has had no contact with Epstein in more than a decade. Acosta, he said, is “a very good secretary of labor,” but he added that the White House is “looking at it [his role in the Epstein case] very closely.”

Trump told reporters he knew Epstein, a well-connected hedge fund manager, “like everybody in Palm Beach knew him. He was a fixture in Palm Beach. I had a falling out with him a long time ago. I don’t think I’ve spoken to him for 15 years. I wasn’t a fan,” he said.

Trump offered a different assessment in 2002, telling New York magazine, “I’ve known Jeff for fifteen years. Terrific guy. He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it – Jeffrey enjoys his social life.”

From 2001 to 2005, Epstein allegedly molested young girls he paid and procured through others — sometimes three in a day — according to evidence gathered by police, who at the time sought help from the FBI.

Under the Florida deal Epstein and his lawyers negotiated with Acosta to avoid federal prosecution, the financier pleaded guilty to state prostitution-related charges and was allowed to go to his office during the day while he served 13 months of an 18-month jail sentence. He also registered as a sex offender and agreed to pay millions of dollars in restitution to dozens of his victims.

Democratic lawmakers, including Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) on Tuesday urged Trump and GOP lawmakers to seek Acosta’s resignation.

Republicans, eager to avoid a public rift with the president, tiptoed carefully around the labor secretary, who appears to be on shaky ground. Senate Majority Leader Mitch McConnell (R-Ky.) said he would “defer to the president” on Acosta’s continued service, calling Epstein’s crimes “horrendous” (The Hill).

Senate Judiciary Committee Chairman Lindsey Graham (R-S.C.) said he is “open” to holding a hearing to examine the details of the financier’s non-prosecution agreement (The Hill).

“If this plea deal doesn’t withstand scrutiny, then it would be the job of the Judiciary Committee to find out how it got off the rails. What kind of checks and balances do we have to make sure that complaints involving minor children are adequately investigated?” Graham said.

Prosecutors in Manhattan who brought new charges of sex trafficking and conspiracy against Epstein are arguing that the 2008 deal reached in Florida does not apply to this week’s federal indictment.

“The Daily” podcast, The New York Times: United States v. Jeffrey Epstein.

The Associated Press: Trump defends Acosta but will look into Epstein plea deal.

Tim Alberta, Politico Magazine book excerpt: How Trump survived the Access Hollywood tape.

LEADING THE DAY

2020 CAMPAIGN & POLITICS: McConnell is also under a different kind of pressure from Democrats, this time from politicos who are hoping to take out the longtime Senate GOP leader in 2020.

Amy McGrath, a retired Marine and Democratic congressional candidate, announced Tuesday, to much fanfare from Democrats, that she is running against McConnell, who is seeking a seventh term in office. A top recruit of Schumer, McGrath lost her bid to unseat Rep. Andy Barr (R-Ky.) last cycle despite being viewed as one of the top Democratic candidates on the 2018 scene.

While McGrath is sure to attract high dollars from Democrats and attention to the race, it will be a steep climb for her to take down McConnell, who has many political advantages in 2020, including Trump on top of the ticket in a deep red state.

“Reality check: Amy McGrath ran for House in 2018 (a terrific Dem year) and lost by 3% in #KY06, which went for Trump by 15% in 2016. Now she’s running w/ basically the same message in a state that went for Trump by *30%.* Folks…” said Dave Wasserman of the Cook Political Report. “Nationally, Dem voters/donors love McGrath’s profile (and those of many other ‘18 women whose personal stories dwarf those of the ‘20 prez candidates). Kentucky voters as a whole...not so much.”

Trump came out shortly after McGrathy’s announcement to endorse the Kentucky Republican, warning voters that “Democrats are coming after” McConnell.

While McConnell has become a political villain to Democrats, he continues to embrace the persona, dubbing himself the “Grim Reaper” and the steward of the “legislative graveyard.” His political team has also continued to use the moniker “Cocaine Mitch” in the campaign after receiving the nickname from Don Blankenship during the West Virginia Senate race in 2018.

Robert Costa, The Washington Post: Democrats cast McConnell as villain in bid to win Senate and energize liberals.

> Steyer announces: The 2020 Democratic field grew once more on Tuesday, as Tom Steyer, a billionaire environmentalist and philanthropist, announced his presidential bid, making him the 25th candidate in the race.

Steyer’s announcement came just months after he did something rare: He traveled to Iowa to say he wasn’t running for president, insisting he would continue to focus his efforts on impeaching the president. However, in the months since, he has reportedly grown tired of the pace toward impeachment and is running for the White House instead (The Associated Press).

Despite his pro-impeachment stance, Steyer made no mention of the issue in his announcement, focusing instead on reducing the influence of corporations in politics and climate change, another pet issue of his.

Steyer’s entrance was not greeted warmly by some in the 2020 field. Sen. Elizabeth Warren (D-Mass.) tweeted that the race “should not be decided by billionaires, whether they’re funding Super PACs or funding themselves,” a veiled shot at Steyer’s announcement (The Hill).

> Biden ramps up travel: Former Vice President Joe Biden will take on a more aggressive schedule in the coming weeks, adding more town halls to his schedule on the heels of criticism that he wasn’t campaigning as much as his competitors, say aides and allies close to the campaign.

Biden is also expected to make a string of policy rollouts in the coming days, aiming to shift the conversation after a bumpy few weeks for his campaign. On Tuesday, Biden’s team announced that he will deliver a speech Thursday in New York on foreign policy “that includes restoring dignified leadership at home and respected leadership on the world stage.”

The former vice president has taken slings and arrows from all directions in recent weeks, including over comments about his work with segregationist senators in the 1970s and over busing at the first Democratic debate with Sen. Kamala Harris (D-Calif.).

This weekend, Biden apologized for the segregationist comments and sought to clarify his record, which has been picked over by his Democratic opponents and operatives. But those close to Biden say he will seek to keep talking about the current day issues on the minds of voters (The Hill).

On Tuesday, Biden also released three years of tax returns and his financial disclosure form, showing that he has made $15 million since leaving the White House. The former vice president made most of his income from a lucrative book deal and speaking engagements.

The Hill: Progressives face steep odds in ousting incumbent Democrats.

W. James Antle III: Joe Biden is having an identity crisis.

Time: For Trump, courts are another 2020 battleground.

The Hill: Greg Murphy wins GOP primary runoff for North Carolina House seat.

David Ignatius: Democratic candidates must get tough on Iran. They could seize the high ground.

Elsewhere in the political world … McConnell is openly courting Secretary of State Mike Pompeo to run for the Senate in 2020 after Kris Kobach launched his bid for the seat. Pompeo has said in recent months that he will not launch a bid to replace retiring Sen. Pat Roberts (R-Kan.) (The Wall Street Journal) … Houston is expected to play host to the third set of Democratic primary debates in September, which will be sponsored by ABC News and Univision. The first debate held two weeks ago was in Miami, while the second one in late July will be held in Detroit (The New York Times).

More … H. Ross Perot, a self-made billionaire who twice ran for president as an independent, died at age 89 of leukemia on Tuesday. The Texas businessman won 19 percent support in the 1992 presidential election, the most won by any independent who has run for the White House (The Associated Press).

IN FOCUS/SHARP TAKES

CONGRESS: Lingering animosity from progressive lawmakers in the House over the recent border supplemental bill is threatening to trip up the National Defense Authorization Act (NDAA), a defense policy bill that typically passes with large bipartisan majorities.

The House is taking up the NDAA this week, a $733 billion bill that touches on everything from the type of hardware the Pentagon can buy to a pay raise for troops to a new military service for space. Trump has issued a veto threat for the measure. Republicans are signaling they will vote against the bill over several provisions they oppose, including a $733 billion top line they consider too low. That means Democrats will likely have to pass the bill on their own.

However, progressives believe the $733 billion is too high, and they aren’t in the mood to make a deal after a bitter fight over the $4.6 billion border bill roiled them two weeks ago. Democratic leaders are concerned they are short of the votes needed, and Wednesday’s caucus meeting will be contentious (The Hill).

> Immigration: While Democratic leaders are seeking piecemeal fixes for the border crisis, they are also weighing a thornier political issue ahead of the 2020 elections: Comprehensive immigration reform.

Pelosi and other Democratic leaders have said that an expansive immigration package is the only long-term solution for managing the waves of migrants arriving at the southern border, where reports of subpar health and hygiene conditions have drawn howls from liberals accusing the Trump administration of creating a humanitarian crisis. However, any package would likely be dead on arrival in the GOP-controlled Senate, leaving Pelosi and Democrats wondering whether any comprehensive effort would be worth it, particularly for moderate Democrats who helped the party retake the House in 2018 and could be in tough races in 2020.

Despite possible consternation for moderates, progressives are relishing the idea of a comprehensive package and are pressing leadership to take it up

"The idea that if we do something, why should we take the risk when the Senate's not going to do anything?" said Rep. Raúl Grijalva (D-Ariz.). "Any sense to slow it down is because of that. But I think it's still an important piece to have out there," he continued. "It's an important placeholder we need to put down for 2020 so that people running for president and Congress know that this bill's out there" (The Hill).

NBC News: Migrant kids in overcrowded Arizona border station allege sex assault, retaliation from U.S. agents.

The Associated Press: Pelosi’s feud with Rep. Alexandria Ocasio-Cortez (D-N.Y.) tests party heading to 2020.

> Debt ceiling: Lawmakers are raising red flags about the timeline for increasing the debt ceiling as negotiations toward a spending caps deal have stalled with the White House.

Congress could need to increase the debt limit by early September, a timeframe that would give lawmakers a matter of weeks before they leave for the August recess. Though they could return in September with days to act, senators are warning against pushing the debt fight, which has the ability to spook financial markets, down to the wire.

The full Congress has only 11 legislative days left before the House leaves on July 26 for a six-week August recess. The Senate is scheduled to leave town for recess on August 2 (The Hill).

The Hill: Pennsylvania Republican expected to replace Rep. Justin Amash (Mich.) on Oversight and Reform Committee.

The New York Times: House Judiciary Committee to issue blitz of subpoenas, raising heat on Trump.

OPINION

Census paves moment of truth for the Supreme Court and rule of law, by Paul Smith, opinion contributor, The Hill. https://bit.ly/30pTPc2

Don't dismiss Tom Steyer: He's the most media-savvy candidate going, by Joe Ferullo, opinion contributor, The Hill. https://bit.ly/2XDm3mL

WHERE AND WHEN

📺 Hill.TV’s “Rising” program features Rep. Larry Bucshon (R-Ind.), to talk about surprise medical billing, and Carl M. Cannon, the Washington bureau chief at RealClearPolitics, to describe RealClear Opinion Research’s polling results on the attitude of Americans toward trade, tariffs and big tech at 9 a.m. ET at http://thehill.com/hilltv or on YouTube at 10 a.m. at Rising on YouTube.

The House meets at 10 a.m.

The Senate convenes at 9:30 a.m. to resume consideration of the nomination of T. Kent Wetherell to be a district judge for the Northern District of Florida.

The president will present ideas about overhauling the nation’s system of organ transplants, dialysis and home care for chronic kidney disease at 11:15 a.m., promoting the goal of government savings and improved life expectancy (The Washington Post).

Vice President Pence will visit Lemoore, Calif., to attend a Trump Victory luncheon, followed by remarks about the U.S.-Mexico-Canada Agreement at a family farm nearby. The vice president will then visit the Vandenberg Air Force Base, where he will stop by the Combined Space Operations Center for a briefing about launch operations. He will speak to base personnel there. From Lompoc, Calif., that evening, Pence will travel to San Diego.

Treasury Secretary Steven Mnuchin meets at 10:30 a.m. with Latvian Prime Minister Arturs Krišjānis Kariņš at the Treasury Department. He then meets with German Federal Minister of Economic Affairs Peter Altmaier at 11:15 a.m. And at 4:30 p.m., the secretary sits down with Sir Mark Sedwill, the U.K. Cabinet secretary and head of the Civil Service.

Federal Reserve Chairman Jerome Powell testifies at 10 a.m. before the House Financial Services Committee and delivers the Fed’s semiannual monetary policy report to Congress. Powell will appear before the Senate on Thursday.

ELSEWHERE

➔ State Watch: In Virginia on Tuesday, lawmakers abruptly adjourned less than two hours after beginning a special session called in response to a mass shooting in the state six weeks ago. State lawmakers opted to postpone any action on proposed gun control measures until after the state’s elections in November. Democratic Gov. Ralph Northam called on the Republican-led legislature to address gun violence following a mass shooting in Virginia Beach, but Republicans dismissed Northam’s efforts as a political stunt (The Associated Press). Virginia is now an election battleground in the fight over gun laws (The Associated Press).

➔ End-of-life care: Some 20 percent of U.S. hospice programs have been found to have flaws serious enough to harm patients, according to the Office of the Inspector General in the Department of Health and Human Services. From 2012 through 2016, health inspectors cited 87 percent of hospices for deficiencies.

However, patients and their loved ones have little chance of learning about those program problems in advance as they select care, according to federal information released on Tuesday (NPR).

➔ Courts: Trump and many like-minded Republicans suffered a setback this week when a federal judge blocked a key administration rule designed to lower drug prices. The executive rulemaking was one of Trump's prominent initiatives in response to consumers who complain about high prescription drug costs (The Hill).

➔ Census: A federal judge in New York, leaning on a procedural rule that requires the government to provide a reason, on Tuesday blocked the Department of Justice from changing its legal team handling the administration’s efforts to add a question about citizenship to the census (The Hill). … Taking a look at history, it turns out the politicization of the census is not new. After the 1920 population survey, Congress refused to reapportion House seats for an entire decade, and many of the themes that played out then are familiar today: fear of immigrants, an urban-rural divide and the legacy of America’s bitter race relations (The Hill).

THE CLOSER

And finally … 🚘 Since 1938, the Volkswagen Beetle has been iconic, ubiquitous, globally adventurous and fun. It shook off the Nazis, seized the post-war boom years, transported free love and free spirits through the 1960s, and somehow survived Disney’s “The Love Bug” and flying Herbie movies.

It was affectionately tweaked, glamorized and reimagined for eight decades. Today, Volkswagen is ending Beetle production. however, as the last of 5,961 collector versions of “the people’s car” heads for a museum following ceremonies in Mexico, where VW began manufacturing the Beetle in 1967.

The end comes at a turning point for Volkswagen as it rebounds from a scandal over cars it secretly doctored to clear diesel emissions tests. The company wants to move into mass production of a battery-driven compact car it hopes will have an impact like that of the Beetle and the Golf by bringing electric vehicles to a mass market. Viel glück (The Associated Press).

The Morning Report is created by journalists Alexis Simendinger and Al Weaver. We want to hear from you! Email: asimendinger@thehill.com and aweaver@thehill.com. We invite you to share The Hill’s reporting and newsletters, and encourage others to SUBSCRIBE!