4th of July is a great time to visit DC - nothing more patriotic than visiting the Archives to view our founding documents, Emancipation Proclamation, a host of other stuff and then watching the fireworks over the mall with all our iconic national buildings as the backdrop is something that can't be beat. All the fabulous Smithsonian Museums are open and free (well, check for Air and Space as it is being renovated) and then the wonderful folk-life festival on the mall (boy, I miss the days watching the Beach Boys play the mall...).

But also for exactly those reasons this is the highest point of the high season and there is no "better" time to visit on either side of the holiday. Suggestion: you might also check with your congress-critters office's about whether or not they are able to arrange any tours (White House, Capitol, house or senate office buildings) while you are here.