Overview
Clean CR Passes the House. The House shifted its focus this week from advancing FY27 appropriations bills to passing a clean continuing resolution (CR) that would extend current funding levels through December 4. With Congress unlikely to complete the full appropriations process before the September 30 deadline, House Republican leaders proposed the measure to reduce the risk of a government shutdown ahead of the midterm elections and provide greater certainty while appropriators continue negotiating a full-year funding agreement.
House Democrats have strongly opposed the effort, with House Appropriations Ranking Member Rosa DeLauro (D-CT) releasing a fact sheet describing the proposal as premature and arguing that it fails to address funding needs or administration anomaly requests. Democrats have also criticized the measure for excluding language from the FY26 Homeland Security appropriations bill that would limit funding for ICE and Border Patrol activities. Despite that opposition, the CR (H.R. 9770) passed the House on Tuesday by a vote of 220-205, with six Democrats voting in favor: Reps. Kathy Castor (FL), Henry Cuellar (TX), Don Davis (NC), Jared Golden (ME), Vicente Gonzalez (TX), and Gabe Vasquez (NM). Rep. Thomas Massie (KY) was the lone Republican to oppose the measure.
The bill is not expected to pass in its current form in the Senate, where it will require 60 votes to advance. Senators are already developing a revised version that would incorporate anomaly requests from the Office of Management and Budget (OMB), while Senate Appropriations Vice Chair Patty Murray (D-WA) has signaled she will push to include additional Democratic priorities. For now, leaders in both parties appear focused on negotiating a bipartisan path forward and have stressed their desire to avoid a shutdown ahead of the election.
As for timing, Majority Leader John Thune (R-SD) said that a vote on the continuing resolution could happen as early as next week but could slip into the first week of August as work on Russia sanctions legislation continues. With the House already in recess, passage in the Senate would set the stage for final negotiations in September.
Reconciliation and Defense. In addition to the CR, the House narrowly adopted a budget resolution for a third reconciliation package by a vote of 216-214, with Reps. Massie and Warren Davidson (R-OH) joining Democrats in opposition. The resolution provides instructions for four House committees – Armed Services, Agriculture, House Administration, and Intelligence – to develop legislation totaling up to $95 billion, including defense and intelligence funding related to the ongoing conflict with Iran, assistance for farmers, and election-related initiatives.
Speaker Mike Johnson (R-LA) and House Republican leadership successfully rallied enough support to advance the measure by emphasizing its national security focus and its potential to serve as a vehicle for Republican election priorities, including elements of the SAVE America Act. Still, there are lingering concerns among fiscal conservatives about the absence of spending offsets. The resolution also faces significant hurdles in the Senate, where Republicans remain divided on the need for a third reconciliation package, particularly as Congress simultaneously negotiates a bipartisan continuing resolution to avert a shutdown. Senate Republicans have also argued that the House framework does not fully reflect the White House's defense funding priorities.
Those tensions were on full display during Tuesday's Senate Appropriations Committee hearing with Defense Secretary Pete Hegseth, who testified that the Iran conflict has cost $37.5 billion to date but acknowledged that the administration's broader $87.6 billion supplemental request includes funding beyond direct war-related expenses. The hearing also revealed that roughly half of the Pentagon's $150 billion FY25 reconciliation account remains unobligated, though Hegseth said 95 percent of those funds would be spent by the end of FY26. While the scope of the challenge remains a subject of debate, recent press reports indicate that several critical Defense Department accounts could run out of funding within weeks. The Department has also scaled back certain training and maintenance activities that support military readiness as it works to stretch available resources.
Defense funding will remain a central point of contention in the months ahead, particularly as the House and Senate continue to differ on whether supplemental resources should be provided through reconciliation or the regular appropriations process.
New Committee Assignments. Senate Republicans voted Tuesday on committee assignment changes following the passing of Sen. Lindsey Graham (R-SC). Senate Appropriations Chair Susan Collins (R-ME) will assume leadership of the State-Foreign Operations Appropriations Subcommittee, while Sen. Ron Johnson (R-WI) will become chairman of the Budget Committee. Newly appointed Sen. Darline Graham (R-SC) will assume her late brother's committee assignments on the Appropriations, Budget, Judiciary, and Environment and Public Works Committees. Chair Collins also released updated Appropriations subcommittee assignments on Wednesday, including the appointment of Sen. Cindy Hyde-Smith (R-MS) to the Defense Subcommittee. The changes come as the Appropriations Committee continues to navigate delays in its markup schedule stemming from Defense Subcommittee Chairman Mitch McConnell's (R-KY) prolonged absence.
OMB. The nomination of Hal Duncan to serve as OMB Deputy Director was favorably reported out of the Senate Homeland Security and Governmental Affairs Committee by a vote of 7-5 and out of the Senate Budget Committee by a vote of 11-10 this week. During Duncan’s June confirmation hearings before the Homeland Security and Budget committees, he declined to rule out the use of “pocket rescissions” and expressed support for the administration's proposed Regulation for Federal Financial Assistance (commonly known as the “Uniform Guidance”), which would expand political appointees' authority over federal grant decisions. The administration’s support for the use of these tactics has been an ongoing issue between OMB and congressional appropriators for the past two years, and one that we are watching closely.
Despite the expected partisan disagreements over federal spending and budget policy, the Budget business meeting this week also provided a reminder of a less common feature of today's Congress. Senators from both parties took time to share personal stories and reflect on their relationships with the late Sen. Graham. While policy disagreements remain sharp, the hearing offered an uncommon moment of bipartisan respect and collegiality, a reminder that personal relationships across party lines still endure even amid contentious political debates.
