Overview
The Buzz on the 302(b)s. This week, the House Appropriations Committee approved 302(b) allocations for FY26, which establish the overall spending levels for individual appropriations bills. However, there is a notable caveat: the Committee only approved allocations for the four bills that were scheduled for markups. The subcommittee allocations for the remaining eight House appropriations bills are still undisclosed for now, as is the overall House topline number which has yet to be deemed.
On the Senate side, appropriators have not yet set a topline spending level and are not expected to do so until after the reconciliation bill is passed. This delay leaves the Senate with a narrow window to finalize funding levels and draft appropriations bills before the end of the fiscal year. We suspect the Senate will use September to advance some bills through committee or post bills publicly as they've done in the past.
Markups Make Progress. Markups continued in the House this week, with subcommittees advancing the Homeland Security and Defense bills and the full committee passing the MilCon-VA and Defense bills. Committee members spent late nights and early mornings trying to advance the bills on a compressed timeline due to the Congressional Baseball Game, the White House picnic, and the late Congressman Charlie Rangel's funeral today. The Agriculture bill is about 70% complete and will be wrapped up when members return. Homeland Security was also postponed.
The House will be out on recess next week and will reconvene on June 23 for consideration of their remaining FY26 bills. The Senate will remain in town and will continue hearing from cabinet secretaries about their requests.
Hegseth on Defense. Defense Secretary Pete Hegseth faced bipartisan scrutiny this week over the Department of Defense's FY26 budget request, which relies in part on yet-to-be-passed reconciliation funds. During testimony before the Senate Appropriations Committee, lawmakers accused Hegseth of using the funds to inflate base budget numbers. Chair Susan Collins (R-ME) emphasized that reconciliation is intended to supplement – not supplant – core defense spending. Without those funds, FY26 levels remain flat compared to FY25, frustrating defense hawks. Hegseth argued that both funding streams form a unified budget, but pushback from these hawks is likely to intensify.
Rescissions Roll On. The rescissions package sent to Congress last week by the President – outlining $9.4 billion in cuts, including $8.3 billion from State Department programs and $1.1 billion from public broadcasting – passed the House on a 214-212 vote. The bill will now head to the Senate, though timing for passage remains unclear as the chamber remains busy working to pass its reconciliation package. Notably, a few Republican senators remain concerned about cuts to foreign aid programs like the President's Emergency Plan for AIDS Relief (PEPFAR) program.
To build on rescission momentum, Office of Management and Budget Director Russ Vought has floated the idea of a "pocket rescission." This tactic involves submitting a rescissions package within the final 45 days of the fiscal year. If Congress does not act, the administration can freeze funding for targeted programs through September 30, allowing the funds to expire without being spent. Although the Government Accountability Office has found this approach inconsistent with statutory requirements, Director Vought claims that it is a legitimate tool to eliminate funding for programs deemed unnecessary.
The proposal has sparked pushback on Capitol Hill, with House Interior Appropriations Chairman Mike Simpson (R-ID) calling it a "bad idea" that "undermines Congress's authority." This debate highlights broader tensions between the executive branch and congressional appropriators, who view control over federal spending as a core legislative function. Efforts by the administration to bypass the appropriations process are seen by many in Congress as an erosion of their constitutional role in shaping funding and policy.
