Overview
Note: With the July 4th holiday, The Topline will take a break next week and will be back in your inbox on Friday, July 11.
Markup Rush. The House passed the first FY26 appropriations bill (MilCon-VA) this week by a vote of 218–206. This follows continued progress by the House Appropriations Committee, which in recent weeks has advanced several bills in full committee, including Legislative Branch, Homeland Security, and Agriculture this week. The committee is aiming to complete all markups before the August recess, though Chairman Tom Cole (R-OK) has acknowledged that meeting this timeline will be challenging. As a status check: Seven of the twelve appropriations bills have yet to be considered by the committee.
Senate Chair Susan Collins (R-ME) and Vice Chair Patty Murray (D-WA) continue to negotiate a topline agreement and subcommittee allocations, while staff continue drafting bills. The committee is tentatively planning to begin subcommittee markups the week of July 10, with Ag-FDA, CJS, and Leg Branch expected first. Additionally, Chair Collins has said her goal is to have a three-bill minibus (the grouping of which remains to be determined) on the Senate floor before the August recess.
Rescissions Center Stage. The rescissions package had its moment in the spotlight this week in the Senate, as Office of Management and Budget (OMB) Director Russ Vought testified before the Senate Appropriations Committee to discuss in further detail the Trump Administration's proposed cuts. Chair Collins zeroed in on proposed cuts to global health programs, saying they lack a compelling justification. Given her concerns, Chair Collins indicated she is drafting a substitute amendment for floor consideration to protect global health programs, though it will ultimately be up to Senate leadership to decide whether the package will be modified.
The passage of a rescissions package could also throw a wrench into FY26 negotiations. As noted last week, Vice Chair Murray has cautioned that passage of the rescissions bill could jeopardize the ability to reach a bipartisan appropriations agreement, stating "if our funding bills must be bipartisan, then our funding cuts have to be as well" – a nod to the growing concern that FY26 appropriated funds may ultimately be rescinded (or impounded) despite any congressional agreement.
The Senate Appropriations and Budget Committees have until July 7 to act on the measure; otherwise, the bill could be discharged to the floor and subject to amendments. The amended version would then have to be sent to the House and passed by July 18. Failure to pass the measure would require that funds specified in the package be obligated and spent before the end of the fiscal year.
Notably, Director Vought confirmed the administration is still considering the use of "pocket rescissions" to cut funds to additional programs within 45 days of the fiscal year's end, though did not specify which programs would be considered for the next round. The administration's continued pursuit of these rescissions – especially pocket rescissions, which circumvents Congress’s power of the purse – will continue to exacerbate the tug-of-war between Congress and the executive branch over spending authority.
Other Outstanding Items: The rapidly approaching debt ceiling remains a critical factor underlying both appropriations and reconciliation discussions. The Treasury Department has advised policymakers that it will exhaust its borrowing authority by mid-August, slightly earlier than the previously anticipated late August timeline. The passage of the reconciliation bill currently under consideration would increase the debt limit by an additional $5 trillion, temporarily addressing the issue until yet another raise is required.
Finally, appropriators and defense hawks are in the early stages of drafting a potential supplemental aid package to provide more aid to Israel and restock US munitions. While there has yet to be a formal request from the Trump Administration, Chair Collins confirmed she is open to the idea.
