Overview
The Big Picture. The FY26 appropriations process is in full swing, with agencies submitting budget justifications, committees conducting hearings, and subcommittees marking up legislation. However, a critical obstacle to reaching a deal lies in the strained cooperation and trust between the legislative and executive branches. Appropriators face competing demands from congressional Republicans seeking spending cuts, Democrats wanting provisions to ensure administrative implementation of any deal, and the White House threatening impoundment of congressionally appropriated funds. Balancing these opposing priorities risks tipping the political scale against a final spending package. No appropriator likes a full-year continuing resolution, under any administration. It deprives Congress of the opportunity to update policy and funding levels, and it eliminates the option for earmarks.
Off to the Races. Some of the long-awaited FY26 budget justifications have been sent to Congress, providing additional detail on the Administration's budget request for most federal agencies (though we are still waiting on the Departments of Defense and Commerce).
Despite the Administration's delay, congressional appropriators are moving forward with the FY26 bills. House Appropriations Chairman Tom Cole (R-OK) hopes to finalize his 302(b) allocations by next week, which will provide clarity on topline spending levels for each subcommittee as they draft and finalize bills for FY26. Additionally, the House kicked off its subcommittee markups this week, beginning with MilCon-VA and Ag-FDA. Next week, the work continues with these two bills moving to full committee consideration and others moving to either subcommittee or full committee action. Notably, while they still lack detail from the Administration on Defense, the House will also move ahead with subcommittee and full committee markups of that bill next week.
The full House markup schedule can be found here. The Senate Appropriations Committee has yet to release its markup schedule, but it is expected to begin an aggressive markup process toward the end of the month.
Day-Deeming. Plans are already in the works regarding how to pass appropriations bills on the House floor later this year, with Republicans opting for the commonly used "deeming" resolution rather than a full budget resolution to set spending levels for FY26. With only one allotted budget resolution per fiscal year, they would like to save the FY26 budget resolution for a second reconciliation bill. The toplines in the deeming resolution would likely be similar to the spending levels provided in President Trump's FY26 spending request.
Rescissions. The Trump administration has formally submitted a rescissions request to Congress, seeking $9.4 billion in cuts, including $8.3 billion from State Department programs and $1.1 billion from public broadcasting. Congress has 45 legislative days to act on the request, and failure to codify any individual cut would require the Administration to spend the funds and prohibit a second rescission attempt on those programs. House Republicans aim to fast-track a vote on the package next week, with Chairman Cole planning on bypassing committee review. On the Senate side, Chair Susan Collins (R-ME) has signaled a willingness to modify what is included in the request and has raised specific concerns about cuts to the US President's Emergency Plan for AIDS Relief (PEPFAR).
Tackling Mandatory Spending. Mandatory spending continues to consume a growing share of the federal budget, leaving less room for discretionary spending decisions. This issue has surfaced in the House reconciliation debate with proposed Medicaid cuts and is now driving a Senate Republican proposal to reduce Medicare costs by cutting payments to private insurers offering Medicare Advantage plans. As Medicare is the second largest and fastest-growing budget item, it has become a key target for Republicans seeking to address deficit concerns and fund their tax priorities.
