Overview
What's the Skinny? Some appropriators are opening their portals for FY26 requests while others have already closed them. Congress is expecting a "skinny" FY26 budget request from the President in April, which will kick off their work. Reportedly, the House and Senate Appropriations Committee chairs had a productive discussion with Office of Management and Budget Director (OMB) Russ Vought on Wednesday and are hoping to move forward with hearings soon after they receive the skinny budget.
Reconciliation Breakthrough? With no major appropriations deadlines on the horizon, Congress focused on reconciliation this week. Republican leaders have been floating ambitious timelines for the process, with Senate Majority Leader John Thune (R-SD) saying a compromise budget resolution could be on the Senate floor as early as next week. Meanwhile, Speaker Mike Johnson (R-LA) has been floating an internal deadline of Memorial Day to enact the final reconciliation package. Any way you slice it, these deadlines will be difficult to meet – particularly given the ongoing disagreements over how to pay for the Tax Cuts and Jobs Act (TCJA) extensions that President Trump wants to enact. House Ways and Means and Senate Finance Committee Republicans are working with the Trump Administration on a path forward.
It is also worth noting that many of the specifics will hinge on the ruling of the Senate Parliamentarian. Republicans and Democrats are both holding meetings with the Parliamentarian to argue their case on specific issues, including whether Republicans will be able to use the “current policy baseline” to offset their planned tax policy. The Parliamentarian will hear their arguments, and we expect her to reach a decision as soon as next week.
The X (Date) Factor: The Congressional Budget Office predicted this week that the U.S. will hit the “X-date” in either August or September. While the debt limit has already been reached, the X-date is the date after which the U.S. would no longer be able to fully pay its bills on time. President Trump wants a debt limit increase to be included in a reconciliation package, but it remains to be seen whether he will be able to convince budget hawks to make this concession. While Memorial Day is the Speaker’s goal for passage of a reconciliation bill, we could see this stretching into the fall or beyond. If Republicans do not include the debt limit in reconciliation, they may need to include it in an appropriations measure, which would require them to work with Democrats.
FY25 Funding Freeze: In a message read on the House floor last week, the White House is blocking the release of $2.9 billion for non-defense emergency funding appropriated under the latest FY25 continuing resolution. The White House argued that this money was improperly appropriated under the June 2023 side deal between former Speaker Kevin McCarthy and President Biden. Additionally, most of this money was for international disaster aid as well as migration and refugee assistance – all things that have been targeted by DOGE cuts.
In response, Senate Appropriations Committee Chair Susan Collins (R-ME) and Vice Chair Patty Murray (D-WA) wrote to OMB Director Vought stating that the President does not have a line-item veto, and since the funding was signed into law, he is expected to uphold each of its provisions. This letter underscores the current push and pull between appropriators and the executive branch, which is unlikely to be resolved any time soon.
ICYMI: Former Rep. Dan Bishop was confirmed to be Deputy Director of the White House Budget Office.
