The Senate enters its final two weeks before the August recess facing a familiar appropriations paradox: September 30 is too close to realistically complete all twelve appropriations bills, yet Congress must generate enough legislative momentum to avoid governing entirely through crisis management. Last week, the House began August recess in July after passing its version of the FY2027 National Defense Authorization Act (NDAA), a continuing resolution (CR), and a budget resolution intended to kick off the reconciliation 3.0 process in earnest. Meanwhile, the Office of Management and Budget (OMB) submitted their anomalies list to Congress, which Senate appropriators are utilizing in their quest for a bipartisan path forward.
The House: Building a Runway Before September
NDAA Progress
After weeks of procedural turbulence and political brinkmanship, House Republican leadership successfully passed a historic $1.15 trillion National Defense Authorization Act last week. What is traditionally one of Congress's most bipartisan annual measures passed largely along party lines, 216-212. The partisan split reflects not only the unprecedented level of defense spending authorized for FY2027 but also growing Democratic concerns regarding the Administration's broader national security policy, most principally the use of military force in Iran and the opinion that it is not only overly expansive, but perhaps unlawful. While the House can claim a significant legislative victory, the narrow margin underscores the increasingly political environment surrounding even traditionally bipartisan national security legislation.
The House Republican Continuing Resolution
House Republicans took the unusual step last week of passing a CR that extends government funding through December 4; more than two months before the September 30 fiscal year deadline. The text is notable not just for its timing – extending funding past Election Day – but also for its relative simplicity (a “clean CR”). Unlike most stopgap measures, the House Republican-drafted CR was developed in the absence of OMB’s anomaly requests and therefore does not include many of the administration’s requested funding adjustments and extension of authorities. Readers of the Approps Drop will recall that OMB anomalies identify funding and policy exceptions needed to keep agencies functioning when a CR's across-the-board funding approach proves inadequate. They frequently include requests for disaster-response flexibility, extensions of expiring authorities, funding to address program shortfalls, transfers between accounts, or other technical fixes.
We do not expect the House-passed measure to become law in its current form, particularly as Senate appropriators and the Administration work toward a bipartisan alternative that will include anomalies. Nevertheless, the vote serves an important political purpose. House Republicans are attempting to demonstrate that they can legislate, avoid a government shutdown, and provide a foundation for future funding negotiations, even if the final product bears little resemblance to the bill that cleared the House.
Shutdown Reform Gets a Hearing
Lastly, the House Appropriations Committee's hearing last week on government shutdown prevention offered a timely reminder that lawmakers are increasingly focused not only on funding the government, but also on addressing the structural problems that repeatedly bring Congress to the brink of shutdown. Of note was the testimony of former OMB Director Shalanda Young, whose perspective carries heightened weight given her experience navigating multiple high-stakes funding deadlines from both Capitol Hill and the Executive Branch.
Former Director Young emphasized the real-world consequences shutdowns impose on federal agencies, employees, contractors, and grant recipients, while cautioning that reforms should preserve Congress's incentive to complete annual appropriations bills rather than defaulting to perpetual stopgaps. Her testimony served as an important reality check, grounding a broader discussion of proposed legislation regarding automatic continuing resolutions and other procedural reforms, within the practical challenges of governing.
The Senate: Stalled Markups, Active Negotiations
The Bipartisan CR Track
While the House has left town, Senate appropriators are diligently laying the groundwork for their own bipartisan CR. Conversations between Chair Susan Collins and Vice Chair Patty Murray continue as staff work through OMB's anomaly requests and other priorities that were absent from the House product.
This represents a meaningful sign of momentum. Senate leaders have indicated they would like to move a bipartisan CR before departing for recess, making the Senate the chamber most likely to shape the stopgap measure that ultimately becomes law. Assuming Senate action occurs, Congress is likely headed toward a familiar fall "ping-pong" process, with funding legislation bouncing between the chambers as leaders attempt to reconcile competing approaches and inclusions. Expect serious CR activity next week, as the Senate's schedule this week has been compressed to accommodate memorial services for Senator Lindsey Graham.
Supplemental Hearing Provides a Reality Check
Last week's Senate Appropriations Committee hearing on the administration's supplemental request served as a reminder that Congress is juggling even more than annual appropriations. Defense Secretary Pete Hegseth and General Dan Caine made the case for roughly $67 billion in defense supplemental funding tied largely to Iran-related operations and munitions replenishment, while appropriators questioned both the scope of the request and whether elements belong in an emergency package rather than the annual appropriations process.
The hearing reinforced a question that will loom over the August recess: how much additional defense spending is Congress willing to entertain while regular appropriations remain unfinished and in negotiations?
That question became even more relevant this week after Senate Majority Leader John Thune acknowledged that he currently lacks sufficient votes to advance the House-passed $95 billion budget resolution, which is intended to pave the way for additional defense, agriculture, and election-related funding through reconciliation. With resistance emerging even within the Republican conference, the Senate may find itself debating not only the merits of the administration's supplemental request, but also whether Congress has the political appetite for multiple vehicles carrying significant new spending at the same time. The combination of an ambitious supplemental request and unfinished FY27 appropriations bills underscores the increasingly crowded fiscal agenda awaiting senators when Congress returns from August recess.
Markups? Posting? What’s Next for FY27?
Senate Appropriations markups remain stalled. Ongoing disagreements over the defense/non-defense spending split, coupled with the lack of a bipartisan amendment agreement, continue to prevent bills from moving through committee. With Senator McConnell remaining out, Appropriations Chair Collins lacks the votes necessary to advance legislation out of committee and onto the Senate floor.
That reality begs the question of whether Republican appropriators will release bill text and report language without formal committee action in advance of the August recess. Such a move would provide stakeholders with greater insight into Senate priorities, establish negotiating positions ahead of bicameral talks, and demonstrate a continued commitment to the appropriations process despite procedural obstacles.
Of course, an equally plausible scenario is that appropriators simply hold the bills until September in hopes of eventually reaching a markup agreement, or even October or November to post. A fall posting has precedent. We've seen years where gridlock has delayed Senate action for months, only for appropriators to eventually release bills and negotiate directly with the House later in the process. The longer Senate bills remain under wraps, however, the more difficult it becomes to "clear the decks" and complete all twelve FY2027 appropriations bills before the next Congress convenes. Difficult, but not impossible.
One More Thing: Thune and Trump
The most consequential drama on Capitol Hill may not be happening inside the Appropriations Committees at all. Tensions between President Trump and Senate Majority Leader John Thune have moved into public view, with the White House openly expressing frustration over the Senate's inability to advance key administration priorities before recess – like the SAVE America Act. Thune, meanwhile, has pushed back by emphasizing the reality of Senate vote counts and procedural constraints.
For appropriations watchers, the significance goes beyond the personalities. A widening divide between the White House and Senate Republican leadership could complicate negotiations on everything from a continuing resolution to reconciliation to supplemental spending. The timing is especially notable as House Republicans are already discussing the possibility of a fourth reconciliation package, even as the current reconciliation effort struggles to gain traction in the Senate. Taken together, the uncertainty surrounding reconciliation 3.0, the emergence of reconciliation 4.0 discussions, and growing tensions between Trump and Thune underscore a broader reality: the legislative agenda is expanding far faster than Congress's capacity to execute it as the clock runs out on the 119th Congress.
