During the week of June 8,both the Labor, Health and Human Services, Education and Related Agencies (LHHS) and Homeland Security (DHS) bills were passed out of full committee in the House and the Defense appropriations bill held a classified subcommittee session. We will see an open full committee markup on June 24 after next week’s House recess.
It was a different story over in the Senate. While no markups were officially noticed, we expected at least three bills to be marked up on Thursday, June 11. That did not happen, and instead a simmering topline spending disagreement boiled over into public view.
Key Highlights
- Simmering Senate disagreements over a topline spending deal boiled over into public view.
- An OMB Proposed Rule would significantly change the Uniform Guidance for federal financial assistance, including grants.
- The Byrd Rule remains a challenge for passing President Trump’s policy priorities via Reconciliation 3.0.
The House – 11/12 Through Full Committee
The House has officially passed 11 out of 12 bills through full committee markups, with just the Defense bill remaining. This is impressive but as a general rule, the House moves bills through Committee and to the floor on a partisan basis and under majority rule. The bills are largely not formulated on a bipartisan basis, and most amendments offered by the minority are rejected on partisan lines in markup. Bipartisanship for the House generally begins at Conference negotiations with the Senate.
During consideration of the LHHS bill, Ranking Member Rosa DeLauro offered an amendment blocking OMB’s most recently published Proposed Rule that would make significant revisions to 2 C.F.R. Part 200, commonly known as the Uniform Guidance governing federal financial assistance. The Proposed Rule includes new prohibitions on the use of federal funds, establishes a new pre-issuance review process involving senior political appointees and imposes new compliance obligations on recipients. The amendment failed 29-32 with one Republican voting in favor. While the rule is slated to go into effect October 1, 2026, this is an issue House Democratic leadership will likely want to confront in any final Fiscal Year (FY) 2027 negotiations.
The Senate, The Stalemate
Last week in the Senate brought much finger pointing and little markup action for Chairwoman Susan Collins and Vice Chairman Murray. Three bills were slated for Full Committee markup on June 4: Agriculture/FDA, Legislative Branch, and Commerce, Justice and Science. That markup was postponed, ostensibly due to Reconciliation 2.0’s vote-a-rama. We expected to see those bills marked up on June 11, but instead Chair Collins released a statement explaining that the Committee could not go forward in part because while Vice Chair Murray insists on a topline spending agreement (how much money the committee plans to spend across all 12 bills) to proceed to markups, Chair Murray did not. Chair Collins also noted that then-Chair Murray refused to proceed if poison pill riders were considered.
From Vice Chair Murray’s reported perspective, the two leaders historically always had a bipartisan understanding on topline funding going into each of the first markups, whether on paper or otherwise. Vice Chair Murray also made it clear in her reported statements that Congress must use its power via the Appropriations Committee to respond to the Trump administration, meaning tough amendments votes are on the table.
What Does It All Mean?
It’s clear that the path forward for final FY 2027 appropriations bills remains rocky at best and certainly uncertain. For the optimists, Chair Collins and Vice Chair Murray traditionally return to bipartisanship, even when the congressional environment is exceedingly grim.
But, for many years Appropriators have underwritten bills with rescissions and offsets from funding pots that have now run dry or are close to it, like Internal Revenue Service (IRS) funds in the Inflation Reduction Act. To keep the non-defense funding merely flat with FY 2026, Appropriators must spend billions, to speak nothing of sought after additional investments in priorities like the Supplemental Nutrition Assistance Program (SNAP) or cancer research funding at the National Institutes of Health (NIH). It is unlikely that Vice Chair Murray can accept large increases to defense spending but is even less likely without increases to non-defense priorities that pull the bills out of their mathematical holes.
If no progress can be made, Chair Collins will likely post the bills on the Senate Appropriations Committee website closer to August recess, but there are many weeks between now and then. Senate magic can always happen.
One More Thing – Reconciliation 3.0
It remains to be seen how real Reconciliation 3.0 will be. Last week during a Defense Appropriations Subcommittee hearing, both Sens. Mitch McConnell (R-KY) and Susan Collins (R-ME) threw cold water on the prospect. Sen. McConnell was quoted as saying “I think it’s safe to conclude there will not be another reconciliation bill. So, it’s really not an option.” Chair Collins agreed with his assessment.
Without another reconciliation bill, it is not clear where $350 billion of requested defense funds will ride, especially given that the NDAA authorized level for the House and Senate exclude those funds. President Trump has increased the pressure by calling on Congress to immediately advance $350 billion in defense spending via Reconciliation 3.0 with the SAVE America Act attached.
It is unclear how the SAVE America Act will fit within the restrictions of the reconciliation process. The reconciliation process is bound by the Senate’s so-called Byrd Rule (named for former Sen. Robert Byrd (D-WV)), which removes any provisions deemed not to have a direct budgetary consequence. Policy provisions such as the SAVE America Act, as currently written, would be in violation.
