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Estimated reading time of this week’s update: 15 minutes
(1) SENATE LIKELY TO DEFEAT DUELING HEALTH BILLS ON THURSDAY: the Democratic plan to extend for 3 years “enhanced” Affordable Care Act (Obamacare) subsidies; and the GOP plan to let the enhanced subsidies expire and shift funds into Health Savings Accounts. Neither bill is likely to get the 60 votes needed for passage.
Speaker Johnson has promised a vote in the House, but has not provided details.
Impact of the enhanced subsidies expiring December 31: Millions of ACA enrollees are already experiencing huge spikes in premium costs as they sign up for 2026 coverage, and nearly 5 million enrollees are expected to lose coverage and become uninsured.
Background: During the government shutdown, Democrats’ primary goal was to include extension of expiring ACA enhanced subsidies in the spending law that reopened the government. President Trump and GOP leadership refused to include an extension. Senate Republican Leader Thune instead offered a promise to allow a Senate vote by mid-December on a Democratic proposal to extend the enhanced subsidies. That vote will occur this Thursday, as well as a vote on the Republican alternative.
What Are “Enhanced ACA Subsidies?” The Affordable Care Act provides federal tax credits to subsidize the purchase of private health insurance for individuals and families who earn too much to qualify for Medicaid. Enrollees select private health insurance plans offered through “marketplace exchanges.” The original ACA subsidies were available for people who have incomes up to 400% of the poverty line. In 2021, Congress enacted “enhanced” ACA subsidies to expand coverage during the pandemic—more than doubling the number of ACA enrollments to over 24 million. The enhancements were originally enacted for two years, but were later extended through 2025 and will expire December 31, 2025, without congressional action—leaving the original, more limited, ACA subsidies in place for 2026.
The enhancements reduced net premiums to zero for some people with low incomes and made subsidies available to people with higher incomes for the first time—permitting anyone to qualify if standard health plans in their area would cost more than 8.5% of their income.
Expiration of the enhanced subsidies will, on average, more than double out-of-pocket costs for enrollees—although the amount of increase varies wildly based on income, age, family size, and state, according to the nonprofit KFF.
According to KFF, Affordable Care Act premiums will rise on average by 26 percent next year, and the loss of enhanced subsidies would mean consumers have to devote more of their income to health care costs. As a result, out-of-pocket contributions could more than double, on average, due to the loss of enhanced subsidies.
The Urban Institute estimates that 4.8 million people will lose coverage in 2026 if enhanced premium subsidies expire.
What would the Democratic plan do? Senate Democrats’ plan would extend enhanced ACA subsidies for three years—with an expensive price tag. The Washington Post reports “it has almost no chance of winning enough Republican support to pass the Senate… Democrats will need the support of at least 13 Republican senators to overcome a filibuster — and no more than a handful of Republicans are open to supporting the bill.”
Senate Republican alternative: According to Politico, Senate Republicans will put up an alternative proposal introduced by Health Committee Chair Bill Cassidy and Finance Committee Chair Mike Crapo to let the enhanced ACA subsidies expire and instead shift funding into Health Savings Accounts. While GOP concerns about fraud in the currently structured ACA subsidies are not unfounded (see the recent GAO report), moving resources to HSAs—while it may have populist rhetorical appeal—has serious shortcomings when considering the goal of increasing access to affordable care. Read “Health Savings Accounts, Backed by GOP, Cover Fancy Saunas but Not Insurance Premiums.”
What is the House likely to do? Speaker Johnson told reporters that he intends to propose a health care plan this week and vote on it before the end of the year — but it’s unclear what that proposal would be. Last week, Axios reported that a group of more than 30 House Members put forward a bipartisan framework that would extend the enhanced credits for two years with income caps and guardrails to prevent fraudulent subsidies, with an extended open enrollment period to mid-March. However, that bipartisan approach now appears dead, with the Senate heading towards voting down dueling proposals by Democratic Leader Schumer and Senate health chairs Cassidy and Crapo—and President Trump not seeking a bipartisan deal.
Further complicating the situation is the unresolved issue of abortion restrictions within Obamacare. According to Politico, for many Republicans, an expansion of abortion restrictions is a must-have in any tentative deal on the expiring enhanced subsidies. Specifically, Republicans want to prohibit any insurance plan receiving a federal subsidy from covering abortion services. Republican Leader Thune said abortion “has always been probably one of the biggest obstacles to getting a deal… The other pieces of this I think you can sort of figure out, but that one is a really challenging one.”
Follow the latest developments on the expiring ACA enhanced subsidies on our ACA webpage.
(2) PARTIAL SHUTDOWN LOOMS JAN. 31, 2026 AS NINE SPENDING BILLS REMAIN UNFINISHED, AND CONGRESS FAILS TO MOVE SPENDING PACKAGE IN DECEMBER.
Background: Last month, the Senate passed 60-40, and the House passed 222-209, the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026. The spending law was signed November 12, 2025, ending the 43-day government shutdown, after Senate Democrats agreed to support the package in exchange for this week’s vote to extend expiring ACA subsidies (explained above).
The November spending law included temporary stopgap funding for agencies funded by the nine unfinished appropriation bills, lasting through January 30, 2026.
The nine unfinished appropriation bills are: Commerce-Justice-Science; Defense; Energy-Water; Financial Services-Gen. Govt. (FSGG); Homeland Security; Interior-Environment; Labor-HHS-Education; State-Foreign Operations; and Transportation-HUD. (Click on the bill names for the latest status of each bill.)
A partial government shutdown will occur on January 31, 2026, if any of the nine bills have not been completed by that date (and additional stopgap funding has not been provided for the unfinished bills).
Will Congress complete another package of spending bills by Christmas? The Senate and House are in session for only this week and next week and, with time running out, will be focused on: consideration of the 2026 National Defense Authorization Act conference report; and the imminent expiration of enhanced Obamacare insurance subsidies.
What’s holding up negotiations on the nine unfinished appropriation bills? Principally, topline numbers: House and Senate Appropriators disagree on overall spending levels for FY 2026, with the White House Office of Management and Budget and House Republicans pushing for major cuts below current spending levels.
(3) ANOTHER BUDGET RECONCILIATION BILL?
White House Budget Director Russell Vought signaled last week that Republicans are considering, but have not yet decided, whether to advance another budget reconciliation bill in 2026. In 2025, Republicans used the filibuster-proof budget reconciliation process to fast-track the massive OBBBA tax and spending cut bill, signed into law in July that exploded the public debt by $4 trillion. (Read or listen to the TRILLIONS summary of OBBBA.)
Vought made his comments in response to questions on whether the $150 billion in extra defense funding, included in OBBBA, would be continued.
Under budget reconciliation, Senate filibusters are prohibited due to a cap on debate time, which means that bills can pass with 51 votes (or 50 with the Vice President breaking a tie).
Besides more defense funding, other items the GOP has been advocating that could be advanced in a 2026 reconciliation bill include:
President Trump’s proposed $2000 “tariff dividend” checks (see the TRILLIONS explanation of why tariffs do not generate any excess cash and the so-called “dividend checks” would require the Treasury to borrow hundreds of billions);
Legislation to repeal impoundment controls on the President;
More tax cuts leading up to the mid-term elections, including bigger capital gains tax breaks on home sales;
Legislation to complete the shutdown of the Department of Education and the Consumer Financial Protection Bureau; and
More spending cuts.
(4) TARIFFS AND THE ECONOMY: Fed Interest Rate Announcement on Wednesday
FEDERAL RESERVE’S OPEN MARKET COMMITTEE ANNOUNCES WEDNESDAY at 2:30pm whether it will hold interest rates steady as a hedge against tariff-fueled inflation, or deliver its third straight quarter-point cut to address layoffs and lagging job growth. Read background from Axios predicting a rate cut.
“A+++++”: See President Trump’s Politico interview rating the U.S. economy “A-plus-plus-plus-plus-plus” as he heads to Pennsylvania to defend his economic record, and Pennsylvania Gov. Josh Shapiro’s response.
THE CHAOS TRADE POLICY CONTINUES AS TRUMP THREATENS TO LEAVE NORTH AMERICAN TRADE DEAL: Yes, he’s now threatening to kill the deal he proudly announced in his first term. The New York Times reports, “Hearings that began Wednesday in Washington reflected anxiety over the future of the U.S.-Mexico-Canada trade pact and whether the president could end up scrapping it.”
TRUMP UNVEILS $12 BILLION AID PACKAGE FOR FARMERS: President Trump’s tariff chaos has caused other nations to close their markets to U.S. agricultural exports—including China shutting down vital markets for American soybean producers for part of 2025. As he did in his first term, Trump is now proposing to borrow $12 billion to compensate farmers for the losses they have suffered due to his trade policies.
(5) OTHER MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
CDC ADVISORY PANEL ELIMINATES HEPATITIS B VACCINE RECOMMENDATION FOR NEWBORNS: The Washington Post warns the change is even worse than it seems; and last week the Republican Chair of the Senate’s Health Committee said RFK Jr.’s CDC vaccine panel is “not protecting children.”
INSTABILITY AT FDA RATTLES INDUSTRY: The Washington Post reports that Food and Drug Administration instability, and alarm over the agency’s direction, have escalated after a top regulator left.
COURT EXPANSION OF TRUMP’S POWER: The Supreme Court may again be poised to support the Administration’s ongoing efforts to expand the power of the presidency. Based on arguments before the Court on Monday, AP reports the Court seems likely to back Trump’s power to fire independent agency board members.
This is based on the Administration’s “unitary executive theory” which argues that as “chief executive” the President should have unfettered authority to remove any executive branch appointee, including at independent agencies established by Congress. This one-dimensional legal reasoning fails to grasp the intent of the Founders which was to gain independence from a tyrannical British monarch and establish a republic that empowers the people through the legislative branch in order to avoid the excesses of an arrogant president. Read more on Chief Justice Roberts record of increasing the power of the presidency.
COURT BACKS TEXAS GOP REDISTRICTING SCHEME DESPITE LOWER COURT FINDING OF RACIAL DISCRIMINATION: Last week, the Supreme Court allowed next year’s midterm elections in Texas to be held under the GOP gerrymandering scheme intended to guarantee more Republican-leaning districts—despite a lower-court ruling that the map likely discriminates on the basis of race.
COURT TO REVIEW BIRTHRIGHT CITIZENSHIP: The Supreme Court has agreed to review President Trump’s executive order restricting birthright citizenship (guaranteed in section 1 of the 14th Amendment).
SIGNALGATE: CNN reports on “why the new Signalgate IG report is so damning for Pete Hegseth.”
TRUMP ADMINISTRATION TO END BIDEN’S STUDENT LOAN REPAYMENT PLAN: The Washington Post reports that “a settlement between the Trump administration and seven states (to resolve a lawsuit) could soon end the Save program that lowered payments and offered quicker loan cancellation... a deal that could leave millions of borrowers scrambling to find another option to repay their debt.”
CONSUMER FINANCIAL PROTECTION BUREAU NEARS SHUTDOWN: In a required report, the Consumer Financial Protection Bureau, said it would need nearly $300 million in 2026 to continue its statutorily required functions, but the Trump Administration is not requesting the funding in order to force a shutdown of the consumer protection agency, established after the financial crisis that triggered the Great Recession. In 2024, CFPB received more than 3 million consumer complaints, including referrals from Members of Congress—who are now complicit in its shutdown.
TRUMP’S UNDECLARED WAR: AP reports on what to know as lawmakers disclose new details of U.S. boat strikes.
NOAA BUDGET CUTS pushes a critical ocean weather system near to a breaking point.
ABUSE OF THE PARDON POWER: A man pardoned by President Trump for his role in the Jan. 6th attack on the U.S. Capitol is again posing a serious threat, reports Politico. In another “pardon” story, we last week reported that President Trump pardoned Texas Democratic Congressman Henry Cuellar, indicted in a federal bribery and conspiracy case. This week President Trump is lashing out at Cuellar as “disloyal” for not switching parties – apparently assuming the pardon was a quid-pro-quo.
However, Alexander Hamilton, in an essay urging ratification of the U.S. Constitution, explained the pardon power as a way to dispense “mercy” where the criminal justice system may have led to an overly harsh result. It was not conceived as a tool to be cynically used for political advantage and subterfuge.
Park Service: The National Park Service has dropped free admission on MLK Day and Juneteenth, while adding free admission for Donald Trump’s birthday.
(6) TRILLIONS SPOTLIGHT – RUSSELL VOUGHT’S $100,000,000 SLUSH FUND:
Why has no one in Congress or the mainstream media asked what Budget Director Russell Vought intends to do with the $100 million in direct appropriations congressional Republicans tucked away for OMB in President Trump’s July megabill (in section 90103).
This is a huge multiyear appropriation—never reviewed by the Appropriations Committees—for an agency with only 500 staff, headed up by an the unelected Russell Vought who: refuses to testify before the House Budget Committee; says his goal is to put career civil servants “in trauma;” wants to strip away job protections from nonpolitical civil servants and return America to the 19th century “spoils” system; repeatedly expresses contempt for Congress’s power of the purse, most recently with his “pocket rescissions” and repeated claims that the Impoundment Control Act is unconstitutional; and urges Republicans to reject bipartisan negotiations on spending.
(7) SOLUTIONS
This new feature of the TRILLIONS National Weekly highlights solutions worthy of consideration.
(8) SUGGESTED READS:
18,000 Reasons It’s So Hard to Build a Chip Factory in America. – NYT
Trump’s bleak, incoherent foreign policy strategy: allies may panic, despots will cheer. – The Economist
Speaking engagements and press interviews can be scheduled by calling: (301) 509-5688. Email comments, suggestions, and questions to: info@capitolpublicpolicy.com.
About the author: served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee, where he had principal responsibility for managing federal budget and debt limit legislation; Minority Chief Counsel at the U.S. Senate Rules & Administration Committee where he advised the ranking member on budget, appropriations, trade, and tax legislation; Staff Attorney at the U.S. Senate Budget Committee where he had responsibility for federal fiscal law issues including the Impoundment Control Act and drafted the first explanation of the congressional budget process; Director of Congressional Affairs at the Consumer Financial Protection Bureau and AmeriCorps; and staff director of a national bipartisan budget task force. Speaking engagements and press interviews can be scheduled by calling: (301) 509-5688. Email comments, suggestions, and questions to: info@capitolpublicpolicy.com.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. Click here to purchase.
He is also Publisher of:
Appropriations.com which tracks the 12 appropriation bills and presidential impoundment developments each day;
andGovBudget.com which tracks major developments, by subject area, each day including: ACA – Obamacare – Expiration of Enhanced Subsidies | Law & Democracy | Cut Tracker | WH-OMB-DOGE | Economic News | Federal Taxes | Tariffs | Health and Human Services Programs | Debt, Deficits and Debt Limit | Discretionary Spending Programs | Mandatory Spending Programs | Immigration | Disabilities Programs | Defense | Climate/Energy | Budget Process.
Another terrific compilation -- it's quite clearly a full time job keeping up with all this, and your summaries are a real public service. Thank you!