Estimated reading time: 14 minutes
(1) TRUMP BUDGET CUTS: House Passes $9.4 billion Rescission Bill; Trump’s OMB orders a New Round of Unilateral Spending Cuts; Fact-checking Trump’s Debt Claims.
RESCISSION BILL PASSES HOUSE: House Republicans on Thursday narrowly (214-212) passed a White House request to rescind $9.4 billion in spending authority--$8.3 billion in foreign aid and $1.1 billion for public broadcasting. Four Republicans joined all Democrats in opposing the bill (H.R. 4). The measure now moves to the Senate where passage of the special budget measure requires only 50 votes.
NEW ROUND OF ILLEGAL SPENDING CUTS: Politico reports that Trump’s OMB Director, Russell Vought, has ordered a new round of unilateral Administration spending cuts targeting more than $30 billion at the EPA, NOAA (including the National Weather Service), National Science Foundation, National Park Service, NASA, and the Departments of Interior and HHS (Health & Human Services). OMB is ordering agencies to unilaterally freeze funds (which is illegal under the Impoundment Control Act), to be followed by rescission proposals seeking congressional ratification of the illegal Administration actions.
The article also reports that Vought intends to use the “deferral” mechanism, which temporarily withholds funds until later in the fiscal year. (Deferrals do not require congressional approval, but may be overturned by Congress.) Under the Budget Act, funds may not be deferred for policy reasons—only for budget execution efficiencies—but Vought has already shown little inclination to respect Congress’s policy decisions on appropriations. “The White House directive was communicated largely to agencies over the phone to avoid creating a paper trail.”
When asked in a recent CNN interview for his view of the 1974 Impoundment Control Act—which does not permit funds to be withheld without congressional passage of a rescission bill or congressional notification of a temporary deferral—Vought said, “We’re not in love with the law.” Vought has said he believes the President has inherent authority to withhold congressionally appropriated funds and sees the limitations of the Impoundment Control Act as an unconstitutional infringement on presidential authority. The issue will not be settled until the Supreme Court eventually rules on pending challenges to presidential withholding of funds.President Trump claimed last week that the rescission bill, along with “the one big, beautiful bill, our highly successful tariffs, mass deportations of aliens, and our strong economy will finally cut the deficit and help balance the budget.” However, as explained below, these policies are actually exploding the debt, boosting prices, and weakening the economy:
The $9 billion saved in this rescission bill is insignificant from a fiscal standpoint—less than one-half of one percent of the projected $1.9 trillion FY 2025 federal deficit.
The “one big, beautiful bill,” Trump’s name for budget reconciliation, will do the opposite of cutting deficits. As explained in previous editions of Trillions, the House-passed budget reconciliation bill will increase deficits by $3 trillion to $5 trillion over 10 years due to massive tax cuts and spending increases, not fully offset by spending cuts.
Trump’s on-again, off-again tariffs, rather than being “highly successful,” are causing massive uncertainty in the U.S. and global economies. Uncertainty holds back investment and limits economic growth. In addition, tariffs are a tax on U.S. importers and are passed along to consumers as higher prices.
“Mass deportations of (undocumented) aliens” do not cut deficits. Deportations increase deficits because: (i) Congress is boosting spending by more than $100 billion for costs associated with deportations; and (ii) tax revenues decline because fewer workers are paying taxes and economic activity slows due to the worker shortage. (Not only that…fewer workers paying payroll taxes accelerates the insolvency of Social Security.)
(2) BUDGET RECONCILIATION BILL: House Tweaks its Version of the Budget Bill; Five Senate Committees (Judiciary, Homeland Security, Agriculture, Energy, HELP) Release Pieces of the Megabill; Budget Chair Releases Competing Version of Homeland Security; Senate Finance Chair Says Business Taxes will Grow, SALT will be cut; Megabill is More Regressive than any Major Tax Bill or Entitlement Bill in Decades.
The vote count: Senate passage of Trump’s budget reconciliation bill only requires support by 50 of the 53 Senate Republicans (because it has special budget protections and Vice President Vance can break a 50-50 tie). Consequently, Senate GOP leaders can afford to lose only 3 votes. Senator Rand Paul (R-KY) already appears to be a “no” as long as the bill contains a large increase in the debt limit.
MOVING TOWARDS PASSAGE: Politico reported Friday that three GOP deficit hawks who had previously expressed concerns about deficit spending in the Trump budget bill—Senators Ron Johnson of Wisconsin, Mike Lee of Utah and Rick Scott of Florida—are now believed to be moving toward support of the bill.
HOUSE TWEAKS ITS VERSION OF THE BILL: As Senate Committees continued last week to release their own versions of budget reconciliation language (explained below), the House took a procedural step last Wednesday to tweak their version of the bill in order to avoid violating the Senate’s “Byrd Rule” (explained in the June 2 edition of this column).
Senate Homeland Security & Governmental Affairs (HSGAC) Committee Chairman Rand Paul released late Thursday his portion of the budget reconciliation bill. The language provides $39 billion in new spending for border security and immigration enforcement; and cuts $24 billion from federal employees and investments in fuel efficient postal vehicles. | Text | Section by Section | Savings Summary. |
Like the House bill, the Senate version would force newly hired federal employees to choose between losing their civil service protections or facing a higher FERS contribution rate and lower pay (the Senate bill requiring a higher rate than the House bill). Read more.
In addition, the Governmental Affairs portion of the HSGAC reconciliation package “would allow the Trump administration to proceed with sweeping changes to the federal workforce — including those currently stalled by federal judges — without approval from Congress.”
In a highly unusual turn of events, Senate Budget Chairman Lindsey Graham unveiled alternative language for the Homeland Security portion of the bill, asserting Paul’s version does not provide sufficient funds for immigration and border enforcement. | Text | One-Pager | The Graham alternative would provide roughly $46.5 billion for border infrastructure (similar to the House-passed version), $45 billion for ICE detentions, and $10 billion in reimbursements to states.Senate Judiciary Committee released on Thursday its portion of the budget bill. Like the House-passed bill, the Senate language boosts funding for DHS, ICE, and DOJ immigration enforcement, judges, and border security; reimburses border states for immigration enforcement; imposes high fees on immigration applications including at least $1,000 for asylees; adds funds for the Secret Service; and reauthorizes the Radiation Exposure Compensation Act. | Text | Section by Section | One-Pager.
Politico reports the bill does not include language sought by conservatives to require congressional approval for some new federal regulations. Also, the bill does not include House language that would limit the ability of federal courts to enforce contempt orders, but does include limitations on preliminary injunctions and temporary restraining orders by requiring the posting of bonds.Senate Agriculture Committee released on Wednesday its portion of the budget bill, which dials back the work requirements for parents of dependent children in the SNAP (food stamps) program. Under the Senate version, the work requirement would not apply to parents of children under age 10. However, the Senate version would still significantly cut federal support of the SNAP program, and would eliminate funding for the SNAP-Ed program which teaches good nutrition to at-risk youth. | Text | Section by Section | One-Pager | Q&A | Rural Provisions | Dem-Stmt on Cuts to SNAP.
Agriculture Committee Ranking Democrat Amy Klobuchar said of the GOP package, “While some changes were made to the food assistance cuts, this bill continues to include an unprecedented cost shift, forcing tens of billions of SNAP costs onto state governments for the first time. Because nearly every state has balanced budget rules, states will almost certainly have to cut SNAP eligibility, benefits, or both, or choose between food assistance and other critical needs, like education, health, and public safety.” Read more.Senate Energy & Natural Resources Committee released on Wednesday its portion of the budget bill, which sells off up to 3.3 million acres of federal land, purportedly for housing or community development, rescinds clean energy investments, expands fossil fuel development on federal lands including ANWR, cuts royalty rates, and increases timber harvests. | Text | Section by Section | One-Pager | One-Pager on Land Sales | Q&A | Dem-Stmt.
The Committee’s Ranking Democrat responded, “Senate Republicans… want to put millions of acres of our public lands up in a fire sale, destroy the investments that have created thousands of manufacturing and clean energy jobs… and obliterate programs that lower energy costs…. This isn’t about building more housing or energy dominance. It’s about giving their billionaire buddies your land and your money.”Senate HELP (Health, Education, Labor, Pensions) Committee released on Tuesday its portion of the budget bill placing limitations on student loans and Pell Grants, claiming budgetary savings of at least $300 billion. | Text | Section by Section | One-Pager | Dem-Stmt. One analysis predicts that the Senate GOP higher education provisions would unleash “an avalanche of student loan defaults.” Another analysis says the Senate language improves on the House bill, but “will still harm millions of students and borrowers.” Read more.
Senate Finance Committee Chair Says Business Taxes will Grow, SALT will be cut: Politico reported Wednesday that Senate Finance Chair Mike Crapo (R-ID) told fellow Republicans that three major business tax deductions (R&D, business equipment, and interest on debt) will be made permanent in the Finance Committee version of the budget bill, while the House cap on the State and Local Tax (SALT) deduction will be reduced. The House-passed bill would terminate the business deductions in 2029 and sets the SALT cap at $40,000.
Crapo, by the way, is the Senate’s leading advocate for using the world’s most egregious budget gimmick (a current policy baseline) to pretend that extending the expiring 2017 tax cuts has no cost to the Treasury. (How the gimmick works: The 2017 tax cuts expire at the end of this year. If they are extended, the Treasury will take in a lot less revenue than it otherwise would have without the extension—requiring Treasury to do a lot more borrowing. But Crapo says since the extension simply continues current tax policies, the revenue losses should be ignored.)
Crapo has not yet commented on the Medicaid provisions in the House-passed bill even though they fall in Finance Committee jurisdiction.The New York Times reported Thursday that the combination of tax cuts for high earners and benefit reductions for the poor, makes the Trump budget bill “more regressive than any major tax or entitlement law in decades”—with the bottom 10% seeing household resources decline by 3.9% and the top 10% seeing an increase of 2.3%. The distributional effects on income groups are part of a new analysis released Thursday by the nonpartisan Congressional Budget Office.
One aspect of the bill contributing to its regressivity is that provisions geared towards working Americans are temporary—expiring at the end of 2028. These include boosts in the standard deduction, the deduction for seniors, and the child tax credit, along with tax breaks for tips, overtime pay, and car loan interest. These tax cuts are temporary in order to hide the true long-term deficit effects of the legislation.
(3) APPROPRIATIONS: House continues marking up FY 2026 bills even though a stopgap continuing resolution (CR) is virtually certain.
Last week the House Appropriations Committee continued its drafting of the FY 2026 appropriation bills on an entirely partisan basis, without any negotiation with Democrats, even though approval of appropriations bills requires 60 votes (bipartisan support) in the Senate.
The full House Committee approved the FY 2026 Defense Bill and the Military Construction-VA Bill, while the Homeland Security Bill was approved at the subcommittee level, and completion of the Agriculture-Rural-FDA Bill was delayed.
However, with the Trump Administration shunning any bipartisan negotiation, these bills will go nowhere in the Senate, and another continuing resolution will be needed before FY 2026 begins on October 1.
(4) TARIFFS AND THE ECONOMY:
Trump tariffs to boost prices on kitchen appliances: The 50% Trump tariffs on steel and aluminum will be expanded, effective June 23, to “steel derivative products” including dishwashers, washers and dryers, stoves and ovens, disposals, and refrigerators.
Rising Prices and Slower Growth: Bloomberg economics forecasts, “The US economy faces the prospect of a summer of rising prices, slowing hiring and consumer discontent. Tariff threats are now near-daily market movers, this week sending the dollar tumbling even after the US and China brokered a tentative trade truce.”
(5) MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
RFK Jr. is making vaccines more expensive and less available: Last week RFK Jr. fired all 17 members of the CDC’s ACIP panel (Advisory Committee on Immunization Practices) replacing them, at least in part, with outspoken vaccine skeptics. One of them is Robert Malone, who spread conspiracy theories that the COVID vaccines cause AIDS. Another is Vicky Pebsworth who falsely blames vaccines for causing her son’s autism—a long discredited conspiracy theory. According to Dr. Leana Wen, “No matter what the newly restructured panel… decides, Kennedy will have already achieved his goal of causing irreparable harm to the CDC and eroding the public’s trust in vaccines….At best, the vaccines would remain available, though at a cost, as insurers are required to fully cover only ACIP-recommended vaccines. At worst, even those who want vaccines would no longer be able to access them.” Read more.
Trump’s chaotic firing and rehiring of federal employees continued last week with the Centers for Disease Control attempting to rehire 460 laid-off employees.
The Pentagon estimated last week that the federal cost of sending marines and national guard to LA will be $134 million. The deployment was not requested by California and occurred over the state’s objection.
President Trump went on a lengthy rant Thursday about Federal Reserve Chair Jerome Powell, calling him a “numbskull” and suggesting he may step in to “force something” on the Fed. Trump desperately wants the Fed to lower interest rates to compensate for his recessionary tariff policies. However, the law limits the President to removing a member of the Federal Reserve’s Board of Governors only “for cause.”
Hundreds of scientists and staffers at the National Institutes of Health released a public letter to Dr. Jay Bhattacharya, the new NIH Director, alleging the administration is making politicized, indiscriminate decisions on grants and contracts leading to harmful cuts in research.
The Senate on Thursday, along party lines, confirmed former Rep. Billy Long of Missouri as next Commissioner of the Internal Revenue Service, “as Republicans looked past concerns about his… promoting fraud-riddled and nonexistent tax credits.”
(6) DEMOCRACY AND THE RULE OF LAW AT RISK
Democratic Senator Alex Padilla (D-CA) was forcibly removed, slammed to the ground, and handcuffed by Homeland Security officers at a Thursday press conference by Homeland Security Secretary Kristi Noem—another example of an Administration growing increasingly dictatorial and contemptuous of the Legislative Branch. Read more.
Defense Secretary Hegseth, testifying last Wednesday at the Senate Appropriations Committee, “insisted the Pentagon’s deployment of troops to Los Angeles was lawful. He just couldn’t cite the law he was following.”
“Like every modern autocrat, Trump is preoccupied with asserting authoritarian power to advance his illicit accumulation of wealth.” Read more.
This week’s MUST READ: Seven Hidden Ways Trump’s Megabill Would Remake America
About the author: Charles S. Konigsberg, J.D., 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; Minority Chief Counsel at the U.S. Senate Rules Committee; Staff Attorney at the U.S. Senate Budget Committee; Director of Congressional Affairs at CFPB and AmeriCorps; and Staff Director of a national bipartisan budget task force.
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 appropriation bills; and GovBudget.com which tracks the Reconciliation Bill and major federal developments, by subject area, each day.
Speaking engagements and press interviews can be scheduled by calling: (202) 818-8578 or (301) 509-5688. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.
Keep it up, the best summary out there.