(Average Read-Time: 12 minutes)
President’s FY 2026 Budget; House Appropriators Begin Marking Up FY 2026 Bills; Budget Reconciliation Action Moves to the Senate; How the “Byrd Rule” Works; Tariffs and the Economy; Major Developments Across Government; Democracy and the Rule of Law at Risk
(1) TRUMP’S BUDGET OFFICE RELEASES FY 2026 BUDGET DETAILS, BUT WELL SHORT OF WHAT IS LEGALLY REQUIRED
Late last Friday, President Trump’s budget office released additional details of their FY 2026 budget request. However, the “Budget Appendix” volume they transmitted is still well short of the details they owe Congress. They still have not transmitted full spending details for the Pentagon, estimates of tax revenues and tax expenditures, or details for federal credit programs, once again ignoring statutory requirements and Congress’s constitutional power of the purse.
Senate Appropriations Committee Ranking Member Patty Murray said of the partial budget submission: “This is a draconian proposal to hurt working people and our economy, and it is dead on arrival….(W)e need Republicans to join us to reject these reckless cuts… and to finally force Trump to follow the law and end his devastating funding freeze.”
The cuts proposed by the Trump budget include “deep reductions for nearly every major federal agency, reserving its steepest cuts for foreign aid, medical research, tax enforcement and a slew of anti-poverty programs, including rental assistance.” The plan proposes nearly a 40 percent decrease for the National Cancer Institute, and proposes to roll back benefits enabling low-income women, infants and children to access fruits and vegetables. The Departments of Housing and Urban Development (HUD) and Health & Human Services (HHS) would each be cut by $33 billion, under the proposal.
The President’s Budget submission is required by law and serves as the Administration’s budget request for the upcoming fiscal year as Congress develops detailed appropriation bills.
(2) HOUSE APPROPRIATIONS SUBCOMMITTEES BEGIN MARKING-UP FY 2026 APPROPRIATION BILLS THIS WEEK.
Thursday, June 5: Military Construction, Veterans Affairs and Related Agencies.
Thursday, June 5: Agriculture, Rural Development, FDA and Related Agencies.
Follow developments at Appropriations.com.
(3) BUDGET RECONCILIATION MULTIYEAR TAX AND SPENDING CUTS BILL MOVES TO THE SENATE, WHERE CHANGES ARE LIKELY; HOW THE “BYRD RULE” WORKS
The House narrowly (215-214) passed the Trump-Johnson multiyear budget reconciliation bill prior to Congress’s Memorial Day recess. The legislation provides trillions in tax cuts, with the largest cuts going to the wealthiest taxpayers, and dramatically increases spending for defense and immigrant deportation, while cutting Medicaid, health insurance subsidies, food stamps (SNAP), and higher education benefits for low-income Americans, and virtually ending all federal efforts to slow the spread of extreme weather, wildfires, and flooding—all of which is projected to boost the public debt by $3 to $5 trillion over 10 years. Notably, the increase in the public debt will trigger automatic annual cuts in Medicare under the Statutory PAYGO Act (which requires that any new tax cuts be fully offset).
For a summary of the House-passed bill, see the May 22, 2025 edition of Trillions. Following are additional noteworthy provisions not covered in last week’s summary:
Restricting Court Enforcement Powers: The bill prohibits funds from being used to carry out court orders holding executive branch officials in contempt of court.
Cutting Taxpayer Services to Benefit Tax Preparers: The bill repeals the recent IRS program enabling taxpayers to direct-file their returns without having to use a commercial preparer.
Fees Aimed at Harassing Migrant Families: The bill charges families $3,500 to reunite with a child arriving alone at the border.
Preempting States from Regulating Artificial Intelligence (AI): Preempts states and localities from passing laws or rules regulating artificial intelligence (AI) for the next 10 years. One analysis suggests the provision could prevent local governments from regulating landlords’ use of AI software to increase rents.
Weakening the Child Tax Credit (CTC): While the bill increases the amount of the CTC, it changes the eligibility threshold making millions of children ineligible.
Tax Incentives for Voucher Schools: The bill gives tax credits to donors who give money to voucher schools and creates a capital gains tax shelter for donors who give appreciated stock to voucher schools.
The Senate returns today, Monday June 2, to begin consideration of the House-passed bill. Four types of changes can be expected in the bill: (1) provisions may be deleted or altered to conform the bill to the Senate’s Byrd Rule (explained below); (2) effective dates and other numbers may be changed to adjust the budgetary effects of tax cuts, spending increases, and spending cuts; (3) Senators could force votes on motions to strike any provisions from the bill; and (4) provisions may be added, deleted, or changed at the committee level in order to secure the votes needed for Senate passage.
Background on the Senate’s Byrd Rule
To appreciate the significance of budget reconciliation procedures in the Senate, it is helpful to understand how the Senate typically operates. The Standing Rules of the Senate generally protect the rights of all Senators to (1) engage in unlimited debate and (2) offer amendments without limitation.
Votes do not occur in the Senate until all debate on a matter is completed and all amendments have been offered. Consequently, opponents of a particular measure can block it by engaging in extended debate or continuing to offer amendments. A “filibuster” is simply the continuation of debate and amendments to prevent a final vote.
The only way to stop a filibuster in the Senate is by limiting debate and amendments with a procedure known as “cloture”—which requires 60 votes. In recent years, filibusters have been threatened more frequently—almost routinely—by opponents of legislation, effectively requiring the routine filing of cloture. This has led to the popular misconception that legislation in the Senate requires the support of 60 Senators. In fact, the passage of legislation requires 50 percent plus one, but invoking cloture requires 60 votes.
The budget reconciliation process effectively short-circuits Senate rules because the 1974 Budget Act protects reconciliation bills with (1) a strict (20-hour) time limit on debate and (2) a germaneness restriction on amendments. The time limit means that reconciliation bills cannot be filibustered.
Consequently, no matter how controversial a reconciliation bill may be, passage in the Senate requires only 51 votes (or 50 when the Vice President is available to break a tie), rather than the 60 votes required to invoke cloture on controversial measures.
Because filibuster-proof budget reconciliation bills are a radical departure from the Senate’s norm of unlimited debate and amendments, Senator Robert C. Byrd (D-WV) in 1985 proposed what came to be known as the “Byrd Rule” to limit the scope of what can be included in a reconciliation bill.
Under the Byrd Rule, all legislation developed pursuant to reconciliation instructions must be budgetary in nature. Any matter that is not budgetary is considered to be “extraneous.” Senators may use a Byrd Rule point of order to strike from the bill specific “extraneous” provisions from a reconciliation bill or conference report.
Generally, the Byrd Rule defines as “extraneous” provisions that (1) have no cost or (2) are policy changes with “merely incidental” budgetary effects (although nonbudgetary provisions are allowed in limited circumstances). Also considered extraneous are: (3) provisions that increase deficits and the reporting committee has not met its reconciliation instructions; (4) provisions that increase deficits in years beyond the (10-year) budget resolution window; (5) provisions that fall outside the reporting committee’s jurisdiction, or (6) provisions that impact Social Security (which is why the new tax break for seniors cannot directly amend the Social Security law).
Senators may challenge and strike out of the bill a lengthy provision as extraneous or short provisions down to the subsection level. The Byrd Rule, itself, (section 313 of the 1974 Budget Act, as amended) is highly technical and arcane. The following four-part test may be used in determining if a provision violates the Byrd Rule.
I. Does the provision have a budget effect?
a. Changes in outlays or revenues brought about by changes in the terms and conditions under which outlays are made or revenues are collected are considered to be budget effects.
II. If a provision has a budget effect, it does not violate the Byrd Rule (and can remain in the reconciliation bill) unless:
a. The budget effect is “merely incidental” to the nonbudgetary (policy) components of the provision (for example, if a policy provision does not have a budgetary “score” you cannot save it from the Byrd Rule by piggybacking it on a minor or “incidental” budgetary provision); or
b. The provision decreases revenues (or increases spending), and the reporting committee has failed to achieve its reconciliation instructions; or
c. In a year beyond the (10-year) budget resolution window the provision would reduce revenues (or increase spending) and that revenue loss (or spending increase) causes the relevant title of the reconciliation bill to become a net deficit increaser in the out-years. This restriction is why tax cuts in reconciliation bills are often drafted to expire after ten years, for example President George W. Bush’s 2001 tax cuts. This year, the Senate Budget Committee is ignoring the nonpartisan revenue estimates of the Joint Committee on Taxation and is claiming that extension of the 2017 tax cuts “cost nothing” because they simply extend current policies.
III. If the provision has no budget effect, it violates the Byrd Rule. Examples of “no-costers” that violate the Byrd Rule are reporting requirements, technical corrections, authorizations, and no-cost policy changes.
a. Exceptions: Senate-originated provisions which have no budget effect during the budget window do not violate the Byrd Rule, if the Chairman and Ranking Member of the Budget Committee and the Chairman and Ranking Member of the authorizing committee certify that one of the following is true:
i. the provision mitigates a budgetary provision; or
ii. the provision will result in substantial deficit reduction in an outyear (i.e., a year beyond the budget “window” of the reconciliation bill); or
iii. budgetary effects are likely to occur in the event of new regulations, court rulings, or statutory triggers; or
iv. budgetary effects are likely but cannot currently be estimated.
IV. Provisions outside a committee’s jurisdiction and provisions affecting Social Security automatically violate the Byrd Rule.
A Byrd Rule point of order may be raised by any Senator—Republican, Democrat, or Independent—when the reconciliation bill is on the Senate Floor. The nonpartisan Senate Parliamentarian rules whether the identified provision violates the Byrd Rule and, if so, it is stricken from the bill by the Senate clerk. However, the Parliamentarian is required to use budget estimates determined by the Chairman of the Senate Budget Committee—currently Senator Lindsey Graham (R-SC). Sixty votes are required to overturn a ruling of the Parliamentarian.
Examples of Provisions that Could Be Vulnerable to Byrd Rule challenges
Provisions in the House bill that could be vulnerable to Byrd Rule challenges include: the REINS Act aimed at rolling back regulations; preemption of state laws regulating Artificial Intelligence; expedited permitting rules for natural gas pipeline projects; and new immigration fees aimed at deterring asylum seekers (if the budgetary effect is found to be merely incidental to a policy objective).
For additional background, on the Byrd Rule and budget reconciliation procedures, request a copy of Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law (2024-25 ed.). Overnight Fed Ex is available.
For daily updates on Reconciliation, see our Reconciliation Tracker: govbudget.com/reconciliation-tracker/.
The author worked on multiple reconciliation bills for the Senate Finance, Senate Budget, and Senate Rules Committees and the White House Office of Management and Budget. Call (202) 818-8578 or (301) 509-5688 for consultations on budget reconciliation, media interviews, or speaking engagements on budget reconciliation.
(4) TARIFFS AND THE ECONOMY:
In a highly significant court action, last Wednesday, a three-judge panel of the Court of International Trade ruled that President Trump overstepped his authority when imposing broad global tariffs, finding that the 1977 International Emergency Economic Powers Act (IEEPA) does not allow the president to “impose unlimited tariffs on goods from nearly every country in the world.” The following day, Thursday, the U.S. Court of Appeals for the Federal Circuit temporarily paused the decision of the Court of International Trade while more briefs are filed.
Last Friday, President Trump added more uncertainty to global markets, threatening to double steel tariffs from 25 percent to 50 percent.
(5) MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
The Department of Veterans Affairs could lose 83,000 employees under the Trump Administration’s planned reduction-in-force.
The Federal Emergency Management Agency (FEMA) is facing a major backlog of emergency aid requests from states as hurricane season approaches, reports the Washington Post. The slow walking of aid requests from states could reflect the reduction of staff at FEMA, as well as the Administration’s stated desire to move emergency response responsibilities from the federal government to the states.
The Washington Post reported that about 32,000 AmeriCorps service volunteers (receiving small federal stipends) lost their positions in April, impacting a broad swath of industries from health care to nutrition.
Last week HHS cancelled funding for Moderna to develop vaccines to combat bird flu.
Last week scientists announced a breakthrough on gene delivery systems in the brain that could lead to new therapies for Parkinson’s and Alzheimer’s, but only if the project’s federal funding continues.
Bloomberg’s editorial board wrote last week that “defunding academic research is a spectacular act of self-harm” for the United States.
(6) DEMOCRACY AND THE RULE OF LAW AT RISK:
Presidency for Sale: See Power & Profit, from Washington Week and The Atlantic reviewing Donald Trump’s shocking use of the presidency for his own personal profit.
Shameful Conduct: Congress approved a bronze plaque honoring members of law enforcement for their efforts to protect the Capitol on Jan. 6, 2021. The Washington Post reports the plaque now sits in a storage room, rather than being installed for public viewing, because Republican leaders are afraid it will anger President Trump.
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 CNCS; 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.