Estimated reading time: 12 minutes
(1) TRUMP’S BUDGET RECONCILIATION BILL: CBO CONFIRMS HOUSE-PASSED BILL WILL HIKE DEBT BY TRILLIONS AND CUT HEALTH COVERAGE FOR MILLIONS; 3 SENATE COMMITTEES RELEASE DRAFT LANGUAGE; SENATE FINANCE DEMS DEMAND COMMITTEE MEETING
Reconciliation Timetable – Completion by August Recess: Contrary to the headlines that the GOP is racing to meet a “July 4 deadline” for reconciliation, the more likely timetable is the end of July, in order to raise the federal debt limit (included in the budget bill) before Congress’s August recess. The Treasury Department has estimated they may run out of borrowing authority as soon as August. But even that “deadline” could slip into the fall if Congress passes a temporary debt limit suspension. In related news, President Trump reiterated last week his call to repeal the debt limit.
Contrary to denials by the White House and Speaker Johnson, passage of the House-passed budget reconciliation bill would explode the public debt $3 to $5 trillion and increase the number of people without health insurance by 16 million. The nonpartisan Congressional Budget Office released updated estimates of the House-passed Budget Bill projecting it would increase deficits by $2.4 trillion over 10 years due to revenue losses exceeding spending cuts. Adding interest payments would boost the estimated debt increase to $3 trillion, and making the temporary tax and spending changes permanent would boost the cost to $5 trillion over 10 years. The Trump bill would cause annual interest payments on the debt to nearly double to $1.8 trillion per year, and cause total debt (held-by-the-public) to escalate to 124% of GDP in 10 years.
The White House and Republican leaders dispute the revenue loss estimates for the Trump budget bill with three flawed arguments:
First, they assert the nonpartisan professional scorekeepers at the Congressional Budget Office and Joint Committee on Taxation are historically wrong—a flatly false assertion receiving 4 Pinocchios from the Washington Post Fact Checker.
Second, they say extension of the 2017 tax cuts should not be counted—even though the Treasury would collect less revenue under the new law, as compared to current law (which has the 2017 tax cuts expiring at year’s end).
Third, they argue that economic growth resulting from tax cuts would offset the revenue losses—an argument based on inflated growth estimates that ignore the serious damage already being done to the U.S. economy by President Trump’s decisions to:
Launch global tariff wars that threaten to ignite stagflation;
Slash U.S. research and development investments triggering a brain drain of our best and brightest scientists and innovators;
End immigration to the U.S. of the best and brightest talents from around the world; and
Shrink the U.S. labor force through mass deportations.
WATCH KEY DEVELOPMENTS AT THE SENATE FINANCE COMMITTEE: In the Senate, the bill’s tax and Medicaid provisions fall under the jurisdiction of the Senate Finance Committee, which has not scheduled a committee meeting or released its own legislative language. Senate Finance Committee Democrats released a letter on Friday demanding the Committee meet to vote on, and have an opportunity to amend, the massive tax cuts and Medicaid cuts in the Trump Budget Reconciliation bill. It is unprecedented for the Senate Finance Committee to forego committee consideration of major tax and healthcare legislation. (The author served twice as General Counsel at the Finance Committee under Daniel Patrick Moynihan.)
Other developments related to Senate Finance Committee jurisdiction:
13 House Republicans sent a letter Friday to Senate leaders urging them to protect some of the clean energy tax credits eliminated in the House bill. “Since January, over $14 billion in energy projects have been canceled or delayed, with $4.5 billion scrapped in April alone,” the House Republicans wrote. (In April, four Senate Republicans warned against full-scale repeal of energy credits.) But the GOP is deeply divided; the conservative House Freedom Caucus said Friday it would “not accept” changes that water down the cuts to green energy tax credits. Also, some analysts argue the bill’s cuts to clean energy tax breaks will boost electricity prices, already surging due to the data center boom.
Politico reported Thursday that “Senate Republicans are eyeing possible Medicare (cuts) to help offset the cost of their megabill as they try to appease budget hawks who want more spending cuts embedded in the legislation.” Medicare falls under the jurisdiction of the Finance Committee, along with Medicaid, and taxes.
Politico reported from a Wednesday meeting at the White House that “President Donald Trump is not sold on (Senate proposals) making a trio of business tax breaks permanent…. In the House-passed version of the sweeping tax, immigration and defense legislation, Republicans made the breaks for business research, investment and interest expenses temporary, running through 2029.”
Politico reported last Tuesday that Sen. Thom Tillis (R-NC) may want significant changes to Republicans’ plans to cut taxes on tips.
The New York Times reported last week: “Though Republicans are not explicitly trying to repeal the Affordable Care Act (ACA), a series of small, technical changes (in Trump’s budget bill) would substantially reduce enrollment and increase the cost of coverage.” A CBO report released last Wednesday, found that changes to the ACA would increase the number of uninsured by 3.6 million; cuts to Medicaid would add 7.8 million uninsured; and failure to extend the expanded ACA premium tax credit would add another 4.2 million uninsured. In all, 16 million people would lose health coverage. (Link here to an explanation of how CBO calculated budget savings from the Medicaid work requirement.)
House GOP Rep. Nick LaLota said he would vote “no” on the budget bill if the Senate lowers the $40,000 cap on State and Local Tax (SALT) deductions in the House-passed bill.
Despite the Finance Committee’s inaction thus far, the following 3 Senate Committees released budget reconciliation packages last week:
Senate Banking Committee Chairman Scott on Friday released a reconciliation package including provisions to: zero out the Consumer Financial Protection Bureau’s (CFPB) funding from the Federal Reserve; reduce pay levels for “non-monetary policy” employees at the Federal Reserve; end the Office of Financial Research (OFR); eliminate technology modernization funds at the SEC; transfer to the SEC the auditing oversight functions of the Public Company Accounting Oversight Board (created after the Enron-Arthur Andersen scandal); reduce small business lending data collection mandates; rescind funds from the Inflation Reduction Act’s green housing initiatives; and provide $1 billion in funding for the Defense Production Act (DPA). Bill Text | Summary | Section-by-Section | Dem-FactSheet
Senate Commerce Committee Chairman Ted Cruz on Thursday unveiled a reconciliation package including: $85B in revenue from a new spectrum auction; $24.6B for improvements to the Coast Guard’s fleet and facilities; $12.5B to overhaul air traffic control; 9.9B toward human space flight; and $1.2B in rescissions. Bill Text | Highlights | Summary | Section-by-Section
Senate Environment and Public Works Committee Chair Shelley Moore Capito released a reconciliation package including a pause on the methane emissions tax (methane has the most severe climate impact of all fossil fuels); the repeal of all clean energy investments in the Inflation Reduction Act; expedited environmental reviews; repeal of tailpipe emission standards; and funds for Kennedy Center repairs. Bill Text | Summary | Section-by-Section | Dem-Stmt
(2) HOUSE APPROPRIATIONS SUBCOMMITTEES BEGIN MARKING-UP FY 2026 SPENDING BILLS; $9.4 BILLION RESCISSION BILL ON HOUSE FLOOR THIS WEEK
The House Appropriations Committee began its drafting of the FY 2026 appropriation bills on a highly partisan basis, without any negotiation with Democrats, even though approval of appropriations bills requires 60 votes (bipartisan support) in the Senate. Two of the 12 subcommittees marked up their bills last Thursday:
The House Appropriations Subcommittee on Agriculture, Rural Development, and FDA approved its FY 2026 appropriation bill. The bill reflects a $1.2 billion or 4.4% decrease from FY 2025 levels. Subcommittee Democrats highlighted cuts impacting low-income rural homeowners, cuts to telemedicine for rural communities, cuts to Farm Service Agency offices, deep cuts to the Food for Peace program, and cuts to a grant program that helps farmers generate new products. Text | Summary | Earmarks | GOP-Stmt | Dem-Stmt | Dem-FactSheet
The House Appropriations Subcommittee on Military Construction and Veterans Affairs approved its FY 2026 appropriation bill. Subcommittee Democrats said the bill underfunds military construction by more than $900 million, moves toward the “Project 2025” goal of privatizing medical care for veterans, and underfunds NATO commitments by nearly $200 million. Text | Summary | Earmarks | GOP-Stmt | Dem-Stmt | Dem-FactSheet
This week in Appropriations (week of June 9, 2025):
The full House will consider this week the President’s proposed rescission of $9.4 billion of current year funding which cuts $8.3 billion in foreign aid and $1.1 billion for public broadcasting. Under the expedited procedures of the Impoundment Control Act, the targeted funds are withheld for 45 days (of continuous session) while Congress considers the measure, but must be released after that period if Congress has not approved the rescissions. The rescission bill is filibuster-proof in the Senate because debate time is limited.
The House Appropriations Subcommittee on Homeland Security marks up its FY 2026 appropriation bill today, Monday, and the Subcommittee on Defense marks up Tuesday.
The House Appropriations full committee marks up the Military Construction-Veterans Affairs bill on Tuesday, the Agriculture-Rural Development-FDA bill on Wednesday, and the Defense and Homeland Security appropriation bills on Thursday.
(3) TARIFFS AND THE ECONOMY:
CBO released an analysis of the budgetary and economic effects of the Trump tariffs last Wednesday. The exact projections are of limited use since the Trump tariffs are constantly changing. In general, however, the analysis concludes that tariffs will shrink the economy, reduce investments and productivity, raise prices for households and businesses, and reduce deficits due to increased tariff revenue.
Steel and Aluminum Tariffs Doubled. Last week President Trump doubled tariffs on steel and aluminum from 25% to 50%. An economist with the Peterson Institute predicted the move would raise prices and unemployment: ““Aluminum goes into all kinds of products — aircraft, autos, construction — and steel is used throughout the economy, so you’re talking higher prices and lost jobs across the U.S. manufacturing industry.”
President Trump announced Friday that Secretary of the Treasury Bessent and Secretary of Commerce Howard Lutnick will meet with Chinese officials today, Monday, in London to discuss tariffs. After launching a trade war with China earlier this year, Trump agreed to lower his 145% tariffs on imports from China to 30%; and Beijing dropped its tariffs from 125% to 10%. Trump is now claiming China has “totally violated” the agreement.
The Federal Reserve’s “Beige Book” chronicles tariffs causing “uncertainty” throughout the economy. “All districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions.” Read more.
(4) MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
Shutting down world’s top climate lab: CNN reported last week, “NASA scientists describe ‘absolute sh*tshow’ at agency as Trump budget seeks to dismantle top US climate lab.” This is on top of cuts at “agencies like the National Oceanic and Atmospheric Administration, where the budget for nearly its entire weather and climate research portfolio would be zeroed out and most of its research labs shuttered.”
It is normally up to Congress to determine if these presidential budget proposals are accepted. However, these are not normal times; the Administration has already acted this year to shut down congressionally established programs, and cut off congressionally appropriated funds without statutory or constitutional authority, as chronicled in prior issues of Trillions.Trump Administration Chaos - Frantically Rehiring Employees Cut by DOGE: The Washington Post reported on Friday numerous instances of the Trump Administration racing to rehire people fired by DOGE upon realizing that vital federal services such as nuclear security, Social Security services, tax collection, bird flu response, weather forecasting, disaster response, drug approval, and foreign aid were imperiled.
AP reported last week that Trump EPA cuts would weaken environmental rules—costing billions of dollars and risking thousands of lives.
AmeriCorps cuts in limbo: A federal judge last week ordered the Trump Administration to reinstate programs funded by AmeriCorps grants in 24 states, but did not order the reinstatement of AmeriCorps staff required to process and oversee the grants.
The President’s FY 2026 budget proposes to shutter the Chemical Safety Board created in 1998 to probe the causes of major chemical accidents.
Trump Administration is again separating families to deter immigration: CNN reported last week that ICE agents have taken around 500 migrant children into government custody – separating them from their families. “The administration has also put in place additional vetting procedures that have made it all-but-impossible for some parents and guardians to retrieve children in government custody.”
(5) DEMOCRACY AND THE RULE OF LAW AT RISK - TRUMP FEDERALIZES CALIFORNIA GUARD:
President Trump on Saturday federalized the California national guard—over the objections of Governor Gavin Newsom--in response to immigration protests. “While Trump said that federalizing the troops was necessary to “address the lawlessness” in California, the Democratic governor said the move was “purposely inflammatory and will only escalate tensions.” Trump “federalized part of California’s National Guard under what is known as Title 10 authority, which places him, not the governor, atop the chain of command…. The law says that can be done under three circumstances: (1) When the U.S. is invaded or in danger of invasion; (2) when there is a rebellion or danger of rebellion against the authority of the U.S. government, or (3) when the President is unable to “execute the laws of the United States,” with regular forces. Newsom called the action “unlawful” and a “serious breach of state sovereignty.” Trump’s move to federalize a state’s National Guard without the governor’s approval was the first of its kind since Lyndon B. Johnson sent troops to Alabama in 1965.
Federal job applicants now are required to answer the following question: “How would you help advance the President’s Executive Orders and policy priorities in this role?” The 30-page directive from OPM to federal agencies mentions nothing about adhering to laws and policies established by the Congress of the United States, or being responsive to the people’s representatives in the House and Senate.
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.