(1) ANNUAL FUNDING BILLS: Congress passed a continuing resolution through September 30 averting a federal government shutdown, but ceding constitutional authority to the Administration. (2) 10-YEAR ENTITLEMENT & TAX CHANGES (“Budget Reconciliation”): House and Senate GOP negotiators face numerous disagreements. (3) ECONOMY: Trump’s volatile actions on tariffs reduce consumer confidence and risk slowdown. (4) MAJOR DEVELOPMENTS: White House disputes judge’s authority; Massive cuts at DoEd, IRS cuts will cost (not save) money, EPA rewriting its statutory mission, Musk targets entitlements, Judges order rehiring.
(Total Read-Time: 15-minutes)
1. ANNUAL FUNDING BILLS: Congress passed a full-year continuing resolution (HR 1968) averting a federal government shutdown, but ceding constitutional authority to the Administration.
When fiscal year 2025 began last October 1, Congress temporarily continued 2024 funding levels through December 20, 2024, and then again through last Friday, March 14, 2025. These funding measures, called continuing resolutions (“CR”), were ostensibly intended to temporarily continue funding for federal agencies at last year’s levels while congressional Republicans and Democrats and the Administration negotiated completion of the 12 annual appropriation bills.
These 12 regular appropriation bills are, in many ways, the most important work Congress does each year because they reflect detailed annual reviews of all federal programs (other than entitlements like Social Security, Medicare, Medicaid, and Food Stamps which operate under permanent funding formulas).
The annual appropriation bills are especially important because they are developed through painstaking bipartisan negotiation of funding levels for all non-entitlement programs and are accompanied by detailed congressional reports establishing goals and guardrails for each program.
For the current fiscal year—2025—the House Appropriations Committee had reported all 12 of the FY 2025 bills and the full House had passed four of them; and the Senate Appropriations Committee had reported 11 of the 12 bills on a bipartisan basis. Nearly all of these bills could have been completed through bipartisan negotiation within weeks.
Instead, the Trump Administration and GOP congressional leaders decided to discard all of the work completed by the two Appropriations Committees and extend “temporary” funding through September 30—the end of fiscal year 2025—giving the Administration extraordinary leeway in deciding how to distribute funds and operate programs free of Congress’ constitutionally required guidance.
In short, Congress ceded its constitutional authority over appropriations to the Administration for the remainder of fiscal year 2025. What is truly extraordinary and troubling about this is that, in the past, House and Senate appropriators on both sides of the aisle would have objected strenuously to this hijacking of Congress’ authority. But last week GOP appropriators ceded their authority without objection or hesitation.
Democrats were deeply split. House Democrats voted unanimously to oppose the full-year CR. However, in the Senate, Democratic Leader Chuck Schumer (NY) and 9 of his colleagues voted to allow the full-year CR to advance, fearing that the mass furloughing of federal employees during a shutdown could have added to the damage being wrought by DOGE. Nevertheless, Schumer’s action provoked the ire of House Democratic appropriators and a rare rebuke from Schumer’s former leadership colleague Speaker Emerita Nancy Pelosi.
Work will soon begin on FY 2026 appropriation bills, with hearings already under way and the Trump budget requests likely to be released in late April or early May. We are likely to again see a highly partisan process with Republicans going along with deep spending cuts proposed by the Trump Administration, but bills unable to move in the Senate without bipartisan agreement (60 votes being required). A CR will again be needed by September 30, 2025, or a shutdown will occur on October 1, 2025.
Follow the process as it unfolds on our website, Appropriations.com.
2. 10-YEAR ENTITLEMENT & TAX CHANGES (“Budget Reconciliation”): House and Senate GOP negotiators face numerous disagreements.
With agencies and most programs now being funded by a continuing resolution (as explained above), attention is now shifting back to enactment of President Trump’s multiyear budget agenda – tax cuts, and cuts to Medicaid, food stamps and other entitlement programs.
This part of the agenda will advance using the fast-track and filibuster-proof “budget reconciliation” process which allows major multiyear budgetary changes to taxes and entitlements to move forward in the Senate with 50 votes, rather than the 60 votes normally needed for major legislation (the GOP has 53 seats in the Senate).
However, before the budget reconciliation process can begin, House and Senate Republicans must negotiate a budget resolution, which is needed to initiate the process by instructing committees of the House and Senate to draft changes to tax and entitlement programs.
House and Senate GOP negotiators are currently divided over the following issues:
· Senate GOP prefers a limited bill now—focusing on spending increases to support mass deportations—while putting off tax and spending cuts to later in the year. The House wants to include that spending, along with tax and entitlement cuts, in one large bill now.
· Some GOP Senators and President Trump want to use a budget gimmick to “write off” the $4.5 trillion cost of extending the 2017 tax cuts and want to make the tax cuts permanent, while some House members want to pay for the tax cuts with offsetting spending cuts.
· House GOP wants up to $880 billion in Medicaid cuts (with work requirements and other spending limits), as well as several hundred billion in food stamps and other entitlement cuts, which gives some GOP Senate moderates and many advocacy groups significant concerns.
· House GOP wants to raise the public debt limit in the filibuster-proof reconciliation bill, while some Senators do not.
· Senate GOP aims to complete the reconciliation process by August, while Speaker Johnson says, “August is far too late.” (Note from the author: Johnson’s timeline is highly unrealistic; a large and complex reconciliation bill including spending and tax cuts will take many months to complete, with July 4th completion possible, but August more likely. Johnson is inexperienced in the complexities of developing tax and entitlement legislation.)
The author managed multiple reconciliation bills for the Senate Finance and Senate Budget Committees. For daily updates on budget reconciliation, see our website GovBudget.com.
3. ECONOMY: Trump’s volatile actions on tariffs reduce consumer confidence and risk slowdown
Last week’s column discussed the view that Trump’s broad-based tariffs have little economic basis and are essentially a power play, requiring countries and businesses to seek repeated temporary exemptions from President Trump. The big economic news during the week just ended was the drop in the stock market, a majority of Americans disapproving of Trump’s handling of the economy, and a big dip in consumer confidence about the economy:
· Bloomberg reported that tariff worries pushed the S&P into “correction” territory, the Wall Street euphemism for a significant drop in stock prices;
· CNN reported that for the first time in their polling, a majority disapprove of Trump’s handling of the economy; and
· Politico reported that “consumer confidence has fallen sharply and more businesses are raising alarms over the policy uncertainty by delaying hiring, investment plans.”
In addition, Commerce Secretary Lutnick’s comments last week raised fears of political interference in economic data.
For daily updates see GovBudget.com/tariffs and GovBudget.com/economic-news.
4. MAJOR DEVELOPMENTS: White House disputes judge’s authority; Massive cuts at DoEd, IRS cuts will cost (not save) money, EPA rewriting its statutory mission, Musk targets entitlements, Judges order rehiring.
The chaotic push by Russell Vought (OMB Director) and Elon Musk (DOGE) to fire thousands of federal employees, cancel grants and contracts, and shutter entire agencies—without legal authority or congressional authorization—is continuing despite multiple pending lawsuits.
As explained in last week’s column, there is a legal, constitutional, and sensible way to identify and eliminate waste: the rescission process set forth in the Impoundment Control Act which permits the President to propose cancellation of congressional appropriations, subject to congressional enactment of rescission legislation.
The Administration’s flagrant disregard for the impoundment control statute, together with the blanket firing of agency Inspectors General, suggest that Vought and Musk are seeking to dismantle the federal government to carry out an ideological agenda, rather than an honest attempt to make congressionally established agencies more efficient.
The following are key developments from last week, including court actions:
· Late-breaking: Secretary of State Rubio posted video on social media showing immigrants being forced off planes in El Salvador, hours after a federal judge barred deportations under a wartime statute. The White House disputed the judge’s authority.
· Education Secretary Linda McMahon announced the firing of nearly half of the Education Department’s employees. House Appropriations Ranking Democrat responded that the firings are illegal.
· A study from the Budget Lab, a nonpartisan policy research group at Yale, estimates that Elon Musk’s cuts in IRS employees will cost the federal government far more than it saves, because the firings will reduce federal tax collections.
· USPS has agreed to DOGE reviewing its operations, which could jeopardize the Postal Service’s statutory mandate to provide universal service to all Americans if this moves the Service towards privatization.
· DOGE—already in violation of the Impoundment Control Act and its congressional notification requirements—is reportedly becoming even less transparent about the details of its cuts in grants, contracts and employees, following media reporting of numerous mistakes in its savings claims.
· The Environmental Protection Agency, seeking to rewrite its statutory functions without congressional authorization, terminated $20 billion in grants and announced its intention to repeal dozens of the nation’s most significant environmental protections on clear air, clean water, and climate, saying its new mission is to “lower the cost of buying a car, heating a home and running a business.”
· Elon Musk claimed, without any evidence, that up to $700 billion in entitlement spending could be “waste and fraud” saying entitlements are “the big one to eliminate.” The largest federal entitlements are Social Security, Medicare, and Medicaid; and Dr. Oz, President Trump’s nominee to head Medicare and Medicaid, declined to oppose Medicaid cuts.
· Key court actions last week (for full details on all litigation, link to the Just Security website; for a good summary see Reuters): Federal Judges, in CA and MD, ordered the Departments of Veterans Affairs, Agriculture, Defense, Energy, Interior and Treasury to “immediately” reinstate thousands of fired “probationary” employees (workers hired or transferred during the last year or two) because OPM lacked the authority to direct the firings; Federal Judge, DC, ruled that termination of a member of the Federal Labor Relations Authority was unlawful and ordered reinstatement; Federal Judge, DC, ordered the government to pay nearly $2 billion in foreign assistance for work already performed, but did not bar the termination of foreign aid contracts; 20 States and DC sued to stop the planned firing of one-third of the Education Department’s employees; Tribal nations filed suit against the Bureau of Indian Education for layoffs resulting in degraded services; A coalition of unions representing TSA officers sued the Homeland Security Secretary for terminating collective bargaining; and a Federal Judge, DC, granted a temporary restraining order barring DOJ and other agencies from retaliatory actions against the law firm Perkins Coie.
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 an Independent, having served Democratic and Republican Administrations and Senators.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. (Contact the author for the 2024-25 edition. The 2025-26 edition will be published by Amazon.com after release of the Trump FY 2026 budget this spring.)
He is also Publisher of Appropriations.com which tracks appropriation bills; and GovBudget.com which tracks major federal developments, by subject area, each day.
Speaking engagements and press interviews can be scheduled by calling: (202) 818-8578. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.