(Average Read-Time: 12 minutes)
Quick Overview:
Last week, House Committees began writing legislation for President Trump’s 10-year budget reconciliation bill to enact up to $6 trillion in permanent tax cuts and hundreds of billions in new spending for defense and Homeland Security—partially offset by $1.5 trillion in entitlement spending cuts to Medicaid, food stamps (SNAP), financial aid, and federal employee pay and benefits.
The Trump Administration has blocked more than $400 billion in funding—according to a new Tracker launched last week by Appropriations Democrats—by shutting down agencies, cancelling grants and contracts, and firing workers, with many of those actions being challenged in court. The Administration had planned to send a $9 billion “rescission bill” to Congress last week to ratify some of the foreign aid and public broadcasting cuts, but that strategy has stalled due to internal GOP divisions.
Last Friday, President Trump’s budget office released a partial outline of his spending proposals for fiscal year 2026 which would effectively freeze overall discretionary spending—but with a massive shift in priorities. The budget outline proposes large increases for defense and homeland security, and drastic cuts to domestic spending and foreign aid—notably a 26% cut at Health & Human Services, 44% at Housing & Urban Development, 48% at the State Department, and more than 50% at the Environmental Protection Agency and National Science Foundation. Congress is currently holding hearings on FY 2026 funding, which will be followed by the House and Senate Appropriations Committees drafting the 12 regular appropriation bills for 2026. Funding for all departments and agencies will expire September 30 without enactment of the 2026 appropriation bills or a stopgap funding measure (“continuing resolution”).
Other major developments last week included: narrow defeat in the Senate of an attempt to overturn Trump’s global tariffs; GAO’s acknowledgement that it has opened 39 presidential impoundment investigations; and a court ruling that Trump’s use of a wartime act for deportations is illegal.
(1) CONGRESS IS IN THE MIDST OF DRAFTING TRUMP’S MULTIYEAR BUDGET RECONCILIATION BILL that will cut taxes, increase spending on defense and immigration enforcement, expedite fossil fuel leases on public lands, and cut Medicaid, food stamps, student financial aid, and federal worker pay and pensions.
Congress adopted a Budget Resolution framework on April 10 that includes 10-Year Budget Reconciliation instructions to House and Senate committees. The following is a summary of last week’s committee action, this week’s scheduled action, and updates on three markups that have slipped into next week.
1. Massive Tax Cuts up to $6 trillion: The tax package would extend the expiring portions of the 2017 individual and estate tax cuts, and enact new tax cuts for overtime pay, tip income, and Social Security benefits, and an increase in the cap on state and local tax (“SALT”) deductions. In addition, the House GOP is currently debating whether to roll back some or all of Biden’s clean energy credits. The House Ways & Means Committee may mark up the reconciliation tax provisions the week of May 12.
2. Defense Spending Increases of $150 billion: The House Armed Services Committee on April 29 voted 35-21 to advance legislation including a massive missile defense system, new shipbuilding, new aircraft, and border security.
3. Spending Increases for Deportations and Border Security: The House Homeland Security Committee on April 29 voted 18-14 to advance $62 billion in new spending for a “border barrier system” on the Mexican border, and more Customs and Border Protection (CBP) facilities and personnel for deportation of undocumented immigrants. The House Judiciary Committee on April 30 voted 23-17 to advance $67 billion in new spending for migrant detention centers, deportation, and new ICE (immigration and customs enforcement) personnel.
4. Medicaid Cuts: House Republicans on the Energy and Commerce Committee, which is tasked with cutting $880 billion in spending over 10 years to partially offset the Trump tax cuts, will meet behind closed doors this Tuesday and Wednesday to determine how best to generate the massive budget savings. The Committee is likely to cut Medicaid to achieve most of the required cuts, with some combination of work requirements to limit Medicaid eligibility, imposing a cap on federal spending for each Medicaid enrollee, and/or reducing the amount of federal funding that supports the Affordable Care Act’s “Medicaid expansion” in 41 States. However, deep divisions remain between budget hawks and moderate Republicans, delaying the Committee markup to next week. See this KFF analysis of which States are most at risk from Medicaid cuts.
5. $230 billion in cuts to food stamps and other programs: The House Agriculture Committee is struggling to achieve their instruction to cut $230 billion, which may come from shifting part of the cost of food stamps (“SNAP”) to the states. They may also include extensions of various expired farm programs which are currently operating under temporary authority. The Committee’s markup will likely be delayed to next week.
6. $330 billion in cuts to student financial aid: The House Education and Workforce Committee on April 29 approved 21-14 student financial aid reforms to cut spending more than $330 billion. The legislation would cap the amount of federal loans a student can take out, cut off Pell Grants for students who attend less than half time, consolidate income-driven repayment plans, and introduce a risk-sharing program where colleges are partially responsible for unpaid student loans. In general, student loans would cost more and fewer people would be eligible for Pell grants.
7. $50 billion in cuts to federal worker pay and pensions: The House Oversight and Government Reform Committee on April 30 approved 22-21 provisions that effectively cut federal worker take-home pay and pensions, and require federal employees to decide between taking a reduced paycheck or keeping their civil service protections.
8. Transportation & Infrastructure Committee: The House Transportation and Infrastructure Committee on April 30 approved 36-30 provisions to rescind Inflation Reduction Act climate investments, impose fees on electric vehicles and hybrids, and increase spending for the Coast Guard and air traffic control modernization, with net deficit reduction of $10 billion from the new fees.
9. Financial Services and HUD cuts: The House Financial Services Committee on April 30 approved 30-22 provisions to rescind funds for energy efficiency retrofits of housing; dissolve the government’s top audit regulator, the Public Company Accounting Oversight Board, and fold it into the SEC; and reduce funding of the Consumer Financial Protection Bureau (by almost 60 percent).
10. Oil, Gas, and Coal Leases on Public Lands: The House Natural Resources Committee will meet Tuesday, May 6 at 10:15am to vote on provisions to expedite on-shore and off-shore fossil fuel leases on public lands, reduce federal royalties to incentivize leases, and impose filing fees to discourage protests. Committee Democrats are calling it “the most destructive environmental bill in American history.”
11. Increasing the Public Debt Ceiling: The House Ways & Means and Senate Finance Committees are instructed to report legislation to increase the statutory limit on the public debt by $4 trillion or $5 trillion, respectively. However, the new debt limit will be reached again in about two years because of the enormous long-term costs of the Trump tax cuts.
House and Senate Committees technically have until May 9 to report legislation enacting the tax cuts, spending increases, and spending cuts, however the markups at the Ways & Means, Energy & Commerce, and Agriculture Committees have been delayed to the week of May 12 due to internal GOP divisions over tax policy, and cuts to Medicaid and Food Stamps (SNAP).
The House GOP Leadership was aiming to bring the House reconciliation bill to the House Floor the week of May 19 but that will likely slip.
Meanwhile, Senate Committees are taking a wait-and-see approach until House committees have acted.
When a reconciliation bill eventually reaches the Senate Floor, it will be subject to the strict requirements of the Senate’s Byrd Rule, under which provisions that are not “budgetary” in nature can be stripped from the bill on the Senate Floor. The Byrd Rule will be explained in detail (in plain English) in a special upcoming issue of Trillions—for paid subscribers ($80/yr).
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.
Stay up-to-date on reconciliation committee mark-up schedules and access bill language and summaries at our new Budget Reconciliation Tracker: https://govbudget.com/reconciliation-tracker/.
(2) APPROPRIATORS SAY TRUMP IS BLOCKING more than $400 billion in funding appropriated by Congress.
On President Trump’s hundredth day in office, the Ranking Democrats of the House and Senate Appropriations Committees, Rep. Rosa DeLauro and Sen. Patty Murray, released a new database tracking how the Administration has blocked over $400 billion in funding by, often illegally, shutting down agencies, canceling grants and contracts, and firing workers required to implement programs.
The two ranking Members said, “No American president has ever so flagrantly ignored our nation’s spending laws or so brazenly denied the American people investments they are owed.”
The Constitution gives Congress sole authority to appropriate funds and the Impoundment Control Act states clearly that: (1) a President may not delay the availability of funds until later in the year without notifying Congress, and (2) may never withhold funds for more than 45 days without proposing a rescission and Congress enacting the rescission into law.
The new Appropriations Committee tracker identifies ffunds “frozen, cancelled, clawed back, illegally impounded, and slow-walked.” Examples of funding blocked by the Administration include:
Medical research into Alzheimer's, women's health, cancer, and diabetes.
Public safety spending, including community policing, Office of Violence Against Women grants, and programs to help victims of crime.
Relief for states and communities responding to and recovering from wildfires, hurricanes, tornadoes, and other natural disasters.
School lunches and food for child care institutions.
Head Start programs vital for early childhood education—sending parents scrambling to find new preschool options.
Critical investments in roads and bridges, airports, public transit, and ports.
Assistance from the low-income home energy assistance program.
Essential health services including cancer screenings and birth control.
(3) TRUMP BUDGET OFFICE RELEASES DISCRETIONARY BUDGET OUTLINE FOR 2026 calling for major increases to defense and homeland security, and drastic cuts to domestic and foreign aid spending.
Last Friday, President Trump’s Budget Director, Russell Vought, released a partial budget outline for FY 2026 covering discretionary (non-entitlement) spending—about one-quarter of the federal budget—with the full budget proposal still delayed.
Friday’s discretionary budget outline proposes to freeze total discretionary funding, but within that total, it would substantially increase defense spending to more than $1 trillion and drastically reduce nondefense spending by one-quarter to one-third.
Nondefense cuts of this magnitude would be unprecedented. The Trump proposal would drastically cut federal spending for medical and scientific research; pandemic preparedness; low-income housing, education, and medical care; clean energy; financial aid for students; air service to rural and small communities; federal law enforcement; national parks; ports and harbors; AmeriCorps; rural programs; small business development; NASA; severe weather tracking; tribal programs; and foreign aid programs. Internal Revenue Service enforcement would be cut by nearly half, costing more in lost revenues than saved from the reductions.
The House Appropriations Committee GOP Chairman Tom Cole calls these cuts “decisive leadership” and “responsible governance” continuing his stunning abdication of Congress’ constitutional authority over federal spending. However, the Senate Appropriations Chair Susan Collins expressed “serious objections” to cuts in low-income home energy assistance, education programs and biomedical research.
For additional details see: Senate Appropriations Democrats’ release; House Appropriations Democrats’ release; Senate GOP release.
For daily updates on the President’s FY 2026 Budget proposals, see our webpage: https://govbudget.com/presidents-budget-news/.
The author served as Assistant Director at the Office of Management and Budget for more than four years under three successive budget directors.
(4) MAJOR DEVELOPMENTS LAST WEEK ACROSS GOVERNMENT and THE ECONOMY:
TARIFFS NOT OVERTURNED: The Senate last Wednesday failed to pass a resolution to block Trump’s global tariffs under a statute allowing the termination of the “national economic emergency” Trump used to levy the tariffs. The measure failed 49-49. Even if the measure had passed, the House was unlikely to pass it, and even then, the Administration said it would be vetoed.
39 PRESIDENTIAL IMPOUNDMENT INVESTIGATIONS OPENED: Last Tuesday, in response to questioning by Senate Appropriations Committee Ranking Democrat Patty Murray, the Comptroller General, who leads the Government Accountability Office (GAO) said the congressional agency has opened 39 presidential impoundment investigations, but the White House Office of Management and Budget and most federal agencies have not been responsive to information requests.
USE OF WARTIME ACT FOR DEPORTATIONS RULED ILLEGAL: Last Thursday, a Trump-appointed federal judge in Texas ruled that President Trump exceeded his authority by invoking the Alien Enemies Act to summarily deport Venezuelan migrants and permanently barred such removals in South Texas. The judge rejected Trump’s declaration that the U.S. is being “invaded” by a Venezuelan gang.
EXECUTIVE ORDER TO END FUNDING OF PUBLIC BROADCASTING: Last Thursday, President Trump signed an executive order instructing the congressionally chartered Corporation for Public Broadcasting to cut off direct funding to PBS and NPR, as well as local stations that might underwrite the national broadcasters’ programming. His reason for the order: news coverage he called “biased and partisan.”
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. (Contact the author for the 2024-25 edition. The 2025-26 edition will be published by Amazon.com after release of the full Trump FY 2026 budget.)
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.