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Estimated reading time of this week’s update: 14 minutes
(1) APPROPRIATIONS: October 1 Shutdown Increasingly Likely; Trump Refuses Bipartisan Talks
Background: Fiscal Year 2026 begins Wednesday, October 1, 2025. Congress is not close to completing the 12 regular appropriations bills to keep agencies and programs funded. Consequently, the federal government will automatically shut down without enactment of a stopgap continuing resolution “CR.” Passage of a CR requires 60 votes in the Senate. Republicans, with only 53 votes in the Senate, need Democratic support.
Democrats are demanding a negotiation on the CR. At a minimum, Dems want to include in the CR an extension of the expanded Affordable Care Act (“ACA”) healthcare subsidies which expire December 31, 2025. (The subsidies were expanded during COVID-19). Some Democrats have also mentioned restoration of Medicaid funds cut by the 2025 reconciliation bill—but this is highly unlikely.
Without extension of the expanded subsidies, the Congressional Budget Office estimates “the number of uninsured people will rise by 2.2 million in 2026, by 3.7 million in 2027, and by 3.8 million, on average, in each year over the 2026-2034 period.” In addition, premium prices would go up for about 20 million people.
On Friday, President Trump Told Senate Republicans not to negotiate with Democrats: “Don’t even bother dealing with them,” he said in a Fox and Friends interview. He added more highly divisive rhetoric, saying of Democrats, “There is something wrong with them… (T)hey want to give away money to this or that and destroy the country.”
Curiously, Trump then said Republicans would get a CR passed on their own—either not understanding that 60 votes are required, or suggesting Republicans change the rules to drop the 60 vote requirement—which would terminate the last incentive for bipartisan cooperation built into Senate rules.
GOP to advance CR without health insurance extension: Following Trump’s advice, Republicans at this time are expected to advance a “clean” stopgap CR in the week ahead—without any extension of the expanded health insurance subsidies. GOP appropriators favor an extension through November 21, to give them time to complete action on the 12 regular appropriation bills.
However, GOP fiscal hawks are aligning with White House Budget Director Russell Vought in support of a CR through January 31, to give the Administration more flexibility to apportion funds as they wish, without detailed congressional instructions.
On Thursday, Sept. 11, some steam was added to the shorter-term (Nov. 21) approach when the House voted to begin a conference with the Senate on 3 appropriations bills: Ag-Rural-FDA; Leg. Br.; and MilCon-VA.
Shutdown Appears Likely: On Thursday, Senate Democratic Leader Schumer said, “On this issue, we’re totally united. The Republicans have to come to meet with us in a true bipartisan negotiation to satisfy the American people’s needs on health care or they won’t get our votes, plain and simple.” House Democratic Leader Jeffries said, “We will not support a partisan spending agreement that continues to rip away health care from the American people. Period. Full stop.”
CR Anomalies Released: If Congress is able to avert a shutdown and pass a CR, the measure will fund most programs, projects, and activities at FY 2025 levels. However, CRs typically include a list of so-called "anomalies," or exceptions, where certain programs are funded at different levels. Earlier this week, President Trump's Office of Management and Budget sent congressional appropriators a list of anomalies for the CR. Click here for the White House list of anomalies obtained by Politico.
Overview of Action on the 12 Appropriations Bills: The House Appropriations Committee has completed action on 12 bills (without bipartisan negotiations) and 3 of the bills have been approved on the Floor (Defense, Energy-Water, and MilCon-VA). The Senate Appropriations Committee has completed action on 8 of the 12 bills (with substantial bipartisan support) and 3 of the bills have been approved by the full Senate (Agriculture, Leg. Br., MilCon-VA). For full details, see appropriations.com.
(2) PRESIDENTIAL IMPOUNDMENTS: Chief Justice Roberts permits OMB to hold back $4 b; Dems say, overall, $410 billion is being blocked.
Roberts allows Administration to continue holding back impounded funds: Supreme Court Chief Justice John Roberts temporarily lifted a lower court’s order finding that President Trump’s “pocket rescission” of $4 billion in foreign aid funds was illegal—allowing Trump to continue withholding the funds, even though insufficient time remains for Congress to consider whether to allow the proposed rescissions.
Roberts’ action contravenes a longstanding legal precedent established by the Comptroller General of the United States that rescissions may not be proposed by the President if less than 45 days remains in the fiscal year for Congress to vote on whether to approve the rescission (under procedures laid out by the Impoundment Control Act). Read a fact sheet on “pocket rescissions.”
This is part of a larger, and highly consequential, effort by the Trump Administration to vastly expand the President’s authority to impound congressionally appropriated funds. Under current law, Presidents must obligate appropriated funds unless Congress approves a rescission of specific funds. The drafters of the Constitution were very clear in their conviction that Congress’s power of the purse was the best defense against an authoritarian leader.
Dems say $410 billion being blocked: Democratic appropriators earlier this week updated their list of FY 2025 funding currently being blocked by the White House budget office (OMB), which they say amounts to $410 billion. "We are now nine months into the year--and weeks away from the end of the fiscal year--and President Trump and Russ Vought continue to withhold hundreds of billions of dollars from families, farmers, children, small businesses, and communities in every part of the country," Murray and De Lauro said in a joint statement.
(3) TARIFFS: Supreme Court will review the legality of Trump’s use of emergency authority; half of tariffs may have to be refunded to U.S. importers.
Supreme Court to review tariffs in November: The Supreme Court on Tuesday agreed to take up in November the Administration’s appeal of lower court decisions finding most of President Trump’s tariffs exceeded his authority to respond to economic emergencies. (Trump has claimed that fentanyl overdoses justify tariffs against Canada, Mexico and China, and trade deficits are economic emergencies justifying the global “reciprocal” tariffs first imposed in April.)
Half of tariffs might have to be refunded: Last weekend, Treasury Secretary Scott Bessent said “about half” of Trump’s tariff collections from U.S. importers would have to be refunded if the Supreme Court rules against President Trump’s use of emergency powers to impose tariffs.
De minimus trade traffic stops: The global postal network saw postal traffic en route to the U.S. "come to a near halt" after Aug. 29, when the "de minimus" trade exemption ended allowing small packages worth less than $800 to be exempt from tariffs.
(4) THE ECONOMY AND THE FEDERAL RESERVE: Stagflation worries increase; Healthcare inflation hits 3-year high; Court says Trump cannot remove Fed Governor Lisa Cook while legal action is pending; Senate advances nominee to fill vacant seat.
Stagflation worries are on the rise, especially at the Fed, which must decide at this week’s Tues-Wed meetings how to respond to its twin mandates to keep inflation down and aim for full employment. According to the AP, “Consumer prices increased 2.9% in August from a year earlier… up from 2.7% the previous month and the biggest jump since January. Excluding the volatile food and energy categories, core prices rose 3.1%.... Both figures are above the Federal Reserve’s 2% target. A separate government report Thursday showed that weekly applications for unemployment aid jumped 27,000 to 263,000, the highest in nearly four years.”
Health care inflation hit a three-year high last month, reports Axios. “Medical care costs rose 4.2%, compared with an overall inflation rate of 2.9%, the Bureau of Labor Statistics said Thursday…. Mercer recently forecast that employers are facing their highest health benefit cost increase in 15 years…. Affordable Care Act marketplace plans are seeking median 18% premium hikes for next year, according to KFF.”
On Friday, the Congressional Budget Office updated its economic forecast, HERE.
Court action on Trump’s attempted firing of Fed Governor Cook: On Tuesday, Federal Judge Jia M. Cobb of the U.S. District Court for the District of Columbia ruled that President Trump cannot remove Federal Reserve Governor Lisa Cook while her lawsuit seeking to prevent her firing is still in progress. In the ruling, Cobb said that although the conflict is still in its preliminary stages, "Cook has made a strong showing that her purported removal was done in violation of the Federal Reserve Act's 'for cause' provision." Cobb noted that “for cause... does not contemplate removing an individual purely for conduct that occurred before they began in office." However, on Wednesday, the Administration appealed Cobb’s ruling, and on Thursday, the Administration asked a three-judge panel to allow Trump’s firing of Cook to take effect before the appeal is heard.
Filling Vacant Fed Seat: Stephen Miran, Trump’s Fed pick to fill vacant seat, could get Senate confirmation Monday. That would allow him to participate in a rate-setting meeting that starts Tuesday. - Politico
(5) BUDGET RECONCILIATION: Renaming OBBBA
“OBBBA” is now the “Working Families Tax Cuts.” The Administration and GOP congressional leaders, having seen negative polling numbers on the “One Big Beautiful Bill Act” signed into law on July 4, 2025, have changed its name to the Working Families Tax Cuts. However, as one of my former bosses, Sen. Daniel Patrick Moynihan, often said, people are entitled to their own opinion, but not their own facts. And the facts, according to the nonpartisan Congressional Budget Office, are that Trump’s spending & tax megabill cuts taxes very little for the lowest income working Americans, and a lot for the wealthiest Americans as shown in the graph below. (See a graph laying this out, HERE.)
(6) MAJOR DEVELOPMENTS ACROSS GOVERNMENT: Dismantling of Education Dept. continues while test scores plummet; Trump tried to kill bipartisan infrastructure law and now takes credit; IRS acting to protect tax shelters; Administration moves to limit eligibility for SSI/disability benefits; House GOP funds mRNA over RFK objections; Senate continues chipping away at bipartisanship; Appeals Court rules against migrants; Judge says fed workers illegally fired but can’t reinstate due to SCOTUS rulings; Putin defying Trump with Ukraine escalation.
Appropriations Committee Democratic Members Murray, DeLauro, and Baldwin released a statement Monday asserting that President Trump and Education Secretary McMahon are continuing to “illegally dismantle the Department of Education, transferring career and technical education responsibilities to DOL.”
Also last week, the House Appropriations Committee’s Labor-HHS-Education appropriations bill for FY 2026 called for a 26% cut to Title I funding for economically disadvantaged students.Ironically, while the Administration continues its dismantling of the Education Department, this week’s “National Assessment of Education Progress” reported that “a decade-long slide in high schoolers’ reading and math performance persisted during the COVID-19 pandemic, with 12th graders’ scores dropping to their lowest level in more than 20 years… (and) eighth-grade students also lost significant ground in science skills,” according to the AP.
Trump Tried to Kill the Infrastructure Law. Now He’s Getting Credit for Its Projects. “Signs bearing President Trump’s name have gone up at major construction projects financed by the 2021 law, which he strenuously opposed ahead of its passage.”...Trump called the bill “a loser for the U.S.A.” when Congress was considering it in 2021 and warned that Republican lawmakers who signed on could be thrown out of office by angry primary voters.
IRS Protecting Tax Shelters for Multinationals and Wealthy Taxpayers: The New York Times reported last week that “the Trump administration is quietly dismantling efforts by the IRS to shut down a slew of aggressive tax shelters used by America’s biggest multinational companies and wealthiest people.” The IRS crackdown had been projected to raise more than $100 billion over 10 years. The IRS action reportedly has included firing senior career employees tasked with investigating the suspect tax shelters.
Trump’s SSI Cuts: Axios reported this week that the Administration is changing the Supplemental Security Income eligibility rules aimed at cutting monthly benefits to people who are poor and unable to work, typically due to disabilities.
RFK Jr. and House GOP at Odds Over mRNA funding: House GOP Appropriators this week snubbed HHS Secretary RFK Jr., by including in the Labor-HHS-Ed funding bill, mRNA vaccine funding. However, if the Supreme Court yields to the Administration’s views on presidential impoundment—that the President can spend anywhere from zero up to the appropriated funding level—the funds may never be made available.
The U.S. Senate continues to chip away at rules designed to incentivize bipartisan agreement: Former Senate Democratic Leader Harry Reid started sliding down this slippery slope by allowing confirmation of then President Obama’s nominees for administration posts by a simple majority vote rather than 60 votes. Former Senate Republican Leader Mitch McConnell went further down the slippery slope by allowing Supreme Court nominees to be approved by 50 votes rather than 60 votes (giving us the current obeisant Court). On Thursday, the Senate went a step further, with Senate Majority Leader John Thune changing the rules (without the required 2/3 vote) to allow large groups of Trump nominees to be approved with a single majority vote—further eroding the rights of the minority party.
Appeals Court rules against 400,000 migrants: A federal appeals court ruled Friday that the Trump administration can end legal protections for around 430,000 migrants from Cuba, Haiti, Nicaragua and Venezuela, AP reported.
A federal judge ruled Friday that the Trump Administration illegally fired thousands of federal workers, but said recent Supreme Court decisions does not allow him to order their reinstatement, reports Reuters.
(7) This Week’s Must Reads – from both sides of the aisle:
After Kirk shooting, Utah Republican Governor Spencer Cox pleads for “turning point” on political violence – YouTube video of Governor Cox
Can America escape the spiral of political violence after Charlie Kirk’s killing? – Politico
If letting people starve is ‘America First,’ it’s not an America I recognize. – Former Republican Senator John Danforth
ICE Raids Will Shackle US Manufacturing Ambitions. – Bloomberg
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 the 12 appropriation bills and presidential impoundment developments each day;
andGovBudget.com which tracks major developments, by subject area, each day including: Law & Democracy | Cut Tracker | WH-OMB-DOGE | Economic News | Federal Taxes | Tariffs | Health and Human Services Programs | Debt, Deficits and Debt Limit | Discretionary Spending Programs | Mandatory Spending Programs | Immigration | Disabilities Programs | Defense | Climate/Energy | Budget Process
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.