House Momentum, Senate Headwinds, and the Return of Shutdown Politics

With the House finally beginning to break its floor paralysis, appropriations may be back in motion. However, the path to funding the government for FY27, and keeping the lights on past September 30, remains complex. Last week, the House passed the National Security, Department of State, and Related Programs (NSRP) appropriations bill, which included a closely watched vote on Rep. Thomas Massie's amendment targeting aid to Israel. House Republicans also renewed efforts to advance a potential reconciliation 3.0 package, while House Republicans will bring a continuing resolution (CR) funding the government through December 4th this week. Across the Capitol, the Senate remains largely frozen on appropriations, with no markups scheduled and no spending bills released for consideration, though a timely budget justification hearing is on the docket.
The House: Finally a Floor Victory After Weeks of Gridlock
After weeks of internal procedural gridlock, House Republican leaders successfully unlocked the chamber by attaching the SAVE America Act to the NSRP bill, which passed largely along party lines in a 217-209 vote. This victory secures a critical legislative milestone for appropriators ahead of the August recess, sustaining momentum for House Republicans’ ambitious "12-for-12" appropriations strategy.
During floor consideration of the NSRP bill, the debate over foreign aid proved nearly as noteworthy as the bill itself. Rep. Thomas Massie's amendment to eliminate $3.3 billion in Foreign Military Financing for Israel exposed a sharp divide among House Democrats. While the amendment ultimately failed, 104-314, the Democratic caucus split almost evenly; 103 members voted in favor, 98 opposed, and 10 voted present.
The vote also triggered a rare public disagreement within top Democratic leadership. Minority Leader Hakeem Jeffries broke with Minority Whip Katherine Clark, with Jeffries opposing the measure while Clark voted in support of it. The outcome underscores a growing divide between Democrats who remain committed to the traditional U.S.-Israel security relationship and an increasingly influential faction seeking greater conditions on U.S. military assistance. As Israel remains a highly contentious issue in Democratic primaries, this fault line is likely to reemerge during future appropriations negotiations and potentially become even more consequential should Democrats retake the House next year.
Meanwhile, signs are already emerging that Congress may be looking beyond regular-order appropriations. On Friday, House Republicans released a 15-page CR extending funding through December 4th.  Moving forward with a CR at this stage is unusual; CR negotiations are typically informed by a package of "anomalies" developed by the Office of Management and Budget. These anomalies identify funding and policy exceptions needed to keep agencies functioning when a CR's across-the-board funding approach proves inadequate. They frequently include requests for disaster-response flexibility, extensions of expiring authorities, funding to address program shortfalls, transfers between accounts, or other technical fixes. Because OMB traditionally develops these requests and transmits them to Congress as part of CR negotiations, drafting a clean stopgap bill without programmatic guidance could present steep technical challenges. We’ll be watching to see how Democrats react to the CR; it will be difficult to oppose a clean CR but we’ve heard technical issues related to DHS spending as extended by the drafted CR could complicate bipartisan support.
Even as appropriators advanced a spending bill, the House is turning its attention to contingency plans if the process fails. On Wednesday, the full House Appropriations Committee will hold a hearing entitled Funding Lapses: Analyzing Shutdown Reform, examining proposals ranging from automatic continuing resolutions to broader budget-process reforms designed to reduce the frequency and impact of government shutdowns.
Appropriations watchers will recall that Senator Ron Johnson has authored two reform proposals in recent years. The Shutdown Fairness Act - which received support from the American Federation of Government Employees - would guarantee pay for federal and military personnel during a shutdown. His Eliminate Government Shutdowns Act would automatically trigger successive 14-day continuing resolutions whenever Congress fails to enact appropriations. Democratic appropriators have generally resisted automatic CR mechanisms, arguing that they weaken Congress's incentive to complete the annual appropriations process. However, the Shutdown Fairness Act generated bipartisan support amid the 40-day shutdown in 2025.  Expect these competing visions to be featured during Wednesday's hearing.
The Senate Reality Check
Senate appropriations markups remain completely stalled. With Senator McConnell yet to return to in-person Committee work and Senator Graham’s vacancy being reassigned, Chair Susan Collins still lacks a viable path to move appropriations bills out of committee. Democrats remain unified in opposition amid unresolved disputes over overall topline defense/nondefense spending levels.
However, Senate appropriators are not sitting idle. On Tuesday, the Committee will hold a budget justification hearing on the President’s June supplemental funding request, including nearly $70 billion for the Department of Defense. That’s a big number, but a far cry from the President’s $350 billion defense number requested to move via reconciliation. Defense Secretary Pete Hegseth, Joint Chiefs Chairman General John Caine, and Agriculture Secretary Brooke Rollins are scheduled to testify.
The hearing offers a preview into Senate sentiment about additional spending as Capitol Hill is already grappling with reconciliation 3.0 alongside looming FY27 funding deadlines. Members’ line of questioning may prove just as revealing as the witnesses’ testimony, offering insight into whether lawmakers view the supplemental as a standalone emergency package, a candidate for inclusion in reconciliation, or a request that faces strong headwinds amid growing fiscal and political pressures.
A Rare Appearance by Sitting Justices
The Supreme Court's budget request took center stage this week as Justices Elena Kagan and Amy Coney Barrett appeared before House and Senate appropriators—a noteworthy departure from routine practice given that Supreme Court justices have not testified before the House Financial Services and General Government (FSGG) Subcommittee since 2019. The timing is particularly notable, following the seemingly late-stage inclusion of additional funding for the Court in the FY26 Homeland Security bill. The unusual placement of judicial branch funding in a Homeland Security measure suggests the request may not have been finalized in time for consideration during earlier action on the FSGG bill, forcing appropriators to find an alternative legislative vehicle. Ultimately, the hearings offered members a rare opportunity for appropriators to weigh the Court's resource needs and to question the justices directly on the judiciary's funding priorities, operations, and growing workload.
One (Two) More Thing(s): Reconciliation 3.0 and OMB Proposed Rule Comment Period Ends
Momentum for a third reconciliation package continues to build in the House. Last week, the Budget Committee advanced a budget resolution and we will see it on the floor this week. Whether that momentum can survive contact with the Senate is another matter entirely.
Senate Republicans face a host of challenges that their House counterparts do not: razor-thin margins, Byrd Rule constraints, and a legislative calendar already crowded with the now fraught NDAA, stalled appropriations, and year-end funding negotiations. That reality was on display last week when Senate Majority Leader John Thune publicly characterized reconciliation 3.0 as a “risky proposition,” questioning whether another pair of grueling vote-a-ramas is worthwhile for a defense funding level that falls well short of the administration’s request.
Senate Republicans have expressed similar concerns that the package's agriculture funding provisions do not adequately address the needs of farmers. Complicating matters further, any final package is expected to incorporate some version of the SAVE America Act at the insistence of President Trump. The central question is not really whether the House can pass another reconciliation package, it is whether Senate Republicans have the appetite, floor time, and votes to take up another partisan budget fight while juggling must-pass appropriations and defense legislation.
OMB’s proposed overhaul of federal grants management closed its public comment period after generating one of the most significant rulemaking responses in recent memory. By the July 13 deadline, nearly 500,000 comments had poured in, reflecting intense interest from states, local governments, universities, nonprofits, contractors, scientific organizations, and advocacy groups. The extraordinary volume of feedback underscores the degree of concern surrounding a proposal that many stakeholders believe would fundamentally reshape the relationship between federal agencies and grant recipients. With the comment period now closed, attention turns to OMB's review process. Given the breadth of opposition of comments received, stakeholders will be closely monitoring whether the administration intends to move forward largely unchanged despite widespread concerns about its implications for federal grantmaking and financial assistance programs.