How the funding battle is colliding with reconciliation

IN THIS EDITION

Deal or no deal? Inside reconciliation and gov’t funding

Endorsement race is on for Oversight Dems

The Vault: Thune stamps out the stablecoin drama

It’s Election Day in New Jersey

THE TOP

Deal or no deal? Inside reconciliation and gov’t funding

Happy Tuesday morning.

All eyes are on Republican senators as they wrestle over the details of a massive GOP reconciliation package, a bill that includes the heart of President Donald Trump’s legislative agenda.

But the reconciliation fight is impacting what’s already going to be a brutal partisan struggle over FY2026 government spending. DOGE funding cuts, tens of thousands of federal employees laid off, a $9 billion-plus rescissions package, the end of USAID — these are all already in play, and it’s only early June.

Now, Senate Appropriations Committee Chair Susan Collins (R-Maine) says she doesn’t expect to reach any topline agreement on FY2026 spending until after reconciliation is over. This will only make a slow-moving appropriations process in the Senate even slower.

“We’re sort of at a standstill until the reconciliation bill is done,” Collins told us on Monday.

Senate GOP leaders hope to be done before July 4 on reconciliation, but as we note below, that goal is somewhat fluid.

Collins added that the Senate Appropriations panel will continue its hearings on the Trump administration’s FY 2026 budget requests. This week includes appearances by Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, Army Secretary Dan Driscoll and NIH Director Jay Bhattacharya.

Collins also still believes that she can cut a deal with Democrats on government funding later this summer.

Sen. Patty Murray (Wash.), top Democrat on the Appropriations Committee, said she remains“hopeful” that a deal can be done sooner.

“We’re working on it,” Murray said Monday.

Yet Collins’ decision caught some Senate Democrats flat-footed. Several senators believed the two sides were close to an agreement last week, one that would have included more funding than what the House Appropriations Committee is working on now.

“That’s a little surprising to me. And I will leave it there,” said Sen. Brian Schatz (D-Hawaii), who serves both on the Appropriations panel and in Democratic leadership.

Across the Capitol. House GOP appropriators are using Trump’s “skinny” budget request as the template for their version of the 12 annual spending bills.

Trump has called for cutting non-defense discretionary spending by $163 billion while boosting funding for the Pentagon and the Department of Homeland Security. That doesn’t include hundreds of billions of dollars in defense and border-security funding included in the reconciliation package.

House Appropriations Committee Chair Tom Cole (R-Okla.) wants to have four bills marked up by the full panel before the end of this week – Defense, Homeland Security, Agriculture and MilCon-VA. House Democrats are vehemently opposed to these proposed funding levels, as well as the policy riders that Republicans have thrown in.

Reconciliation. Conservative House Republicans are starting to amp up pressure on their Senate GOP colleagues to enact drastic changes to the reconciliation package.

The House Freedom Caucus and its allies sent a lengthy memo to the Senate on Monday demanding far steeper spending cuts.

The memo calls for more Medicaid spending cuts and clean-energy tax credit repeals, a higher tax on remittances and scrapping a proposed ban on states regulating AI. But conservatives’ biggest asks are certain to turn off moderate Republicans in both chambers.

HFC also wants to change the House’s SALT deduction cap, which is set at $40,000 – something Republican senators wholeheartedly agree with. This could cause blue-state House Republicans to bolt. SALT is one of the Senate Finance Committee’s most difficult issues it needs to resolve.

HFC can create its own problems if and when the reconciliation bill heads back over to the House with Senate-authored changes. But they also have a core group of Senate allies who are making a similar push on spending cuts.

That group of senators huddled in the Capitol during and after Senate votes Monday night with two senior Trump administration officials: James Braid, the White House legislative affairs chief, and Deputy OMB Director Dan Bishop, a former Freedom Caucus member.

Sen. Ron Johnson (R-Wis.) emerged from the meeting teasing a potential meeting later this week with Vice President JD Vance.

“What’s the point of having the majority if you don’t fully use it?” Johnson asked.

July 4 rush. Three Senate committees — Armed Services, Commerce and Banking — have released their reconciliation text, and a Byrd Rule review is ongoing. Additional committees are slated to release legislative text today and throughout the week.

The Finance Committee has the biggest lift when it comes to Senate Republicans’ reconciliation package, handling both taxes and Medicaid spending cuts. The Senate GOP leadership is pushing for all of the aforementioned disagreements to be hashed out by Friday so that the Byrd Rule process can begin next week.

As text is nailed down, committee leaders, including Finance Chair Mike Crapo (R-Idaho), will brief GOP senators on Wednesday afternoon to talk through high-level plans. The “Big Six” meets Thursday.

The Senate GOP’s hopeful timeline for text would pave the way for a floor vote before the July 4 recess. But then the bill would still have to get back through the House.

Senate Majority Leader John Thune acknowledged Monday that the Congressional Budget Office’s latest debt-limit assessment “gives us more runway.” The CBO estimated Monday that the federal government won’t hit its borrowing limit until late summer.

“We want to complete this — you know the aspirational goal, and if we can get all the Byrd work done, I think we could be on pace for that,” Thune told us. “But that is a factor.”

— John Bresnahan, Laura Weiss, Andrew Desiderio, Max Cohen, Mica Soellner, Jake Sherman and Samantha Handler

Tomorrow: Join us for a conversation with Sen. Ted Cruz (R-Texas). Punchbowl News Founder Jake Sherman will sit down with Cruz on Wednesday, June 11, at 9 a.m. ET to discuss the news of the day, 5G and spectrum policy. There’s still time to RSVP!

HOUSE OVERSIGHT

Endorsement race is on for Oversight Dems

The four House Democrats vying for the top perch on the Oversight Committee will be trolling for endorsements this week.

Today is the biggest day. Candidates are invited to make their pitch to the Congressional Hispanic Caucus, the Congressional Progressive Caucus and the New Democrat Coalition.

The Congressional Black Caucus lunch is on Wednesday. The Democratic Women’s Caucus also meets Wednesday. Both will hear from the candidates.

The CHC is the most likely to offer an endorsement — only one Hispanic member, Rep. Robert Garcia (D-Calif.), is running for the post — and that will likely come quickly after the meeting. The CPC has three members running, and the New Dems have none.

Rep. Greg Casar (D-Texas), who chairs the CPC, said he’ll moderate a forum where all candidates will be asked the same questions. Then the CPC will decide if it wants to weigh in.

“We endorsed last time,” Casar said. “But of course, it’s a different race with different candidates and multiple CPC members.”

These forums will mark the start of the endorsement game. Even if the caucuses themselves don’t endorse, leading members may once they’ve had a chance to evaluate the candidates. This is especially true for the CBC, which has two members running: Reps. Jasmine Crockett (D-Texas) and Kweisi Mfume (D-Md.).

The June 24 election will be a big moment for House Democrats. The caucus continues to grapple with a party base that wants generational change and a more combative response to President Donald Trump. The member they pick for Oversight will help spearhead that effort.

Crockett and Garcia are in their 40s. Mfume and Rep. Stephen Lynch (D-Mass.) are in their 70s. Crockett has made pushing for a Trump impeachment inquiry part of her pitch.

Garcia is someone to watch. The California Democrat has a strong path if he locks up enough of the CHC and his home state’s delegation.

Democratic leadership, including House Minority Leader Hakeem Jeffries and House Minority Whip Katherine Clark, has remained silent about who they want to see in the job.

“A number of people have asked me — they’re sort of waiting to see if there’s a signal from Hakeem and Katherine,” said Rep. Don Beyer (D-Va.), a member of the Oversight committee. “They’re all not just careful politicians, but don’t want to be seen putting their finger on the scale.”

— Ally Mutnick

The Vault: Thune stamps out the stablecoin drama

Good news, crypto: Your legislative agenda might just survive the Senate!

Senate Majority Leader John Thune flipped a switch on Monday night that effectively ended the open amendment process around the GENIUS Act. That means senators will dodge several painful votes that could’ve otherwise been queued up as the Senate attempts to enact stablecoin reform.

Progressives, led by Sen. Elizabeth Warren (D-Mass.), will lose their chance to force votes on a series of amendments covering presidential corruption, Big Tech, closing the Tether loophole, bolstering national security provisions and shoring up financial stability controls. Retail advocates, championed by Sen. Roger Marshall (R-Kan.), won’t get a vote on the Credit Card Competition Act.

It’s an abrupt end to a saga that, in fairness to everyone involved, was predictable. “Regular order” seems to lose its charm for every majority leader sooner or later in the modern Senate once legislation stalls on the floor for a couple weeks. Which is what happened here.

Thune reset the bill’s amendment tree and filled it, closing out the open-ended process by subbing in an amendment in the nature of a substitute from Sen. Bill Hagerty (R-Tenn.). That amendment contains the final version of the stablecoin bill, a combination of bipartisan changes needed to bring along a bloc of crypto-friendly Senate Democrats and final technical tweaks. Read the 120-page bill here.

Democrats and Republicans are doing another round of amendment hotlines right now, but the effort doesn’t have the same heft with the tree filled up. Any additional amendments will require unanimous consent to be included. That’s not going to happen with the CCCA or most other amendments of note, but we’ll keep an ear out.

In other words, the crypto world could have a blissfully boring week ahead in the Senate.

What’s next? We have a rough run-of-show for you. Without a time agreement, the Senate’s next round of GENIUS votes will start Wednesday. Hagerty’s amendment in the nature of a substitute should get a vote around Thursday. That will likely set up a final passage vote on Monday, assuming time agreements remain elusive.

The GENIUS Act appears to have more than enough Democratic votes to clear the chamber’s filibuster. The last procedural vote on the GENIUS Act advanced 69-31. Sure, a couple of those Democratic “yes” votes have said they’re not totally sold on the final product. But are nine senators going to jump ship at this point? Not without a significant shift.

Don’t forget the House: Our friend Jesse Hamilton at CoinDesk had a good write-up with House Financial Services Committee Chair French Hill (R-Ark.) on the ways the chambers remain apart on stablecoin policy.

– Brendan Pedersen

THE GARDEN STATE

It’s Election Day in New Jersey

Democratic Rep. Mikie Sherrill (N.J.) is the one to watch tonight in New Jersey’s gubernatorial primary.

The four-term lawmaker has led in recent public and private polling of the open governor’s race. And she’s the only woman in a crowded Democratic field. Sherrill’s opponents and their allies only confirmed her front-runner status by going negative on her in the closing weeks of the race.

The big question is whether the barrage of attack ads has knocked Sherrill out of first place. Newark Mayor Ras Baraka and an outside group for Jersey City Mayor Steve Fulop slammed Sherrill for taking money from a PAC tied to Elon Musk and not disclosing stock trades. They’re Sherrill’s top competition.

Sherrill and her allies weren’t the biggest spenders. But House Democrats’ Class of 2018 has been on the rise, especially women with national security backgrounds. Rep. Abigail Spanberger (D-Va.) appears to be on a glide path in Virginia’s gubernatorial race. Spanberger doesn’t even have a primary.

And in Michigan, Democrat Elissa Slotkin made the jump from the House to the Senate last fall. Sherrill could be the next.

What about Gottheimer? Rep. Josh Gottheimer (D-N.J.) has been eyeing the governor’s mansion for years and stockpiled more than $20 million in a House account. Gottheimer can’t spend that directly, but he can transfer it to a super PAC. Two pro-Gottheimer super PACs spent nearly $17 million, according to AdImpact.

Gottheimer has racked up endorsements from Jewish groups, and Jewish turnout could help him. But he’s struggled to break through, and many operatives watching the race are unsure if Gottheimer can crack the top three.

If a House member wins, they won’t need to resign from Congress until after the general election this fall. Gottheimer and Sherrill can keep their seats if they lose.

The GOP front-runner is Jack Ciattarelli, a former state lawmaker who has the backing of President Donald Trump.

– Ally Mutnick

… AND THERE’S MORE

Scoop: Get ready for some special election ads in the D.C. media market. Fairfax County Supervisor James Walkinshaw, a Democrat, is going on TV with his first spot. Watch it here.

Walkinshaw plans to remain on air until the June 28 special primary to replace the late Rep. Gerry Connolly (D-Va.) in his northern Virginia district. In the spot, Walkinshaw vows to stand up to President Donald Trump, protect abortion rights and touts his endorsement from Connolly, his mentor.

— Ally Mutnick

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