Will the government shut down? Let's explore.

IN THIS EDITION

Why the federal government will shut down. And why it won’t

Senate GOP looks to avoid Trump ‘eruption’

Senate inches toward Russia sanctions vote

A ton of campaign news

Rounds on the future of payments

THE TOP

Why the federal government will shut down. And why it won’t

Happy Wednesday morning.

The FY2026 government-funding deadline is just 83 days away. So far, it’s not going well at all and talk of a shutdown is rampant in both parties.

And before you accuse us of getting ahead of ourselves, the House has just 22 more days in session before the Sept. 30 funding deadline. The Senate is set to leave at the end of this month and won’t return until Sept. 1.

So what we’re going to do this morning is explain why we think there will be a shutdown, and then – alternatively – why it won’t happen. This is based on conversations with nearly a dozen top lawmakers and aides.

The backdrop. Here’s the scary reality: No one has any idea yet how Congress is going to avert a shutdown come Sept. 30.

There’s virtually no chance the House and Senate are going to pass all 12 appropriations bills between now and the end of September. It’s not even clear that GOP appropriators can get them all out of their respective committees by then. At least one continuing resolution is needed, maybe multiple CRs.

Senate Minority Leader Chuck Schumer caught hell from the Democratic base when he helped Republicans keep federal agencies open in March by passing a long-term CR, a decision that will come back into play later this year.

GOP leaders can’t avert a shutdown without the help of Democrats. Yet so far, the White House is demanding tens of billions of dollars in spending cuts that Democrats oppose.

Republicans also jammed through $325 billion in new Pentagon and border security funding on a party-line vote as part of the OBBB. And the White House and GOP leaders are pushing a $9 billion rescissions package as well.

Just one FY2026 spending bill has passed the House so far – MilCon-VA. The House Appropriations Committee has marked up four other bills: Legislative Branch, Homeland Security, Defense and Agriculture. The panel is lagging behind its own schedule, however, and there’s no guarantee that House Republicans can pass some of the tough bills on the floor, like Labor-HHS.

The Senate Appropriations Committee hasn’t passed a single bill, although three bills are scheduled for markup this week — Commerce-Justice-Science, Ag and Legislative Branch. Senate Appropriations Committee Chair Susan Collins (R-Maine) and Sen. Patty Murray (Wash.), the top Democrat, don’t have a deal on a topline FY2026 number. Collins isn’t saying much on her plans past this week.

We spoke to Speaker Mike Johnson about how he views the government funding state of play. Johnson sounded a bit tentative about the outlook:

Why the government is definitely shutting down. The “skinny budget” from the White House calls for $163 billion in cuts to non-defense discretionary spending while adding defense and border money. This comes on top of the rescissions package, which Schumer has warned would poison the chances of any bipartisan spending deal.

OMB Director Russ Vought is threatening more “pocket rescissions,” and Johnson is talking about more reconciliation bills.

Rep. Rosa DeLauro (Conn.), the top Democrat on the House Appropriations Committee, called it “an absurd and opaque process” during a recent markup. DeLauro hates shutdowns, but even she’s very frustrated with what’s happening.

And have you listened at all to the Democratic base since President Donald Trump won? New York City Democrats just picked a socialist for the mayoral candidate. Members and senators are personally confronting Trump officials over immigration raids and getting arrested – or just knocked down.

There was even a Trump impeachment vote in the House already (it failed badly). Democrats want more, not less, challenges to Trump’s growing power, especially since Hill Republicans are doing little to defend the institution.

So what about this toxic political climate makes it likely that Democrats will be eager to work with Republicans to keep the government funded?

Let’s say Johnson could get a funding bill – most likely a CR – through the House with Republicans only (thanks to Trump). Senate Majority Leader John Thune would still need at least seven Democrats – maybe more – to get it through the Senate.

Now let’s return to the March CR fight. Schumer came under sharp criticism from other Democrats, including House Minority Leader Hakeem Jeffries and Murray, for backing the CR after suggesting he wouldn’t.

Why would Schumer cave again, even if he wanted to? What kinds of policies could Democrats even ask for that Trump and Hill Republicans would agree to? From our vantage point, the list is short.

Why Congress will Congress again – and avoid a shutdown. If Congress is good at anything, it’s taking things to the brink, staring disaster in the eye, and then folding.

Truth be told, a shutdown would hurt Democrats way more than it would hurt Republicans. Trump and Vought could make all federal workers come into work and just not pay them. This would be especially demoralizing to a federal workforce still reeling from DOGE layoffs. And never forget that the longest (partial) shutdown in history occurred during Trump’s first term. He’s not averse to them at all.

Democrats are also the anti-shutdown party. They’ve railed against them for years, arguing they are counterproductive, waste a lot of money and no one wins. All of which is true.

If Republicans are truly OK with a clean CR — and some GOP sources told us they are — it may put some Democrats in a bind. Democrats would have to vote against a CR and for a shutdown.

Also, can this group of Democrats even win a shutdown against Trump? No one plays this game better than Trump, who will have the full backing of Fox News and conservative outlets in any political fight.

— Jake Sherman and John Bresnahan

THE SENATE

Senate GOP looks to avoid Trump ‘eruption’

President Donald Trump’s allies in the Senate are warning their GOP colleagues that failing to pass the White House’s $9 billion-plus rescissions package would embarrass the president and show Republicans aren’t serious about reducing federal spending.

There’s cautious optimism among party leaders that the Senate can pass a rescissions bill. But the number of GOP holdouts and the scope of their concerns could force Republicans to significantly water down what’s already a relatively tiny pool of spending cuts. So the “shaming” period of the whip effort is well underway.

Sen. John Kennedy (R-La.) said Tuesday that if Senate Republicans can’t pass a bill by next week’s deadline, the White House will “go nuts” and there will be “another Trump eruption.”

“If the Republicans in the United States Senate do not pass the rescissions package after all the rhetoric about reducing spending, then they should hide their head in a bag,” Kennedy told reporters. “And I think the White House will provide the bag.”

Kennedy’s warning was a reminder that, even after Republicans met Trump’s July 4 deadline for his “one big, beautiful bill,” the president wants GOP senators to keep bending to his agenda.

The whip count. Senate Majority Leader John Thune told reporters Tuesday it’s too early to game it out. But the first step will likely be a vote early next week to discharge the House-passed rescissions bill from the Senate Appropriations Committee.

Thune will then need to muster the 50 votes necessary to send an amended bill to the House so that it can hit Trump’s desk by July 18, the statutory deadline.

The rescissions package touches on foreign aid programs as well as public broadcasting funding. Sen. Susan Collins (R-Maine), the Appropriations Committee chair, is among the leading skeptics of the proposal. Collins declined multiple times to speak with reporters Tuesday.

Collins and several other senior GOP appropriators have concerns about the proposed cuts to PEPFAR, a George W. Bush-era global HIV/AIDS prevention program. Others, like Sen. Mike Rounds (R-S.D.), believe that slashing public broadcasting funding will negatively impact rural and native communities.

“One way or another, OMB said they would work with us,” Rounds said. “So whatever forms it takes, we can’t lose these small-town radio stations across the country that [are] literally the only ways of getting out emergency messages.”

There’s also Sen. Thom Tillis (R-N.C.), a new wild-card of sorts after he announced he isn’t running for reelection in 2026. Tillis said that while he’s sympathetic to the argument that cutting foreign aid undermines national security, he expects to vote yes.

“I’m planning on supporting it, but there are people who have expressed soft-power national security concerns that I’m going to take a look at,” Tillis said. “But I’m generally going to be in the yes column.”

— Andrew Desiderio and Samantha Handler

WASHINGTON X THE WORLD

Senate inches toward Russia sanctions vote

Senate Majority Leader John Thune is teasing an announcement as soon as this week on a path forward for Sen. Lindsey Graham’s (R-S.C.) bipartisan Russia sanctions bill.

In a brief interview Tuesday night, Thune made it clear he wants to see the bill become law and is taking a leading role in making it happen. The South Dakota Republican, a longtime Russia hawk, told us the sanctions bill would send “a very strong message” and noted that “the Europeans are looking for that kind of leadership from us as well.”

But Thune said he wants to move the bill “in sync” with the House and the White House — presumably so that the Senate isn’t left hanging out to dry. Thune’s conversations on those fronts have intensified in recent days, and he’s actively making the case for its passage.

“We want to make sure, when we move it, that we’re coordinating it with the White House, with the House,” Thune added. “It’s a very bipartisan issue here in the Senate. And I’m hoping that we’ll get the other entities in a place where there’s an opportunity for us to get this done.”

President Donald Trump said Tuesday he’s “looking at” the Senate bill “very strongly” and touted the fact that the bill gives him some flexibility when it comes to imposing the sanctions, which are intended to target nations that purchase Russian oil and uranium.

Graham told reporters that the bill’s waiver authority was tweaked to Trump’s liking, giving him a 180-day waiver that, if extended, would be subject to congressional review.

Next steps. Thune sounds very much like someone who wants to get this done. Yet Thune still wants commitments from the House and the White House that they’ll move in tandem. Thune seemed very optimistic — more so than in recent weeks — that they’ll be in lock-step.

That’s especially the case after Trump turned sour on Russian President Vladimir Putin this week over his steadfast refusal to accept ceasefire proposals while continuing to launch attacks in Ukraine, including in civilian areas. Trump seems to want to try a different approach after six months of his entreaties to Moscow haven’t changed the status quo.

“With the weapons flowing, this bill passing, the Europeans having a sanctions package — I think it’s the best chance to get Putin to the table,” Graham told us. “I feel confident the president is ready for us to act.”

The Senate will be in session the next four weeks, followed by the August recess. Senators are voting on nominations this week and are likely to handle the rescissions package next week. That means the week of July 21 is likely the soonest the Russia sanctions bill could hit the floor.

— Andrew Desiderio

THE CAMPAIGN

A ton of campaign news

News: Pennsylvania Rep. Brian Fitzpatrick (R-Pa.) will report raising $1.3 million in the second quarter of 2025 and has $6.5 million in the bank. Fitzpatrick represents one of the few GOP districts that former Vice President Kamala Harris won in 2024. Fitzpatrick voted against the One Big Beautiful Bill Act last week.

House Administration Committee Chair Bryan Steil (R-Wis.) will report raising more than $1.3 million and having $3.6 million on hand. Democrats have said they will target Steil this cycle.

Democrats raised $390 million on ActBlue in the second quarter, which the platform says is a 36% increase from Q2 2021. This is despite an executive order that targeted ActBlue with an investigation.

Scoops: Rocky Mount Mayor Sandy Roberson, a Republican, will report raising $2.3 million in Q2 for his bid against Rep. Don Davis (D-N.C.). That total includes a $2 million loan from Roberson.

And Republican Lorenzo Rios, a Marine and Army veteran, is launching a challenge to Rep. Jim Costa (D-Calif.). Costa won his seat by five points in November while President Donald Trump only lost the seat by four points.

In Maine: In a new video, the Maine Democratic Party is going after Sen. Susan Collins (R-Maine) for standing by her support of Supreme Court Justice Brett Kavanaugh and HHS Secretary Robert F. Kennedy Jr. The video previews how Democrats are planning to attack Collins for backing controversial Trump nominees.

— Max Cohen and Ally Mutnick

PUNCHBOWL NEWS EVENTS

Rounds on the future of payments

ICYMI: We sat down with Sen. Mike Rounds (R-S.D.) to talk about the future of payments and artificial intelligence. We also got into some of the early political ramifications of Republicans’ reconciliation approach.

Rounds said a national framework for AI and the economy was coming — but it would take some time to come together.

“You’ve got to have the Judiciary Committee and you’ve got to have the Commerce Committee both involved in it,” Rounds said. “You need to have a process in which business and industries feel comfortable stepping forward and talking about what their needs are.”

Watch the full conversation here.

– Brendan Pedersen

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