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.”
