Post-Recess Appropriations Outlook

When the House and Senate return from their month-long August recess, Congress will have just 14 legislative days to avert a government shutdown. Some kind of temporary funding patch is almost certain, and the risk of at least a partial shutdown is looking greater than ever.

The Senate has now passed three of its 12 FY26 appropriations bills: Agriculture-FDA, Military Construction-Veterans Affairs, and Legislative Branch. The House has passed two bills: Military Construction-VA and Defense. Passing more than 3-5 bills by September 30^th is a near impossibility. Normally, an omnibus package (likely following a short-term continuing resolution) would be the solution. But an omnibus package – even before the end of the calendar year – seems unlikely, as congressional Democrats are seeing fewer reasons to come to the negotiating table. And Republicans appear worried about the likelihood of a shutdown. Let’s take a look at incentives:

Avoiding a shutdown: Government shutdowns are extremely harmful to federal employees, the economy, legislative productivity, and trust in the government. We saw the heartburn that a near shutdown caused Senate Democrats earlier this year, which led Minority Leader Schumer to intervene and support passage of the full-year continuing resolution in March – for which he was sharply criticized. Many Democrats, particularly in the House, are frustrated with their inability to counter the actions of the Trump Administration. For better or worse, a forced shutdown seems to be one of the few points of leverage that Democrats have at this time. But if a shutdown does occur, there’s no guaranteeing who will bear the brunt of the blame.

Reconciliation Asks: As a potential ask in exchange for votes to avoid a shutdown, Democratic leadership is considering policy concessions in the next budget reconciliation bill. It’s unclear what the asks would be at this point, but anything more than minor limitations on GOP priorities seems unlikely.

Rescissions: Another possible request to avoid a shutdown is a promise from Republicans not to pass any more rescission packages. This seems more likely than anything significant being included in a reconciliation bill, as some Republicans were apprehensive about passing the most recent rescission package, which only addressed public broadcasting and State Department funding. On the other hand, now that a Federal Court has ruled that the administration cannot reallocate $4 billion in FEMA mitigation funding, the White House may decide to lean on Congress for more rescissions rather than waiting for the Supreme Court to weigh in.

Power of the Purse: For the most part, the majority of the funding levels coming out of both chambers align much more with FY24/FY25 spending than they do with the President’s budget request, which, on paper, should reassure Democrats. At the same time, questions about how the administration plans to spend what Congress appropriates persist. Without assurance that federal funds won’t be impounded by the Office and Management and Budget, why should Democrats negotiate?

No matter how Democrats decide to approach the FY26 appropriations conversation next month, negotiations are definitely going to be tense. Unless Republicans offer concessions or assurances to Democrats, they could face blame for another shutdown.