Spending conversations continue to dominate Congress. House Republicans are prepared to release text in the coming days for a continuing resolution (CR) that would fund the government until Sept. 30, 2025. Additionally, the House and Senate have passed budget resolutions that completely differ in their path forward.
Appropriations Update
On Feb. 28, the Office of Management and Budget (OMB) transmitted a list of anomalies for consideration under a full-year CR. Notably, the list includes a number of flexibilities for the Department of Defense (DOD) as this would be the first time the department would operate under a full-year CR. The list also includes funding increases for veterans’ health care, low-income housing subsidies, nutrition aid for women, infants and children, air traffic controllers, immigration detention beds and nuclear modernization. It is expected that the full-year CR will also include language to nullify earmarks included in each of the House and Senate FY 2025 appropriations bills.
House and Senate appropriations leadership have indicated their desire to pursue a dual-track approach by preparing a full-year CR with anomalies and a short-term CR to provide more time to negotiate FY 2025 appropriations bills. We believe it is unlikely Congress can pass bipartisan appropriations bills for FY 2025 given the challenge of increasing spending over FY 2024 levels coupled with congressional pushback on efforts led by the Department of Government Efficiency (DOGE). President Trump has made clear his desire for Congress to pass a full-year CR. Once the House releases text, the full-year CR will need to be considered by the House Rules Committee before a House floor vote. We will continue to monitor developments in the House and Senate in advance of the March 14 deadline.
Budget Update
On Feb. 25, the House passed its fiscal year (FY) 2025 budget resolution on a party line vote 217-215 (one Republican voted no). Similarly, on Feb 21 the Senate voted 52-48 to adopt their FY 2025 budget resolution. Although both chambers have passed their budget resolutions, the reconciliation instructions contained in each are different.
The House budget resolution calls for at least $1.5 trillion in spending cuts, while spending $4.8 trillion. The spending cuts are instructed largely to the Energy and Commerce Committee, Education and Workforce Committee and Agriculture Committee. These committees would likely have to include cuts to Medicaid, SNAP and green energy policies. The House resolution includes spending of $4.5 trillion, which would result from an extension of the 2017 tax cuts and the tax proposals put forth by President Trump. The House resolution would also increase spending for immigration and defense policies. In addition, the House resolution would increase the debt limit by $4 trillion, from $36.1 trillion to $40.1 trillion.
The Senate budget resolution contains reconciliation instructions that would create new spending of $521 billion, which would be offset by at least $4 billion. The new spending is similar to the House resolution, which would increase defense and immigration spending. The Senate resolution does not specifically address tax extensions but could argue for a current policy baseline, an assumption that all policies in place in the current year will continue regardless of scheduled expirations or phaseouts.
Since the budget resolutions and reconciliation instructions are different between the chambers, they must conference or amend their resolutions to come up with one budget resolution. Once that occurs, then each chamber will vote on the conferenced/amended budget resolution. Committees in each chamber can start markups to reach their recommended reconciliation instructions.
Additionally, the Senate parliamentarian can now review the budget resolutions to ensure they meet the requirements. There are two outstanding issues that will need to be addressed. First, the House version was amended in committee to add a provision that would change the Ways and Means Committee instruction by a dollar for dollar amount based on the savings generated by other committees. Second, the Senate has been pushing for the current policy baseline to be included to make the tax cuts permanent. The Senate parliamentarian will have to assess whether each of these could be included in a budget resolution and reconciliation.
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