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House Markups and Senate Hearings Continue. The House Appropriations Committee maintained a full schedule this week, holding two budget hearings and conducting a full committee markup on the Energy and Water Development and Legislative Branch bills for FY 2027. The committee also advanced the Interior and Transportation-HUD measures at the subcommittee level, albeit on partisan votes.
Across the Capitol, the Senate Appropriations Committee held seven FY27 budget hearings featuring officials from the National Institutes of Health, Department of Transportation, Department of Labor, Department of Justice (DOJ), the Navy, the Army, and the Army Corps of Engineers. Senate appropriators continue to target June 4 as the tentative start date for markups, with the first measures expected to include Agriculture, Commerce-Justice-Science, and Legislative Branch.
As noted in last week's newsletter, Senate subcommittees have begun receiving tentative allocations to begin the drafting process, though those figures have not yet received bipartisan sign-off. It is unclear how these behind-the-scenes conversations between Senate Republicans and Democrats have unfolded, but Democrats are beginning to express concern over the preliminary allocations, signaling potential opposition in upcoming markups absent bipartisan agreement.
Democrats are also continuing to raise questions about the defense versus nondefense funding balance proposed by the Trump administration, which includes a roughly 42 percent increase in defense spending paired with steep reductions to domestic programs. And some Republicans have expressed concern about the need for the administration to submit a supplemental request to fund the war in Iran, without which it is difficult to settle on an overall number for FY27 defense appropriations.
Looking ahead, there is early discussion about advancing a limited package of subcommittee bills alongside a September continuing resolution (CR). While expectations remain cautious and plans are fluid, appropriators are eager to make progress and avoid delays.
Reconciliation Update. The reconciliation process remains turbulent, with Senate Republican Leadership deciding to postpone the planned vote-a-rama until after the Memorial Day recess. While the controversial provision related to funding for the White House ballroom had already been removed, despite strong opposition from the President, a new issue causing bipartisan backlash and stalling discussions emerged: the Department of Justice's (DOJ) newly announced $1.8 billion "anti-weaponization fund."
The DOJ initiative, unveiled this week by Acting Attorney General Todd Blanche, would compensate individuals who claim they were unfairly targeted by the Biden administration. The fund would operate through December 2028 and will provide financial relief and formal apologies, overseen by a five-member commission--all of whom would be appointed by Blanche. Funding would come from the Judgment Fund, a permanent Treasury account used to pay legal judgments and settlements against the federal government when no appropriated funds are available.
The proposal has drawn bipartisan criticism, with lawmakers warning it could serve as a political "slush fund." Ninety-three House Democrats have filed a legal challenge to block the settlement, arguing it misuses taxpayer dollars and could benefit Trump allies, including some linked to the January 6 Capitol attack.
The controversy surrounding the fund has become a new flashpoint in the reconciliation debate, further complicating negotiations and delaying progress. Lawmakers are expected to revisit these issues when both chambers return in June.
Undermining Appropriations. Partisan policy disputes--spanning issues such as defense and immigration funding, the proposed White House ballroom, and the new DOJ "anti-weaponization" fund--continue to derail progress on appropriations and complicate efforts to reach bipartisan spending agreements. The appropriations process, long viewed as one of the last bastions of cooperation on Capitol Hill, is being tested as political tensions seep into traditionally bipartisan work.
Despite these challenges, our team remains cautiously optimistic that lawmakers can eventually find areas of agreement. In the weeks and months ahead, appropriators will face mounting pressure as midterm election dynamics heighten political volatility and further constrain the path toward consensus.
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