U.S. Congressional Update

The U.S. Congressional reconciliation process—which dominated the congressional agenda for the past several months—has finally come to a conclusion. The Senate passed its version of the reconciliation bill on July 1 by a vote of 51-50 (Vice President JD Vance cast the tie-breaking vote), the House of Representatives passed the Senate bill on July 3, and the bill was signed into law by President Trump on July 4.

Yet this isn’t the last we’ll hear about this massive and complex piece of legislation. Both parties are already engaged in a messaging battle to shape the narrative leading up to next year’s midterm elections. Republicans are focusing on the bill’s tax cuts on overtime and tips along with funding increases for immigration and defense, while Democrats are highlighting cuts to Medicaid and nutrition assistance. Early polling indicates that the reconciliation bill is unpopular with the general public, but only time will tell how this may impact voting patterns.

Next up on center stage is the Congressional appropriations process. Unlike reconciliation, which requires only a simple majority vote in both the House and Senate, appropriations bills are subject to the Senate filibuster, which means that the Democrats have some leverage to shape the outcome. Somewhat predictably, the process is off to a rocky start. In the House, Republicans are plowing forward with appropriations bills that include deep spending cuts requested by the Trump Administration—a non-starter for Democrats.

In the Senate, greater progress has been made in crafting bipartisan bills, but at least for the moment, the process has been derailed by a dispute over the Administration’s efforts to spend previously appropriated funds in a manner contrary to congressional intent. Even if the Senate process gets back on track, it is difficult to envision the House and Senate reaching agreement on funding levels that would enjoy support from Senate Democrats.

As a result, there is a high probability that we will once again see one or more “continuing resolutions” to keep the government running, and a reasonable chance that at some point we may face a government shutdown.

Finally, a note on foreign policy. Members of Congress from both parties are growing increasingly frustrated with Russian President Vladimir Putin’s refusal to agree to a ceasefire and bring an end to Russia’s illegal invasion of Ukraine. In the Senate, a bill to ramp up sanctions on Russia has now garnered 84 co-sponsors—an almost unheard of number—and pressure is mounting on Senate leadership to bring it up for a vote.

In the House, Representatives Mike McCaul (Republican-Texas) and Greg Meeks (Democrat-New York) have introduced a resolution condemning Russia’s abduction and forcible deportation of more than 19,000 Ukrainian children and calling for the return of these children before the conclusion of any peace agreement. We at Blue Star wholeheartedly support this effort, and hope the House passes this important legislation in the near future.