The Senate returns to session for a four-week stretch after leaving town 10 days ago without passing its Reconciliation 2.0 legislation, which would fund Border Protection and ICE for three years. The House returns tomorrow for two weeks.
While quick passage of 2.0 once seemed nearly inevitable, progress stalled abruptly following the Administration’s announcement of a settlement in President Trump’s lawsuit against the IRS that creates a DOJ “Anti-Weaponization Fund.” While touted by President Trump/DOJ as a means of providing recourse for victims of lawfare, with no clear guidelines in place, many members remain concerned that taxpayer funds could be used to compensate those convicted of committing crimes on January 6th, 2021.
While no funding for this purpose is included in the reconciliation bill, an amendment to bar such funds from being used would surely be offered during “vote-a-rama” on the Senate floor, and if offered it could pass over objections of the President. Therefore, Senate Republicans chose not to proceed with reconciliation and instead used the last week to begin to work out guardrails with the Administration that would satisfy both GOP members and the President, but so far to no avail.
As a result, members return to DC in much the same position in which they left, without an immediate path forward on reconciliation, and with mounting feelings of angst among Senate Republicans in the wake of the President’s endorsements in several GOP primaries, along with his demand for security funding for the White House ballroom, and the Anti-Weaponization Fund.
Accordingly, Reconciliation 2.0 will not be considered on the Senate floor this week and will require additional discussions both with the White House and GOP Senators, with an eye towards processing it sometime during the June work period. In the meantime, the Senate will consider legislation to extend the Foreign Intelligence Surveillance Act (FISA) as well as potentially several other bills over the upcoming four-week Senate work period.
Nominations. Today at 5:30 p.m. the Senate will vote on cloture on the nomination of Kathleen Lane to be U.S. District Judge for the District of Montana. Tomorrow, the Senate will vote to confirm the Lane nomination as well as on cloture and confirmation on the nomination of Jeffrey Kulhman to be U.S. District Judge for the District of Kansas.
FISA. After several short-term extensions, Section 702 of FISA is authorized through June 12. Prior to that extension, House Republicans passed a three-year renewal with reforms to the program and paired it with a permanent ban of a Central Bank Digital Currency (CBDC). Senate Democrats have objected to a permanent ban, leaving FISA unresolved in the Senate. Senators have been working on an amendment to the House-passed bill, text of which is likely to be released early this week. We anticipate the Senate will process their FISA bill in time to send it back to the House early next week, in advance of the June 12 deadline. If obstacles emerge to this plan, another short-term extension may be necessary.
Housing Legislation. Both the House and Senate have passed separate bipartisan housing legislation that include some limitations on the ability of institutional investors to purchase single-family homes. In May, the House amended the Senate’s housing bill by striking the seven-year forced divestiture of certain build-to-rent housing, and adding a variety of deregulatory provisions to the bill. The next move lies with the Senate; options include either taking up the House bill as-is or attempting to further amend it and send it back to the House. Those discussions are ongoing, with many members expressing interest in getting to finality so that the legislation can get signed into law sooner rather than later.
E15. In mid-May the House passed H.R. 1346, the Nationwide Consumer and Fuel Retailer Choice Act, by a vote of218-203. The bill permanently lifts Clean Air Act restrictions that prohibit E15 sales during the summer driving season (June 1–September 15). The legislation now sits in the Senate, and it is possible it could be brought to the floor for a vote in June. As with the House, we expect strong feelings on both sides of the issue to emerge in the Senate, with farm-state/ethanol Senators strongly supporting the E-15 bill and Senators representing refineries opposing it, including GOP Whip Barrasso.
National Defense Authorization Act (NDAA). The annual NDAA remains one of the few remaining bills that is enacted every year, without fail. The House Armed Services Committee is expected to mark up the Fiscal Year 2027 NDAA on June 4 with the Senate Armed Services Committee expected to mark up its bill the week of June 8. The House is likely to consider the NDAA on the floor the last week of June, and the Senate may also attempt to begin consideration before the July 4 recess.
Privileged Items. It is likely that the Senate will continue to consider privileged legislation relating to Iran War Powers. With repeated votes over the last two months, the vote matrix on this issue has changed over time, with four Republican Senators now voting to discharge a Joint Resolution that, if enacted, would direct the removal of U.S. Armed Forces from Iran. The House is also expected to vote on War Powers as well, having left town for recess. Even if legislation passes both the House and Senate, it won’t become law due to a Presidential veto.
Market Structure Legislation. After months of laborious negotiations, the Senate Banking Committee reported its portion of Market Structure legislation that seeks to provide a comprehensive framework for the regulation of digital assets, a priority of both the Trump Administration and many members of the House and Senate. While the vote in Senate Banking was bipartisan, with two Committee Democrats (Senators Alsobrooks and Gallego) joining all Committee Republicans, there remains work to be done to merge the Banking and Agriculture committee bills as well as to solidify enough Democratic support to get to 60 votes on the Senate floor. Part of that discussion relates to a continuing conversation about federal ethics rules that would prohibit elected members and the President from benefitting from personal financial interests in the cryptocurrency industry.
FY27 Appropriations. Despite the ongoing failure to resolve elements of DHS spending via Reconciliation 2.0, there remains strong interest in building upon last year’s appropriations process which led to the enactment of 11 of 12 full year FY26 appropriations bills on a bipartisan basis. To this point, there is no agreement on a topline spending number for FY27 bills, but Congressional leaders begin the appropriations season with hopes that last year’s success can be replicated. The House has begun to process FY27 bills, having passed its FY27 Military Construction and Veterans’ Affairs bill in May, with Agriculture Appropriations expected to follow this week. For its part, the Senate will begin Appropriations Committee markups this week (Agriculture, Legislative Branch, Commerce-Justice-Science) with an eye towards bringing a package of bills to the floor in July.
OUTLOOK/ANALYSIS. The upcoming two months provides Congress with a number of opportunities to make law prior to the election, while readying other items for final action later in the year. However, as we have seen with DHS funding through reconciliation, nothing comes easy, and therefore very little is assured.
This upcoming stretch will be decisive as to what the art of the possible is ahead of November. A long-term FISA 702 reauthorization, housing legislation and market structure, are all in the realm of the doable, but none is yet assured. Similarly, Reconciliation 2.0 is still very much alive, but remains bogged down in unrelated issues that, if not worked out, threaten its survival.
Other priorities like NDAA and FY27 Appropriations are less likely to be resolved ahead of the election, but rather are setting up for final action later in the year. And yet other matters, such as Reconciliation 3.0, comprehensive farm legislation, energy permitting reform and a long-term surface transportation reauthorization are longshots. A wild card: a yet-to-be-requested emergency supplemental spending bill, focused on Iran and farm disaster aid, could be in play depending on a slew of dynamics.
In short, as Congress begins this work period the possibilities are many, but the outcomes are far from clear. This will change over the course of the coming four weeks, as Congress grapples with the art of the doable in the summer months.
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