Senate Takes up Reconciliation Package

Congress returns today from a week-long Memorial Day recess, marking the beginning of a crucial four-week stretch for Republican Lawmakers to finalize their reconciliation package and send it to President Trump’s desk by their internal deadline of July 4. While the One Big Beautiful Bill Act (OBBB, H.R. 1) cleared a major milestone when it passed the House by a slim one-vote margin (215-214) on May 22, the measure will face new hurdles in the Senate.

First, it will undergo review by the Senate parliamentarian to determine whether it complies with reconciliation rules, which could impact several provisions within the package—including how its impact on the deficit is measured. Even if it clears that hurdle, the bill faces opposition from both moderate and conservative Republicans, with some the former expressing concerns about the deep cuts to Medicaid and the total repeal of Inflation Reduction Act (IRA) clean-energy tax credits and the latter arguing that the bill does not go far enough to cut spending. GOP senators will also have to weigh how to approach the House’s plan to raise the cap on state and local deductions from $10,000 to a maximum of $40,000 — something that is of little concern to the vast majority of their constituents, but was part of a delicate balance that brought needed support from blue-state Republicans on the other side of the Capitol. With the reconciliation process requiring just a simple majority for Senate passage, Majority Leader John Thune (R-SD) can only afford to lose up to three GOP votes. However, any changes made in the Senate will need to be approved again by the House before final passage.  

While the lower chamber marked up the various components of H.R. 1 within committees of jurisdiction, the Senate is unlikely to do the same. Instead, we expect negotiations to take place behind closed doors.

For their part, Democrats are preparing to launch a major campaign highlighting an early distributional analysis from the Congressional Budget Office (CBO) indicating that the bill would disproportionately benefit the wealthiest ten percent, while the poorest ten percent would see a net loss. The CBO plans to release an updated score on the measure as passed by the House sometime this week, which will likely bolster those talking points. Yesterday, Minority Leader Schumer released a Dear Colleague letter previewing the messaging the Democrats will rely on in their fight against the bill.

 House and Senate Action

The Senate will consider nominations to the Department of Defense and State Department this week. Negotiations also continue on a major cryptocurrency regulatory bill, the GENIUS Act (S. 1582), a GOP-led measure that has some key Democratic support. While a vote was thought possible this week, floor consideration is now expected later this month.

For its part, the House is slated to consider several non-controversial bills under suspension of the rules, most of which touch on small business matters. On Wednesday, the chamber will hold a floor vote on the bipartisan SUPPORT for Patients and Communities Reauthorization Act of 2025 (H.R. 2483), which would reauthorize critical programs that target overdose prevention. The National Association of Counties (NACo) has a helpful summary of H.R. 2483 here. That same day, the House will vote on the Save the Small Business Administration (SBA) from Sanctuary Cities Act of 2025 (H.R. 2931), which would direct the SBA to relocate any of its offices currently housed in states and localities it defines as sanctuary jurisdictions.

Meanwhile, both Chambers will continue to hold hearings on the President’s FY 2026 budget proposal with various Cabinet heads and agency officials, while House Appropriations Subcommittees will begin marking up their spending bills for FY 2026.  

White House Releases Additional Materials Outlining President’s FY 2026 Budget Request

The White House has unveiled more information on its fiscal 2026 budget proposal, releasing an appendix and various agency budget documents that expand on the “skinny” budget request the Administration released in early May. The new documents provide greater detail of the President’s proposed $163 billion, or 22 percent, in cuts to non-defense discretionary spending across a wide array of agencies. However, the White House has yet to release specific funding details for many Department of Defense (DOD) programs and will reportedly submit a separate request to Congress later this month relating to the Pentagon.

The release of the budget appendix and agency-level requests is timely, as the House Appropriations Committee will begin work on appropriations measures this week. However, it is unclear how much weight the President’s proposed budget will carry as lawmakers negotiate a discretionary spending package, which must ultimately clear the Senate by a 60-vote threshold. Given the GOP’s current laser focus on the reconciliation package, it is unlikely that legislation dealing with discretionary funding levels for FY 2026 will see movement until the fall. 

Supreme Court Limits Scope of Federal Environmental Review for Infrastructure Projects

The Supreme Court on Thursday unanimously ruled (8-0, with Justice Gorsuch recusing) to limit the scope of environmental review required under the National Environmental Policy Act (NEPA), holding that a law originally meant to be a procedural check to inform agency decision making has instead grown to paralyze it. Under NEPA, federal agencies must study any potentially significant environmental consequences of federal permits for infrastructure projects. In Seven County Infrastructure Coalition v. Eagle County, the Supreme Court reversed a D.C. Circuit ruling that the U.S. Surface Transportation Board had not done enough in its environmental impact statement to review the potential upstream and downstream effects of a proposed railroad line.

In ruling for the railroad, the justices sketched out a relatively narrow role for courts reviewing future decisions under NEPA, the landmark environmental law at the center of the case. “NEPA does not allow courts, 'under the guise of judicial review' of agency compliance with NEPA, to delay or block agency projects based on the environmental effects of other projects separate from the project at hand,” the ruling states.

The high court’s ruling returns the case to the lower court for further review under more limited parameters. It remains unclear whether the rail line will ultimately be built. However, the ruling should have broader implications for reforming the NEPA process.

 Relevant Hearings & Markups

Tuesday, June 3 | 10 a.m. Senate Appropriations Labor, HHS, Education and Related Agencies Subcommittee hearing on the fiscal 2026 budget request for the Education Department. Secretary Linda McMahon will testify.

Tuesday, June 3 | 2:30 p.m. Senate Appropriations Financial Services and General Government Subcommittee hearing on the fiscal 2026 budget request for the SEC, where Chair Paul Atkins will testify.

Tuesday, June 3 | 2:30 p.m. Senate Judiciary Constitution and Federal Courts, Oversight, Agency Action, and Federal Rights subcommittees joint hearing on “The Supposedly ‘Least Dangerous Branch’: District Judges v. Trump.” 

Wednesday, June 4 | 10 a.m. House Appropriations Transportation-HUD Subcommittee budget hearing on the FAA, where acting Administrator Chris Rocheleau will testify.

Wednesday, June 4 | 10 a.m. House Small Business Committee hearing on “Budgeting for Growth: Testimony from SBA Administrator Kelly Loeffler.”

Wednesday, June 4 | 10 a.m. Senate Appropriations Commerce Justice, Science and Related Agencies Subcommittee hearing on the fiscal 2026 budget request for the Commerce Department. Secretary Howard Lutnick will testify. 

Wednesday, June 4 | 2 p.m. House Appropriations Financial Services Subcommittee budget hearing on OMB. Director Russell Vought will testify.

Wednesday, June 4 | 2:45 p.m. Senate Aging Committee hearing on “The Aging Farm Workforce: America’s Vanishing Family Farms.”

Thursday, June 5 | 10 a.m. House Oversight and Government Reform Committee hearing on “The Federal Government in the Age of Artificial Intelligence.” 

Thursday, June 5 | 10 a.m. Joint Economic Committee hearing on “Barriers to Supply Chain Modernization and Factor Productivity Enhancements.”

Thursday, June 5 | 11 a.m. House Appropriations Commerce-Justice-Science Subcommittee budget hearing on the fiscal 2026 budget request for the Commerce Department. Secretary Howard Lutnick will testify.