Effective October 1, under the first continuing resolution (CR) for FY27 (PL 119-103), the government will operate at FY26 levels through December 11, 2026. As is usually the case under CRs, with very few exceptions, no new starts for projects and contracts are allowed. None of the twelve FY27 appropriations bills have been enacted and no significant action is expected prior to the mid-term elections. No progress has been made on the major outstanding issues:
- Lack of a topline spending agreement – The President wants $1.5 trillion for defense, a 42% proposed increase while he proposes to cut non-defense programs by 10%. Both the House and Senate disagree with the depth of the cuts in non-defense spending however there is no agreement on defense spending levels.
- The status of the war in Iran, the costs of the war in Iran, and whether Republican Leadership will choose to use the filibuster-proof reconciliation process after the election to approve some or all of the President’s $67 billion supplemental request for DOD.
- Waning support in Congress for President Trump’s proposal to fund a $350 billion increase for defense programs through reconciliation.
- Objections to an Administration effort to allow senior political officials to cancel grants, notwithstanding the recommendations of peer review panels; and
- Objections to scores of so-called “poison pill” riders in the House bills (abortion, family planning, environment, diversity, etc.).
After the election, Congress must decide whether to attempt to complete action on FY27 Appropriations, enact a few of the bills during the lame duck session (Military Construction-VA, Agriculture, Energy and Water, and Legislative Branch are possible), or defer action on FY27 Appropriations to the next Congress and pass a CR to avoid a December government shutdown.
Currently, there are only four weeks in session between November 9 and December 1. Two of those weeks will be consumed by House and Senate meetings to organize for the 120th Congress that may include a change in control of the House, the Senate, or both.
Congress and the President will need to negotiate the terms of a second CR. Major issues include:
- The duration of the CR – In 2018, after the mid-term elections, funds were extended through February 15, 2019 until the new In similar situations, CRs have extended funding through December 20, December 23, January 30, March 14, March 15, March 23, and as late as May 5;
- Should the CR include any of the President’s $67 billion request for DOD for the war in Iran, the $11 billion request for Agriculture disaster assistance, or the $3.3 billion request for embassy security, global health such as Ebola, and humanitarian assistance?
- Should it include disaster response funding such as FEMA disaster aid, or firefighting?
- Should it include the President’s proposed election reforms (SAVE America Act) and;
- Should it extend the delay on OMB finalizing its draft regulation that would empower political officials to cancel grants?
As we have seen in recent cycles, a factor complicating these negotiations could be recounts and contested results in multiple House and Senate races that could alter control of the House or Senate in the next Congress.
A December 11 shutdown is a possibility, but given the November elections, there are too many variables to assess the odds. In 2018, after the mid-term elections, President Trump shut much of the government down for 34 days (from December 22-January 25) because Congress refused to fund the border wall. The border wall is now fully funded through the One Big Beautiful Bill Act, but it is not clear whether funding for the war in Iran (or the lack of such funding) or the failure of Congress to enact the SAVE America Act would result in a shutdown.