The Big Freeze: This week, the Office of Management and Budget (OMB) released and then rescinded a memo for executive agencies freezing most federal spending, which has caused both confusion and frustration among some appropriators. Senate Appropriations Vice Chair Patty Murray (D-WA) was particularly vocal about her concerns, saying the rescinded memo "caused real harm and chaos for millions over the span of the last 48 hours..." Senate Appropriations Chair Susan Collins (R-ME) said that "while it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation." Beyond the rescission memo, the larger impoundment and power of the purse debates will surely cause uncertainty for appropriators in the near term.
Our colleagues at Steptoe wrote a client alert on how an OMB freeze would affect federal tax provisions, if you'd like to read more.
Topline Negotiations Ongoing: The spending freeze and ongoing reconciliation discussions have disrupted topline discussions for FY25. Although we were expecting a topline deal this week, top appropriators in both chambers have not been able to reach an agreement. Vice Chair Murray said this week that it is "extremely difficult" to come to a compromise given the administration's view on Congress' jurisdiction over funding. House Appropriations Ranking Member Rosa DeLauro (D-CT) however, stated that the funding freeze would not derail their topline negotiations.
Who's Going to Pay-For That?: House Republicans met with President Trump in Florida this week, where the President reiterated many campaign promises he wants included in either reconciliation or other legislation this year. This includes (1) increased funding for border security; (2) no taxes on tips, overtime pay, or Social Security; and (3) no cuts to Medicare or Social Security. The unfortunate reality is that legislative priorities cost money, and offsetting all new spending (and cutting taxes) without making reforms to mandatory programs may be nearly impossible without increasing the debt. It will be especially challenging given the current slim majorities in Congress. We continue to reiterate that serious spending cuts require taking a serious look at mandatory spending, which makes up over two-thirds of annual federal spending.
Reconciliation Update: The overall strategy for reconciliation is reportedly still up in the air, with the House and Senate both sticking to their one- or two-bill strategy. Senate Majority Leader John Thune (R-SD) has said the Senate is ready to go if the House fails to move a budget resolution. Speaker Mike Johnson (R-LA) is aiming to have a House budget resolution written in committee next week and finalized the week after.
ICYMI: Full subcommittee rosters are now up on the Senate Appropriations website. Also, it was reported this week that Republicans on the House Appropriations Committee are discussing loosening earmark restrictions on Labor-HHS accounts. Previously, the House did not allow earmarks in their version of the subcommittee bill. We will keep a close eye as it all continues to unfold.
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