Budget Battles & Beyond: What’s On Congress’s To-Do List

Congress returns to Washington next week. A showdown over funding the federal government is already emerging. After an August recess where members navigated a shaky economy, health care cuts and their own intraparty dynamics, there are big questions about how Congress will fund the government – and what will come next?

Precision’s Congressional experts – Partner Mike Spahn and SVPs Matt Williams and Henry Connelly – worked at the highest levels of House and Senate leadership during the biggest budget battles and legislative fights of the last decade. As the action heats up, they break down what you need to know and how you need to prepare.

Shutdown Watch: The Government Funding Fight Endgame 

Congress has made little progress passing the 12 annual appropriations bills. Lawmakers will need to agree to a continuing resolution – or “CR” – to keep the lights on past Sept. 30. While there is little agreement between parties, there is also zero agreement between chambers. House Republican appropriators are pushing partisan bills that slash funding levels in line with the White House’s “skinny” budget request, while the GOP Senate has slowly pursued a more bipartisan process. Once again, at least seven Senate Democrats will need to vote with Republicans to clear the 60-vote threshold for any funding bill.

Here are the questions that need to be answered:

• Funding Levels – President Trump and House Republican leadership continue to push for flat-funding defense and significant non-defense spending cuts from FY25 levels. Senate Appropriators have taken a different approach – flat-funding non-defense and increasing defense spending. Will the Senate hold fast to their higher funding levels or get rolled by the House?
• Rescissions & Unilateral Executive Cuts – “Rescissions” requests submitted by the President to claw back previously appropriated funds only require a majority vote in the Senate. That, plus the White House asserting unilateral power via DOGE cuts or acts like closing the Department of Education, makes it harder for Senate Democrats to trust that any funding levels in a budget deal will be honored. However, conservatives have shown remarkable flexibility – voting for higher funding levels in March, crafting a major recission package shortly after, and greenlighting massive funding additions and subtractions in the Big Beautiful Bill. How will Congressional leaders negotiate around the lack of trust and inconsistency?
• ACA Subsidies – Democrats have made extending the enhanced ACA subsidies due to expire at the end of 2025 a top priority. After Republican moderates pushed the effective date of the One Big Beautiful Bill’s Medicaid cuts out past the 2026 midterms, the prospect of millions of ACA subsidy beneficiaries losing coverage or seeing their premiums soar has some Republicans pushing for an extension. Republicans remain deeply divided over both the price tag and the principle of supporting the ACA, but backers include ruby-red Senators like Sen. Mike Rounds and Sen. Tommy Tuberville from states most vulnerable to insurance premium hikes. Consumers will begin to see notices for 2026 premium increases this fall ahead of the open enrollment season, turning up the heat for Republicans back home. Will pressure in Republican states and districts push an ACA subsidies extension into the final bill?

Republicans and Democrats will start drawing battlelines next week when Congress reconvenes. With Democrats pushing for a meeting of the “Big Four” Congressional Leaders to kickstart negotiations, here’s what will be on party leaders’ minds as they walk into the room:

• Who blinks first – Polling at the time showed President Trump took most of the blame for the record-setting 2018-2019 partial government shutdown over his demands for border wall funding. Now Republicans know that Democrats believe they risk shouldering the blame if their demands are seen as responsible for a shutdown – the calculus that led Senator Schumer to blink, taking a shutdown off the table in March.  President Trump has broad power to leverage a shutdown as a cudgel against the federal workforce, and that remains front of mind for Democrats. The question is, who blinks first?
• At-risk Senators – House Republican Appropriators have pursued a hard partisan line with deeper funding cuts enshrining DOGE’s work just as many of those cuts are being felt across states in schools, hospital systems, disaster relief and more. The big question is whether top 2026 Senate battleground target and Appropriations Committee Chair Susan Collins will hold fast to the bipartisan funding bills she’s been orchestrating, or yield to pressure from President Trump. There are consequences for Senator Collins for either decision she makes.
• Senate Democratic Unity – Senate Democrats are still licking their wounds from their caucus battle last March that led to a late, public breach. Leader Schumer is attempting to create a more unified strategy for this budget round that the full caucus can support.  Without unity, Democrats have no chance to extract policy or political victories on funding levels, ACA subsidies, or any other key priorities. The question is whether Democrats can make a public case about their demands, and, if needed, hold firm on shutting down the government if their terms aren’t met. 
• House Majority – House Democratic Leader Hakeem Jeffries has one goal in mind with every vote: take back the House. One year out, that means drag down Republicans’ favorability and show a conflict-thirsty Democratic base enough “fight” to drive fundraising dollars to House frontliners and get Red to Blue candidates. Any caucus division will hurt those goals – and Jeffries’ leadership team prizes unity for big votes to drive a clear contrast with Republicans. For House Democratic Leadership, there is no question about whether to drive a hard line, and stick to it. 

It Is Time to Prepare: Negotiations around government funding bills tend to move slowly, then all at once. In the final stages of talks, major provisions can be added or axed overnight. Robust scenario planning is essential to be able to respond effectively in real-time to developments around your funding priorities. Take a fresh look at the stakeholder ecosystems that will need timely messaging, targets and tactics from you and begin to activate them with the right content to the right targets to make your case.  

Big Decisions on the Horizon 

Government funding negotiations will take center stage next month, but there is already telegraphing around consequential legislative decisions that could have a big impact on our politics and our economy.

• Round 2 of Big & Beautiful – GOP leaders are working on a second reconciliation bill and conservative and moderate factions in the Republican conference are already at odds over making even deeper cuts to Medicaid and Medicare. More cuts mean more political pain – including raucous townhalls and primary threats – which presents challenges for GOP leaders to get a bill over the finish line. Frontline Republicans have already faced angry townhall audiences over their Medicaid votes. Without the debt ceiling and expiration of the 2017 Trump Tax Cuts forcing lawmakers’ hands, the timetable will drift until President Trump delivers some marching orders, which he has yet to do. 
• Delayed Health Care Spending Cuts – High-profile Republicans like Sen. Josh Hawley want to reverse steep Medicaid cuts from the One Big Beautiful Bill before they take effect in 2027. In recent years, Republicans and Democrats have both acted to keep postponing painful health spending cuts, like delaying physician payment cuts or the ACA’s Cadillac tax – and industry will be fully mobilized to try to stop them from ever taking effect. While the Medicaid cuts are unlikely to be reversed this year, there are other expiring health care provisions that communities and patients rely on like funding for community health centers and telehealth flexibilities for Medicare recipients. Democrats are in no mood to deal though, jeopardizing the future of any bipartisan health care package.
• Tariffs & USMCA Renegotiation – The ongoing whiplash of tariff pronouncements continues to create significant uncertainty for businesses. Pro-trade GOP lawmakers won’t publicly break with the president, but there are intensive behind-the-scenes pressure campaigns for exclusions and reversals. Thus far, President Trump has favored making foreign trade deals with his executive powers alone. That helps him avoid the cumbersome legislative negotiations required to enshrine formal trade agreements through Congress. But after clashing repeatedly with Canada and Mexico, President Trump looks likely to force the renegotiation of the U.S.-Mexico-Canada trade agreement in mid-2026. By law, a USMCA public comment period will open around October 2025 and USTR will announce the US’s position on whether or not to extend the USMCA around January. 

It Is Time To Prepare: Whether you are trying to reverse health care cuts, stave off tariffs, or move an issue in the next reconciliation, it is critical to mobilize the right storytellers to tell a story and publicly shape perception of your issue. An American small business going under because of tariffs or a citizen facing dire health issues because his rural community has no access to health care carries more weight in the media, on air, or in the halls of Congress than a position paper or press release.  

Bipartisanship? It is still alive.  

Partisan combat is at a fever pitch, but there are some prospects for bipartisan action on critical issues impacting our economy.   

• Permitting Reform Rises Again –Permitting reform is now a priority…for everyone. The “Abundance” agenda calls for it, President Obama said Democrats can’t deliver for working people without it, our AI-obsessed economy demands it, and our antiquated energy infrastructure needs it. While members of both parties are moving on reforms, they need to bend drawn lines for reform to become a reality. Finding consensus on how best to modernize our environmental laws would accelerate both renewable and “all-of-the-above” energy projects – a win-win for both sides.
• Tech Accountability, Kids Safety and the rise of AI – Kids safety efforts in states from Louisiana to California have caught the eye of federal lawmakers, increasing the chances that Congress finally takes a real step forward to impose national privacy and safety standards. But the devil is in the details – mandating age verification, limiting ad targeting, banning youth access to certain platforms and other solutions to keep kids safe online divide support across both caucuses. And all of these efforts come at a moment when AI development, regulation and energy production are taking up more and more of the tech-focused policymaking mindspace. Concerns about free speech, competition with China and the impact further regulation could have on innovation and economic development make finding bipartisan agreement extremely challenging and unlikely to get across the finish line.
• Must-Pass Bipartisan Vehicles – Toward the end of the year, a long list of bipartisan legislation looks to catch a ride on one of the must-pass legislative vehicles moving through Congress. Both the final government funding agreement and the annual National Defense Authorization Act have historically served as major vehicles for unrelated legislation. Late last year, however, a conservative revolt fanned by President-elect Trump forced Speaker Johnson to abandon an overloaded end-of-year CR.

It Is Time To Prepare: Cultivating allies and advocates for your issues on both sides of the aisle remains essential to advance any policy that can’t make it through reconciliation. While partisan showdowns will dominate the headlines and chyrons, bipartisan work continues behind the scenes even in the most divided Congress. Keeping your priorities moving forward – or keeping them off the menu – requires proactive engagement to maintain pressure on lawmakers and Congressional Leadership.

The Wildcards: New Dynamics to Monitor 

The midterms may be 15 months away, but the political season begins now. Unexpected battles, emergent intraparty fighting, and a cloudy economic outlook are shaking up the board, forcing decisionmakers to jockey for position to gain (or not lose) the political advantage.      

• Epstein Files Pressure Drives GOP Hunt for New Controversies – The crescendo of pressure to release the Epstein files from key elements of the MAGA base (enthusiastically fanned by Democrats) ground the House to a halt at the end of July. The bipartisan vote in the House Oversight Federal Law Enforcement Subcommittee to subpoena the Justice Department for the Epstein files was a significant breach in Congressional Republicans’ lockstep unity with the Trump White House. Republicans are eager to change the subject and redirect their base’s attention to new investigations. Expect an increasingly aggressive posture from Republican committee investigations in the form of document production requests, hearings, and subpoenas.
• Economic Volatility Remains at Center Stage – The state and strength of the economy continues to be the central interest for most of official Washington. But uncertainty continues to reign supreme, with indicators pointing in different directions and confidence in major actions low. Policymakers in Washington will continue to live by the old adage – it’s the economy, stupid. The next jobs report in the wake of the BLS firing, the expectation of a Federal Reserve rate cut and President Trump’s push to fire a Federal Reserve Governor, and overall Wall Street performance are likely to drive policy prioritization from the White House and Republican leaders. Congress has few levers to pull to affect economic trajectory for the next several months, meaning the regulatory bodies and their appointed leaders will be more important than ever. Companies should look at the coordinated rhetoric coming out of key policymaking mouths – and, of course, monitor Truth Social – to track in real time the efforts of political actors to drive historically non-political economic decision making.
• Redistricting Scrambles the Congressional Maps – The accelerating arms race to aggressively gerrymander congressional districts in red and blue states is upending the House battleground for the midterms. Republicans can pick up more seats in more states with fewer procedural hurdles. Democrats’ largest pickup opportunity is in California, but rewriting the maps will require a successful ballot initiative this November. The maps on both sides are likely to be challenged in court, stretching uncertainty out even closer to primary election dates. Congressional offices are bound to their current districts, but Members at risk of being redistricted won’t wait to start making inroads with their new district’s interests and industries.