(UBS)
Government Funding
With Senate approval this week of three spending bills (Energy-Water, Interior-Environment, and Commerce-Justice-Science), Congress now has passed six of 12 fiscal year 2026 funding bills. The House also passed two more funding bills (Financial Services and National Security-State), which the Senate will vote on during the last week of January. With a looming 30 January deadline, that leaves four remaining bills (Defense, Homeland Security, Labor-Health-Education, and Transportation). Among the more controversial and large spending bills, they collectively make up the majority of all federal discretionary spending. Following the shooting of a woman in Minnesota by an Immigrations and Customs Enforcement (ICE) agent last week, Democrats pushed for tougher rules for ICE officers in the Homeland Security bill. The House hopes to tee up another package of funding bills next week, but it’s uncertain whether a final agreement on Homeland Security will be part of that (it was originally a part of the package of spending bills that passed the House this week). Even if the House passes all of these bills next week, they still will need to be passed by the Senate the following week.
With only a short time remaining, another short-term extension for some of the remaining spending bills seems likely.
Health Care Stalemate
Lawmakers remain at loggerheads over whether to revive expired federal health care subsidies and reverse a surge in premiums for more than 20 million Americans. The House last week passed a bill (with 17 Republicans joining Democrats) to renew Affordable Care Act (ACA) subsidies for three years. A bipartisan group of Senators have been working on an alternative (a short-term extension with income caps and other restrictions), but those efforts have stalled. A major sticking point is abortion coverage restrictions. Republicans have sought to expand these restrictions, which is a non-starter for Democrats. The Trump administration this week released its own proposal on health care, which would provide funds through Health Savings Accounts instead of the ACA subsidies, but this does not have a realistic pathway in Congress.
The chance of a bipartisan breakthrough on health care continues to fade.
Trump's Populist Push
President Trump appears to be standing firm on the populism that helped him win last year. In private conversations and public remarks, he has emphasized that swing‑state voters responded most strongly to his attacks on corporate power, immigration, and Washington elites. The result is a renewed push to position Trump as the champion of the working‑class against corporations. Beyond the aforementioned proposals on housing and credit cards, Trump has taken aim at defense contractors, threatening to cut contracts for companies that can’t speed up production and deny bonuses to executives. While some within the party have embraced these messages, many Hill Republicans worry that his sharpened rhetoric on trade, taxes, and corporate conduct could alienate traditional GOP constituencies and complicate their messaging in competitive races.
It remains to be seen how effective President Trump’s efforts at populist messaging will be when Republicans control all of the levers in power in Washington.
For much more, see the latest Washington Weekly .
