Washington Weekly: Shutdown Threat, Again

The Senate approved a large package of 97 Trump administration nominees and passed the annual National Defense Authorization Act. The House passed several healthcare and environmental and energy bills, including a bill to streamline the environmental review process for energy projects.

Both the Senate and House will be out of session until the week of January 5.

Healthcare Push Hits a Wall.

The House this week had votes on some modest healthcare bills, but not on an extension of Affordable Care Act (ACA) subsidies. Frustrated by that, four moderate House Republicans joined House Democrats on a discharge petition to force a vote on renewing the ACA subsidies for three years. While this was a notable step, the bill won’t receive a vote until January. With the support of these Republicans, the bill is expected to pass the House, but its prospects in the Senate are dim. A similar bill already failed to reach the needed 60-vote threshold (47 Democrats and 4 Republicans voted yes). Senate Republican leadership has shown little appetite for taking up the measure again. Despite the momentum, ACA subsidies will expire at the end of this year and are unlikely to be extended next year (barring a wild card like President Trump calling for an extension).

Shutdown Threat, Again.

Congress left town for the year having made little progress on government funding. As part of the end of the government shutdown, Congress passed three (Legislative Branch, Military Construction-Veterans Affairs and Agriculture) of the 12 government spending bills for fiscal year 2026. It has the daunting task of trying to pass the remaining nine bills next month before a January 30 funding deadline. In January, the Senate will try to pass a group of five spending bills, but there are concerns about overall spending levels and certain provisions in the some of the larger and more contentious bills (particularly Defense and Labor-Health). The House is taking a different approach of trying to pass bills in groups of three, starting with those that are comparatively less controversial like Commerce, Energy, and Environment. With such little time to reconcile differences and pass these bills in January, Congress may resort to trying to extend current funding for most government agencies through another continuing resolution, whether to buy themselves some more time or to throw in the towel and extend it to the end of the year. Congress may ring in the new year with the threat of another government shutdown.

Trade Uncertainty.

With all of the political hand-wringing about affordability, one major and uncertain driver is tariffs. All eyes are on the Supreme Court and its decision on the Trump administration’s use of emergency powers to apply broad-based “reciprocal” tariffs on US trading partners. The court is out until January 12 and likely will make a decision in the first few months of 2026. Beyond the court’s decision, there are plenty of other milestones on trade early next year. In January, the US Trade Representative will issue a report to Congress with findings and recommendations on the US-Mexico-Canada trade agreement. President Trump may use the occasion to renew tariff and other threats on these neighbors and trading partners. In the coming month or so, the Trump administration also is set to issue reports to establish the predicate for industry-based tariffs in such products as semiconductors, pharmaceuticals, critical minerals and civilian aircraft. Tariffs in these areas could be a big part of any Trump administration strategy of rebuilding a tariff wall if the Supreme Court strikes down the reciprocal tariffs. Whatever the Supreme Court decides, President Trump is likely to retain elevated tariffs in some form even with prevailing concerns around the country about affordability and inflation.

America-First Foreign Policy.

The Trump administration issued a National Security Strategy report last month that calls for the US to pursue national interests (particularly military and economic strength) while avoiding foreign military entanglements. It is a break from a longstanding US worldview that positioned the US as an indispensable leader in promoting a liberal international order built around security and economic ties with allies (particularly other democracies), multilateral institutions and international rules. As such, the Trump administration sees a global order where regional powers can and will exercise power in their respective spheres of influence. With the war in Ukraine, the US has pushed Ukraine to make territorial and other concessions in a potential peace deal. Concerns about Russia’s aggressions and violation of Ukraine’s sovereignty have taken a back seat to the Trump administration’s ostensible bigger interest in having de-escalation with Russia, though it has been Russia that has shown little interest in ending the war. The Trump administration’s recent handling of Ukraine is reflective of this more non-interventionist and realist/transactional approach to foreign policy.

War Powers Showdown.

Bipartisan frustration has been brewing in Congress over Defense Secretary Pete Hegseth’s refusal to release footage of US strikes on alleged drug vessels outside of Venezuela in early September. The National Defense Authorization Act included a provision that will take away part of his travel budget until unedited footage has been provided. Additionally, though the House did not pass a Democratic resolution that would have ceased military actions in Venezuela, the Senate has a bipartisan resolution to require explicit authorization for offensive military action. This echoes recent efforts during the Biden administration to repeal outdated authorizations for use of force in Iraq and Afghanistan. Lawmakers on both sides of the aisle argue that decades of executive overreach have eroded Congress’s authority over war powers. They’re determined to reverse that trend even as President Trump signals he may act unilaterally. However this latest clash ends, there is a slow but steady interest in Congress in reasserting Congressional war power authorities.

Global Minimum Tax.

Over the past year, the Trump administration and Republicans have pushed back on a global minimum tax that had been negotiated by the Biden administration with other nations in the Organization for Economic Co-operation and Development (OECD). During the tax bill, Republicans threatened to increase taxes on companies from countries that implemented such a tax. That threat worked and yielded an agreement to work out a solution before the end of the year. In the final two weeks of 2025, negotiators aim to finalize a deal that would recognize the US’s tax system as being satisfactory. If these negotiations fall short and countries institute a global minimum tax that captures American companies, the Trump administration and Republicans will respond quickly with retaliatory measures.

Affordable Housing.

The House Financial Services Committee this week overwhelmingly passed a package of bills focused on increasing housing supply and addressing housing costs, an area that has contributed significantly to the rising cost of living. It would try to modernize local development and rural housing programs, expand manufactured and affordable housing, protect borrowers and those utilizing federal housing programs, and enhance oversight of housing providers. The Senate Banking Committee unanimously passed its own housing proposal in July. That bill almost was added to the annual defense authorization bill, but that effort failed given objections from some House Republicans. For its part, the Trump administration is planning to announce executive orders on housing reform in the new year. Housing will continue to be a priority, but it remains to be seen whether there is the time and inclination to work out differences between competing approaches in an election year.

Discharge Petitions on the Rise.

Once considered a rarity, discharge petitions are becoming a common tactic for lawmakers impatient with leadership’s tight grip on the floor agenda. A discharge petition allows rank-and-file members to get a vote on a priority bill if they can get 218 members of the House to sign on to a petition. Beyond this week’s petition on healthcare subsidies, there have been recent efforts to force votes on bills relating to the Epstein files and federal workers’ collective bargaining rights. Discharge petitions have had limited success historically (only 14 have received 218 signatures in the past 40 years), though that appears to be changing (seven have received the needed votes in the past two years). The increased use signals mounting pressure on Speaker Mike Johnson (R-LA) and lawmakers’ ability to get creative when the political stakes are high. Paradoxically, discharge petitions are a reflection of Congressional dysfunction and a way for lawmakers to find a way around it.

2026 Political Winds.

With the calendar about to turn, both parties are sharpening their messages for the midterm elections. Democrats are betting big on “affordability,” a catchall for concerns about rising costs on groceries, rent, childcare, and healthcare. They believe the theme powered recent strong performances in off-year elections in Virginia, New Jersey, and elsewhere. However, while polling shows that voters are angry about high prices and are souring on President Trump’s economic policies, they still aren’t fully sold on Democrats as the alternative. This rings especially true among moderates and white working-class voters in states like Alaska, Iowa and Ohio where Democrats will need to win difficult Senate races if they hope to flip the upper chamber. Meanwhile, Republicans are leaning into economic stewardship and cultural fights, hoping to keep their gains among Latinos and younger voters who remain skeptical of both parties. Recent elections show momentum for Democrats going into the midterms, but it remains to be seen how much they can capitalize on prevailing economic anxieties.