Policy Backgrounders

This week, Congress has worked to pass a continuing resolution (CR) to fund the Federal government through the end of the current fiscal year (FY) on September 30 amidst serious disputes between the parties on its contents. The lack of any real budget process this year again highlights CED’s urgent call for reform.

Key Insights

The current CR for FY2025 will expire on Friday, March 14; absent a new CR, the government will have at least a temporary shutdown.
House Speaker Mike Johnson (R-LA) and other Republican leaders in Congress moved forward with a CR that mostly extended the current levels of funding through September 30, passing it by a vote of 217 to 213 and adjourned for a scheduled recess, thus forcing the Senate to accept it or accept a shutdown.
Democratic Senators wrestled with whether to support the CR to provide the 60 votes necessary to pass the measure in the Senate, with many demanding a separate vote on a one-month CR to allow for additional time to pass all 12 appropriations bills.

House Proposal for a CR Through September 30

On December 21, 2024, Congress passed a CR to extend FY2024 spending levels through March 14, along with supplemental appropriations for disaster relief funding and the extension of various public health, health care, and human services programs. In a statement, Speaker Johnson said, “This is a necessary step to bridge the gap to put us in that moment where we can put our fingerprints on the final decisions on spending for 2025.” The goal of the CR was to allow more time for the new Republican majorities in the House and Senate to craft the budget for FY2025, which began on October 1, 2024.

Nevertheless, Congressional negotiators from the House and Senate struggled to reach agreement on topline spending totals, let alone the details of the 12 appropriations bills to fund the government for FY2025. Democrats also demanded language requiring the President to spend funds appropriated by Congress, considering the Federal funding freezes, spending cuts, and layoffs conducted by the Department of Government Efficiency (DOGE). Additionally, Republicans prioritized passing competing versions of a concurrent budget resolution to unlock the budget reconciliation process that can advance the President’s legislative agenda permitting passage without the necessary 60 votes in the Senate to invoke cloture.

The House Appropriations Committee released The Full-Year Continuing Appropriations and Extensions Act of 2025 on Saturday. This CR generally extends FY2024 spending levels through the rest of the current fiscal year ending September 30, 2025. The Fiscal Responsibility Act of 2023 (FRA) had stated that if budget bills for FY2025 were not enacted by May 1, automatic sequestration cuts for all “discretionary” programs (including defense) would occur. However, in response to the new bill, the White House Office of Management and Budget (OMB) issued an advisory opinion stating that a full-year CR would not result in sequestration (automatic spending cuts) per the FRA because “a full year-CR itself is a full-year discretionary appropriations Act.”

The bill boosts overall defense spending by $6 billion, primarily for shipbuilding costs and military pay increases, and provides $8 billion in flexible transfer authority for the Department of Defense to shift funding towards priority programs (which could include operations at the border). Other programs receiving additional funding include the Department of Veterans Affairs (VA) health care accounts ($6 billion), the Department of Housing and Urban Development’s rental assistance programs ($4.5 billion), the Federal Aviation Administration’s air traffic control services, the Federal Emergency Management Agency’s disaster relief fund ($2.2 billion), and pay increases for wildland firefighters ($330 million). The CR also contains additional funding for US Immigration and Customs Enforcement to carry out deportations and freezes $20 billion previously allocated to the Internal Revenue Service (which the Congressional Budget Office suggests will have a negative impact on the deficit).

Compared to FY2024 totals, the bill cuts approximately $13 billion in domestic and foreign aid programs, including billions of dollars in nondefense earmarks directed to projects in lawmakers’ districts and states. While the CR extends various health care provisions, the bill does not include $23 billion in advance appropriations for FY2026 for the VA’s Toxic Exposures Fund and language to prevent Medicare physician pay cuts. Finally, the bill treats the District of Columbia as a Federal agency and does not include a provision allowing it to continue spending its current 2025 budget, effectively forcing DC to revert to its 2024 spending levels and likely resulting in more than $1 billion in cuts to government services in the Nation’s capital (ordinarily, DC receives a waiver from the provision that it be treated as a Federal agency).

Republicans in Congress quickly lined up to support the CR, with the President and Vice President pressuring holdouts to change their minds. The White House released a statement in support of the CR, and the normally intransigent House Freedom Caucus also came out in support despite its previous opposition to CRs. These House Republicans cited the work of DOGE to “address fraud, waste, and abuse” as their reason for supporting the CR, with Rep. Warren Davidson (R-OH) saying, “I think for a lot of people back home, they’re wondering, why isn’t this just the same thing that Congress always does? This is how the president has asked us to fight now, so that they can do what they’re doing with DOGE.”

On Monday, the House Rules Committee advanced the legislation to the House floor, meaning only a simple majority was required to pass the CR and send it to the Senate. House Democratic leadership began whipping votes against the CR to demonstrate unified opposition. House Minority Leader Hakeem Jeffries (D-NY) said the bill “does nothing to protect Social Security, Medicare and Medicaid . . . House Democrats will not be complicit in the Republican effort to hurt the American people.” Highlighting the importance of the DOGE cuts to the overall outcome, House Appropriations Committee Ranking Member Rosa DeLauro (D-CT) termed the CR “a blank check for Elon Musk . . . for tax breaks for billionaires.”

On Tuesday, the bill passed almost completely along party lines by a vote of 217-213, with only Rep. Thomas Massie (R-KY) and Rep. Jared Golden (D-ME) breaking party lines, with Golden arguing that a shutdown would be worse than the bill at a time of “chaos and uncertainty”. The House then adjourned for a scheduled recess, putting immense pressure on the Senate to accept the CR before Friday at midnight or risk a government shutdown.

The Senate

Appropriations bills in the Senate require 60 votes to overcome the filibuster rule, meaning a handful of Democrats must support the CR for it to pass the Senate given the current 53 to 47 Republican majority. Senate Appropriations Committee Vice Chair Patty Murray (D-WA) released a statement opposing the CR and pleading for bipartisanship to pass a short-term CR to finalize all 12 appropriations bills: “Congress should immediately pass a short-term CR to prevent a shutdown and finish work on bipartisan funding bills that invest in families, keep America safe, and ensure our constituents have a say in how federal funding is spent.”

On Wednesday, many Senate Democrats began stating their opposition to the House’s CR and their desire to vote on a short-term CR to allow for more negotiations on the FY2025 appropriations bills on a bipartisan basis. Senate Minority Leader Chuck Schumer (D-NY) said, “Our caucus is unified on a clean April 11 CR that will keep the government open and give Congress time to negotiate bipartisan legislation that can pass. We should vote on that.” One potential avenue to resolve the disagreements between the parties is for enough Senate Democrats to vote for cloture, which would end debate on the Senate floor and proceed to a vote on the bill, in exchange for a vote on an amendment regarding the short-term CR. If the amendment vote fails, which is highly likely, Republicans in the Senate can then pass the CR through September 30 by a simple majority vote and avoid a government shutdown. Senate Majority Leader John Thune (R-SD) said, “We’re open to those conversations and discussions.”

Senate Democrats are aware of the political dynamics of a government shutdown and how it would give OMB significant discretion in choosing which government services to shutter temporarily and when to do so. Senator John Fetterman (D-PA) said, “Now it’s a CR that we all agree we don’t like – but for me we can’t ever allow the government to shut down. If you shut it down, you will impact and hurt millions and millions and millions [of] Americans, and you run the risk of slipping us into a recession.” Senator John Hickenlooper (D-CO) added, “If you shut down, [the President] decides what is essential. [Trump] is the one who decides which arms of government continue, which arms get actually shut down. In a strange way, [a government shutdown] gives him even more power.”

Conclusion

Adding to the complexity and urgency of debates over spending, the debt, and the upcoming debate on a tax bill, the Treasury reported that the US budget deficit exceeded the $1 trillion mark in February for this fiscal year, the earliest date on record, even with a series of CRs rather than regular appropriations. The government had a $307 billion deficit in February alone, even as receipts also rose. Nearly $396 billion has been paid so far this year on net interest payments on the national debt.

Whether or not there is a shutdown, as the fight over the FY2025 appropriations process winds down, Republicans in the majority in Congress will now turn to the President’s legislative agenda of tax cuts, border security, increased defense spending, and energy policy. The President has endorsed the House budget resolution’s approach of one bill containing all of his legislative priorities, despite the Senate proposing a two-bill strategy with defense, energy, and border security funding coming first followed by a tax cut bill later this year. The House and Senate must agree on a concurrent budget resolution to unlock the budget reconciliation process that allows Republicans to pass their legislative agenda without any Democratic votes. Lawmakers must then craft the details of a legislative package that aligns with the budget resolution, all with a potential default on the US debt in the background as the Treasury Department’s extraordinary measures move closer to the “X” date given the lack of a debt ceiling increase or suspension earlier this year.