The House passes a CR with two months left on the clock.

A punt is a concession you make when you’ve run out of downs. The House made this one on first down. With more than two months left in the fiscal year and none of the twelve appropriations bills finished, it passed a continuing resolution funding the government at fiscal year 2026 levels through December 4th, largely on party lines. Appropriations Chair Tom Cole calls the bill clean. Steve Ellis and TCS Director of Research and Policy Josh Sewell take that word apart. Clean means no partisan poison pills. It does not mean neutral. Extending the current base level for the Pentagon, for the Justice Department, for every agency, is a choice about priorities — just one nobody has to vote on.

Then there’s the White House anomalies list, transmitted before every CR. Some items are housekeeping: updating a program date, dropping funding for an inauguration three years away. Others are not. The list includes $1 billion to start building a Trump-class battleship whose design isn’t finished — the same concurrent-design approach that produced an F-35 fleet fully mission capable about 30 percent of the time. It includes $3.2 billion in defense-wide procurement justified only by information available at a higher classification. And it would shield unobligated One Big Beautiful Bill Act funds from the standard 8 percent sequestration clawback, while the Pentagon sits on $89 billion of that money unspent and asks separately for $73 billion for the war with Iran.

Steve and Josh also dig into Senate Majority Leader Thune’s threat to fall back on reconciliation if Democrats won’t deal, the Lankford-Hassan bill that would make automatic two-week CRs painful enough to keep members in town and working, and the record underneath all of it: Congress has finished all twelve appropriations bills on time four times in more than fifty years. The last was 1997.

Transcript

announcer (00:02):

Welcome to Budget Watchdog, All Federal, the podcast dedicated to making sense of the budget, spending, and tax issues facing the nation. Cut through the partisan rhetoric and talking points for the facts about what’s being talked about, bandied about, and Kushner Washington. Brought to you by Taxpayers for Common Sense. And now the host of Budget Watchdog AF, TCS President Steve Ellis.

Steve Ellis (00:40):

Welcome to All American Taxpayers Seeking Common Sense. You’ve made it to the right place. For 30 years, TCS, that’s taxpayers for common sense, has served as an independent nonpartisan budget watchdog group based in Washington, DC. We believe in fiscal policy for America that is based on facts. We believe in transparency and accountability because no matter where you are on the political spectrum, no one wants to see their tax dollars wasted. It’s the end of July and Congress just did something it does almost every year and still manages to make it look chaotic. With more than two months left in the fiscal year, the House passed a continuing resolution to fund the government at last year’s levels through December 4th, largely on party lines. House Appropriations Committee Chair Tom Cole calls it clean. The White House says it needs a list of anomalies on top of that, some technical, some worth billions of dollars, including money for a battleship that hasn’t even finished being designed.

(01:36):

Senate Majority Leader Thune wants those anomalies folded into a bipartisan Senate version, and he’s floated budget reconciliation as the fallback of Democrats don’t go along. So is a clean CR actually the responsible move or is Congress ducking its job with two months still on the clock? Josh Sewell, TCS Director of Research and Policy is here to dig into it with me. Josh, welcome back. Let’s get into it.

Josh Sewell (02:00):

Hey Steve, it’s good to be here.

Steve Ellis (02:01):

All right, Josh. The House passed this CR more than two months before the fiscal year even ends. Why does that timing matter? And what does it say about Congress’s appetite for doing the 12 individual spending bills this year?

Josh Sewell (02:15):

I think it’s an indication many Republicans would rather campaign than govern. It isn’t even August, let alone September, and you’re punting on getting the spending bills done?

Steve Ellis (02:25):

Two months is a long time, especially in DC time, but it also indicates how hard it is to get anything done right now. Thin margins in the House mean you could only lose a handful of measures on any vote and still get something passed. So it is difficult to get bills across the finish line.

Josh Sewell (02:42):

If your goal was doing your job, which task number one for Congress each year is, at least according to the Constitution, fund the government, then it wouldn’t be that hard.

Steve Ellis (02:52):

But you got to admit, a twin goal for most members is getting reelected. That seems to be priority number one at this stage of the cycle. And to answer my own question, this shows the appetite for doing the 12 appropriations bills is basically non-existent.

Josh Sewell (03:06):

Yeah, I completely agree.

Steve Ellis (03:08):

So Josh, Chair Cole is calling this a clean CR. Is clean the same thing as good? What does locking in agencies into fiscal year 2026 priorities for months actually cost?

Josh Sewell (03:21):

As far as clean is good, not really.

Steve Ellis (03:24):

Care to expand?

Josh Sewell (03:25):

Yeah, so clean is a weird term. Chairman Cole is using clean to refer to a lack of political poison pills. So basically political hot potatoes, policy writers designed to further a partisan agenda or inflict some kind of pain on your opposition.

Steve Ellis (03:40):

And this bill mostly avoids a lot of that, right?

Josh Sewell (03:43):

Yes. But no, also. Good DC response. I’m hedging because rubber stamping this fiscal year’s budget and saying keep that for the first quarter of fiscal year 2027, it prevents most major changes. So you are extending the base level for DOJ funding, the base level for Pentagon spending. So even a cleanish rubber stamp, it’s a political choice.

Steve Ellis (04:08):

It really can’t be a rubber stamp, right? Because any CR has to be updated for the next year. If you literally just rubber stamp current year spending, it would be wasteful.

Josh Sewell (04:17):

Yeah, there is a technical aspect that happens, literally changing the fiscal year and calendar year in the text.

Steve Ellis (04:24):

That’s not controversial either. I mean SNAP, Medicare reimbursements, basically every social safety net program needs an authorization to make payments in fiscal year 2027 and have those payments be based on current conditions and formulas. So where’s the hiccup to calling the CR a clean one?

Josh Sewell (04:43):

That comes down to this thing called the nature of anomalies. All

Steve Ellis (04:48):

Right, we mentioned the anomalies a little bit ago. Walk us through the White House’s anomalies list. What’s the difference between a technical fix like scrubbing 250th anniversary of the US language and the more consequential asks?

Josh Sewell (05:03):

So this is where politics comes back in. Few people are going to object to updating the date for a program. I say a few because I would not be surprised. And also you need anomalies for one-offs. So a CR in a year, say after a census is written or conducted, you shouldn’t include all that money for the census. So ditto with the inauguration.

Steve Ellis (05:24):

You don’t need the extra funding for the upcoming inauguration when the next one is three years away. But the White House anomalies list, which is something that is transmitted before every CR, is about more than just simple updates. In some areas it seeks substantive changes in new funding. I mean, this particular anomalies list includes a number of anomalies related to the Pentagon, for instance.

Josh Sewell (05:47):

Yeah, it does. Including, I think we teased at the top, but $1 billion for the Trump class battleship, which Gabe flagged for us because this would send cash for building the ship before the design is even finished.

Steve Ellis (06:01):

Gabe’s our policy analyst that handles national security spending, and this is a major red flag. And we’ve seen this before with the F-35, and that is this idea of concurrent design and where you’re actually building while you haven’t actually tested the product entirely. And so you know that everything works and that’s the final way. And so with the F-35, they were fielding it at the same time they were testing it. And so it’s had a huge number of problems and it had to have fixes and retroactive fixes. And so it’s something where now the F-35 is only fully mission capable about 30% of the time, and you can’t afford to do that with a weapon system. It’s really failing the war fighter and it’s certainly failing taxpayers.

Josh Sewell (06:46):

Yeah, we already have a F-35 of the seas. I think it’s called the literal combat ship. But I mean, come on, a battleship?

Steve Ellis (06:54):

You suck my battleship.

Josh Sewell (06:56):

Right. And that’s a real concern because when you’ve got drones being flown thousands of miles on one hand, cheap drones, and hypersonic ship busting weapons on the other hand, constructing these hulking battleships seems like a really bad idea.

Steve Ellis (07:14):

And especially because it’s the Trump class battleship, this is just a vanity project that they’re throwing in there.

Josh Sewell (07:21):

I don’t know. I think gold blends in pretty well on the sea, so we’ll see what it’s painted.

Steve Ellis (07:26):

Sticking with the Pentagon, there’s also language exempting unobligated OBA, the One Big Beautiful Bill Act. Pentagon funds from the usual 8% sequestration clawback. And this is where there’s a haircut that’s taken off of unexpended funds to make sure that we don’t have waste and monies just sitting around. And as of early July, the Pentagon already had $89 billion of that funding sitting unspent. And they had the gall to then ask for a separate $73 billion for the Iran war. What’s the case, if any, for shielding that funding from sequestration?

Josh Sewell (08:09):

Well, they want their money and they don’t want to adjust to the realities in the budget space, let alone the new reality in the Middle East.

Steve Ellis (08:16):

And the point of sequestration is mainly to ensure that funds are spent when and where they’re needed. If you have a lot of funds sitting around unused after years, that indicates a problem.

Josh Sewell (08:28):

Yeah, it means you have too much compared to the need, or you are incompetent in parsing out those funds to meet those needs.

Steve Ellis (08:35):

Or there have been other priorities that needed your focus.

Josh Sewell (08:39):

Yeah, and that’s fair. And that’s kind of where we are now, I think. Whatever the reason the Pentagon is sitting on all that OBA money, now it’s time to spend it elsewhere. Somewhere clearly more pressing for the nation.

Steve Ellis (08:53):

What could that be? Oh, how about the war in Iran?

Josh Sewell (08:57):

Exactly. In place of the $73 billion ask for Iran, yes, 100%. So the OBA money is therefore, Gabe would tell you all the specifics, but weapons systems, some modernizations. It’s not war fighting, and that’s fine. So I have a savings account for upgrading my kitchen right now with more efficient appliances and honestly just a cooler look because it was redesigned a long time ago. Efficiency and style. Well, if a tree falls through my roof, I got to shift that nice to have money I’ve saved to address that tree in my roof. Just a fact.

Steve Ellis (09:31):

It’s long-term investments with current needs. That’s especially important when a tree falls on your house and you decided to disregard the arborist advice and trim it yourself, but I digress. All right. Another interesting anomaly. The $3.2 billion defense-wide procurement anomaly is justified with “additional information available at a higher classification.” How should Congress or taxpayers evaluate a request they’re not allowed to see the details of?

Josh Sewell (10:02):

Skeptically. Classified requests are not abnormal, but this administration has a, we’ll call it a penchant for not being transparent, not just at the Pentagon. We’ll have to defer to our elected members on these particular requests. Many of them have access. They have access to classified briefings, and they need to hold the line and make sure that this money is being requested for something that is actually important and needs to be classified.

Steve Ellis (10:29):

One concern is that using classified requests is just a way to paper over the true costs of engagement. We’ve certainly seen some lack of forthrightness when it comes to reporting the actual effects and costs of the war.

Josh Sewell (10:43):

Yeah, certainly. I would say that’s an understatement both on casualty counts, costs, duration, all of it. But yeah, I’ll save that soapbox for Gabe. He’ll do it much better justice than me.

Steve Ellis (10:56):

We’ll be back to Gabe soon. Don’t you worry. Budget Watchdog AF faithful. All right, back to Senate Majority Leader Thune. He says that if Democrats don’t get on board with a bipartisan Senate version of a CR, that Republicans will try to use reconciliation instead. What does that threat actually do to the negotiation?

Josh Sewell (11:18):

I think it’s more poisoning of the will. So reconciliation, it’s not the right tool for making major policy changes. We’ve written about that a lot. I know we’ve done at least two, maybe a hundred podcasts, I forget how many on that. And it also just isn’t the right tool for Congress doing the basics, not just the big stuff. And the basics, which is a lot of money still, is funding the government. There just needs to be a ratcheting down on reconciliation, put that tool back in the toolbox, stop utilizing it all the time, and also ratchet down the partisanship on spending in general. I think this threat to go do reconciliation, to do what is the basic thing Congress has to do every year, which is fund the government, I think it does the opposite of making things easier. It makes everything harder.

Steve Ellis (12:08):

Yeah, it’s way too early to be making a threat like this also. Essentially, you’ve got two months to work with the Democrats to come up with a CR. Neither party wants to have a government shutdown because it’s a bad look right before an election and nobody knows exactly who’s going to get the blame. And so it’s something where they’ve got other work to do. And so it just seems a self-inflicted wound to be talking about, okay, if you don’t go along with us, well then we’re going to do reconciliation to keep the government open. So Josh, Congress has finished all 12 appropriations bills on time, only four times in the last 50 plus years. The last time was in 1997. Is regular order a realistic standard to hold them to? Or is it time to admit the CR is the permanent default?

Josh Sewell (13:02):

Yeah, I definitely don’t want to concede that CRs are the new default, but clearly the budget process is in fact broken.

Steve Ellis (13:10):

Well, if not CRs, Josh, then what are some changes?

Josh Sewell (13:14):

Well, that’s going to take a few podcasts. Well, but to start, I think Congress just needs to start holding itself accountable. The first step really starts internally with them. And Senator Lankford, a Republican from Oklahoma, he has a bill with Senator Hassan, a Democrat from New Hampshire, and has some other co-sponsors now. It would authorize automatic two-week CRs if no funding bill is passed on time.

Steve Ellis (13:39):

Well, that sounds like you’re back to endorsing CRs, Josh.

Josh Sewell (13:43):

This is a very Washington podcast. We’re on both sides on everything right now, and we use very interesting language. But in reality, you have these two-week automatic CRs, but at the same time, the bill would increase the pain on members during those periods. So that two-week period and if it continues to another two-week CR. So it includes things like no taxpayer-funded travel for members or their staff. So no CODELs or staff visits to places. No votes are in order unless the vote is on a probes. So you can’t do any other work basically. And a daily Senate quarm call, which means they actually have to go down the senators and say that they’re in town every single day. And there’s a few other provisions in there, but it’s really an attempt by elected members to force themselves and their colleagues to physically stay in town and work on spending and nothing else while the government is shut down and most of us are affected.

(14:40):

So it’s a start to get people in the same room and hopefully on the same page.

Steve Ellis (14:46):

Yeah, this just kind of reinforces how crazy it is that the House in July passed a CR when they’ve got the whole month of September to work. And this bill from Senator Lankford and Senator Hassan, it really kind of underscores that just to me, the ridiculousness of what the House did. They’re saying, “Hey, all right, you’re going to just have a two-week CR, a very brief CR to keep the pressure on to get the work done.” Right now they’ve got a month to do the work and they haven’t done anything. And when I say a month to do the work, I mean that they’re in recess in August, and so it’ll be the month of September. So counting that there’s still a whole nother month left in the fiscal year when they get back in town or nearly a month, what would you actually want to see Congress do between now and the end of the fiscal year?

Josh Sewell (15:34):

Well, work on approps. I mean, I know it’s a simple answer, but I think it’s that simple. Do at least a couple of the spending bills before the end of the fiscal year. This is kind of like our work on a balanced budget or deficits. We don’t expect you to get all the way there. Just do your job, fund the government. It’s literally the only thing you must do every year. So do it. At least some of the bills. Give it that good old college try, that good faith effort, and then we’ll have an election and there will be an aftermath. And no matter what happens, the math changes. And so electoral math and political math and lame duck status, I’ve been doing this long enough to know that lame duck status can really change restraints and spur, I guess we’ll call it courage. But we got to stop waiting for the next opportunity and just do the job now.

(16:29):

The stakes are too high, the costs are too much to continue waiting for a better time to take on these challenges, and it’s time to just do it. You ran for the job, do your job.

Steve Ellis (16:40):

So Josh, bottom line, a clean CR isn’t automatically the responsible choice and a longer anomalies list isn’t automatically pork. It comes down to what is actually in it and whether Congress uses these next two months to do its job and still punting into December. That’s the whole ballgame. Thanks for being here, Josh.

Josh Sewell (17:02):

It’s good to be here. We don’t get an August recess.

Steve Ellis (17:05):

That is true. That is true. And to be clear, Budget Washdog AF Faithful, we don’t want a government shutdown. We know that shutdowns are wasteful. Nobody wins out of a government shutdown. So in the end, if they have to do a CR, they should do a CR, but they should try to get some of their work done before they get there. All right, there you have it, podcast listeners. Congress has two months and a to-do list, and now they’ve come back with a battleship that isn’t even being done drawn yet and won a billion dollars for it. This is the frequency. Mark it on your dial, subscribe and share, and know this, Taxpayers for Common Sense has your back, America. We read the bills, monitor the year marks, and highlight those wasteful programs that poorly spend our money and shift long-term risk to taxpayers. We’ll be back with a new podcast soon.

(17:47):

I hope you’ll meet us right here to learn more.