One big thing – Shutdown fuels partisan funding shift

The prolonged Department of Homeland Security shutdown is pushing Republicans toward reconciliation as a workaround for funding impasses. While this tactic could reopen DHS, it risks setting a precedent that sidelines bipartisan appropriations and weakens long-term fiscal restraint.

The big picture

The latest government shutdown may usher in a new, more partisan, approach to appropriations.

When Republicans included nearly $200 billion for the Department of Homeland Security (DHS) in the One Big Beautiful Bill Act (OBBA) they likely did not anticipate finding themselves in the longest ever ongoing partial government shutdown impacting DHS nearly a year later.

President Trump also likely hoped he was buying Congress time to work through the issues dividing the House and Senate when he signed an executive order in March that allowed DHS employees to continue receiving pay. The administration was able to do so in part because of previously passed OBBA supplemental funding for DHS, which eased pressure on Congress as airport wait times returned to normal and the most visible effects of the shutdown faded from view.

But the Administration’s ability to pay employees at DHS has limits, and they may soon reach them, putting the responsibility squarely back on Capitol Hill, and especially Republican leadership, to find a way out of the shutdown by funding the Department.

Why reconciliation is back in focus

For weeks, Republicans have suggested they may be close to a solution to reopen DHS, in part by turning to the same process used to pass the OBBA: reconciliation.

Reconciliation requires only a simple majority in both the House and Senate, allowing legislation to bypass the Senate’s 60 vote filibuster and the need for bipartisan compromise. Yet even with control of both chambers, reconciliation has proven far from easy for the President’s party.

Even if Republicans ultimately agree on a way out of the shutdown, the approach they choose may upend long standing precedent in ways that have broader implications for federal funding going forward.

Key takeaways

• Republicans are likely to turn to reconciliation again this Spring, beginning with a targeted effort on funding Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), potentially following on with a second round targeting broader priorities. Disagreements remain over how reconciliation should be used, including whether it can replace regular appropriations, how long those appropriations can last (a year vs. multiple years), what other priorities should be included, and whether new spending must be offset through spending cuts or tax increases.
• In the event Republicans pass multiple reconciliation bills there may be many priorities included and, in this scenario, Republicans may agree to cut spending or increase taxes to help ‘pay for’ the bill. Put differently, Americans may need to be on alert again this year for additional tax changes.   
• Using reconciliation in place of regular appropriations for agencies could set a lasting precedent. Appropriations are traditionally a bipartisan process that requires compromise. If reconciliation full or in part replaces that process, pressure for fiscal restraint could weaken, potentially supercharging future deficits.

How did we get here?

Immigration was a top polling issue for Republicans in the 2024 elections. Their advantage was so apparent that by late January 2025, just weeks after taking their seats, Congress passed the Laken Riley Act with 46 House and 11 Senate Democrats joining with their Republican colleagues to pass the Law.

Feeling confident of their position on the immigration issue, and in support of the Administration’s approach to enforcement, Republicans passed a huge supplemental for DHS totaling $190 billion with $75 billion for ICE and $65 billion for CBP through the OBBA. Compare these figures with 2024 ICE funding at approximately $10 billion and CBP funding at approximately $20 billion.

Things changed in early 2026 when two protestors, both American citizens, were killed in confrontations with ICE in Minnesota. The polling on the issue began to change for Republicans and scrutiny of the agency by Democrats exploded.

Congressional hearings and the removal of Secretary Kristi Noem followed as did the now longest running partial government shutdown in history. To help reopen DHS, Democrats have demanded reforms to immigration enforcement that the Administration and Republicans see as non-negotiables. Likewise, House Republicans refuse to pass a Senate bill which would fund all of the DHS excepting CBP and ICE.

Numerous proposals have floated around the Republican conference to find a way out of the shutdown, but it now seems clear that reconciliation will play a role.

How reconciliation could upend precedent

The Senate has proposed a reconciliation measure to be used to appropriate funding for ICE and CBP. The House could then pass it alongside a bill that previously passed the Senate which appropriated funds for the rest of DHS.

Under normal circumstances, appropriations move through a bipartisan process that requires a bill to clear the Senate’s 60 vote threshold, forcing some level of compromise with the minority party. While reconciliation has been used to fund discretionary spending in the past, including IRS enforcement funding under the Biden administration, those measures supplemented regular appropriations rather than replacing them as would the proposed Senate measure.

Passing a portion of DHS funding solely through reconciliation, in a party line vote, may set a precedent for Congress. This could impact fiscal restraint. While usually cost ‘offsets’ or ‘payfors’ are used in reconciliation, there is some talk that this may not be necessary for DHS since it is being done in lieu of appropriations, a process that does NOT require offsets.

In the end this could mean a new avenue for discretionary funding has opened up for a party with complete control in Washington. Funding discretionary spending without any checks from the minority party through appropriations and without any fiscal checks normally a part of reconciliation, may mean that there is even less pressure to contain costs. Given both parties’ track record in recent decades of increasing deficits and debt, it is not impossible to imagine how deficits could balloon even further.  

What else to watch

After passing this measure, Republican leadership has called for another broader reconciliation bill that includes more of the party’s priorities.

Among the items appearing on Republican reconciliation wish lists are:

• Pentagon supplemental funds to top up the nation’s war chest following the conflict with Iran that are likely to total into the tens of billions of dollars. This is in addition to the White House’s FY 27 request for the Department of Defense totaling $1.5 trillion;
• The SAVE America Act which includes voting reforms that may be too partisan for moderate Republicans in the Senate to support; and
• Efforts to curtail waste, fraud and abuse in government programs that may be difficult for moderate Republican House members to vote for, especially as elections loom.

And this list is just the beginning. Reconciliation presents a temptation often too hard for Members to resist – horse trading support for a difficult policy position for their own state-wide or district-wide priorities. 

These priorities often lead to escalating costs and then demands for ‘offsets’ or ‘payfors’ by fiscal hawks that may prompt talk of tax rises or further spending cuts. If one or more reconciliation bills become a grab bag of policies that end up being costly, tax rises may be back on the table in 2026.

In other news

• The US-Israeli war with Iran continues to present uncertainty. While a two-week ceasefire has now been extended, opening the door to peace talks, disagreements over Iran’s nuclear materials and the Strait of Hormuz remain. It is unclear if both sides will come to the negotiating table and find ground. Markets continue to react sharply given the region’s role in global energy trade. A prolonged conflict could keep energy prices elevated, particularly in Asia and Europe.
• Virginia narrowly voted in favor of redistricting on April 21. The state’s new congressional map could give Democrats an advantage of up to four additional seats in the 2026 midterms. Virginia follows Texas’s and California’s 2025 redistricting moves, with Florida still a possible next step. Given the tit-for-tat redistricting across red and blue states, neither party may end up with an advantage.
• Primary races continue apace across all 50 states. As candidates are finalized, races are being reclassified across the map. The Cook Political Report recently moved the Ohio Senate race to “toss up” status and shifted Georgia and North Carolina to “lean Democrat,” suggesting a more competitive fight for control of the upper chamber.