Why resolving the debt limit while also passing the reconciliation bill might be the next installment of Mission Impossible – Federal News Network

“There’s a lot of motivation to move quickly, because they don’t want to rely on a long stop gap beyond September 30th,” said Fitzpatrick.
The Federal Drive with Terry Gerton provides expert insights on current events in the federal community. Read more interviews to keep up with daily news and analysis that affect the federal workforce. Reach out to Terry and the Federal Drive producers with feedback and story ideas at FederalDrive@federalnewsnetwork.com.
Interview transcript:
Terry Gerton: Congress was on recess last week, but now they’re back. They’re taking up lots of important topics. Probably the biggest newsmaker is the big, beautiful bill moving across the Hill to the Senate side. What are you hearing on that?
Jack Fitzpatrick: There have been some long-standing concerns on the Senate side that I think are going to crystallize into some more specific critiques and eventually specific changes. You know, we had heard from more moderate sort of swing state Republicans that they were concerned with Medicaid changes. Now, when you get member’s warning “don’t cut Medicaid,” they have to look at the specifics and decide, are these stricter work requirements, is that a cut that’s too much for someone like Josh Hawley (R-Mo.)? There are some members who are interesting to have an eye on, like Jim Justice from West Virginia, who said he has some concerns about the healthcare impacts, but he’s okay with the work requirements. So for a while we’ve heard some sort of vague warnings that senators aren’t going go along with everything the House has done. I think now we’re in the state of the negotiations where senators find some specific things they have problems with, and of course there’s the Byrd Rule, where the parliamentarian is going to have to say, well here’s what does and here’s doesn’t align with the reconciliation rules and the restrictions in the Senate that allow you to get things through with only 51 votes rather than 60.
Terry Gerton: Are you hearing anything about specific provisions that Senators are going to take issue with, beyond the Medicaid and work requirements?
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Jack Fitzpatrick: The Medicaid and work requirements, as well as potentially the SNAP measures are something to keep an eye on that could put some pressure on swing state members who have competitive re-elections coming up. And then when it comes to the Byrd Rule, and this is also probably related to some political pressure. There’s this measure that would basically limit courts’ ability to hold litigants in contempt under certain circumstances if the other litigants have not put money up front. There’s some pushback to that on the merits, and some question as to whether you can do that through a reconciliation bill under the rules. That’s not really a budgetary measure. That’s a restriction on the judiciary that presumably would not have a major budgetary impact. So there’s some overlap where there could be some political pushback from moderate members as well as concerns being raised about what you’re actually allowed to do through the reconciliation process.
Terry Gerton: Well, the Senate’s given themselves a July 4 deadline. How will this all get sorted out? That, presumably, will be the time they finish their version of this reconciliation package. Then they’ve got to come to terms with the House, yes?
Jack Fitzpatrick: Well, they’ve talked about July 4th, but we’re still talking about staggered deadlines, because if you want to wrap this up and have it enacted by July 4, which in the House, the Speaker said that was the goal, that’s what he was talking about with Independence Day, you know, they want a signing ceremony, but keep in mind the real functional deadline here probably is going to be the debt limit deadline, because this includes a measure to raise the debt limit. And they probably have to do that by the August recess. There’s a wide range of dates when they actually think the deadline to raise the debt limit could be, because this is hazy and it’s based on the math of money coming in and going out. It is probably between August and early October, according to the latest estimates from the Congressional Budget Office and from the Bipartisan Policy Center. So you don’t want to mess around with that deadline. You really have to get this done before August to be sure that you’re not going to trigger a default on federal payments. And so, if you want to delay this and say, let’s vote on a Senate measure by July 4 and then start a quick conference between the two chambers, theoretically that’s possible. But really, if if you’re trying to hold to the deadlines they’ve talked about, you’d like to see them quickly hold a vote before that July 4 deadline, knowing that there’s going to be some work. If they make any changes to go back and forth between the House and Senate.
Terry Gerton: Well, there were some bold Republicans that came forward and said, “wait, we shouldn’t have to raise the debt limit because we shouldn’t be adding to the deficit,” which circles them back to the reconciliation bill in the math there.
Jack Fitzpatrick: Coming into this, I think the clear political opposition in the Senate is from the conservative side. Even though there are measures where there had been warnings from moderates, immediately after House passage, Ron Johnson, very conservative senator from Wisconsin, was clearly unhappy. He said that they didn’t take the debt seriously. He’s open to a debt limit measure, but he wants a very aggressive path to cutting spending and says this doesn’t cut it, you wonder about Rand Paul (R-Ky.) who made more big statements a little less opposed than Ron Johnson but Rand Paul is certainly somebody who’s willing to vote no on something a lot of Republicans want him to vote yes on, so you’ve got a bit of an early conservative contingent that number one is usually not comfortable voting to increase the debt limit at all, and number two, say they’re not particularly impressed by the House’s work, so there’s a there are a challenges on the conservative end in the Senate.
Terry Gerton: So beyond just debt limit, just debt and reconciliation, that bill has a thousand pages in it. There’s gotta be lots and lots of other little provisions below the surface that aren’t garnering national headlines, but still are gonna be important for people. Give us a couple of those.
Jack Fitzpatrick: Yeah it’s a big bill and a lot of the attention has gone to the fact that it’s basically an extension of the 2017 tax cuts and then there’s been a lot attention on Medicaid changes, SNAP changes, and extra money for the military and for border immigration. But beyond that there’s a bunch of stuff in there and because it’s alive negotiation there are recent changes so one of the things that got it through the finish line in the House or you know at least House passage which is real finish line was seemingly because of one single House Republican, Andrew Clyde from Georgia, they added a measure to eliminate taxes on the purchase and transfer of firearm silencers. Andrew Clyde has a long history, essentially someone who is not supportive of heavy regulation of gun purchases. He has a history with the IRS there before he was a member of Congress. This was not something that was heavily campaigned on as the purpose of the bill and it’s not a major budgetary part of the bill but he got them to add that measure almost at the last minute because he was one of the key conservative holdouts in the budget committee. So that’s an example of sort of a late addition of something that’s not part of the core measures. I’d also point out there are things that have gotten some coverage that are quite important that just are not treated as core parts of the bill that may have been overlooked. For one, there’s a 10-year ban on state and local governments doing their own artificial intelligence regulations and restrictions. And at this point in time, with the development of AI and the adoption of AI, that is an important measure to say that the regulation of this is in the federal government’s hands, and a liberal state that might take a much more aggressive approach like California that can’t sort of hijack that process. That’s very, very significant. I’d also point out a lot of the cost-saving measures, even though there’s a lot of discussion about Medicaid, the education measures are pretty significant. There are hundreds of billions of dollars in savings or cuts, depending on your perspective. It’s basically a cap on federal student aid overall. There are restrictions on Pell Grant eligibility. That’s a significant offset to the cost of the tax measures that it’s gotten coverage, but it hasn’t really been treated as a core part of the bill. So yes, in a thousand-page bill, there’s a lot to go through and it’s not quite just a tax bill.
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Terry Gerton: It’s a great example of the negotiations and how a bill becomes a law.
Jack Fitzpatrick: Yes, including very last minute changes.
Terry Gerton: But the reconciliation bill still isn’t a budget bill. So we’re gonna go through September of 2025, the end of the fiscal year without a budget, still in a continuing resolution. What does that mean for the 2026 process?
Jack Fitzpatrick: It means there’s a lot of pressure for action. This is the first time we’ve had a full-year continuing resolution for everything, including the military. Last time there was a full-year CR for portions of the government, the Defense Appropriations Bill had its own actual full appropriations bill. So especially even in a political sense, if you’re looking at members of Congress on the Republican side, the defense hawks are not thrilled that we’re on a full-year CR, and they definitely don’t want a long CR past September 30th, because then we’re well over a year. Now, the reconciliation bill has kind of been treated as a pseudo-minor appropriations bill because it’s got some extra funding, about $140 billion for the military, which maybe made a full-year CR a less bitter pill to swallow for defense hawks, and it’s got Homeland Security funding in there. But yes, at its core, that’s separate from the appropriations measures. So they are starting action, they have the basic budgetary information from the White House, at least enough to get started on the early work. And this week, the House Appropriations Committee is going to get started on the earliest of its bills. They’re starting with a military construction and Veterans Affairs bill and the Agriculture and Food and Drug Administration bill. Those are two more bipartisan-leaning bills, even though the House usually doesn’t go in a very bipartisan direction with its early bills. After that, next week, they do Homeland Security and Defense, which are heavy lifts, because border measures are controversial, and defense is the biggest appropriations bill. So overall, they’re playing catch up after a late start, which is what you get in the beginning of a presidential administration. And there’s a lot of motivation to move quickly, because they don’t want to rely on a long stop gap beyond September 30th.
Terry Gerton: Well, they’ve got 60 days or so till the August recess. So I guess they’ll be in town and they’ll be working.
Jack Fitzpatrick: Yes, they will want to get as much done before the August recess as possible. The House Appropriations Committee is scheduled to finish its markups before then, but then of course there’s a question of how much can you do on the floor? Can you take some of them onto the floor and pass them in July? How much pressure is on you when you come back in September? And what does the Senate do, and how much progress do they make? It’s very difficult to finish government funding work before September 30th, or at least they’ve had a hard time historically. But the question is, if you’re going to rely on a CR, do you rely on the long one, or do you rely on many of them, or can you just buy a little more time and then get your work done quickly beyond that September 30th deadline?
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Terry Gerton is host of the Federal Drive and has been working in or with the federal government for more than 40 years.

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