Senate leaders reach funding deal to avoid government shutdown

Aug 2, 2026

Senate leaders reached a deal on a short-term spending bill to fund the government through Dec. 11, avoiding a shutdown before the midterm elections. The bill, which awaits a vote, excludes a $1B request for "Trump-class" battleships and temporarily blocks a controversial rule that would allow political appointees to review federal grants based on the president's policy priorities.

Short-term funding bill

▪Key senators unveiled a short-term spending bill on August 2, 2026, to keep federal agencies funded past the midterm elections.
▪The bill does not include the administration's $1 billion request for "Trump-class" battleships and prevents transferring funds to the Border Patrol.
▪The Senate is expected to vote on the measure before its traditional August recess, which lawmakers want for campaigning.
▪The bill funds the federal government at current levels through December 11.

Previous government shutdowns

▪Senate Majority Leader John Thune noted that Americans have experienced two record-breaking government shutdowns in the past 10 months.
▪Both parties aim to avoid a shutdown before the polls, as polling showed neither party evaded blame for a previous 43-day shutdown.
▪A previous spending battle over funding for the Department of Homeland Security took 76 days to resolve.

Appropriations negotiations

▪A short-term extension is needed because Congress has struggled to approve the dozen annual appropriations bills before the September 30 deadline.
▪President Trump also called for boosting defense spending by approximately 44%.
▪For full-year funding, Republicans seek a dramatic increase in defense spending, while President Trump proposed a 10% cut in non-defense programs.

Grant politicization rule

▪Sen. Susan Collins cited the rule's potential to politicize grants and harm communities, families, and biomedical research.
▪Democrats fear the grant rule would be used to punish political foes, while the White House says it is about accountability.
▪The proposed rule would require a senior political appointee to review grant proposals to ensure they "advance the President's policy priorities."
▪The stopgap spending bill will prevent a proposed Trump administration rule on federal grants from taking effect.