Beyond the Bill: What’s Next for Federal Spending

With the passage of the OBBBA now in the rear-view mirror, Congress and the Trump administration are shifting their focus back to the annual budget battles. This year’s negotiations are shaping up to be particularly contentious, and will test whether Republican-led efforts to rein in federal spending can maintain momentum. This is especially true with the debut of Department of Government Efficiency (DOGE) and a potential rescissions package on the horizon.

Rescissions, essentially the formal cancellation of previously approved but unspent federal funds, are expected to play a central role. Rescissions allow the administration to target specific programs or accounts for cuts, even after funding has been authorized. They are often used alongside tools such as the Impoundment Control Act (a 1974 law that allows the president to propose canceling previously approved spending) and the regular appropriations process. The goal: to claw back billions in spending and reshape the federal budget in line with conservative priorities.

Democrats are likely to have a say in how this unfolds. With Speaker Mike Johnson (R-LA) and Sen. Majority Leader John Thune (R-SD) navigating one of the narrowest Congressional majorities in history, Republican leaders will face challenges uniting their caucus—especially with the more conservative members frustrated that the OBBBA didn’t go far enough in slashing spending. Unlike the OBBBA, which passed through the reconciliation process and required only a simple majority in the Senate, this year’s budget and appropriations bills must move through regular order, meaning bipartisan cooperation will be essential.

Testing Bipartisanship With Key Legislation

While the Trump administration has been active in advancing its agenda through executive orders (more than seen in recent decades) legislative progress has been more limited. So far, the OBBBA stands as the only bill to pass both the House and Senate this year. This reflects not just the complexity of the issues at hand, but also the realities of governing with razor-thin margins in both chambers. Johnson and Thune are operating with limited room to maneuver, especially in a political climate in which nearly every issue sparks partisan division.

Beyond the budget and annual spending bills, several major legislative items, each with a history of bipartisan support, are still waiting in the wings. Whether that tradition holds in today’s polarized environment remains to be seen, but these bills will be key tests of whether Congress can still function across the aisle:

• The National Defense Authorization Act – Sets military policy and defense spending

• The Farm Bill – Covers crop subsidies, rural development, and food assistance programs

• Surface Transportation Reauthorization – Funds highways, transit, and infrastructure

• Crypto Legislation – Aims to regulate digital assets and protect consumers

There’s some cautious optimism that collaboration may still be possible, but we remain skeptical. As the September 30 budget deadline approaches, a government shutdown or the need for a continuing resolution (a temporary funding bill) seems more likely than a smooth path forward. That said, we’re giving slightly better odds that at least some of the big-ticket items mentioned above could make progress before the end of the year.

Crypto’s Growing Footprint in Washington

The cryptocurrency industry played an outsized role in the 2024 elections, largely through unprecedented political spending. The industry’s super PAC, Fairshake, poured record sums into key races, helping shape the political landscape both on Capitol Hill and within the Trump administration. Its goal: to support candidates on both sides of the aisle who are aligned with the interests of this rapidly evolving sector. Despite ongoing partisanship in Congress, the industry has made notable progress.

A major milestone came on June 17, when the Senate passed the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). The bill establishes a regulatory framework for US-dollar-pegged cryptocurrencies, known as stablecoins. Designed to balance innovation with oversight, the legislation includes consumer-protection measures and aims to mitigate risks to the broader financial system. It passed with bipartisan support, and now awaits consideration in the Republican-controlled House. House leadership has designated the week of July 14 as “Crypto Week,” during which the GENIUS Act and other crypto-related bills are expected to be taken up.

In parallel, the Trump administration has taken executive action to further support the industry. A recent Labor Department ruling now permits 401(k) plans to include investments in cryptocurrencies and related digital assets, such as NFTs (unique digital collectibles stored on a blockchain) and meme coins (cryptocurrencies often created as internet jokes or cultural references). The move reverses Biden-era guidance that had cautioned against such investments due to concerns over fraud, volatility, and investor protection.

Under the direction of the current administration, the Labor Department argued that the previous standard of “extreme care” was not grounded in the Employee Retirement Income Security Act (ERISA) and emphasized a neutral stance on investment types. Officials clarified that they are “neither endorsing, nor disapproving of” employers offering crypto options in retirement plans.

While the policy shift treats crypto like any other asset class, it comes amid ongoing uncertainty about regulation and risk. Critics of the Biden-era guidance viewed it as unfairly targeting crypto, but the underlying concerns about volatility and investor exposure remain relevant.

As the Trump administration continues to fill out its regulatory team, further developments in the digital asset space are expected and could potentially reshape how crypto is integrated into the broader financial system.

Setting the Stage for Elections to Come

Trump secured a major legislative milestone less than six months into his term, as a Republican-controlled Congress passed his signature OBBBA on July 3. The historic vote concluded a lengthy process of negotiation, internal debate, and compromise—much of it within the GOP. Democrats, excluded from the legislative talks, have so far had limited influence as the administration advances its broader agenda. While the OBBBA’s passage marked a significant win, it also set the stage for future debates. Several key provisions are designed to take effect years from now, ensuring that these issues will resurface in the political spotlight.

Notably, some of the most controversial reductions to Medicaid and the nation’s largest food assistance program are scheduled for implementation in 2028. That same year, many of Trump’s most favored tax cuts are set to expire, with the expanded SALT deduction, which is important to many blue-state Republicans, following in 2029.

The OBBBA locks in a mix of long-anticipated tax benefits and significant restrictions on safety-net programs, laying the groundwork for high-stakes political battles in the 2026 midterms and the 2028 presidential election. Its passage may mark the end of one legislative chapter, but attention now turns to how its provisions will play out in practice—and how they’ll shape the political and policy landscape in the years ahead.