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Congress is set for a busy and raucous 2026, despite the looming distraction of the November midterms, which typically slow down the legislative process. The GOP is eager to advance President Trump’s agenda while they still control the House and Senate, which won’t last if Democrats wrestle back control of one or both chambers after the midterm elections.
A government funding bill is first on the list. Funding for most federal agencies expires January 30, and without a bipartisan deal, those agencies will partially close. While a government shutdown is possible, odds are lower now after the 43-day closure that was forced by the Democrats last fall. Their appetite to play hardball has waned since that showdown.
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Unifying House GOPers won’t be a breeze, as hard-liners and moderates haggle over priorities. But Speaker Mike Johnson (R-LA) has kept his party in line during past funding rows, though not easily.
Venezuela could upend funding deals. Democrats are incensed at President Trump’s invasion of the nation without congressional approval, and could withhold needed votes for military funding unless Congress also restricts future White House military actions against Venezuela. But that likely won’t happen, as Republicans overall have cheered Trump’s move. Regardless of congressional action, Venezuela will consume lawmakers this year and add to the widening divide of trust and cooperation between the parties.
The thorny issue of whether or not to extend Obamacare tax credits lingers. The subsidies expired on December 31, resulting in premium hikes for millions of Americans. But Democrats and moderate Republicans haven’t given up trying to address the issue. A deal still could be worked out during the early months of the year, as lawmakers in both parties fear a voter backlash in the midterms if health care costs aren’t lowered. Despite the challenges, some sort of fix is in the cards, if only a modest tweak.
There is a growing bipartisan push in Congress to slap Russia with sanctions over its ongoing war with Ukraine. Democrats have been clamoring for this for months, though GOPers have been reluctant, as they wanted to give the president time to broker a peace deal. But patience with Russian President Vladimir Putin has run out, and lawmakers are ready to move forward with sanctions. Trump seems to be on board.
Tech issues also will be front and center in 2026, though whether any bills successfully clear both chambers is uncertain. Many in both parties want stronger regulations for artificial intelligence. Ditto for rules for the expanding cryptocurrency market. Trump favors a more hands-off tack. But compromises may gel as the year proceeds.
The upcoming ruling on Trump’s tariff power could put Republicans in a bind. Many of them aren’t fans of the tariffs. But if the Supreme Court rules against Trump, he will pressure lawmakers to take up legislation imposing the tariffs themselves.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
