House Passes Final Spending Bills for 2026, Including Divisive DHS Measure

Jack Smith
Allison Bailey/NurPhoto
By Yuval Rosenberg and Michael Rainey

Happy Thursday! The ongoing partisan divide over the 2020 election and the January 6, 2021, attack on the U.S. Capitol played out in front of television cameras and the House Judiciary Committee today as former special counsel Jack Smith defended his efforts to prosecute President Trump. Here's what you should know - and what else we were watching while waiting for the huge snowstorm expected over much of the country.

Smith Staunchly Defends His Trump Investigations: 'No One Should Be Above the Law'

Former special counsel Jack Smith today defended his efforts to prosecute President Trump for working to overturn the 2020 election result, his role in the January 6, 2021, attack on the U.S. Capitol, and alleged mishandling of classified documents. In a tense, televised House Judiciary Committee hearing, Smith disputed Republican claims that his prosecution was politically motivated and pushed back on outrage over his secretly obtaining the phone records of several GOP lawmakers during his investigation.

"President Trump was charged because the evidence established that he willfully broke the law, the very laws he took an oath to uphold," Smith said in his opening remarks, adding, "Our investigation developed proof beyond a reasonable doubt that President Trump engaged in criminal activity. If asked whether to prosecute a former president based on the same facts today, I would do so regardless of whether that president was a Democrat or a Republican. No one - no one - should be above the law in our country."

Trump, returning from the World Economic Forum in Davos, Switzerland, attacked Smith in social media posts. "Based on his testimony today, there is no question that Deranged Jack Smith should be prosecuted for his actions," Trump wrote. "He destroyed the lives of many innocent people, which has been his history as a prosecutor. At a minimum, he committed large scale perjury!"

Read more about the hearing at the Associated Press, CNN, Politico or The Hill.

House Passes Final Four Spending Bills for 2026, Including Divisive DHS Measure

House Republican leaders on Thursday managed to muscle through their four remaining annual spending bills for fiscal year 2026, approving some $1.2 trillion in discretionary spending for the departments of Defense, Health and Human Services, Labor, Housing and Urban Development, Transportation, Education and Homeland Security.

The process once again involved some drama, but the result cemented a win for GOP leaders, who had promised a return to a regular budgeting and appropriations process and celebrated an end to Biden-era spending levels.

"Today, House Republicans completed another monumental achievement by completing Fiscal Year 2026 appropriations - without a bloated omnibus bill or another continuing resolution," House Speaker Mike Johnson and his leadership team said in a statement. "Together, all twelve appropriations bills provide responsible, full-year government funding, spend less than another continuing resolution, and codify reforms to cut waste, fraud, and abuse. Once enacted, any last remnants of Biden-era spending will be replaced with President Trump's spending levels."

Most Democrats oppose DHS funding bill: House leaders had set up a separate vote on the politically charged Homeland Security funding bill, which faced opposition from Democrats angry about the Trump administration's immigration enforcement tactics under Homeland Security Secretary Kristi Noem and the controversial Immigration and Customs Enforcement crackdown in Minneapolis, including the fatal shooting of Renee Good earlier this month.

"We have a broken immigration system that should be fixed in a comprehensive and bipartisan manner. Democrats fought for meaningful, reasonable and necessary reforms meant to protect everyday Americans and immigrant families from the administration's reckless and violent tactics," House Democratic Leaders Hakeem Jeffries, Katherine Clark and Pete Aguilar said in a joint statement. "Unfortunately, House Republicans have rejected the effort to address the serious concerns raised by the American people about the lawless conduct by ICE. For this reason, we are voting No on the Homeland Security appropriations bill."

In the end, seven Democrats broke ranks with their leadership and voted for the Homeland Security funding bill, which passed 220-207.

The House then easily passed a massive, three-bill spending package funding the Pentagon, HHS, Labor, and other departments in a 341-88 vote.

Johnson sways GOP holdouts: Republican leaders had to leave open a procedural vote on the spending bills for nearly an hour as Johnson negotiated to secure the votes of a group of conservatives that reportedly included Reps. Lauren Boebert, Andy Ogles and Zach Nunn. In the end, Boebert and Rep. Victoria Spartz flipped from no to yes, Ogles and Nunn also voted to move ahead and the test vote advanced by the narrowest of margins, 214-213.

The House also voted 427-0 to include language in the Homeland Security bill to block senators from being able to collect rich payouts if their electronic data was secretly collected as part of the federal investigation into President Trump's efforts to overturn his 2020 election loss.

The inclusion of the provision in the DHS funding bill jams the Senate, where Republican Majority Leader John Thune has resisted undoing the measure allowing senators to collect hundreds of thousands of dollars. Thune had included that measure in a stopgap spending bill passed last year, surprising many lawmakers.

"The one thing the House can agree on is f--- the Senate," one Democratic source reportedly told Punchbowl News.

What's next: The four bills passed by the House on Thursday will be packaged together with an earlier pair of spending bills and sent to the Senate, which will look to pass them as one bundle next week, ahead of a January 30 deadline to avoid a partial government shutdown.

Trump Admin Orders Review of Funding for Democratic States

The White House Office of Management and Budget has ordered a review of federal funding for 14 Democratic-leaning states and the District of Columbia, according to various reports Thursday.

In a memo earlier this week, OMB called on all agencies except for the Defense and Veterans Affairs departments to gather data on federal spending in the targeted states to "facilitate efforts to reduce the improper and fraudulent use of those funds." A worksheet is reportedly being provided to help states track all federal funding going to state and local government, universities and nonprofits.

The memo also states that the request complies with the law. "This is a data-gathering exercise only," the memo reads. "It does not involve withholding funds, and therefore does not violate any court order."

Still, the effort heightens concerns that the Trump administration could withhold federal funding in states perceived as political enemies by the White House.

The 14 states are California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia and Washington state. As CNN notes, all of the states on the list and the District of Columbia voted for former Vice President Kamala Harris in the 2024 election, and most are led by Democratic governors.

President Trump has vowed to cut off federal funding as of February 1 for cities and states that limit local cooperation with federal immigration enforcement. In a recent speech at the Detroit Economic Club, Trump said the federal government would cease to make "any payments to sanctuary cities, or states having sanctuary cities, because they do everything possible to protect criminals at the expense of American citizens."

Democrats in targeted states have largely shrugged off the threats so far. "We will go to court within seconds, and we will win if he does this," California Attorney General Rob Bonta said last week.

Inflation Rose to 2.8% in November

The personal consumption expenditures price index, the Federal Reserve's preferred measure of inflation, rose two-tenths of a percentage point on a monthly basis in November, contributing to an annual rate of 2.8%, the Department of Commerce announced Thursday.

The core PCE price index, which omits volatile food and fuel prices to provide a better sense of the underlying trend, also rose 0.2% on a monthly basis and 2.8% on an annual basis. Both sets of numbers were in line with expectations.

Delayed by the government shutdown, the latest inflation data boosts expectations that Fed policymakers will sit tight on interest rates at their first meeting of the year next week as inflation continues to run above the central bank's 2% target rate.

GDP growth revised higher: The nation's gross domestic product grew by 4.4% in the third quarter of 2025, according to revised data that saw the growth figure move upward by one tenth of a percentage point. Economic growth in the second quarter was 3.8%.

Consumer spending in November grew by 0.3% month over month on an inflation-adjusted basis, beating expectations. Incomes rose, too, though not by as much, with real disposable income growing by 0.1%.

Heather Long, chief economist at Navy Federal Credit Union, said the latest data shows the economy continues to expand, though unevenly. "The United States is experiencing a jobless boom where strong growth is powered by AI investments and consumption by wealthier families, but there is almost no hiring,'' Long told the Associated Press. "It's an uneasy situation for many middle-class families. One of the big questions for 2026 is whether the middle class will start to feel the uplift from the boom."

Fiscal News Roundup

Views and Analysis