Legislative Outlook for the Second Session of the 119th Congress
Dynamics in Washington and Impact on the Legislative Agenda
With the second session of the 119th Congress now well underway, the legislative outlook reflects the familiar dynamics of an election year: a compressed calendar, heightened partisan tensions, and a preference for must-pass legislation and time-limited extensions over sweeping reforms. Despite the environment, there are prospects for many pieces of legislation to advance, perhaps including some that could even move with bipartisan support.
Included below is our analysis of the legislative measures that have the highest probability for action. We have also sought to identify bills that have medium prospects for activity this year. Finally, our list includes a handful of other issues where the odds of legislative progress are lower, but we cannot rule out the possibility that something gets done or that efforts made this year influence the legislative agenda as we head into 2027.
High Probability for Action
Fiscal Year 2026 (FY26) Appropriations: Six of the 12 FY26 appropriations bills have already been enacted and conferenced versions of all six remaining bills have now been publicly released. With the Senate in recess this week, and a massive snowstorm in the forecast, it remains unclear if the final bills will make it across the finish line ahead of the January 30 funding deadline or whether a short-term continuing resolution (CR) may be needed. Senate Majority Leader Thune (R-SD) has indicated the upper chamber will remain in session next week until appropriations work has been completed. With only a handful of Democrats expected to vote for the FY26 Homeland Security Appropriations bill, which will receive a standalone vote in the House, it is also uncertain whether funding under this bill might need to operate under a CR for the remainder of the fiscal year.
Fiscal Year 2027 (FY27) Appropriations: All indications are that the Trump Administration will miss the early February deadline to release the FY27 President’s Budget Request (PBR). The latest rumblings suggest that the PBR will be made available in early March following the president’s February 24 State of the Union (SOTU) address. While the release of the PBR will kick off the appropriations process for the next fiscal year, election-year constraints make it unlikely Congress will be able to complete FY27 appropriations by October 1, making at least a short-term CR highly probable.
Fiscal Year 2027 (FY27) National Defense Authorization Act (NDAA): The NDAA’s record of 65 consecutive years of enactment is expected to continue this year. While negotiations may be contentious, particularly around the Trump Administration’s topline target of $1.5 trillion in defense spending, acquisition reform, and social policy riders, the bill’s must-pass status makes enactment highly likely, potentially with a narrower scope or via a year-end package.
Affordable Care Act (ACA) Subsidies: Enhanced ACA premium subsidies expired December 31. Earlier this month, House Republicans joined House Democrats on a discharge petition to force a vote and pass a three-year extension of enhanced ACA subsidies. Senate Republicans oppose the clean extension and are continuing to negotiate with Democrats on a compromise. While Congress is currently deadlocked, there is a strong likelihood that a deal will be clinched to extend the subsidies for a defined period, potentially one or two years, either as a standalone measure or as part of a larger tax or healthcare package. Even a temporary extension passed this year would set the framework for longer-term consideration of healthcare subsidies in the next Congress.
Foreign Intelligence Surveillance Act (FISA) Section 702 Authority: FISA Section 702 authority is scheduled to sunset on April 20. The House and Senate Judiciary Committees continue to assess the impacts of 2024 reforms and determine the path for the 2026 reauthorization. While debates are expected on contentious issues such as warrant requirements, the “data broker loophole,” and which entities are considered “Electronic Communications Service Providers” (ECSPs), given national security imperatives, Congress is highly likely to pass either a short-term extension or a reauthorization that includes some reforms.
Water Resources Development Act (WRDA): A biennial and traditionally bipartisan bill, WRDA has been routinely enacted every two years since 2014. The Senate Environment and Public Works (EPW) and House Transportation and Infrastructure (T&I) committees have initiated the 2026 reauthorization process by soliciting stakeholder input and proposals for Army Corps of Engineer projects and policy changes. If trends persist, we might expect to see the next WRDA finalized towards the end of this Congress, especially as the committees of jurisdiction simultaneously attempt to tackle a surface transportation reauthorization bill, Toxic Substances Control Act (TSCA) reauthorization, and permitting reform.
Toxic Substances Control Act (TSCA): The current ten-year authority for the Environmental Protection Agency (EPA) to collect TSCA fees will expire September 30, necessitating Congressional action. Earlier this month, the House Energy and Commerce (E&C) Committee held a hearing to consider Republican draft legislation to modernize and reform TSCA fees by speeding up reviews and narrowing EPA authorities, drawing scrutiny from Democrats. Congress will now be in the position to decide whether to simply renew the fees or pursue reforms regarding regulation of new and existing chemicals.
Medium Prospects for Activity
Housing Reform: Housing reform remains a focus for the 119th Congress, with major bipartisan legislation advancing in both the House and Senate to address housing supply and affordability challenges. Back in October, the Senate passed a housing package that included regulatory reforms, zoning incentives, and codification of the Community Development Block Grant – Disaster Recovery (CSBG-DR) program as an amendment to the FY26 NDAA. Meanwhile, the House Financial Services Committee advanced a competing and narrower proposal in December. The administration has declared housing reform a priority for 2026, creating some pressure for the House and Senate to reconcile their approaches and agree on a bill for final passage.
Prescription Drug Pricing: The bipartisan agreement on the FY26 Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) Appropriations Bill included significant Pharmacy Benefit Manager (PMB) reforms targeting the business practices of drug intermediaries to lower costs and increase transparency for patients and pharmacies. The debate in Congress may now shift towards codifying Most-Favored Nation (MFN) pricing into law, as envisioned by the president’s recently released Great Healthcare Plan, and other efforts to extend out-of-pocket caps to the private commercial insurance market. While comprehensive reform is unlikely, targeted adjustments or pilot programs could be folded into larger healthcare or budget legislation.
Kids’ Privacy and Online Safety Legislation: Bipartisan concern over harms to children has kept issues related to kids’ privacy and online safety atop the Senate Commerce and House E&C agendas. House E&C leadership remains committed to moving bills like the Kids Online Safety Act (KOSA) and the Children and Teens’ Online Privacy Protection Act (COPPA 2.0) through the committee under regular order, with a full committee markup possible in February. However, unresolved disputes over First Amendment and liability protections, as well as ongoing concerns about preemption, may limit progress towards framework legislation or committee action, let alone floor votes or final passage. Given the difficult landscape around legislation intended to protect children, it is even harder to imagine that any comprehensive privacy bill will move forward in this Congress. Regardless, a legislative proposal from the House E&C Republican comprehensive data privacy working group, expected soon, could include language around kids’ online privacy.
FirstNet Authority Reauthorization: Though FirstNet Authority is not due to expire until February 2027, Senate Commerce and House E&C leadership have articulated a desire to complete the reauthorization process this year, perhaps timed to coincide with the 25th anniversary of 9/11. The Senate Commerce Committee will hold a hearing on FirstNet Authority next week, formally kicking off the reauthorization process. Coming off a series of hearings markups centered on public safety communications, House E&C is expected to follow suit shortly thereafter. While there is strong bipartisan support for the reauthorization, debates are expected over oversight, accountability, competition, and transparency in FirstNet Authority.
Cryptocurrency Regulatory Framework: In recent months, there has been some momentum around efforts to clarify digital asset regulation, particularly around market structure and consumer protections. The Senate Banking Committee recently postponed a markup of its bipartisan Digital Asset Market Clarity (CLARITY) Act, likely to February or March, as it prioritizes housing reform. The full House passed its version of the bill back in July. Meanwhile, the Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission (CFTC) and its potential role in regulating spot digital commodity markets, has now released its own discussion draft and announced plans to hold a markup soon, even though the bill lacks bipartisan support at this stage. While the White House has expressed interest in enacting a crypto bill, lawmakers and industry must still work through disagreements.
Community Banking Package: The idea of targeted regulatory relief for community banks continues to enjoy bipartisan support. Throughout the first session of the 119th Congress, the House Financial Services Committee was actively engaged on building a foundation for reforms, with Chairman French Hill (R-AR) and committee Republicans unveiling a new community banking legislative package in early January. Aimed at encouraging de novo bank formation, providing regulatory relief, clarifying regulations around mergers, and strengthening local bank funding, this latest bill is reportedly designed to move before Congress becomes heavily involved in midterm election activities. A modest package could advance, especially if it is attached to a broader financial services or economic bill.
Taiwan Tax Bill: Legislation alleviating double taxation on cross-border investments and providing tax benefits to qualified Taiwan residents with U.S.-source income continues to see bipartisan support, even as it remains stalled. While the full House passed the U.S.-Taiwan Expedited Double-Tax Relief Act early last year, it continues to await Senate consideration. Despite hope that the legislation could ride on a FY26 appropriations package, the consensus view is that this effort to improve tax relations with Taiwan will now need to wait and hitch a ride on a broader tax vehicle. Such a path is unlikely to emerge until a deal is reached to extend enhanced ACA premium subsidies.
Reconciliation 2.0: A second reconciliation bill could address expiring tax provisions, seek to advance other Trump Administration proposals to address the affordability crisis such as creating health savings accounts and granting the president authority to issue tariff rebate checks, and further plus up defense spending through a straight party-line vote. While some Republicans have been bullish about a second reconciliation package, GOP leaders for the Senate Finance and House Ways and Means Committees have been more bearish about the prospects, acknowledging that their narrow margins, political risk, and time constraints in an election year would make passage of another reconciliation measure challenging. Additionally, President Donald Trump has touted last year’s One Big Beautiful Bill Act (OBBBA) as inclusive of all his priorities and instead demanded that Congressional Republicans abolish the filibuster to get around the constraints of the Byrd Rule.
Lower Probability of Legislative Progress
Farm Bill Reauthorization: The 2018 Farm Bill has now been extended three times with the next deadline approaching on September 30. Despite broad stakeholder interest, the Farm Bill reauthorization remains difficult due to disputes over nutrition assistance, conservation funding, and spending offsets. Especially because a significant portion of typical Farm Bill provisions were addressed in the OBBBA, a short-term extension or a piecemeal approach to action on outstanding provisions is more likely than a full reauthorization this year.
Highway Bill Reauthorization: The process to reauthorize surface transportation programs is in an active drafting and negotiation phase ahead of a September 30 expiration date. Senate EPW and House T&I Committee leadership have said to expect a more traditional highway bill this year rather than a larger transportation package. Though the hope is that bill text can be released in late spring and marked up this summer, election year politics make it possible that an extension of highway programs is needed. Even if the reauthorization slips to next year, policy groundwork will undoubtedly be laid in the weeks and months ahead.
Permitting Reform: While there is bipartisan recognition of the need for permitting reform and the issue has seen significant legislative momentum in recent weeks, there is currently a stalemate in the Senate due to clashes over energy policies between the Trump Administration and Congressional Democrats. Though the full House passed the Standardizing Permitting and Expediting Economic Development (SPEED) Act late last year, Senate negotiators have halted negotiations over what they characterize as the administration’s “war on wind.” While the White House’s efforts to drive permitting reform by executive order could ramp up pressure on Congress, prominent permitting reform proposals still lack the Democratic support needed to clear the 60-vote threshold in the Senate.
Defense Production Act (DPA) Reauthorization: After a lapse during last year’s government shutdown, the DPA was temporarily reauthorized, though this extension is now set to expire on January 30. While the Senate-passed FY26 NDAA included bipartisan reauthorization language, this provision was not included in the final NDAA conference report enacted at the end of 2025. Debates continue about the scope of the DPA and the length of the next reauthorization. Absent an acute national emergency, DPA reauthorization is likely to be deferred or extended briefly rather than comprehensively reworked at this time.
Export-Import (Ex-Im) Bank Reauthorization: Coming off a seven-year reauthorization, the longest reauthorization in history, the Ex-Im Bank will no longer be authorized to operate come December 31. Although historically bipartisan, reauthorization timing remains uncertain and may slip into the next Congress, especially given interest in revising the Bank’s policies to ensure its competitiveness against foreign export credit agencies, especially China’s. If a new authorization is not passed before the end of 2026, Ex-Im Bank will be unable to approve new transactions though it could continue to manage its existing portfolio.
Artificial Intelligence (AI): AI will remain a key area of interest in Washington, even as sources on Capitol Hill express skepticism about much getting done legislatively this year. While a comprehensive AI regulatory package seems unlikely given tensions between state-level regulations and executive branch policies, outstanding policy recommendations issued in 2024 by the Bipartisan Senate AI Working Group and the House Bipartisan Task Force on AI, along with any initiatives undertaken by the new House Democratic Commission on AI and the Innovation Economy, will continue to receive scrutiny, along with the Trump Administration’s AI Action Plan. Issues related to AI diffusion and export controls on advanced AI chips are likely to remain in the headlines, but despite recent committee-level action in the House to advance the AI OVERWATCH Act, it is uncertain that legislation the administration sees as hamstringing its efforts to make the world reliant on the American AI stack can move forward in the current political environment. Other issues tangential to AI including data centers and energy needs will also receive attention as part of the overall AI conversation.
Quantum Reauthorization: The original 2018 National Quantum Initiative Act saw its initial five-year authorization for several research and development (R&D) activities expire in 2023. A reauthorization bill was approved by the House Science, Space, and Technology (HSST) Committee in 2023 but never moved on the floor. A subsequent Senate version that saw some traction in 2024 also failed to advance out of the Senate Commerce Committee. While reauthorization efforts continued throughout 2025, no final bill was passed, leading to the recent Senate reintroduction of the National Quantum Initiative Reauthorization Act. The bill has been given the bill number S. 11, indicating it is a high priority for Senate leadership. While there is generally bipartisan support for shifting the U.S. quantum strategy from basic research to commercialization and deployment, there is no guarantee of action, especially since quantum authorities are now several years lapsed.
Looking Ahead
This list is by no means exhaustive but offers a roadmap to how we might expect the legislative agenda to unfold this year to accommodate for upcoming policy expirations. While only a narrow set of major bills are likely to be enacted in 2026, the measures under consideration, whether enacted, extended, or left unresolved, will significantly shape the legislative starting point for the 120th Congress. In many cases, provisions excluded from bills, temporary extensions of expiring authorities, or bipartisan frameworks developed this year are likely to carry forward and reemerge in the next Congress as the foundation for future legislative action.