Congress Weekly: DHS Shutdown, Day 52

The Week That Was

DHS Shutdown: Day 52 and Counting

Here's a sentence that should make your head spin: the United States Senate voted 100–0 in the early hours of Sunday, April 5, to pass a bill that would fund most of the Department of Homeland Security through the end of the fiscal year. One hundred to zero. That's not a bipartisan consensus — that's unanimous. Every single senator from both parties agreed that TSA agents should get paychecks, that FEMA should have money for disasters, and that the Coast Guard should be able to, you know, guard the coast.

And then the House said, "Cool, we'll look at it when we get back from vacation."

Let that marinate. A group of conservative lawmakers are so upset about the deal — which deliberately excludes ICE and CBP funding to be handled separately through reconciliation — that they won't even allow a vote until Congress reconvenes on April 13. That's another week of 50,000 DHS employees working without pay, another week of TSA agents calling out sick or quitting entirely, and another week of FEMA's disaster relief fund bleeding dry while hurricane season approaches like a freight train nobody can hear because the conductor is on spring break.

The human cost is staggering. Over 4,000 FEMA employees aren't receiving pay. More than 1,600 are working without compensation. Another 2,400 are furloughed. Each week, approximately 45,000 students — including emergency managers, firefighters, and EMTs — are missing critical FEMA training. The disaster relief fund has dropped to roughly $4 billion, but $3 billion of that is earmarked for reserves, leaving about $1 billion for actual disaster response. If a major hurricane hits before Congress acts, the response will be funded with prayers and IOUs.

The Presidential Pay Order: Constitutional Innovation or Constitutional Crisis?

President Trump announced he'll sign an executive order to pay all DHS employees, declaring the shutdown an "emergency situation compromising the Nation's security." He directed the DHS Secretary to use funds with a "reasonable and logical nexus" to DHS functions to provide compensation. GOP leaders endorsed the move. The markets shrugged.

Here's the problem: this is a power no president has ever claimed. The Antideficiency Act — a 150-year-old law — prohibits federal officials from spending money that Congress hasn't appropriated. That's not an obscure technicality; it's the foundation of congressional power of the purse. The executive branch deciding it can pay people without an appropriation is like your teenager deciding the allowance jar is a self-serve buffet. It might solve the immediate crisis, but the precedent it sets should keep every small business owner who depends on federal contracts awake at night. If the executive can fund agencies without Congress, what exactly is Congress for?

The good news: TSA callouts dropped 43% after agents started receiving checks. Lines are easing. The bad news: each new TSO replacement requires 4–6 months of training, so the 500+ who already quit aren't coming back anytime soon.

The $1.5 Trillion Question

On April 3, the White House dropped its FY2027 defense budget request: $1.5 trillion. That's not a typo. It's a 44% increase over FY2026 and the largest single-year defense spending surge since the Korean War. JPMorgan analysts compared it to the 3.4x budget explosion of 1951 when Truman was sending troops to the Korean Peninsula.

The architecture is clever, if you're into that sort of thing. About $1.1 trillion would flow through the regular appropriations process (which needs bipartisan support), while $350 billion would ride through a second budget reconciliation bill that Republicans can pass on party lines alone. The "modernization account" — procurement plus R&D — would hit $760 billion, including $65.8 billion for 34 new combat and support ships.

For the small business defense contractor, this is a double-edged sword the size of an aircraft carrier. More money means more contracts, more opportunities, more work. But 44% more money also means 44% more complexity, 44% more competition from the primes who have 100 lobbyists each working the committee rooms, and a procurement system that's being simultaneously rewritten (see: FAR overhaul) while processing the biggest spending increase in 75 years. If you're a small business that hasn't already established relationships with the contracting officers at your target agencies, you are now competing against a tidal wave of new money that the big boys are already positioning to catch.

Oh, and the plan cuts non-defense spending by 10%. So if you serve both defense and civilian agencies, one hand giveth while the other taketh away.

The Tariff Trifecta

The Supreme Court struck down IEEPA tariffs in February, ruling that tariffs are "very clearly a branch of the taxing power" belonging to Congress alone. The government collected $166 billion from over 330,000 businesses in tariffs the Court found unconstitutional. Refunds are being processed. Slowly.

But the administration didn't miss a beat. Three replacement mechanisms are now in play:

• Section 122 Universal Tariff (10%): A 150-day stopgap through July 24. The legislative equivalent of duct tape — it holds, but everyone knows it's temporary.

• Section 232 Pharma Tariffs (up to 100%): Announced April 2. Patented pharmaceuticals get hit with 100% duties unless manufacturers agree to onshore production (20% rate) or sign MFN pricing agreements with HHS (0% rate). Generics are exempt. Effective dates: July 31 for the 17 largest companies, September 29 for everyone else. Health Affairs estimates a 30% average drug price increase under baseline assumptions.

• Section 301 Country-Specific Investigations: Covering 86 countries. Public comments due April 16, hearings April 28 and May 5. This is the replacement for the country-by-country IEEPA tariffs — slower, more legally defensible, and potentially more painful.

For the small business owner: the effective tariff rate went from 2.5% in January 2025 to 27% by April 2025. It's now at 13.7% after the Supreme Court ruling and restructuring. That's still five times higher than two years ago. If your supply chain touches imported goods, your margins have been permanently compressed, and the pharma tariffs suggest the administration's appetite for trade barriers is not diminishing — it's finding new legal avenues.

The Week Ahead

Congress remains in recess through April 13. The Senate has pro forma sessions on April 6 and April 9 — the parliamentary equivalent of keeping the lights on so nobody breaks in. No votes, no hearings, no legislation. When the Senate returns April 13, it will resume consideration of two judicial nominations: John Thomas Shepherd for the Western District of Arkansas and Christopher R. Wolfe for the Western District of Texas, with cloture votes at 5:30 p.m.

The House, meanwhile, is in a "District Work Period" — Washington's euphemism for "we're in our home districts doing everything except voting on a DHS funding bill that passed the Senate unanimously." The expectation is that the House will take up the Senate DHS bill as soon as it returns. The question is whether conservatives who've been digging in their heels will continue to hold it hostage or if two weeks of constituent anger about airport lines will concentrate minds.

Follow the Money

The money this week isn't moving through Congress — it's moving around Congress. Here's where the dollars are flowing while the People's House is empty.

The AMI Metals awards are worth watching. A $2.24 billion border wall steel contract and a $654 million F-35 aluminum IDIQ to the same company in the same procurement cycle tells you exactly where the "Department of War" is putting its chips. If you're in the metals supply chain, the wave is here. If you're not, the consolidation of these massive awards with a single vendor should concern every small business metals supplier who's been told the playing field is level.

Rhetoric of the Week

The "Two-Track" Shell Game

This week's rhetorical masterpiece comes from the joint statement by Speaker Johnson and Majority Leader Thune announcing their "two parallel tracks" to end the DHS shutdown. Track one: pass the Senate bill funding TSA, FEMA, and Coast Guard. Track two: fund ICE and CBP through reconciliation via the "One Big Beautiful Bill."

This is textbook Framing by Analogy. "Two parallel tracks" evokes the image of a train system — efficient, coordinated, both lines running at the same speed toward the same destination. The reality is that Track One requires House conservatives to swallow a bill that funds DHS without funding immigration enforcement, and Track Two requires a second reconciliation bill that even the Ways and Means chairman says "extremely rare" and "I don't think it will happen."

Johnson's response? "It will not be as big, but it can be just as beautiful." That's Commitment Avoidance wrapped in Optimism Signaling. It concedes the second track probably won't deliver the same payload while using aesthetic language ("beautiful") to distract from the substantive downgrade. It's the legislative equivalent of your contractor saying the renovation won't be as large, but the paint color will be gorgeous.

Then there's the blame game. The White House labeled it the "Democrat-Caused Shutdown" in official press releases. DHS's own press releases use this framing. Democrats counter that the shutdown started because Republicans refused to include ICE/CBP reforms after the Minnesota shootings. Both sides are deploying Labeling Judo — attaching the word "caused" to the opponent's name to make the attribution stick before the audience examines the timeline. The small business owner doesn't care who caused it. They care that their FEMA reimbursement check isn't coming.

What This Means for You

• If you hold DHS contracts: The Senate bill would restore funding for TSA, FEMA, Coast Guard, and CISA. If the House passes it unchanged after April 13, expect a wave of delayed procurement actions to resume. Get your proposals ready now — the backlog will create a bottleneck where prepared firms win.

• If you bid on defense work: The $1.5T FY27 request signals historic procurement growth. But the money flows through both regular appropriations and reconciliation, creating two separate funding streams with different timelines. Start tracking which programs are in which lane. The FAR overhaul (major provisions hitting June 30) will change how you bid — verify your clause references, compliance matrices, and reps & certs against the new FAR Part 19 and Part 52 deviations now.

• If your supply chain involves imports: The Section 122 universal 10% tariff expires July 24 unless Congress extends it. The Section 232 pharma tariffs hit July 31. Section 301 hearings start April 28. Your cost basis is a moving target. Build scenario models for each tariff regime change, not just the current one.

• If you depend on FEMA reimbursements: The disaster relief fund is critically low. Even if the DHS bill passes next week, it will take weeks for the payment pipeline to restart. If you're owed money for prior disaster work, plan your cash flow accordingly.

The Weekly Awards

ICYMI

• The FAR overhaul's biggest provisions hit June 30. If your defense contracts are under $10M, you'll no longer need certified cost or pricing data — a significant burden reduction for small businesses. But the "Rule of Two" can no longer be used as a basis for protest on GWACs, meaning more full-and-open competition on vehicles where small businesses previously had some protection.
• The "Department of War" rebrand could cost taxpayers $10M to $125M according to CBO. The bronze plaques at the Pentagon entrances have already been swapped, but Congress hasn't actually approved the name change. war.gov is live, though, so at least the URL works.
• The Navy overhauled its SBIR and STTR programs to emphasize speed and commercialization. If you've been sitting on a Phase II that's been languishing, now's the time to push for a Phase III transition — the new rules reward companies that can move from prototype to deployment fastest.
• Six House Republicans crossed party lines to vote to end Trump's tariffs on Canada before recess. That's not enough to override anything, but it's a crack in the wall that tariff opponents will try to widen when Congress returns.

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