Lawmakers return to Washington this week facing a full agenda and a tight schedule. Several bills, policy fights and negotiations require attention, including a third reconciliation package, a suite of kids’ online safety bills, a farm bill and key cybersecurity programs. Congress will also be navigating economic pressures from rising food and diesel prices as the approaching midterm elections put pressure on Republicans to move quickly on their legislative priorities. POLITICO policy teams detail what else is on lawmakers’ fall agenda.

— Congress is deadlocked on several defense bills, including the National Defense Authorization Act and supplemental funding for the war in Iran.

— President Donald Trump and Chinese leader Xi Jinping are set to meet this month for a discussion that's expected to touch on artificial intelligence.

— The trade war with Canada is at a stalemate, risking the economy and the GOP's election outlook.

Agriculture

— Farm bill Status: Lawmakers will reconvene after Labor Day to address the future of the stalled farm bill. The Senate Agriculture Committee failed to advance the legislation amid disagreements over proposals to delay a requirement for states to share the cost of providing food aid under the Supplemental Nutrition Assistance Program.

Democrats have demanded a two-year delay of the cost-sharing requirement enacted as part of the One Big Beautiful Bill Act, but Republicans and the White House won’t budge beyond one year, fueling fears that the once-bipartisan legislation that farmers rely on will not pass during this Congress.

With the midterm elections on the horizon, farm-focused lawmakers are also preparing for dramatic changes. Agriculture Committee ranking members Sen. Amy Klobuchar (D-Minn.) and Rep. Angie Craig (D-Minn.) are set to leave Congress. Rep. Shontel Brown (D-Ohio) is already vying for the top Democratic seat on the House side. House Agriculture Chair G.T. Thompson (R-Pa.) would have to step down unless granted a waiver to continue. Rep. Austin Scott (R-Ga.) would be next in line to lead Republicans if Rep. Frank Lucas (R-Okla.) doesn’t want the job.

Issues such as tariffs, rising farm production costs and even the spread of data centers are expected to be important issues in competitive districts where Agriculture Committee lawmakers, like Rep. Derrick Van Orden (R-Wis.), are defending their seats.

— Tariffs vex cattle industry: Meanwhile, cattle ranchers are fuming after President Trump signed a proclamation temporarily removing tariffs on some beef imports. Farm-state Republicans and ranchers say the plan to lower consumer prices ahead of the midterms will damage their businesses.

At USDA, officials are gearing up to release a highly anticipated regulation aligning federal school meals with the Dietary Guidelines for Americans, which were released in January. Agriculture Secretary Brooke Rollins has said the proposed regulation could be published this week. While details remain unclear, it’s expected to lower added-sugar and salt limits, as well as reduce highly processed foods. School nutrition professionals have raised concerns that the rule will impose new costs without raising the federal reimbursement rate for meals at a time when food costs are already high.

— Food safety: The Trump administration is also facing heightened scrutiny for its handling of recent foodborne illnesses, including salmonella and a record-setting cyclopsora outbreak. Former Trump administration officials have called for a review of the government’s handling of the outbreak, but it’s not clear if Congress will take up the matter this fall. — Marcia Brown

Trade

— Trade war with Canada: President Trump’s 50 percent tariff on $20 billion worth of Canadian goods went into effect on Aug. 22, launching a new and more fraught phase in the North American trade war.

In response, Prime Minister Mark Carney announced counter-tariffs targeting more than 700 products, with the hardest squeeze on American steel and aluminum. The duties are set to go into effect on Sept. 8.

Carney has also expressed an interest in trying to negotiate a detente, after pulling his negotiators from the talks on Aug. 21. But neither government looks prepared to return to the table immediately, despite pressure from business groups.

Trump has threatened to impose yet another round of 50 percent on Canadian vehicles, steel and other items beginning Jan. 1, suggesting the stand-off could drag throughout the fall.

— Tariff's create midterm headaches: That’s bad news for industries that rely on North American markets and supply chains, particularly in Canada. It’s also alarming Republicans in U.S. states that border Canada in the buildup to the midterm elections.

Four border states — Maine, Michigan, New Hampshire and Alaska — as well as manufacturing-heavy Ohio are on the front lines of both the midterms and Trump’s trade war.

Fifty-six percent of U.S. adults said cost-of-living concerns are among the top issues facing the country in a recent POLITICO Poll. And a notable share of Trump’s own voters hold negative views about the current state of the economy — and how he is trying to improve it.

Among Trump voters who said things are less affordable now than a year ago, most blamed the Iran war (52 percent), but a sizable share (42 percent) blamed Trump’s tariffs on imported goods.

Former Republican Sen. John Sununu, who is running to recapture his New Hampshire Senate seat this fall, said in a statement to POLITICO Tuesday that “it makes no sense to start a trade war with our closest neighbor."

“Canada is an important and valued trading partner for New Hampshire,” Sununu added. “As Senator, I’d encourage both sides to continue to negotiate and keep trade flowing between our countries.” — Zi-Ann Lum, Daniel Desrochers, Jordain Carney, Mia McCarthy

Financial Services

— Interest rate intrigue: The Federal Reserve will meet this month, and some members of the rate-setting committee are expected to make the case for hiking interest rates in the face of elevated inflation. In his Aug. 28 speech at the Fed’s annual conference in Jackson Hole, Wyoming, Warsh laid the groundwork for an interest rate hike by acknowledging that inflation was concerning but argued that the economy is strong and the labor market is at full employment.

— Clarity action coming: The Senate is expected to vote on a major cryptocurrency bill known as the Clarity Act on Sept. 15. The bill needs bipartisan support to advance, but Democrats say they are withholding their support without further concessions in three key areas. Most importantly, they are pushing for ethics language that would crack down on President Trump’s ability to profit from his family’s crypto businesses. Democrats are also seeking to force changes to a portion of the bill known as the Blockchain Regulatory Certainty Act, that has been a concern for law enforcement groups, and to overhaul the commodities portion of the legislation that is overseen by the Senate Agriculture Committee.

— House Financial Services back to business: Treasury Secretary Scott Bessent is scheduled to testify before the House Financial Services Committee on Sept. 15 about the international financial system. The panel will also hold a hearing on strengthening the American economy and conduct a markup. Additionally, lawmakers will have to take action on a slew of fiscal 2026 programs and government funding that will expire at the end of the month. In particular, $289 million in funding for the Community Development Financial Institutions Fund is set to expire Sept. 30, raising concerns among lawmakers and industry groups.

— Here come the SEC rules: Securities and Exchange Commission Chair Paul Atkins is moving to check off some major items on his to-do list. Following the Wall Street regulator’s recently proposed cryptocurrency rules, the SEC is preparing to roll out new plans on how companies report executives’ compensation, its pay-to-play rule and the regulations for safeguarding client assets, including crypto tokens. All three efforts are currently under White House review, which is usually the final step before they’re voted on and formally proposed.

— HUD rulemaking: HUD plans to propose a rule in September to overhaul the Continuum of Care program, which provides federal funding to local organizations that assist people experiencing homelessness. The proposal will “increase flexibilities for Continuums of Care to address substance use disorder and behavioral health barriers to stable housing” as well as increase state and local government involvement, according to the department’s regulatory agenda. Previous efforts by HUD to restructure the program through funding notices were struck down by a federal judge, who ruled the overhaul will have to go through a standard regulatory process. — Victoria Guida ,Jasper Goodman, Katherine Hapgood, Declan Harty, Cassandra Dumay

Tax

— Crypto tax plan faces hurdles: Many in tax world are also waiting to see if House Ways and Means Chairman Jason Smith (R-Mo.) decides to mark up his cryptocurrency tax plan. He’s been eager to move it, and the pressure to act will increase if the Senate can finally pass a separate crypto regulatory bill known as the Clarity Act.

But that’s a big “if.” Smith is anxious to win bipartisan support and it’s unclear whether Democrats will back the plan. President Trump's highly profitable crypto ventures could make it harder for many Democrats to support Smith’s measure.

Lawmakers aren’t expected to stick around Washington for long, with both sides eager to campaign ahead of the midterms.

— Year-end tax bill takes shape: In Congress’s absence, expect a lot of strategizing and speculation about a potential end-of-the-year tax bill, though that will depend largely on the elections. If Democrats win big, they may decide to postpone the issue until next year when they’d have more negotiating power. At the same time, they might decide they’d rather clear the decks now, and dispose of the issue so they can focus on bigger things next year.

Any bill would likely focus on the slew of bipartisan tax administration bills approved this year by both the House and Senate tax committees. It’s possible a deal could go beyond that to include so-called extenders, like the Work Opportunity Tax Credit. In August, Finance Chairman Mike Crapo (R-Idaho) and ranking Democrat Ron Wyden (D-Ore.) issued a joint statement in support of extending the Advanced Manufacturing Investment Credit, which phases out for construction projects that begin after the end of this year. It’s important to the semiconductor industry, which has big presences in both Idaho and Oregon.

In the meantime, there’s ongoing speculation about who will be joining the tax committees next year, especially if Democrats take control of the House. Many lawmakers are already jockeying for a seat.

— Tax law details: At the Treasury Department, officials remain focused on churning out regulations related to Republicans’ 2025 tax cuts, and are expected to produce more details about how the law’s changes to the tax code affecting multinational corporations will work. — Brian Faler

Education

— Funding federal education programs: Before senators left town for August recess, the chamber passed a continuing resolution to fund the government through Dec. 11 and avoid a government shutdown at the end of September. The House is expected to vote on the Senate bill under suspension of the rules when lawmakers return.

The stopgap funding bill includes language that would temporarily delay the Trump administration from finalizing a controversial rule to put political appointees across federal agencies in charge of approving and terminating federal discretionary grants. It's a proposal that K-12 schools, colleges and research universities worry could cause more financial uncertainty.

The Office of Management and Budget initially intended to finalize the rule by the beginning of the new fiscal year in October. But if the House clears the bill, the Trump administration would be blocked from finalizing the rule until December. Education leaders and advocates want Congress to permanently block the rule or the Trump administration to rescind the proposal.

— Grant rules unsettled: But that might not resolve the funding uncertainty for K-12 schools and colleges. The Education Department has proposed a rule clarifying that the agency has the ability to terminate discretionary grants “for convenience in a manner consistent with law.” The agency’s goal with those proposed changes includes “ensuring that Federal funds are not wasted, projects remain aligned with Department priorities, and recipients remain accountable for delivering projects consistent with public purposes authorized by law.” Public comment for the proposal is open until Sept. 23.

The department also plans to make K-12 formula funds for Title I-A, which supports high-poverty schools, and Title II-A, which supports teacher professional development, available to states at the end of the month using its own grant management system. The continued use of the education agency system comes despite a deal with the Labor Department to manage federal K-12 programs, as part of the Trump administration’s effort to offload federal education programs and shutter the education agency. The Labor Department is distributing career and technical education formula funds using its system under a separate deal with the education agency. — Mackenzie Wilkes

Defense

— Return to inaction: The war against Iran grinds on, with the Trump administration now focusing on economic sanctions on countries that do business with Tehran. And the Senate and House return from recess no closer to consensus on the military conflict, defense spending and a variety of other national security issues.

Republican efforts to advance roughly $60 billion for the war effort cleared the House before lawmakers left town. But a pressure campaign by the Trump administration in the Senate has yet to yield results. Senate Majority Leader John Thune has warned that the House-passed framework to unlock supplemental funding doesn't have the votes needed to clear the upper chamber and has been unwilling to subject vulnerable Republicans to politically charged votes.

While the Senate could push forward when it returns mid-month, clearing the budget resolution would be just a first step. And little time remains before the midterms to pass a funding bill through a party-line reconciliation process.

— Policy problems: Annual defense policy legislation remains stalled as well. While House Republicans barely passed a hard-right version of the NDAA in July, a competing Senate bill has stalled. Democrats in the Senate blocked the bill in protest of the Iran war and Trump's $1.5 trillion Pentagon budget request.

The failure of the defense policy bill in the Senate, with no immediate resolution in sight, means congressional leaders may have to wait until after the midterm elections to iron out a compromise. — Connor O’Brien

Health Care

— Health nominees in flux: Nominees for top jobs at the Health and Human Services Department are in limbo, and November’s election could keep them there permanently.

Normally, a Senate controlled by the president’s party would be rushing to confirm pending executive branch nominees in advance of an uncertain election.

But President Trump’s decision to oppose Sen. Bill Cassidy’s reelection has thrown out all the norms. Cassidy lost his May primary in Louisiana and won’t be returning to his chairmanship of the Health, Education, Labor and Pensions Committee. His political incentive to help Trump is now gone.

Through his chairmanship or his seat on the Finance Committee, Cassidy has the deciding vote on the four pending HHS nominees: Heidi Overton for FDA commissioner; Chris Klomp to serve as HHS deputy secretary; Sean Kaufman to lead the Administration for Strategic Preparedness and Response; and Nicole Saphier for surgeon general.

Cassidy has already expressed reservations about Kaufman, citing his past statements questioning vaccine safety, and about Overton, because she stood with Trump in August as he announced a new review of the childhood vaccine schedule.

— No Surprises fix? Members of the House Ways and Means Committee are trying to assemble a compromise measure to fix problems created by the 2020 No Surprises Act.

That law aimed to protect patients from unexpected medical bills after they unknowingly received treatment from out-of-network doctors. That was a problem, especially in emergency care.

But the arbitration system Congress set to mediate between doctors and insurers resulted in outsized payments in some cases for doctors. At the same time, doctors complain that insurers often refuse to pay after arbitrators issued their ruling.

Any change in the law will have to pass muster with both doctors and insurers — each of which are powerful forces on Capitol Hill. — Health Care Pro Team

Transportation

— Highway bill blues: Congress is on the precipice of approving a short-term extension of the current surface transportation bill, which is riding on government stopgap funding legislation. That patch would extend the bill’s authorities until Dec. 11, but a new five-year bill remains very much a work in progress.

In the House, the Ways and Means Committee has not yet taken up the bill. That’s a problem, since the panel is in charge of the tax title of the package, which would touch on the federal gas tax and a contentious, proposed electric vehicle fee. Committee Chair Jason Smith (R-Mo.), has been tight-lipped about his intentions, but told POLITICO that it’s “being discussed daily.” He did not say when a markup of the bill would happen, and nothing is on the calendar yet.

In the Senate, things are moving even more slowly. Environment and Public Works Chair Shelley Moore Capito (R-W.Va.) told POLITICO she hopes to have text from her committee this month. Hopes are now pinned on the lame duck session, but election results could go a long way in determining what, if anything, gets done.

— ATC overhaul turbulence: DOT Secretary Sean Duffy has been routinely touting achievements in the much-ballyhooed modernization of the nation’s aging air traffic control system. But beneath the surface, the FAA has been displeased with the progress of the effort’s main contractor, Peraton.

One person familiar with the project told POLITICO that Peraton, which had little prior experience with the FAA, had “basically not done any work” since winning a $1.5 billion bid late last year. The FAA has also struggled to coordinate with Peraton, with another source telling POLITICO that the agency has micromanaged Peraton’s efforts. FAA Administrator Bryan Bedford recently acknowledged some bumps, saying that Peraton “did not meet” at least one goal.

The upshot is that FAA officials have been considering scaling back Peraton’s involvement in the massive project. Last year, congressional Republicans gave the FAA $12.5 billion for the project. Duffy has asked Capitol Hill for up to $20 billion more, though the Peraton news could give lawmakers pause.

— Leadership shakeup: The FAA is also grappling with a major personnel shakeup. POLITICO reported in early June that Donald Bornhorst, a former airline executive who joined the FAA last year as chief administrative officer, was leaving the agency because of a family issue. Bedford’s now-former chief of staff, Pete Hearding, is now filling that position on an interim basis, while Jeannie Shiffer is Bedford’s new chief of staff.

Earlier this summer, the longtime No. 2 at the agency, Chris Rocheleau, left for a private sector job. Liam McKenna, the agency’s chief counsel, is now acting in that role.

All of this comes as the FAA has undergone a significant reorganization and is in the midst of a bid to consolidate its office space in the Washington area. — Samuel Larreal

Technology

— FCC nominee on deck: The Senate will likely consider President Trump’s nominee for an open Republican seat on the Federal Communications Commission. The Senate Commerce Committee hearing, which has yet to be scheduled, would give senators a chance to question Danielle Thumann Severs, a longtime adviser to Chair Brendan Carr.

Her confirmation would give Carr a 3-1 Republican majority and eliminate any risk of losing his three-member quorum. Democrats want Republicans to advance Thumann Severs with one of their own picks, including by renominating Democratic Commissioner Anna Gomez.

The Senate will face a tight timeline for Thumann Severs’s confirmation given the few legislative days left and other competing priorities like government funding. The vetting could give Senate Commerce Chair Ted Cruz (R-Texas), who has objected to some of Carr’s media actions and process decisions, a chance to press Thumann Severs on those issues.

— Surveillance pricing deadline: The deadline to comment on the Federal Trade Commission’s new enforcement policy on personalized pricing is Sept. 18. The agency issued a statement in August warning that failing to disclose when people's information is used to set personalized prices may violate the FTC Act.

FTC Chair Andrew Ferguson said listed prices should be the same for everyone, not adjusted based on customers’ personal data.

Ferguson noted the FTC can’t ban the practice, but that four states have laws limiting it.

— Potential AI markup: Cruz plans to hold a markup on a slate of AI bills in September, though no official date has been set.

Cruz previously planned to hold a markup covering legislation for kids’ online safety and AI, but it was narrowed after senators were unable to strike a deal on the legislation. It is unclear which bills would be included in the markup, but dozens of proposals have been floated.

One of the most closely watched is an AI bill led by Sen. Amy Klobuchar (D-Minn.) and Majority Leader John Thune. Klobuchar said in July that negotiations would continue over August recess and that she hoped a markup would be scheduled “immediately.”

— Next steps on kids' online safety: A package of kids’ online safety bills was approved by the Senate Commerce Committee last month, and could be voted on by the full chamber as soon as September.

But the Senate is under a time crunch, with the approaching midterms and other bills and nominations in the queue.

After the House passed its own kids’ online safety legislation that differs significantly from the Senate version, Cruz suggested the Senate would pass its package before negotiating a compromise with House leaders.

The main hangup is a provision that would impose a legal requirement on tech platforms to mitigate harms they know their products cause children. The Senate version includes the language, while House lawmakers opted to omit it, citing concerns that it could violate the First Amendment.

— Trump-XI summit: President Trump and Chinese leader Xi Jinping will meet on Sept. 24 for a discussion that's expected to touch on artificial intelligence.

Xi’s U.S. visit comes as the Trump administration and lawmakers in Congress grapple with how to effectively regulate the technology. Newly unveiled models from leading AI developers with advanced hacking capabilities, along with reports of AI-powered cyberattacks, have sparked a renewed sense of urgency among policymakers to implement safety guardrails.

The White House, which has consistently favored a pro-innovation AI agenda as a means of beating China in the global AI race, is facing calls from lawmakers and AI safety advocates to regulate the industry more aggressively.

The summit also comes as the administration considers whether to ban Chinese AI models, a proposal that has been met with significant pushback from industry leaders. Major tech companies and Silicon Valley startups argue the move would cut off access to Chinese open-weight models. Smaller businesses rely on open-weight models because they are comparable to American-made models but come at a much lower cost. China is the leader of such models. — John Hendel, Alfred Ng, Owen Dahlkamp and Katherine Long

Cybersecurity

— Cyber program deadlines: Congress is back in session this month as two key cybersecurity programs face expiration. There is also dwindling time before the midterms to address recent hacks of U.S. water utilities and the threat of artificial intelligence models carrying out autonomous cyberattacks.

The 2015 Cybersecurity Information Sharing Act, which incentivizes private companies to share cyber threat information with the federal government, is set to lapse at the end of the month. The law expired in September 2025 and has been kept alive through temporary reauthorizations since then. Last month, the Senate passed a continuing resolution that included a provision extending the law until December. House lawmakers will return this month to debate whether to pass the stopgap funding deal.

Also nearing its renewal deadline is the State and Local Cybersecurity Grant Program, which previously provided $1 billion in federal funding to states and localities to boost their cyber defenses. It lapsed last September and has also been subject to temporary fixes to keep the program alive.

— Water attacks: The push to reauthorize the state and local cyber program could be bolstered by recent coordinated cyberattacks on water facilities across at least a dozen U.S. states in late July and early August. Lawmakers in the House and Senate introduced multiple bills to strengthen the cybersecurity of water utilities after the attacks — which many federal and state officials have tied to Iran — but no committee has scheduled any public hearings or briefings on the incidents.

— AI battles: Several AI developers, including OpenAI, recently announced that their AI models with hacking capabilities had escaped testing environments and carried out autonomous cyberattacks. Congress is now under pressure to respond, and a number of lawmakers has sent letters to AI leaders asking them to appear at hearings and otherwise provide more information about their testing protocols. We also expect Congress to use September and October to advance legislation that puts guardrails around these models.

September also marks the reported internal deadline for Pentagon contractors to stop using Anthropic’s AI software. However, the Pentagon’s decision earlier this year to blacklist Anthropic and label it a supply chain risk is being challenged in two federal courts, and the order's ultimate fate remains unclear.

— CISA rule expected soon: CISA is also expected to release a long-awaited final rule this month requiring critical infrastructure owners and operators to report major hacks to the agency. Congress passed the underlying law, known as CIRCIA, in 2022 following a string of major cyberattacks on private U.S. companies. But the law, which would give significant new powers to an agency that generally relies on voluntary cooperation from the private sector, has been repeatedly delayed from its expected October 2025 implementation. — John Sakellariadis, Dana Nickel and Maggie Miller