President Donald Trump signed the legislation passed by the House, ending the longest shutdown in U.S. history.
WASHINGTON - Happy new year?
President Donald Trump faces daunting challenges in 2026 once the holiday celebrations are done, including a familiar impasse over government spending, rising health care costs for millions of Americans and midterm elections that threaten Republican control of Congress.
The political disputes about spending - and the possibility of another federal government shutdown - will play out while waiting for a Supreme Court decision that could overturn tariffs central to the president's economic agenda that are projected to generate more than $3.3 trillion over the next decade.
Beyond the domestic issues, foreign affairs also remain volatile for the two-term Republican president. Trump is seeking a peace agreement in the Russian war with Ukraine that's nearing its fourth anniversary. He is also working to keep the ceasefire in Gaza, where isolated skirmishes continue to erupt between Israel and Hamas.
And the Justice Department's slow-motion release of documents about the investigations into convicted sex offender Jeffrey Epstein could continue to drown out the political debate.
The narrowly divided Congress is a consistent challenge across all the contentious issues, even though Trump's Republican Party currently holds majorities in both the House and Senate. Lawmakers approved only 61 laws in 2025, reflecting the polarization between the parties, like when only 34 laws were approved in 2023. Typically, lawmakers approve more than 300 bills in each two-year Congress.
Republicans have little room to maneuver with majorities of 53-47 in the Senate and 220-213 in the House. The House margin will narrow when Rep. Marjorie Taylor Greene, R-Georgia, leaves Jan. 5. Two seats previously held by Democrats will be filled with special elections in Texas on Jan. 31 and in New Jersey on April 16. And midterm elections, when the president's party traditionally loses seats, loom in November for the entire House and one-third of the Senate.
Here are six contentious topics Trump will have to navigate in the new year:
Congress returns to government funding impasse in January
The lack of consensus about the overall federal budget and the details of Trump's priorities, incuding significantly boosting funding for immigration enforcement, prevented approval of most of the dozen spending bills needed to keep the U.S. government running each year.
The impasse that sparked the longest shutdown in American history at 43 days focused on health care funding. A temporary spending bill expires Jan. 30, setting up another showdown over priorities.
Senate Democrats blocked approval of spending bills in the fall while arguing for an extension of subsidies for lower-income families to buy health insurance under the Affordable Care Act, which is also known as Obamacare. But Republicans refused, saying the program drove up insurance prices without improving care.
The expiration of food benefits for 42 million people under the Supplemental Nutrition Assistance Program during the shutdown provided more pressure the end the impasse.
But the temporary spending measure provided full-year funding for the Department of Agriculture - which restored SNAP funding - the Department of Veterans Affairs and the legislative branch.
With SNAP off the table, lawmakers go back to the drawing board for spending bills in January.
Health care costs rise as lawmakers debate remedies
The expiration of Obamacare subsidies on Dec. 31 is projected to double average health insurance premiums for 24 million Americans who participate in the program.
Senators were unable in December to approve a Democratic proposal to extend Obamacare or a Republican proposal to deposit $1,000 to $1,500 annually into health savings accounts for eligible consumers.
The House approved Republican legislation that aimed to lower health care costs. But without extending Obamacare its chances of passing in the Senate are low.
Four House Republicans joined all the Democrats in a parliamentary maneuver to force a January vote on legislation that would extend Obamacare subsidies for three years. But the Senate isn't expected to approve it.
GOP Reps. Rob Bresnahan, Brian Fitzpatrick and Ryan Mackenzie of Pennsylvania and Mike Lawler of New York had been pushing for a bipartisan overhaul of the program.
"We wanted an up or down vote," said Lawler, who faces a tough re-election contest in his district just north of New York City. "Unfortunately, leadership found every way not to let that happen."
Trump seeks peace in Ukraine and Gaza
Besides the domestic issues, Trump is juggling several foreign conflicts expected to carry into the new year.
Trump ordered the military to strike Islamic State targets in Nigeria on Dec. 25, after warning the group had attacked Christians in the region.
He has left open the option of war with Venezuela over alleged drug smuggling, a U.S. military blockade of oil tankers and attacks on 28 boats that killed more than 100 people.
And Trump continues to negotiate for peace between Russia and Ukraine, and to keep the ceasefire in Gaza.
Ukraine's President Volodymyr Zelenskyy is expected to meet with Trump at Mar-a-Lago on Dec. 28. The visit comes after officials in the United States, Ukraine and Europe reached a consensus on Trump's peace proposal offering security guarantees for Kyiv and leaving territorial disputes to be resolved by the two countries.
"We have agreed on a meeting at the highest level - with President Trump in the near future," Zelenskyy said on social media Dec. 26. "A lot can be decided before the New Year."
But attacks continue amid the talks. Russia's President Vladimir Putin signaled a reluctance for compromise in a Dec. 19 news conference.
Putin's special envoy Kirill Dmitriev and foreign policy aide Yuri Ushakov participated in talks Dec. 26 with the U.S. administration.
In Gaza, the ceasefire agreement remains fragile between Israel and Hamas. Their October peace deal came after two years of intense Israeli bombardment and military operations in retaliation for a deadly attack by Hamas-led fighters on Israeli communities in October 2023.
But humanitarian agencies say there is still too little aid getting into Gaza, where nearly the entire population is homeless. Pope Leo condemned the conditions for Palestinians in Gaza in his first Christmas sermon since becoming leader of the Catholic Church.
Israel's Prime Minister Benjamin Netanyahu is expected to meet with Trump at Mar-a-Lago on Dec. 29. Netanyahu argued on social media Dec. 24 that Hamas continues to violate the ceasefire, including by detonating an explosive device that wounded an Israeli defense officer, and must demilitarize and be removed from governance of the region.
Midterm elections could change - or reinforce - control of Congress
Trump won't be on the ballot in November, but his agenda will be.
Losing Republican control over the House, which some political experts say is possible, would make it even harder for the president to pass the kind of legislation he wants. And Democrats would gain subpoena power to resume investigations of the Trump administration that previously led to two impeachments during his first term.
Trump began in the summer to urge House members exploring campaigns for Senate or governor to stay put rather than risk primary fights. Threats of violence and dysfunction drove a half-dozen senators and 46 House members to announce they would retire or seek other jobs.
Trump proposed in September that Republicans hold a midterm convention in 2026 "to show the great things we have done." His urgency spiked after state and local elections Nov. 4 - when Democrats swept two gubernatorial contests, the New York City mayor's race and a California ballot initiative on redistricting - while exit polling showed voters punished Republicans over rising cost of living. His approval rating has slipped to 39%, according to a Reuters/Ipsos poll of 1,016 Americans conducted Dec. 12 to 15.
Trump has encouraged Republicans to campaign on tax cuts approved in July on tips, overtime and Social Security benefits along with growing economy.
"This month alone President Trump has delivered yet another drug pricing deal, five new trade deals, record-breaking commercial and investment deals with Saudi Arabia, new stock market highs and a blockbuster jobs report," White House spokesperson Kush Desai said.
Party primaries will begin to define campaign in early March and will run through September. Texas, North Carolina and Arkansas each have primaries on March 3; Mississippi's is on March 10; Illinois has one March 17.
States including Republican-led Texas and Democrat-led California are redrawing congressional maps to gain more seats for their parties. But political experts say so many maps are in flux that it's unclear which party might ultimately benefit.
A big advantage when one party controls both chambers of Congress is the option to approve one package of spending legislation with a simple majority. That parliamentary maneuver is called reconciliation. It's how Congress approved Trump's massive tax-cut and spending package last summer without any Democratic support.
Trump has urged Republicans to have a simple majority to approve legislation, whether through reconciliation or by abolishing the Senate filibuster. Republican leaders have resisted eliminating the filibuster because it preserves power for lawmakers in minority; they are also concerned about potential policy changes if/when Democrat wins back White House.
But Trump has said either approach would allow Republicans to approve spending bills and avoid crisis with Jan. 30 deadline.
"Republicans should knock out the filibuster and we should approve a lot of things," Trump told reporters Dec. 15.
Justice Department to take weeks longer to release Epstein files
The Justice Department's slow-motion release of documents about the investigations of convicted sex offender Jeffrey Epstein could distract from the policy debates as Democrats highlight Trump's appearance in pictures, flight logs and emails.
Trump hasn't been credibly accused of wrongdoing. But the president faces questions about the files when he promoting his own priorities such as military shipbuilding or lowering the price of prescription drugs.
Congress set a Dec. 19 deadline for the department to release all its files. But the department has released records in batches as officials said reviewing them to redact the names of people who accused Epstein of abuse is taking longer than expected.
The department announced Dec. 24 that FBI and prosecutors in Southern District of New York found a million more documents that need to be reviewed, adding weeks to the process.
The two House members who drafted legislation forcing release of documents - Rep. Thomas Massie, R-Kentucky, and Ro Khanna, D-California - threatened to seek congressional finding of contempt for partial release of documents. But Justice Department is unlikely to prosecute contempt recommendation against itself.
A bipartisan group of senators asked Justice Department's acting inspector general, Don Berhtiaume, on Dec. 24 to audit release of documents to determine whether it fulfilled disclosure law.
Supreme Court decision on tariffs a 'LIFE OR DEATH' matter for country: Trump
The Supreme Court could rule at any time on Trump's tariffs.
The president has called the case as important as "LIFE OR DEATH for our country" and "one of the most important in the History Of The Country."
Trump said it would be a disaster if the high court overturned the tariffs because they have raised $205 billion through October, pressured companies to build manufacturing plants in the United States and persuaded other countries to negotiate trade deals.
But lower courts ruled that Trump exceeded his authority under the 1977 International Emergency Economic Powers Act, which had previously been used to impose sanctions, to create taxes on imports from countries worldwide.
The justices heard oral arguments on Nov. 5.
Treasury Secretary Scott Bessent has said there are other statutes Trump could impose tariffs under. For example, Trump imposed tariffs on steel and aluminum under a different section of code.
But Trump has said the law he used is the most flexible.
Bessent and Kevin Hassett, director of National Economic Council, have said it would be difficult to refund tariffs already collected.