A creative way to get federal money sent back

Summary

Marketplace Morning Report: A Creative Way to Get Federal Money Sent Back Release Date: June 5, 2025

Introduction

In this episode of Marketplace Morning Report, host David Brancaccio delves into two significant topics affecting the U.S. economy and communities: a potential loophole for federal budget rescissions and innovative community-driven rebuilding efforts in the wake of devastating wildfires. The episode provides insightful discussions with experts and community leaders, offering listeners a comprehensive understanding of these pressing issues.

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Federal Budget Rescission: Exploring the Clawback Loophole

Overview

David Brancaccio opens the episode by addressing a novel approach proposed by Trump administration officials to reclaim federal funds through a process known as rescission. This method, often referred to as "clawbacks," aims to cancel previously approved Congressional spending, potentially allowing the administration to redirect funds without standard legislative approval.

Expert Insight with Bobby Kogan

Marketplace’s Nancy Marshall Genzer introduces Bobby Kogan, a former Senate and White House budget staffer now with the Center for American Progress, to elaborate on the mechanics of rescission:

“We talked about it yesterday, David. It basically cancels spending Congress approved. Since Congress has the power of the purse, only lawmakers can claw money back.”
(01:05)

Kogan explains the loophole in the rescission process:

“Once the president sends a rescission request to Congress, the funding he wants to take back is frozen for 45 days... Congress says no on August 20th. But you still have 45 days to pause, and you can pause at the end. That would be insanely cool. But that's what they're arguing.”
(01:43 – 01:57)

This strategy hinges on the timing of the rescission request relative to the fiscal year’s end, potentially allowing the administration to halt funding despite Congressional disapproval.

Administration’s Public Stance

David Brancaccio references statements from White House Budget Director Russell Vogt, who has publicly advocated for this approach:

“The White House thinks it's found a way to formalize and legalize cuts made by Elon Musk's Doge Commission.”
(02:16)

Legal and Practical Implications

Bobby Kogan cautions about the potential challenges to this approach:

“The Government Accountability Office is the official arbiter here and it could challenge the admin in court.”
(02:21 – 02:29)

This indicates that while the administration is pushing forward with this strategy, its success is uncertain and may face significant legal hurdles.

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Corporate Downsizing Amid Geopolitical Tensions

Procter & Gamble’s Job Cuts

The episode briefly touches upon Procter & Gamble’s announcement to cut 7,000 jobs worldwide, citing "geopolitical volatility and consumer uncertainty." This move is interpreted as an indirect reference to ongoing trade tensions affecting global markets.

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Community-Driven Rebuilding: The Altadena Collective

Impact of Wildfires

David Brancaccio transitions to a more community-focused segment, discussing the aftermath of severe wildfires in Altadena, California. Highlighting the unpredictable costs and logistical challenges of rebuilding, he emphasizes the strain on homeowners facing escalating construction expenses.

The Formation of the Altadena Collective

In response to these challenges, a grassroots initiative known as the Altadena Collective has emerged. This group aims to streamline the rebuilding process by fostering collaboration among neighbors to negotiate better prices and more efficient construction practices.

Interview with Tim Vautri, Architect and Collective Leader

Tim Vautri, a key figure in the Altadena Collective who personally lost his cottage in the fire, shares his insights:

“I need to find a way to inform people and not by just screaming into the void... It needs to be in an organized fashion and help people understand what the process is for rebuilding and how many steps you have to take and what the sequence is.”
(05:08 – 05:37)

Vautri discusses the collective’s strategy to reduce costs through bulk purchasing and standardized construction methods:

“If we're doing that 40, 50 times, they start to make fixtures in the factory that are specific to that shape, and then it becomes an assembly line, even at a small scale. So more efficient, more cost savings.”
(05:55 – 06:36)

He further explains how coordinating multiple projects in close proximity can lead to significant savings in labor and materials:

“Ordering wood flooring for five homes is so much more cost effective than ordering it for one.”
(07:22)

Benefits of the Collective Approach

By uniting homeowners and contractors, the Altadena Collective aims to:

• Negotiate Dedicated Pricing: Establish special pricing agreements for materials and services tailored to the specific architectural needs of the community.

• Enhance Efficiency: Reduce mobilization and logistics costs by clustering construction projects geographically and temporally.

• Facilitate Knowledge Sharing: Provide a centralized resource for understanding the rebuilding process, thereby empowering homeowners to navigate the complexities more effectively.

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Conclusion

The episode of Marketplace Morning Report effectively intertwines discussions on high-level fiscal policies with ground-level community resilience strategies. By exploring the potential for federal budget rescissions and highlighting the innovative responses of the Altadena Collective, David Brancaccio provides listeners with a multifaceted view of economic and social challenges and the diverse approaches to addressing them.

Engage with Marketplace

Listeners are encouraged to provide feedback through a short anonymous survey at marketplace.org/forward/survey for a chance to win a $75 gift card, supporting Marketplace in delivering insightful reporting.

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Notable Quotes:

• Bobby Kogan on Rescission Loophole: “Once the president sends a rescission request to Congress, the funding he wants to take back is frozen for 45 days.” (01:43)

• Tim Vautri on Organized Rebuilding: “It needs to be in an organized fashion and help people understand what the process is for rebuilding and how many steps you have to take and what the sequence is.” (05:08)

• Altadena Collective Efficiency: “Ordering wood flooring for five homes is so much more cost effective than ordering it for one.” (07:22)

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Connect with Marketplace Morning Report:

• Website: marketplace.org
• Social Media: Facebook, Instagram, TikTok (@APM)

Transcript

[David Brancaccio]

Hey there, and thanks for listening. We want to know more about our audience. Stick around at the end of this episode to hear about how you can help provide feedback and have a chance to walk away with a $75 gift card.

[Nancy Marshall Genzer]

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[David Brancaccio]

A creative way to get federal money sent back. I'm David Brancaccio in Los Angeles. Trump administration officials have identified a possible loophole that could enable what are often termed clawbacks. Marketplace's Nancy Marshall Genzer joins us now to explain.

[Bobby Kogan]

Well, this is a process known as rescission. We talked about it yesterday, David. It basically cancels spending Congress approved. Since Congress has the power of the purse, only lawmakers can claw money back. And here's that loophole. Once the president sends a rescission request to Congress, the funding he wants to take back is frozen for 45 days. Now, funding approved by Congress for this fiscal year dies at the end of the fiscal year anyway, on September 30th. Bobby Kogan is a former Senate and White House budget staffer now at the center for American Progress. He explains it this way, and they're.

[Unnamed Speaker]

Like, oh, we found a loophole where we can do it. Even if Congress says no, you send it up on on August 15th. Congress says no on August 20th. But you still have 45 days to pause, and you can pause at the end. That would be an insanely cool. But that's what they're arguing.

[David Brancaccio]

And Nancy, administration officials are starting to make this case in public. White House Budget Director Russell Vogt, for example.

[Bobby Kogan]

Yeah, he's been on CNN talking about this. Basically, the White House thinks it's found a way to formalize and legalize cuts made by Elon Musk's Doge Commission.

[David Brancaccio]

Is it likely to actually work? Can you use this loophole?

[Bobby Kogan]

Well, Bobby Kogan says the Government Accountability Office is the official arbiter here and it could challenge the admin in court.

[David Brancaccio]

On this, Marketplace's Nancy Marshall Genzer, there's news. Procter and Gamble is cutting 7,000 jobs worldwide. The firm cites geopolitical volatility and consumer uncertainty taken as an oblique reference to the trade war.

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[David Brancaccio]

See t mobile.com now to social capital and saving a buck on rebuilding after a disaster. Our Altadena, California house was one of 16,000 structures burnt up in the big wildfires in January. In a video we posted as an excellent army Corps of Engineers crew cleared our ruins, I muse about the unpredictability of the cost per square foot for rebuilding when there's so much demand for labor and materials. It used to be maybe $400 a square foot to build from the ground up in that area before the fire. Now some are talking 550, 750, and the higher it goes, the fewer can afford to rebuild. Now we got multiple comments back from you with this. Good question. Was there a way homeowners could band together to keep costs down? By then, a loose knit group of neighbors was already working on this. It's called the Altadena Collective, which started after the Eaton fire among people with small Tudorish cottages built about a century ago. I spoke to one of the community members who helped spearhead that eff Tim Voortread, an architect who himself lost his cottage to the fire.

[Tim Vautri]

I thought, wow, there's A lot of bad information out there. I need to find a way to inform people and not by just screaming into the void, which I think we all kind of did a little bit in the beginning. It needs to be in an organized fashion and help people understand what the process is for rebuilding and how many steps you have to take and what the sequence is. That's where we can share purchasing, essentially.

[Unnamed Speaker]

These Englishy cottages that many people had. I had one, you had one.

[David Brancaccio]

Both burned.

[Unnamed Speaker]

They had, for instance, many of them, distinctive windows. They seem expensive to duplicate. But your idea would be if a whole bunch of people needed windows like that, we might be able to get a price.

[Tim Vautri]

Yeah, I mean, the way you make a window, let's say you do it out of fiberglass, which is more cost effective than wood. It's also pretty fire resilient, which is a good practice these days. You extrude that in bulk. And once you say, all right, this is a funky shape that we have to do. A lot of these Jane's cottages had some very interesting window shapes, but if we're doing that 40, 50 times, they start to make fixtures in the factory that are specific to that shape, and then it becomes an assembly line, even at a small scale. So more efficient, more cost savings.

[Unnamed Speaker]

We don't know what's coming. Tariffs, we don't know what's coming. Labor. There's a lot in flux in the general economy that affects people in this area as well.

[Tim Vautri]

However, from the alternate collective perspective, because we're trying to be a resource that helps as much of the community as possible, just going into the right people and saying, hey, let's have a dedicated price book for Altadena. And contractors or homeowners will come in to you. Whether it's raw material or finished material will come into you, and they get this special treatment. That's what we're trying to negotiate.

[Unnamed Speaker]

Might be more efficient and you might get a better price. If you can go to a builder and say, hey, there's seven houses all on this block that would like to use you.

[Tim Vautri]

I think there's two elements that help that similarity in the actual structure of the home and proximity. If one contractor is able to lock up three or four adjacent homes or homes within a couple blocks radius, their mobilization costs and their logistics significantly reduce, and then they can start to sequence and stage their construction. So a lot of contractors say they have five homes next to each other. They'll have one or two framing crews. You know, one gets two weeks here, the next one gets the next two weeks. And then certainly with material drops or deliveries. Ordering. Yeah, ordering wood flooring for five homes is so much more cost effective than ordering it for one. These were done fairly cheaply 100 years ago and we need to take the benefit of that knowledge and replicate it.

[Unnamed Speaker]

Tim Vautri, thank you very much.

[Tim Vautri]

My pleasure.

[David Brancaccio]

We're speaking about a community group that's arisen from the fires called the Altadena Collective Marketplace. APM on Facebook, Instagram and TikTok have videos with what I'm learning from those fires. In Los Angeles, I'm David Brancaccio with the Marketplace Morning Report from apm, American Public Media. Really quick, before you go, please complete a short anonymous survey by going to marketplace.org forward/survey. It should only take about 10 minutes. And as a token of our appreciation, you can enter your name to win a $75 gift card. When you've completed the survey, you do all of us at Marketplace a huge favor by filling it.