John Law (10:48)
All right, first up, let's start with what the right is saying. The right supports Trump's order, but many say it could have been executed more effectively. Some say Democrats misled the public about what the order would have done. Others praise the order for introducing more scrutiny to federal spending. The Wall Street Journal editorial board wrote about the spending freeze panic and so ends the first resistance panic of the second Trump era. On Monday, the White House ordered a pause on federal grants to ensure that they don't promote Biden administration obsessions. Democrats and the press went into full constitutional crisis mode, and a judge halted the pause. Then on Wednesday, the White House rescinded it. The board said it's well within Mr. Trump's executive authority to pause disbursement of discretionary funds to ensure they comply with the his priorities. But governing by chaos doesn't work to succeed. His executive actions need to be nailed down and carefully explained or they'll be torn apart by the courts and the agents of status quo. There's nothing wrong with an incoming administration that doesn't want to keep shoveling money out the door without first reviewing where it's going. Take the National Institutes of Health's first program, which requires grant recipients to use diversity statements for government funded faculty, the board wrote. Mr. Trump was elected in part to stop the willy nilly spending blowout of the last four years. Non defense discretionary spending has increased 45% since 2019, twice the rate of inflation. Democrats want to keep the party going, but Mr. Trump has the authority, pause or no pause, to scrutinize discretionary funds that still haven't gone out the door in Red state. Jennifer Oliver O'Connell criticized Democrats for lying about the impact of Trump's order, despite Press Secretary Caroline Levitt's more precise outlining of what was and was not affected by President Donald Trump's executive order freezing funding for federal grants, loans and other financial programs pending agency review, along with a memorandum from the Office of Budget and Management outlining the same. Democrats took this opportunity to rail against dictator Trump fear monger and have an absolute meltdown, o'connell said. The supposed damage done by Trump's actions started resembling a game of telephone. Exhibit A Alexandria Ocasio Cortez, who took it from Medicaid and snap benefits going away to hospitals shutting down and vital services crippled right on schedule, a Biden appointed judge issued an administrative stay on existing funding while allowing the pause to remain in effect as to any new spending, O'Connell wrote. Democrats are probably taking credit for the judge's quick action and they may have played some role in it. But the desperation is palpable. The old playbook is no longer working as effectively as it used to, and they know they have very few plays left. The New York Post editorial board said Trump's federal grant freeze is great news for America's taxpayers. Despite the howls of outrage and already launched lawsuits from the left team Trump's pause on federal spending on most grants, loans and more is a wise, perhaps necessary move to ensure Americans tax dollars are well spent and to keep up the battle against Bidenflation, the board wrote. The freeze doesn't impact programs that provide direct benefits to recipients. Social Security, Medicare, Medicaid and food stamps are all exempt. Yet the outlays, now frozen, pour into almost every corner of society and accounted for up to $3 trillion of federal spending in 2024 is this approach coming into the admin via Elon Musk and the techie philosophy that underlies Doge? Certainly it resembles zero based budgeting, a fiscal strategy popular in the startup world for Uncle Sam. Under zbb, past spending isn't automatically assumed to be justified during forward budgeting. Instead, every dollar slated to be spent requires an actual reason, the board said. Regardless, the memo and the out of whack response are strong reminders those trillions do not belong by rights to non profits or defense contractors or research universities. They belong to the American taxpayer. Alright, that is it for what the right is saying. Which brings us to what the left is saying. The left criticizes Trump's orders, arguing that it was a blatantly illegal act. Some say Trump is advancing a radical idea about executive power that could reshape the entire government. Others suggest the battle over federal funding has only just begun. In the Los Angeles Times, Erwin Chemerinsky called Trump's order patently unconstitutional. The order could affect trillions of dollars of federal spending that has been approved by Congress and appropriated by federal statute. The president has no authority to do this under the Constitution, under which the legislative branch holds the power of the purse, chemerinsky wrote. Indeed, presidential interference with Congress budgeted spending violates a federal statute, the Congressional Budget and Impoundment control act of 1974. When a federal statute has been adopted that appropriates money, the president has no authority to refuse to spend it. The law forbids presidential impoundment of funds but under certain circumstances allows a brief delay and gives the president means to ask Congress to reconsider an appropriation, also known as a rescission. If the president wishes to rescind spending, he must send a special message to Congress identifying the amount of the proposed rescission, the reasons for it, and the budgetary, economic and programmatic effects of the rescission, Chemerinsky said Trump has not made the required notifications to Congress, and so his order this week to halt spending is patently illegal. In Politico, Aziz Huq wrote about why Trump's power grab on spending was so radical. The memo identified no source of constitutional or legislative authority for the president to pause any, let alone all, domestic grant programs. But it is animated, at least implicitly, by a striking claim. Not only can the president freeze all funding amid a review, but he must also then be permitted to permanently eliminate items from appropriation statutes at a whim, huck said. It's a move that threatens not only a radical curtailment of Congress's authority, but but imperils the separation of American civil society from the partisan tides of the White House. There is also a breathtaking discontinuity between the reasons for the funding pause and its reach. The OMB memo points to the never enacted Green New Deal and to a Marxist agenda that is a figment of the MAGA imagination, huck wrote. Exactly like the line item veto invalidated by the Supreme Court in 1988, the claimed impoundment power is de facto power to selectively edit duly enacted laws. This claimed non enforcement should elicit whiplash among conservatives. After all, it was red states such as Texas, aided by Trump's advisor Stephen Miller, that once excoriated the Biden administration for negating federal laws on immigration via non enforcement. In the Atlantic, David A. Graham said there is a strategy behind the chaos. The great federal grant freeze of 2025 is over, but don't expect it to be gone for good. This episode resembles the incompetent fumbling of the first Trump administration, especially its earliest days. But this was no fluke and no ad hoc move. It's part of a carefully thought out program of grabbing power for the executive branch, graham wrote. The abortive grant freeze is an example of the second Trump administration's strategy to drastically deploy executive power as part of a bigger and somewhat paradoxical gambit to shrink the federal government as a whole. The court injunction yesterday was a nuisance, but what really seems to have gone in the freeze was the backlash, not so much from the public, but from state and local officials, including many Republicans, who were outraged about the withdrawal of funds and lack of communication. The political team won this round over the ideologues, but there will be more, Graham said. Having to back down for political reasons tends to make the internal battles only fiercer. Trump's attempts to decimate the civil service and clear out career bureaucrats are well known, but Project 2025's authors reserved special animus for those they expected to be on their side during the first Trump administration. Alright, that is it for what the right and the left are saying. Which brings us to our take. Today's take was authored by managing editor Ari Weitzman, and I'll be reading it in the first person. So if your head is spinning over all of this, I don't blame you. In the middle of an incredibly tumultuous period of American history, within an absolutely jam packed first two weeks of a new administration, we get this confusing saga of executive orders and memoranda and press conferences and leaks. It's a storm inside a maelstrom inside a hurricane. Let's slow down and spell it all out, starting with the timeline of events. Note this timeline covers news about the spending freeze and government employment updates, because I think those are the two things that are closely related. January 20th President Trump authorizes a hiring freeze, telling the Office of Management and Budget and the Office of Personnel Management to work with the Department of Government Efficiency to submit a plan to reduce the size of the federal government's workforce through efficiency improvements and attrition, with the exemption that nothing in this memorandum shall adversely impact the provision of Social Security, Medicare or veterans benefits. Separately, the President signs the Unleashing American Energy Executive Order, which includes the directive all agencies shall immediately pause the disbursement of funds appropriated through the Inflation reduction Act of 2022 or the Infrastructure, Investment and Jobs Act. January 21 the OMB issues a memo to clarify the language of the Unleashing American Energy Order stating that this pause only applies to funds supporting programs, projects or activities that may be implicated by the policy established in section 2 of the order, which includes a series of directives to encourage energy exploration and production. January 22 the administration clarifies exemptions in the hiring freeze for Department of Defense civilians, positions required for the disbursement of veterans, Medicare and Social Security benefits, and any position related to essential activities. Separately, the Senate holds the confirmation hearing for Russell Vaught as OMB head Note Vaught wrote the chapter proposing policies for the Executive Office of the president in Project 2025's mandate for leadership. January 27 the OMB's acting director, Matthew J. Vath, issues a memo directing all federal agencies to temporarily pause all activities related to obligation or disbursement of federal financial assistance and other relevant agency activities that may be implicated by the Executive Orders, including but not limited to financial assistance for foreign aid, non governmental organizations, DEI woke gender, ideology and the Green New Deal social engineering policies emphasis added. Separately, the OMB and OPM co issue a memo requiring all employees to report to work in person while the agencies come up with a plan to comply with the President's memorandum requiring in person work with exemptions as department heads deem necessary. Anonymous reports from OPM employees begin to emerge, claiming that the agency is reporting to and issuing communications from DOGE staffers. Two anonymous government workers sue the OPM for allegedly breaking privacy laws and sharing employee emails with a former Stafford Elon Musk. January 28th broad wording in the EOS and memos creates confusion about its scope. Medicaid payments are reportedly disrupted. White House press Secretary Caroline Levitt initially cannot say whether the disruption was intentional, then says Social Security, Medicare and Medicaid are not affected. Later, the OPM offers a buyout to any federal employee who decides to resign. Instead of committing to four pillars, return to office performance, culture, more streamlined and flexible workforce, and enhanced standards of conduct. That evening, a federal judge pauses the federal hiring freeze for one week to allow judicial review. Immediately thereafter, 22 states and DC challenge the order's legality in court, claiming that all already committed funds must still be dispersed. January 29th the OMB rescinds the memo but clarifies that all funding freezes as specified by existing OEs are still in force. January 30 the Senate Budget Committee will vote on Russ Vaught's nomination for OMB head. So here are some observations after laying it all out. Three things are immediately clear based on the agendas of the people involved. 1. Donald Trump wants to temporarily suspend outgoing federal money so his office can evaluate what funds are going to initiatives he finds counterproductive, namely DEI gender and climate initiatives, and put a stop to them. This is based on reporting from the Washington Post's Jeff Stein, who has been all over this story. Trump is doing this in the most Trump way possible, turning off the government, trying to keep as much of the things he doesn't like turned off, and then turning it back on again. 2. Russ Vought, and presumably Acting Director Veith, wants to couple OMB with the president's agenda as much as possible. We know that because Vought said as much for Project 2025. The Director of the OMB must view his job as the best, most comprehensive approximation of the president's mind as it pertains to the policy agenda, while always being ready with actual options to affect the agenda within existing legal authorities and resources. This cannot be performed adequately if the director acts instead as the ambassador of the institutional interests of OMB and the wider bureaucracy of the White house. End quote. 3. Elon Musk wants to cut the federal workforce, fire ineffective workers, and maximize the output of the remaining employees. We know that because he's been appointed to head an advisory group on government efficiency, obviously, and because that was exactly his playbook when he took over Twitter. We can also be pretty sure he's involved with operations at the opm. There's simply too much smoke about this for there not to be fire. And the January 28th deferred resignation email titled A fork in the Road has his fingerprints all over it. Musk sent essentially the same message in an email to Twitter Employees also titled A Fork in the Road. Here are some reactions to this, with different messages for people who voted for Trump and people who did not. If you voted for Trump, you're probably a little conflicted. The good news for Trump voters is that he assumed his office with a machete in each hand and things he's put his sights on are exactly what he said they'd be immigration, DEI and government spending. The bad news is that this whole saga has been a total mess. I think any objective overview just has to admit that Trump has always said he wants to run government like a business, but I wouldn't want to work with this company. Poorly written directives that effectively pause all operations, then confusing clarifications that seem to unpause them, then complete reversals of those orders, but with the caveat that you do what those overly broad orders enforced. Actually, all the while important operations are thrown into limbo while confused department heads are unsure what they're supposed to do. The United States government has the most expenditures of any organization in the world. It employs, contracts or funds the jobs of over 9 million people. If you're reading this newsletter, you almost certainly personally know somebody who works for or with the federal government. It manages everything from care for seniors to research initiatives, health policy, to national infrastructure projects, and the most powerful military in the history of the planet. The President can't just shake it like an Etch A Sketch without some people justifiably freaking out and markets feeling it. And he shouldn't have to. Republicans control Congress. If you did not vote for Trump, I'm sure you're freaking out. Yes, someone who literally wrote part of the book for Project 2025 is about to become the OMB head and be given the Executive Branch's wallet. Yes, the OPM has signaled that they'll try to reclassify many people under Schedule F. One of two things we said we were most concerned about Trump doing when we covered Project 2025. Yes, long term continued operation for major sources of government funds like student loans and the National Institute of Health is uncertain. But be sure to respond to what is actually happening now. This is not the President being a king. It has nothing to do with executive immunity and it is not fascism. It's Trump doing everything he can to pursue his agenda and then the courts checking him, which is him being the guy a majority of Americans voted for and our democracy working to balance his actions. Legal challenges are already underway and I don't expect the courts to allow the Executive branch to decide not to continue funding grants and loans it has already approved. In the immediate term, the government will continue to function, and these whirlwind upheavals are about to slow to heavy winds and work their way through our courts and our legislature. So what do we watch for next? Well, Speaking of Project 2025, the OMB is about to be led by Vought. Barring any unexpected last minute changes of Hart from Senate Republicans, we know what he wants to do. Tightly couple the agency's directives with the President's agenda, likely by directing the OMB to underspend some of the budget Congress has allocated to strangle out initiat the president doesn't favor. Doing so would violate a 1974 law requiring congressional approval, but a recent report by Ashley Parker in the Atlantic suggested the White House is preparing to challenge that law in court. Keep an eye out for a new debate over the constitutional limits of executive power with the key words deferral and rescission. Deferrals are pauses in federal funds the President's office can enact unilaterally, and rescissions are spending cuts the president cannot enact without Congress. If congressional approval for rescissions is indeed challenged in court, that would be a significant and worrisome attempt to shift power from the legislative branch to the executive. The OPM looks like it's working pretty closely with Doge, which could well be illegal, and I'd wager that those whistleblower lawsuits are going to seriously limit Musk's reach within that office. But I also think the big move out of the OPM is still yet to come. Schedule F reclassification for many federal workers, it may go without saying, but depending on the scope, that would also be significant and worrisome. Either way, this isn't the end of the story, it's a prelude. President Trump is bringing significant changes to how the executive branch and the Offices of Personnel Management and Management and Budget are going to be ground zero for those changes.
