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Trump Freezes Trillions. Chaos Ensues.
00:24:52
In one of his most audacious moves since taking office, President Trump ordered a freeze on Tuesday on trillions of dollars in federal money — from anti-poverty programs to foreign aid — in order to purge the government of what he called woke ideology. Michael D. Shear, a White House correspondent for The New York Times, discusses the order, the chaos it prompted and whether it is likely to survive in court. Guests: Michael D. Shear, a White House correspondent for The New York Times.
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- [00:00]
Tracy Mumford
This podcast is supported by Capital Group.
- [00:04]
Mike Gitlin
Looking for fresh ideas and actionable insights? Tune into Conversations with Mike Gitlin brought to you by Capital Group. Join us as investment professionals share our distinctive investment approach. Each 30 minute episode dives deep inside one of the world's largest investment managers, offering stories and insights to help guide your investment decisions. Invest 30 minutes in an episode today. Subscribe now, wherever you get your podcasts. Capital Client Group, Inc.
- [00:34]
Sabrina Tavernisi
From the New.
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John
York Times, I'm Sabrina Tavernisi and this is the Daily On Tuesday, President Donald Trump made one of the most audacious moves since he took office last week, freezing trillions of dollars in federal money, everything from anti poverty programs to foreign aid, in order to purge the government of what he called woke ideology. Today, my colleague, White House reporter Mike Scheer on that order, the chaos that it prompted, and whether it is likely to survive in court. It's Wednesday, January 29th.
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Sabrina Tavernisi
So, Mike, President Trump has done something pretty remarkable. All of Washington where you are right now is talking about it. I'm wondering if you can lay out for listeners exactly what he did and what's unfolded in the days since.
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Mike Scheer
Right. It really was remarkable. Essentially late in the day on Monday, President Trump's budget office, which is called the Office of Management and Budget, it reports directly to the President. They put out a memo, a really short memo. It was just two pages, but it essentially exploded in Washington the minute it went out. Because what it did was it said that every single federal program that involves the delivery of money in the form of a grant or in the form of a loan to any organization, any entity across the country had to be paused. And I'm just going to read directly from the memo, and it said the use of federal resources to advance Marxist equity, transgenderism and green New Deal social engineering policies is a waste of taxpayer dollars that does not improve the day to day lives of those we serve. It said that all of the agencies had to pause the funds while they reviewed whether the programs in question, the loans and the grants were, quote, consistent with the President's policies.
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Sabrina Tavernisi
Okay, so basically the memo is saying all these federal funds go out to all of these programs all over the country. They need to be put on hold to make sure that none of them are actually at odds with the administration's agenda.
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Mike Scheer
That's right. And this is a lot of money. According to the administration's own figures, as much as $3 trillion. And the agenda that the memo says these programs must adhere to was really laid out by the president in a series of Executive orders that we've seen him announce over the course of the eight or nine days that he's been in office. And we know what those executive orders have tried to do, right? Root out wokeness in the government, as the President would put it, and really align all of the government spending with this sort of MAGA agenda that seeks to kind of wipe out some of the efforts that have been made by previous administrations over the past several years.
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Sabrina Tavernisi
So exactly how does the memo propose that this is going to work?
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Mike Scheer
What the memo says is that over the course of the next two weeks, starting Tuesday at 5pm all of these federal agencies are supposed to fill out a spreadsheet. The spreadsheet has every single federal grant and federal loan. And apparently what the Office of Management and Budget will do is essentially go through that spreadsheet. If they find programs that don't violate the orders that the President has done, those will be safe, the funding will continue, but that in some fashion, if they identify the programs that they think are funding things that President Trump would not want to fund or are blocked by these executive orders, that funding would be then at risk.
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Sabrina Tavernisi
So which programs exactly will be affected here? What do we know about that?
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Mike Scheer
Well, the memo is quite broad, and it's clear that it is intended to cover the vast sweep of most government programs. There's literally hundreds and hundreds of grant programs and federal loan programs that provide money to organizations, nonprofits, state agencies, state programs, local programs across the country. Just to give you a sense of how far ranging this could be, it's everything from Head Start programs for early childhood education, grants that cover renewable energy research and clean energy demonstrations. There are special education grants. All of those would have to be subject to this order. There are some exceptions. One exception, for example, says that nothing in this memo should be construed to impact Medicare or Social Security benefits. They go on to explain that it's any type of assistance that's directly received by individuals wouldn't be affected. So that leaves this sort of vast other area where the money is provided not directly to people, but to organizations or states or other programs that provide benefits to Americans, but not in a direct way.
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Sabrina Tavernisi
Okay, so this memoir, as you say, is quite a bombshell in Washington. What happens next?
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Mike Scheer
Well, what happens next is kind of a freak out right across the country. People begin to wonder what impact this is going to have. Who's on the list? That's the big question that's sort of ricocheting across Washington, but also across the country. In all of these programs that rely on the federal government for money. They wake up and are trying to figure out, is my program affected? You know, if so, how do I deal with that? And so by midday Tuesday, after all of the angst in the country, the White House decides it needs to respond.
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Carolyn Levitt
Good to see all of you.
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Mike Scheer
Carolyn Levitt, who is the new White House press secretary for Mr. Trump, has her first press briefing for the White House press corps. And she really tries to push back.
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Carolyn Levitt
Well, I think there's only uncertainty in this room amongst the media. There's no uncertainty in this room building. So let me provide the certainty and the clarity that all of you need.
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Mike Scheer
You know, she really tries to explain that, no, there's a lot of these programs that are not going to be affected.
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Carolyn Levitt
Social Security benefits, Medicare benefits, food stamps, welfare benefits, assistance that is going directly to individuals will not be impacted by this pause. And I want to.
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Mike Scheer
It's essentially the White House trying to kind of reassure its own people that this big dramatic action by the president isn't going to sort of hit them in the pocketbooks directly. But the questions keep piling up.
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Carolyn Levitt
How long is this pause going to last?
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Tracy Mumford
Do you think there will be a list of who is affected and how much money is affected?
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Mike Scheer
Medicaid, is that affected? What about Medicaid, the health insurance program for low income people that's funded through money sent to the states by the federal government?
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John
Are you guaranteeing here that no individual.
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Thomas Gibbon
Now on Medicaid would see a cutoff.
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John
Because of the cost?
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Carolyn Levitt
I'll check back on that and get back to you, John.
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Mike Scheer
The White House later says that Medicaid is not impacted by the memo. But the problem is that the reality is actually happening more quickly than their statements can keep up with. So you have the system by which state Medicaid offices log in to get their money from the federal government not only goes down so all these states are locked out, but it goes down with a big red banner across the top that says the system is down and we're delaying or canceling payments based on the president's executive orders. So it becomes very clear very quickly that this memo has actually begun to have real world implications.
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Sabrina Tavernisi
How should we make sense of that disconnect? I mean, the White House is saying Medicaid not affected, but Medicaid clearly was affected. I mean, was the White House just not being forthcoming?
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Mike Scheer
I'm not sure we know 100% the answer to that question. I mean, in some ways it's kind of a feature, not a bug, of the Trump presidency. Is that he embraces the chaos. He likes the sense that the American people feel like he's just out there, you know, kind of. And like a wrecking ball, essentially. Right. Like from President Trump's perspective, from the perspective of his supporters, they want him to come in like a bull in a china shop and kind of disrupt everything. And so I think in some ways, the Trump administration isn't so concerned about not having the answers to all the questions. But I think that one of the repercussions of that is for the rest of the country, and especially in this case, the vast numbers of organizations rely upon this funding, and they need the money to pay rent, to pay salaries, to pay out benefits to people. All of that has to happen in an organized and methodical way. And this is anything but to that point.
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Sabrina Tavernisi
What are those thousands upon thousands of organizations and grantees saying what's happening over the course of the day?
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Mike Scheer
Well, it's been a mixed bag. And, you know, our reporters have sort of reached out broadly across the spectrum, and some of them have not seen any direct impact yet, but they're essentially wringing their hands. Right? They're worried that maybe their research grant is funded by the federal government, and they're not sure whether that will continue, or perhaps they have a program that provides benefits to migrants, and they're not sure if that's going to pass muster. So there has been a lot of hand wringing, and then there have been some examples of actual impact. One of my colleagues talked to a woman who runs Head Start programs in Michigan. She has something like 41 schools that have about 600 students that come every day. When all of this started going down on Tuesday, she decided to cancel class for Wednesday, essentially worried that if funding dried up from the federal government, it was unclear whether she could continue. And so there have been those kinds of examples where people have actually taken steps to stop what they're doing out of fear that continuing could sort of violate these executive orders or what President Trump wants to do.
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Sabrina Tavernisi
Right. So it sounds like mass confusion is at least the bare minimum of what was happening.
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Mike Scheer
Yeah, chaos, confusion across the country. But at the same time, another thing is happening, a real effort to try to stop this whole thing from moving forward, both politically and legally.
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John
We'll be right back.
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- [12:28]
Mike Gitlin
Looking for fresh ideas and actionable insights? Tune in to Conversations with Mike Gitlin brought to you by Capital Group. Join us as investment professionals. Share our distinctive investment approach. Each 30 minute episode dives deep inside one of the world's largest investment investment managers, offering stories and insights to help guide your investment decisions. Invest 30 minutes in an episode today. Subscribe now, wherever you get your podcasts. Capital Client Group Inc.
- [12:57]
Thomas Gibbon
My name is Thomas Gibbon. I'm a journalist at the New York Times. I served in the Marine Corps as an infantryman. When it comes to reporting on the front line, I think nothing is more important than talking to the people involved, you know, hearing their stories and being able to connect that with people thousands of miles away. Anything that can make something like this more personal, I think is well worth the risk. New York Times subscribers make it possible for us to keep doing this vital coverage. If you'd like to subscribe, you can do that@nytimes.com subscribe.
- [13:29]
Sabrina Tavernisi
So, Mike, tell us about the fights that have been brewing over this order since it was issued.
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Mike Scheer
So the first fight that immediately happened was the political one. The scope of the damage that will be done is enormous. The Democrats on Capitol Hill immediately seized on this.
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Advertisement Speaker
So as we stand here today, people.
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Sabrina Tavernisi
Should think about the mom who doesn't know if she can get her kid to childcare.
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Democratic Speaker
Today, there's a dagger at the heart of the average American family. In red states, in blue states, in cities, in suburbs, in rural areas. It is just outrageous, asserting in a.
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Mike Scheer
Really forceful way that what the president had done would affect Americans, would hurt Americans.
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Democratic Speaker
This decision is lawless, dangerous, destructive, cruel. It's illegal. It's unconstitutional.
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Mike Scheer
The idea on the part of the Democrats was that not only would this have a really terrible impact on people who rely on this federal motion money, but they also questioned whether it would even be constitutional.
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Democratic Speaker
I spoke to my attorney general this morning. She's head of the State Attorneys General Association. They're going to court right away on this horror.
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Mike Scheer
And on Tuesday, you had many Democratic state attorneys general coming together to file a lawsuit to try to block the president's order from going into effect and keep the money flowing. You had progressive groups who filed separate lawsuits trying to do the same. The goal for all of them to try to block President Trump from moving forward with his actions regarding all of this federal money.
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Sabrina Tavernisi
Okay, so you did have these legal challenges coming out pretty much right away. What were they arguing exactly?
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Mike Scheer
Well, essentially, the gist from all of the different lawsuits boiled down to a general argument that what the president had done with this memo essentially violates the heart of the Constitution, which gives Congress the power of the purse. It says Congress has the ability to decide how much money is spent, where is that money is spent, and that, you know, essentially the executive, in this case, President Trump and his administration, is required. And that the language in the Constitution is to faithfully execute the laws that are passed. Right. And that by essentially holding back this money, President Trump was violating that basic precept of constitutional law.
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Sabrina Tavernisi
So, in other words, the argument is Trump and the executive branch can't just suddenly take on a power that's always belonged to Congress.
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Mike Scheer
That's right. And then another argument actually goes to a much more specific law, and that was the impoundment act of 1974. Okay.
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Sabrina Tavernisi
You'll have to define that for people. I do not know what that is.
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Mike Scheer
Right. That was essentially part of the reform efforts after President Nixon had really pursued aggressively a kind of imperial presidency in which he would pick and choose the laws and the spending that he wanted to put into action after Congress had passed them. That essentially provided the impetus for Congress to reassert its authority and say, no, no, no. If you had any doubt that the Constitution actually mandates that the executive branch must put into effect the laws that we passed, we're going to pass a law that actually says that and makes that very clear.
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Sabrina Tavernisi
And, Mike, what does the Trump administration say to these kinds of arguments? That what he's doing here is illegal?
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Mike Scheer
Essentially, they waved them aside. Carolyn Levitt, the press secretary, in her press briefing, essentially said, we disagree. Our lawyers think that what the president has done is perfectly legal. And part of their argument relies, I think, on the temporary nature of the pause. And whether they're right or the other folks who write obviously is up for argument will be argued in courts. But essentially the White House position was we don't put any stock in the legal arguments against this. We're very confident. And to underscore that point, Carolyn Levitt said at the briefing today that the White House fully intends to defend what the president did all the way to the Supreme Court, if necessary.
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Sabrina Tavernisi
So, Mike, we are talking at about 6:30pm on Tuesday, and we already have some updates on these lawsuits.
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John
Tell us how the lawsuits have started.
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Sabrina Tavernisi
To make their way through the legal system.
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Mike Scheer
Right. So we're really at the very, very beginning. But late Tuesday, a judge in the District of Columbia did rule, at least temporarily, on one of the cases brought by a progressive group, essentially putting a temporary stay on the president's order. That means that the White House, the administration, is unable to move forward in enforcing the order. The judge said that she would rule in a more permanent way on February 3rd. So, essentially, for a number of days, the president's effort here is at least temporarily blocked.
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Sabrina Tavernisi
So does that mean a full pause on this entire effort?
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Mike Scheer
It does, at least for the moment.
- [18:48]
Sabrina Tavernisi
And you said they already mentioned that they were ready for this to go all the way up to the Supreme Court. Might it go that far? And what do you think will happen if it does?
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Mike Scheer
So this feels like one of those moments in Washington where there is a real fundamental issue at stake, right? The question of the power of an executive to make a sweeping decision like this versus the power of Congress to essentially control and mandate that their laws are faithfully executed. In those moments when there are real clashes between executive and legislative power, is tends to be where the federal court system really does engage. And they do engage, typically in a quick way. So it's hard to predict 100% what will happen and how this will play out. But I think most people we've talked to believe that this will make its way pretty quickly to the Supreme Court and that the Supreme Court justices will likely take it up because it is in their interest to clarify and to rule on, you know, a pretty fundamental question of presidential power.
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Sabrina Tavernisi
And do we have a sense of how the Supreme Court might rule?
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Mike Scheer
Well, it's always hard to know, but I did talk to our colleague, Adam Liptak, who is our exceptional Supreme Court reporter. Adam is always cautious not to make too many predictions, but I think that he generally thinks that the precedents probably favor Congress in this fight and that the clarity with which Congress over the years has described that power probably means that the courts will rule against the president. But, you know, that's to be seen, right?
- [20:30]
Sabrina Tavernisi
I mean, I guess it raises the question, though, you know, if the memo isn't really likely to survive a court challenge, ultimately, if it goes away in a matter of days or weeks, the Trump administration presumably would have seen that coming. So what was the point of all of this?
- [20:48]
John
What were they actually up to?
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Mike Scheer
Well, so I think that, you know, they are serious about pushing through changes to federal law when they can. You know, I don't think they would have embarked on this effort if they thought that it was not possible that they could win, but they also recognize that if they don't ultimately win on a kind of legal basis, and this memo either has to be scaled back or changed, or maybe it never gets implemented at all, I think from their perspective, they still have sent a really strong message to the country, to especially President Trump's most ardent supporters, that he is trying, right? That he isn't somebody who's going to come in and tinker around the edges, that he really wants to fundamentally change the country. And that message, that political message, is almost as important as succeeding in the end for them. You know, he won't win all the time, and I think they know that. But that is sort of besides the point.
- [21:52]
Sabrina Tavernisi
Mike, as we prepared for a potential second Trump administration, reporting really suggested that Trump 2.0 was going to be very different than Trump 1.0. It would be more organized, it would be more effective. You know, Trump knows how the government works now. He has lawyers who have of executive orders written ready to go. But this memo today and the chaos it sparked would seem to kind of undercut that idea. So how do you make sense of that?
- [22:21]
Mike Scheer
You know, it's. Actually, I was thinking about this today. It. Today was the first time that it really felt like the first Trump term, which I covered from the beginning. I recall covering the White House, the first Trump White House, at the end of the first week when President Trump signed the travel ban on several majority Muslim countries. The chaos there was very similar in the sense that people didn't understand what was happening. I remember talking to Trump administration officials late into the night, asking them for details about what the executive order meant, how it would be implemented. They didn't have any of the answers. But I think what's a bit different here from the chaos of the first Trump term is that now Trump has a bit more of an intention, you know, not only to have kind of political power and to, you know, have a presidency for another four years, but it's to reshape this whole government that he sees as having been filled with woke ideology and liberal ideology and to purge it of all of that and remake it in his image, in the, you know, make America great movement ideology. That's, you know, for him. President Trump is all about making sure that he leaves a legacy, that the country has been, you know, and certainly the government has been remade in his image.
- [23:49]
Sabrina Tavernisi
And the question is, will the institutions hold?
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Mike Scheer
It's always the question, right? The question was asked the first time around, during the first four years. And I think what we see in what's happened over the last eight or nine days, and especially what's happened from Monday night forward is that President Trump is absolutely willing and determined to test the boundaries, to test the institutions of government and see how far he can get in his efforts to remake the government in his image. And he will continue to push and the institutions will continue to push back. And I think the American people will be watching the outcome of that for the days, weeks, months, and probably years to come.
- [24:40]
Sabrina Tavernisi
Mike, thank you.
- [24:41]
Mike Scheer
Sure. Happy to.
- [24:48]
John
We'll be right back.
- [24:52]
Tracy Mumford
This podcast is supported by Capital Group.
- [24:55]
Mike Gitlin
Looking for fresh ideas and actionable insights? Tune in to Conversations with Mike Gitlin brought to you by Capital Group. Join us as investment professionals. Share our distinctive investment approach. Each 30 minute episode dives deep inside one of the world's largest investment managers, offering stories and insights to help guide your investment decisions. Invest 30 minutes in an episode today. Subscribe now, wherever you get your podcasts. Capital Client Group, Inc.
- [25:25]
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Mike Scheer
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- [25:58]
Tracy Mumford
Hey, I'm Tracy Mumford. You can join me every weekday morning for the headlines from the New York Times.
- [26:03]
Mike Scheer
Now we're about to see a spectacle.
- [26:04]
Mike Gitlin
That we've never seen before.
- [26:06]
Tracy Mumford
It's a show that catches you up on the biggest news stories of the day.
- [26:09]
Mike Scheer
I'm here in Red Square.
- [26:10]
Tracy Mumford
We'll put you on the ground where news is unfolding.
- [26:13]
Mike Scheer
I just got back from a trip out to the front line and every.
- [26:15]
Tracy Mumford
Soldier and bring you the analysis and expertise you can only get from the Times newsroom.
- [26:20]
Mike Scheer
I just can't emphasize enough how extraordinary this moment is.
- [26:25]
Tracy Mumford
Look for the headlines wherever you get your podcasts.
- [26:31]
John
Here's what else you should know. Today, President Trump moved toward pushing transgender people out of the military by telling the Pentagon that anyone who openly identified that way should be seen as having an impediment to the physical and mental well being necessary for military service. While the order did not immediately exclude anyone from the military, it gave the Pentagon 60 days to update its policy on medical standards and 30 days to come forward with revised guidance on how to implement Trump's vision. And also on Tuesday, the Trump administration offered roughly2.2 million federal workers the option to resign and still be paid through the end of September. The message came in the form of an email from the Office of Personnel Management, which oversees the federal workforce. It had the subject line fork in the road and said that a majority of federal agencies would probably be downsized and that a substantial number of employees would be furloughed or reclassified to a status that would make them easier to fire. The effort was meant to reduce the size of the federal workforce and to help push out people who do not support President Trump's political agenda. Today's episode was produced by Rob Zipko and Will Reed with help from Sydney Harper, Carlos Prieto and Michael Simon Johnson. It was was edited by M.J. davis. Lynn contains original music by Dan Powell and Marian Lozano and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonder. That's it for the Daily I'm Sabrina Tavernisi. See you tomorrow.
- [28:36]
Tracy Mumford
This podcast is supported by Capital Group.
- [28:40]
Mike Gitlin
Looking for fresh ideas and actionable insights? Tune in to Conversations with Mike Gitlin brought to you by Capital Group. Join us as investment professionals. Share our distinctive investment approach. Each 30 minute episode dives deep inside one of the world's largest investment managers, offering stories and insights to help guide your investment decisions. Invest 30 minutes in an episode today. Subscribe now wherever you get your podcasts. Capital Client Group Inc.