Trump Buyouts, Spending Freezes Wreak Havoc Across Government

President Donald Trump is overwhelming the political system in his drive to bend the US government to his will, plunging broad swaths of the federal bureaucracy into chaos while leaving the opposition snowed under by the sheer scope of his efforts.

The White House offered federal workers buyouts on Tuesday night for those who didn’t want to end their remote arrangements, while warning employees the new administration planned additional aggressive cuts to the federal workforce.

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The missive was the latest blow to department and agency workers that spent much of the day furiously trying to interpret a sweeping order freezing federal grants and loans. The memo - and a subsequent clarification document issued by the Office of Management and Budget - said that benefits enjoyed by individual Americans wouldn’t be impacted. But a lack of clarity or specificity wreaked havoc across critical programs and partnerships, with the status of potentially billions of dollars in pay-outs left uncertain.

A federal judge late Tuesday issued a temporary stay blocking the move, but the mere threat of the freeze rippled across federal workers, state and local governments, and prominent nonprofit organizations afraid funding for vital services could be revoked. Deepening the concern was the perception that the move was the opening volley in a coming constitutional fight over Congress’ power of the purse, testing whether Trump can follow through on his long-held desire to personally control spending.

US President Donald Trump

Photographer: Al Drago/Bloomberg

The announcement followed moves to purge federal workers in diversity, equity and inclusion roles, Justice Department officials who investigated Trump, and more than a dozen inspectors general.

He’s also revived his call for blanket tariffs, threatened a trade war with Colombia, began the process to pull the US out of the World Health Organization, suspended foreign aid, unleashed Elon Musk on the federal workforce, pardoned Jan. 6, 2021 rioters and attempted to end birthright citizenship.

It’s all proving too much for his opponents. On Capitol Hill, Democrats scheduled an “emergency meeting” on the funding freeze for Wednesday — two days after OMB issued their guidance. Local Democratic officials said they faced an onslaught of questions from constituents and partner organizations. As soon as one controversy appeared to gain political traction, another subsumed it, cannibalizing media and political attention.

The power plays are emblematic of the “flood the zone” approach espoused by Trump ally Steve Bannon: moving quickly and breaking things disorients and demoralizes critics who are mostly powerless to respond.

White House deputy chief of staff Stephen Miller said Tuesday on CNN “it is essential for him to get control of government, to establish a whole of government process for Donald Trump’s political appointees, to review discretionary grants of spending.”

Trump has been better prepared to methodically stoke chaos on government than eight years ago, when he entered the White House as a novice politician. An order shutting down a little-known US Army office focused on reducing civilian harm in wars was sent at 9 p.m. on Inauguration Day, according to a memo obtained by Bloomberg News, showing the breadth of the new administration’s overhaul.

Democrats Reeling

Some Democrats said their cohorts should have been prepared for the onslaught.

“He ran on that, that he was going to do all these things, the pardons and all this dump of executive orders,” Pennsylvania Senator John Fetterman said in an interview. “He’s doing exactly everything that he’s been saying, so I’m not surprised.”

Though Trump’s push is meant to be strategic, some moves were marked by the sort of politically risky haphazard behavior typical of his first term.

The funding freeze was made public by news reports late Monday night and sparked furor and confusion in Washington and state capitals, with politicians rushing to determine if it affected programs like food stamps. Officials in several states reported being locked out of the Medicaid payment system, though the administration denied the technical issue was related. On Tuesday, the White House was forced to clarify the pause did not touch “individual assistance” measures. Some Republican lawmakers nonetheless chafed at its scope.

While the directive does not impact entitlement programs like Social Security and Medicare, it could affect money for veterans, disaster relief, health care providers, education and dozens of other functions. Agency heads have until Feb. 10 to submit reports on whether their initiatives comply with Trump’s orders on DEI, climate change and other issues.

The Impoundment Control Act of 1974 prevents presidents from unilaterally overriding congressional funding decisions. Democrats said the freeze was illegal while Trump’s defenders said a “temporary pause” is permissible, subject to a policy review. Trump’s pick to lead the budget office, Russell Vought, has said the law’s limits are unconstitutional.

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Republican Jerry Moran of Kansas, who sits on the Senate committee with jurisdiction over discretionary spending, said Trump still must spend money appropriated by Congress by the end of the fiscal year unless lawmakers claw back the funding.

“That’s the law, and perhaps that’s the Constitution as well,” he said in an interview.

Yet Trump is betting that moving faster than Democrats will keep them off balance. Senate Democrats on Tuesday held a press conference about last week’s Jan. 6 pardons. Meanwhile, the president’s push continued apace this week with the firing of US labor and employment board officials who backed worker rights, the expansion of immigration raids to New York City, and banning of transgender people from military service.

Some Trump actions, however, like his birthright citizenship order, were stymied by the courts. He has fewer Cabinet leaders confirmed than some predecessors at a similar juncture. Trump also has yet to address in a significant way core issues like inflation and the war in Ukraine.

Federal Workers

The administration has taken special interest in the government’s human resources agency, the Office of Personnel Management, as it looks to install loyalists across Washington.

OPM’s acting director Charles Ezell has directed leaders of federal agencies to send lists of easy-to-fire employees still on probation to Amanda Scales, OPM’s new chief of staff. Scales recently worked for Musk’s artificial intelligence company, xAI. Ezell further directed federal agencies to “determine whether those employees should be retained.”

Republican Senator Chuck Grassley of Iowa joined Dick Durbin, the No. 2 Senate Democrat, in asking Trump for justification for the inspector-general firings as required by law. But it’s unclear if Congress can do more to force accountability for the dismissals. The president is mandated to give Congress 30-days notice to oust an independent watchdog.

“The freezing of federal grants, the firing of all inspector generals, the immunization of political violence — does everybody not see what’s happening?,” Democratic Senator Chris Murphy of Connecticut wrote on X. “In a blitzkrieg, Trump is trying to collapse our democracy — and probably our economy — and seize control.”

--With assistance from Josh Wingrove, Nick Wadhams, Steven T. Dennis, Kate O’Keeffe, John Harney, Derek Wallbank and Meghashyam Mali.

To contact the reporter on this story:
Jordan Fabian in Washington at jfabian6@bloomberg.net

To contact the editors responsible for this story:
Justin Sink at jsink1@bloomberg.net

Mario Parker

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