(Average Read-Time: 13 minutes)
(1) CONGRESS IS NOW DRAFTING TRUMP’S MULTIYEAR BUDGET RECONCILIATION BILL THAT WILL EXPLODE THE PUBLIC DEBT AND CUT MEDICAID AND OTHER VITAL SERVICES:
At President Trump’s direction, congressional Republicans are drafting a multiyear, filibuster-proof “Budget Reconciliation Bill” that will explode the Public Debt—putting the U.S. economy at severe long-term risk, while simultaneously giving unnecessary tax breaks to wealthy Americans, and cutting Medicaid, food stamps, and education funding for Americans in greatest need.
Congress adopted a Budget Resolution framework on April 10 that includes 10-Year Budget Reconciliation Instructions to House and Senate committees to report legislation to enact:
1. Massive Tax Cuts up to $6 trillion: extending the expiring portions of the 2017 individual and estate tax cuts, and possibly additional tax cuts providing breaks for overtime pay, tip income, and Social Security benefits, and an increase in the cap on state and local tax (“SALT”) deductions—using budget gimmicks (baseline trickery and fraudulent growth assumptions) to hide the enormous long-term costs of the cuts;
2. Defense Spending Increases of $150 billion including missile defense, shipbuilding, aircraft, and border security [markup 4/29.10am];
3. Spending Increases up to $200 billion for deficit-financed deportation of undocumented immigrants, border surveillance and security [Homeland Security markup 4/29, 10am and Judiciary markup 4/30, 2pm];
4. Spending Cuts of at least $1.5 trillion: including $500-$600 billion in cuts to health programs including MEDICAID (acknowledged by the Energy & Commerce Committee Chairman), and cuts to food stamps (“SNAP”), limitations on student loans and Pell Grants [markup 4/29, 10:15am], cuts to federal worker benefits [markup 4/30.10am], and rolling back climate investments [markup 4/30, 10am];
5. Cutting Funding for Federal Agencies (CFPB and PCAOB) established to protect consumers and investors and avoid a repeat of the 2008 housing crisis and financial meltdown [markup 4/30, 10am]; and
6. Increasing the Public Debt Ceiling by $4 or $5 trillion. (However, this is only a temporary patch that would last less than two years. The Trump Reconciliation Bill could add so much to total public debt that annual interest payments would increase from $1 trillion per year to $2 trillion per year.)
House and Senate Committees technically have until May 9 to report legislation enacting the tax cuts, spending increases, spending cuts, and debt limit increase.
The House GOP Leadership is aiming to bring the bill to the House Floor the week of May 19 (but that will depend on how swiftly the Energy & Commerce and Ways & Means Committees can act on Medicaid and tax legislation).
When a bill reaches the Senate Floor, it will be subject to the strict requirements of the Senate’s Byrd Rule, under which provisions that are not “budgetary” in nature can be stripped from the bill on the Senate Floor. The Byrd Rule will be explained in detail (in plain English) in a special upcoming issue of Trillions—for paid subscribers ($80/yr).
If the two chambers have passed their respective reconciliation bills in May or June, they will appoint a House-Senate conference committee to resolve their differences. It is here that the budget reconciliation process could grind to a halt because the House and Senate remain far apart on Medicaid cuts, food stamp cuts, the SALT deduction, and the overall deficit impact of the legislation.
However, reconciliation bills are filibuster-proof (requiring only 51 votes for Senate passage) so the GOP will not require any Democratic votes if they are able to resolve these internal differences.
The author worked on multiple reconciliation bills for the Senate Finance, Senate Budget, and Senate Rules Committees and the White House Office of Management and Budget. Call (202) 818-8578 or (301) 509-5688 for consultations on budget reconciliation, media interviews, or speaking engagements on budget reconciliation.
Stay up-to-date on reconciliation committee mark-up schedules and access bill language and summaries at our new Budget Reconciliation Tracker: https://govbudget.com/reconciliation-tracker/.
(2) SHUTTERING AGENCIES AND PROGRAMS WITHOUT CONGRESSIONAL APPROVAL: President Trump has directed the near- or total-shutdown of multiple federal agencies, exceeding his executive authority and violating Congress’ constitutional authority over appropriations. The following are examples—not an exhaustive list.
DEPARTMENT OF EDUCATION: In March, Education Secretary McMahon announced plans to lay off nearly half of the department’s 4,100 employees, as a step towards shutting down the department—even though the President has no legal authority to shut down a congressionally established and funded department.
Consequences: (1) The Secretary’s plan to move administration of student loans to the Small Business Administration has sparked concern and confusion and experts warned it would cause chaos for Americans with student loans. (2) The Administration said its programs for children with special needs would be moved to the Department of Health and Human Services (HHS)—which is already in turmoil due to the termination of 20,000 employees. (3) Project 2025, on which much of the first 100 days’ actions have been based, calls for phasing out “Title I” funding—"a longstanding funding stream for schools based on how many low-income students they serve.” This would leave huge gaps in school system budgets throughout the country.US Agency for International Development (USAID): In January, President Trump ordered a near total freeze on distribution of foreign aid. In early February, nearly all USAID employees were placed on administrative leave cutting the workforce from 10,000 to 294, severely disrupting humanitarian programs. In March, Secretary of State Rubio said the purge of USAID programs was complete, with 83% of the agency’s programs gone. In April, contracts that Rubio had said would be protected because they provided “lifesaving services” were summarily canceled.
DISMANTLING OF CFPB: The Consumer Financial Protection Bureau was created in the wake of the 2008 financial crisis to supervise the nation’s largest banks and protect consumers from abusive practices in the home mortgage, credit card, financial services and consumer loan industries. In February, the Trump Administration ordered CFPB workers to cease all bank supervision and consumer protection activities. In mid-April the Administration announced that nearly 90 percent of CFPB personnel would be fired, although a federal judge has temporarily blocked the mass firings.
SLASHING AMERICORPS: Last week DOGE terminated $400 million in grants—nearly half of AmeriCorps’ grants to volunteer and nonprofit organizations throughout the country, and earlier placed 85% of AmeriCorps’ workers on leave. The AmeriCorps program, created by the Clinton Administration, has long been opposed by many Republicans who oppose expenditure of federal funds to leverage volunteerism and public service. A key exception was President Bush-43 who was a very strong supporter of AmeriCorps and civic engagement.
LOW INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP): Last week, HHS Secretary RFK Jr. fired the entire staff of the LIHEAP program—first enacted by Congress in 1980 to help America’s poorest families afford essential heating and air conditioning. States and advocates have warned that the “HHS cuts put low-income families at risk of utility shutoffs and health emergencies.”
Track developments on federal agency shutdowns on our new webpage: https://govbudget.com/cut-tracker/.
(3) REDUCING FEDERAL GOVERNMENT CAPACITY TO DELIVER SERVICES TO AMERICANS: President Trump is reducing federal employment by 280,000 employees—with no detailed justifications, no strategic planning, no legal authority, and no consultations with Congress—leaving key agencies and program offices at risk of being unable to deliver congressionally mandated services to the American people.
The right way vs. the wrong way to eliminate waste: Compare President Trump’s arbitrary employee terminations with the reductions during the Clinton-Gore Administration’s National Performance Review which were accomplished through close collaboration with agencies, employees, and Congress and which provoked no lawsuits. (For the status of the dozens of lawsuits filed against the Trump Administration, see the Just Security website.)
Perhaps most disturbing about the Trump mass firings are the underlying motivations. White House Office of Management and Budget (OMB) Director Russell Vought stated his ambition to put career civil servants “in trauma” so they won’t want to do their jobs. “When they wake up in the morning, we want them to not want to go to work because they are increasingly viewed as the villains. We want their funding to be shut down….We want to put them in trauma.”
The following are a few examples of the damage already occurring in federal agencies’ ability to serve the public:
IRS CUTS WILL INCREASE DEFICITS AND BREAK CUSTOMER SERVICE: The Internal Revenue Service is laying off roughly 7,000 workers, right after spending four years increasing the workforce to beef up customer service and collect more of the estimated $700 billion per year that is owed, but not paid. Former IRS Commissioner Rettig who served during Trump-45 said, “An underfunded IRS significantly benefits unidentified, noncompliant taxpayers at the direct expense of compliant taxpayers.” The irony here is that DOGE’s termination of IRS enforcement workers will cause a significant loss in federal revenues—costing the Treasury more in lost revenue than DOGE is likely to save with their arbitrary and capricious employee terminations. (“DOGE” is the White House office headed by Elon Musk that has been directing employee terminations throughout the federal government.)
SOCIAL SECURITY ADMINISTRATION IN CHAOS: The Social Security Administration is planning to cut at least 7,000 staff (12% of the workforce). The arbitrary and capricious cuts at the vital agency have caused chaos. In March, the Washington Post reported, “Long waits, waves of calls, website crashes: Social Security is breaking down.” Earlier this month, there were reports that the Social Security website was crashing at the same time DOGE was demanding cuts to SSA’s IT staff. In addition, DOGE had planned to entirely eliminate telephone inquiries to the agency, but backed away after a public outcry on behalf of Americans who lack access to the Internet.
FIRING THE PEOPLE CHARGED WITH IDENTIFYING WASTE AND FRAUD: Among the more ironic actions by Trump have been: (1) firing 17 independent Inspectors General in January (nonpolitical career experts in charge of identifying fraud and waste), and (2) laying off 90 employees at the General Services Administration (GSA) who were tasked with assisting all other agencies with upgrading and modernizing their software to achieve greater efficiencies.
PUBLIC HEALTH / FOOD AND DRUG SAFETY: The Department of Health and Human Services is abruptly cutting its staff by 20,000—from 82,000 to 62,000—without any strategic evaluation of which statutory functions are overstaffed or understaffed. This includes 2,400 terminations at the Centers for Disease Control and Prevention (CDC), which is charged with tracking and responding to potential pandemics (for example, the currently growing outbreaks of bird flu), and 3,500 terminations at the Food and Drug Administration (FDA), charged with food and drug safety throughout the U.S.
STABILITY OF U.S. BANKS: The Federal Deposit Insurance Corporation which insures Americans’ bank accounts and supervises banks to ensure they have adequate reserves has already lost 670 employees at a time when the FDIC examiner force was already shorthanded.
NUCLEAR SECURITY: In one of the more notorious examples of the Administration’s total lack of strategic planning, the Energy Department laid off 300 staffers at the National Nuclear Security Administration (NNSA), apparently not realizing that NNSA oversees America’s nuclear weapons—an action they later scrambled to reverse.
VETERANS SERVICES: In February, the Department of Veterans Affairs announced it was cutting 1,000 employees. A senior Member of the Senate Appropriations Committee said the layoffs have affected VA researchers working on mental health, cancer treatments, alcohol and opioid addiction, prosthetics and burn pit exposure.
HOUSING AND URBAN DEVELOPMENT: HUD is cutting 4,000 positions impacting a dozen programs that provide low income rental subsidies, assist first-time homebuyers, provide disaster recovery, and investigate discrimination claims.
Track developments on federal agency cuts on our new webpage: https://govbudget.com/cut-tracker/.
(4) LOSING AMERICAN DOMINANCE IN GROUNDBREAKING RESEARCH: President Trump has ordered mass cancellations of federal grants & contracts and student visas—risking America’s dominance in medical and scientific research that took decades to build. China and other nations will quickly fill the void while America stumbles into self-inflicted underinvestment and economic isolation.
The abrupt reductions in research funding for America’s universities and the National Institutes of Health are undercutting technological and medical advancements and overall U.S. global competitiveness.
The arbitrary and capricious cancellation of student visas are discouraging the best and the brightest foreign students from coming to the U.S. to study at America’s universities and joining America’s entrepreneurs and researchers.
A must-read: Fareed Zakaria’s column last week, Trump is destroying 100 years of competitive advantage in 100 days - cuts to research and attacks on universities are handing global leadership to China.
A must-watch: former NIH head Francis Collins interviewed on 60 minutes: Scientists fear Trump administration cuts to NIH could impact the health of Americans for generations.
(5) TARIFFS & STAGFLATION: President Trump’s erratic tariffs have shattered consumer confidence, increased inflationary expectations, and spread uncertainty that has stalled business investment—threatening to trigger “stagflation” (high inflation and low growth).
Reuters reported yesterday: “Risks are high that the global economy will slip into recession this year, according to a majority of economists in a Reuters poll, in which scores said U.S. President Donald Trump's tariffs have damaged business sentiment. Just three months ago, the same group of economists covering nearly 50 economies had expected the global economy to grow at a strong, steady clip.”
Just last year, economists at the World Bank were praising the U.S. economy as the engine driving global economic growth.
Global tariffs have increased costs for U.S. companies importing goods and components, and Trump’s tariff war with China is hurting U.S. agricultural exports and cutting off supply chains to U.S. companies.
In response to Trump’s tariffs, China has halted imports of Boeing aircraft and exports of critical rare earth minerals to the U.S.
Moreover, as mass deportations scale up, the abrupt shrinking of the U.S. labor force will undermine one of the key drivers of recent U.S. economic growth – a young, healthy, and growing labor force. Last year, the nonpartisan Congressional Budget Office projected “the higher growth rate of… GDP over the next five years stems mainly from rapid growth in the labor force, reflecting a surge in the rate of net immigration from 2022 to 2026 compared with recent years.”
For daily updates see GovBudget.com/tariffs, GovBudget.com/economic-news, Bloomberg tariff tracker, NYTimes Tariff Tracker, Washington Post Tariff Tracker.
(6) DEMOCRACY UNDER FIRE and POWER OF THE PURSE
In addition to the debt-exploding budget reconciliation bill, the illegal agency shutdowns, the damage to the government’s capacity to deliver vital services, the self-inflicted forfeiture of America’s dominance in research and development, and the economic chaos of tariff-induced stagflation, American democracy itself is under increasing stress.
President Trump’s very intentional executive overreach—along with the congressional leadership’s meek acquiescence—threatens the Constitution’s separation of powers, is stifling freedom of speech in the media, at universities, and in government, and risks a dangerous constitutional crisis between the Executive and Judicial branches of government. Also of profound concern is the serious damage to the rule of law by Donald Trump’s pardons of the convicted criminals who beat police officers, threatened the Vice President’s life, and defaced our nation’s Capitol on January 6, 2021.
I close with an excerpt from a recent judicial decision halting the shutdown of the Voice of America. As reported by Politico, Judge Lamberth, a Reagan appointee, ordered the Trump administration to restore employees and contractors to their news programs and unfreeze funding streams. The judge concluded that the Administration’s attempt to shut down VOA was likely a direct breach of the Constitution, saying the Administration’s “unwillingness to expend funds in accordance with the congressional appropriations laws is a direct affront to the power of the legislative branch.”
America’s Founders gave the power of the purse to Congress as a protection against tyranny. Congressional leaders need to remember that before it’s too late.
About the author: Charles S. Konigsberg, J.D., served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee; Minority Chief Counsel at the U.S. Senate Rules Committee; Staff Attorney at the U.S. Senate Budget Committee; Director of Congressional Affairs at CFPB and CNCS; and Staff Director of a national bipartisan budget task force.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. (Contact the author for the 2024-25 edition. The 2025-26 edition will be published by Amazon.com after release of the Trump FY 2026 budget this spring.)
He is also Publisher of Appropriations.com which tracks appropriation bills; and GovBudget.com which tracks the Reconciliation Bill and major federal developments, by subject area, each day.
Speaking engagements and press interviews can be scheduled by calling: (202) 818-8578 or (301) 509-5688. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.