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Scheduling note: The House of Representatives has recessed through Labor Day. The Senate remains in session this week.
Estimated reading time: 14 minutes
(1) TARIFFS AND THE ECONOMY: Recent Tariff Deals and the Friday, August 1 Deadline; U.S. consumers face highest tariffs since 1934—translating into inflation and income loss.
The Big Picture: the Trump Administration has threatened to impose tariffs up to 50 percent on U.S. trading partners this Friday, August 1, if trade deals have not been achieved.
“Framework” deals have thus far been announced with Japan, the European Union, the United Kingdom, Indonesia, Vietnam, and the Philippines.
What you should understand about President Trump’s announcements of “massive tariff deals”:
They are broad “framework” agreements, with few details committed to paper.
The White House continues to claim—falsely—that foreign governments pay U.S. import tariffs, when it is U.S. companies who pay import tariffs when foreign goods are brought into U.S ports, with those costs often passed along to consumers as higher prices.
President Trump claims that he would have ”discretion” to direct promised foreign investments to particular sectors, but the President has no such authority in a free market economy, nor can foreign governments force their private companies to make particular investments in U.S. companies.
The chaotic rush to simultaneously cut deals with dozens of countries has been economically unnecessary.
The Yale Budget Lab projects the results of this unnecessary trade war will be that U.S. consumers face an average effective tariff rate of 18.2%, the highest since 1934, estimated to add 1.8% to overall inflation in 2025—with clothing prices rising by 37% and the overall economy shrinking by 0.5%.
While it is true that increased tariffs bring more revenues into the Treasury, the roughly $2.3 trillion in new tariff revenues will be far exceeded by $4 trillion in increased budget deficits resulting from enactment of Trump’s One Big Beautiful Budget Act (OBBBA). The net effect of Trump’s enactment of OBBBA and his 2025 tariffs will be a substantial increase in deficits and inflation, a slower economy, and an increase in unemployment. Read more here.
The bottom line: Trump’s tariff taxes will reduce overall global trade, slowing the U.S. economy and the global economy. These results will show up in the second half of 2025.
US and the European Union on Sunday announced a trade deal setting a baseline tariff of 15 percent on EU goods coming into the U.S., while most goods will be imported into the EU tariff-free. According to Politico, the framework deal also calls for the EU to purchase $750 billion of energy and invest $600 billion in the U.S. (including military equipment)—although these dollar goals are aspirational. Read more about the EU deal.
The 15 percent tariff rate will boost pharmaceutical prices for U.S. consumers, because 60% of drug imports come from the EU.
The 15% tariff rate would not apply to steel and aluminum imports, which Trump said would remain at 50 percent—boosting prices for U.S. manufacturers reliant on imported steel and aluminum. The 15% baseline rate also does not apply to semiconductors (computer chips)—still under negotiation.
U.S. and Japan last Tuesday announced a trade agreement with the U.S. imposing 15 percent tariffs on imports from Japan, in exchange for a $550 billion investment by Japan in the U.S. In addition, Japan committed to opening its markets to U.S. cars and trucks, rice and certain other agricultural products.
Tariff impact hits U.S. automakers: General Motors’ second quarter net income fell by 35%, impacted by $1.1 billion in tariffs. Stellantis swings to loss as Trump tariffs hit Fiat and Jeep maker.
For quickly changing developments and the various categories of on-again, off-again tariffs, see Bloomberg’s Trump Tariffs Tracker HERE.
(2) MASS FEDERAL LAYOFFS—WITHOUT CONGRESSIONAL AUTHORIZATION—ARE UNDER WAY IN THE WAKE OF THE SUPREME COURT’S GREEN LIGHT
The Supreme Court, in a July 8, 2025 ruling, allowed agencies to proceed with major reductions-in-force (RIFs), reversing a lower court order that had blocked mass layoffs.
In addition, 77,000 workers have accepted “incentivized buyouts” under the so-called “Deferred Resignation Program.” Under the program, employees are encouraged to resign effective September 30th in order to avoid involuntary separation and keep pay and benefits through September.
As a result of the Supreme Court’s green light on RIFs and deferred resignation:
Centers for Disease Control and Prevention (CDC) has fired 13%--1,622 employees.
Centers for Medicare and Medicaid Services (CMS) has fired 5%--300 employees.
Central Intelligence Agency (CIA) has fired 5%--about 1,200 employees.
Commerce Dept. is aiming to cut its workforce by 20%, nearly 10,000 employees (through attrition and Deferred Resignation).
Defense Dept. is aiming to cut its civilian workforce by 5% to 8%, as many as 61,000 employees, with 5,400 fired thus far.
Energy Dept. (DOE) has fired 6%, about 1,000 employees.
Environmental Protection Agency (EPA) has reduced its workforce by 23%, 3,707 employees (including elimination of the Office of Research and Development).
Federal Aviation Administration has fired about 400 employees.
Federal Emergency Management Agency has fired over 200 employees.
Food and Drug Administration (FDA) has fired 17%--about 3,500 employees.
Forest Service (USFS) has fired 9%--3,475 employees.
General Services Administration (GSA) has fired 9%--nearly 1,000 employees (including elimination of the entire tech team aimed at improving digital efficiency throughout government).
Health and Human Services (HHS) is aiming for an overall reduction in force of 24%--about 20,000 employees, which includes RIFs of 10,000 and attrition for the remaining 10,000. (This total includes the reductions at CDC, FDA, and NIH noted elsewhere in this list.)
Internal Revenue Service (IRS) workforce has decreased by at least 25% with 25,386 taking deferred resignation and 7,315 fired. (Rather than saving money, these cuts will cost the American people tens or hundreds of billions in lost revenues from uncollected taxes.)
Labor Dept. (DOL) has fired most of the employees in its Office of Federal Contract Compliance.
NASA has reduced its workforce by 20%--4,000 employees--through the Deferred Resignation Program.
National Institutes of Health (NIH) has fired 6%--about 1,200 employees.
National Park Service (NPS) has fired 5%--about 1,000 employees.
National Oceanic and Atmospheric Administration (NOAA) (including the National Weather Service) has fired 5%--about 675 employees.
Small Business Administration (SBA) has fired 41%—about 2,700 employees (including employees in its customer service center for disaster victims). At the same time, President Trump says he will move the processing of student loans from the Education Department to the vastly diminished SBA.
State Dept. has fired 9%--1,353 employees (including 1,100 civil service staff and 250 foreign service officers).
TSA (Transportation Security Administration) has fired 243 employees.
U.S. Geological Survey (USGS) has fired 10%--about 1,000 employees.
Veterans Affairs is now aiming for a reduction of 30,000 jobs by the end of September to be achieved by offering early retirement or severance payments. As of this month, 17,000 employees have left.
In addition to the reductions-in-force detailed above, several agencies have been shut down entirely or severely limited in scope:
Agency for Global Media (parent agency for Voice of America) has fired 85%—about 1,400—employees.
AmeriCorps has fired 84%--650 employees.
Consumer Financial Protection Bureau tried to fire 88%—about 1,500 employees—but the firings were temporarily blocked by a federal court. In addition to the pending firings, OMB Director Russell Vought, serving as CFPB’s Acting Director, has rolled back much of CFPB’s consumer protection work—terminating lawsuits, settlement agreements, and rulemakings that had been under way.
Education Dept. (DoEd) has thus far fired 33%--1,378 employees, with total elimination of the Department a stated Administration objective.
HUD Community Planning and Development Office has fired 83%--780 employees.
Office of Personnel Management (OPM) has lost one-third of its staff, with 750 taking deferred resignation, 150 resigning without pay, and 129 fired.
U.S. Agency for International Development (USAID) has been entirely shut down with 10,000 employees fired (a few hundred may be rehired at the State Department to administer a vastly diminished aid program).
Other agencies in various stages of elimination include: the Institute of Museum and Library Services; Federal Mediation and Conciliation Service; National Endowment for the Humanities; Commerce Department’s Minority Business Development Agency; the Wilson Center; the Interagency Council on Homelessness; and the Treasury Department’s Community Development Financial Institutions (CDFI) Fund.
(3) APPROPRIATIONS: President Signs Law Rescinding Funds for USAID and Public Media; Appropriators advance FY 2026 spending bills, but October Shutdown or CR Possible; House Dems Urge Court to Unfreeze Federal Funds; House GOP Appropriators Seek to Protect NIH; OMB Releases Frozen Education Funds
President Trump signed a rescission bill (H.R. 4) last Thursday, July 24, 2025. The new law rescinds $9 billion in FY 2025 funds for: the Corporation for Public Broadcasting (PBS and NPR) and numerous foreign aid programs. The CBO summary of rescinded funds is available HERE (note that after the CBO summary was released, a Senate change to the bill protected about $400 million in funds for PEPFAR, the international AIDS program).
Second rescission bill coming: The White House said they plan to send to Congress a second filibuster-proof rescission bill aiming at cuts in Education Department funds.
Senate GOP Leader Thune says a 3-month Continuing Resolution (CR) for October through December is likely, while appropriators continue work on the 12 regular spending bills. However, passage of a CR requires 60 votes in the Senate, and Democrats are plenty steamed over the use of the filibuster-proof rescission process to rescind $9 billion of appropriated funds—as well as hundreds of billions in appropriations being blocked by the Administration. Moreover, White House Budget Director Vought is actively discouraging bipartisan negotiations. An October 1 federal shutdown remains possible.
Status of the 12 Regular Appropriation Bills—with only 2 months until FY 2026 begins (on October 1, 2025):
The House of Representatives has recessed through Labor Day. Thus far, the House has passed only 2 bills on the Floor—Defense and Military Construction-VA. Another 7 bills have been approved by the full Appropriations Committee: Agriculture-Rural-FDA; Energy-Water; Homeland Security; Interior-Environment; Legislative Branch; National Security-State; and Transportation-HUD. In addition, Commerce-Justice-Science and Financial Services-General Government have been marked up at the subcommittee level. All of the House bills were drafted by Republicans with no Democratic input.
The Senate is in session this week and will recess through Labor Day at the end of the week. Senate Leadership is considering moving a 3-bill package (called a “minibus”) this week comprised of Agriculture-Rural-FDA; Commerce-Justice-Science; and Military Construction VA. Each of the bills have bipartisan support. The Senate Appropriations Committee has also completed action on Interior-Environment, Legislative Branch and Transportation-HUD bills. The Senate Appropriations Committee has taken no action on the other 6 bills, with the new fiscal year beginning in two months.
Yesterday (Monday), 157 House Democrats joined in an amicus (friend of the court) brief challenging the Office of Management and Budget’s unlawful freezing of appropriated funds. Read the amicus brief HERE. A comprehensive tracker of frozen funds is available HERE.
Also yesterday, Appropriations Democrats asked the Governmental Accountability Office (GAO) to examine the legality of the Energy Department moving hundreds of millions of dollars away from Wind and Solar in violation of the Purpose Statute and the Antideficiency Act. Read more HERE.
The Purpose Statute (31 USC 1301) requires that appropriated funds be used only the specific purposes for which they were intended by Congress.
The Antideficiency Act prohibits agencies from spending money in excess of the appropriated amount.
NIH Funding: Roll Call reported Monday that “House Republican appropriators plan to disregard the White House’s proposed 40 percent cut to the National Institutes of Health (NIH) budget for fiscal 2026.” However, the President’s Budget Director, Russell Vought, believes that congressional appropriations are a ceiling on spending—not a floor—and that OMB can unilaterally decide not to spend appropriated funds. Consequently, without court intervention, OMB may decide to withhold funds for NIH—disregarding congressional intent on appropriate funding levels.
This issue of the President’s authority to “impound” appropriated funds will eventually be decided by the Supreme Court, most likely in their 2025-2026 term.
Last Thursday 14 Republican Senators sent a letter to Vought urging OMB to release all funding for NIH included in the FY 2025 appropriations law. On CBS’ Face the Nation Vought responded to the letter, refusing to commit to releasing Congress’s appropriated funds for research on cancer and cardiovascular disease by changing the subject and pointing to miniscule examples of wasted grant funding.
Last Friday, the Trump budget office agreed to release $5.5 billion in frozen education funding, after 10 Senate Republicans sent a letter to OMB Director Vought pressing for the funds to be released.
(4) MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
Fiscal idiocy: the House Financial Services and General Government subcommittee last week advanced a 2026 appropriation bill that would reduce IRS funding by 20%, the inevitable result being expansion of the $700 billion tax gap (taxes owed each year but not collected) and increased deficits—all because political demagogues like to whip up furor against government in general and tax collectors in particular.
Ag. Dept. will relocate most of its DC-based workforce: The Trump Administration announced last week its intention to relocate most of the Agriculture Department’s DC-based workforce—about 2,600 employees—to five other locations and close key facilities in the D.C. region including the Department’s main research center. This reshuffling of the deck chairs will incur a lot of expense without any perceivable benefit. Read more.
Huge cuts to nutrition benefits in Trump’s recently signed budget megabill “stand in the way of RFK Jr.’s goals for a healthier national diet.”
With both political parties failing to address the impending budget shortfalls in Social Security only eight years from now, AARP released a new survey showing that nearly two-thirds of retirees rely substantially on Social Security. By 2033, the Social Security Trust Fund (Old Age and Survivors Insurance) will have insufficient funds to pay full benefits—requiring abrupt benefit cuts or borrowing from the general fund.
Driven by conspiracy theories rather than science, RFK Jr. signed a recommendation that the preservative thimerosal be removed from flu vaccines. At the same time, he refused to sign a recommendation that everyone aged 6 months and older get annual flu shots.
EPA is drafting a plan to eliminate its own authority to address climate change by denying the globally accepted causal link between fossil fuel emissions and a very perceptible and well documented warming climate.
Disabled Americans Fear Impact of Medicaid Cuts: “The White House says roughly $1 trillion in Medicaid cuts won’t limit home- and community-based care. Health care experts disagree.”
(5) THE FIGHT FOR DEMOCRACY AND THE RULE OF LAW:Bottom of Form
Republican leaders in Congress are working with White House Budget Director Russell Vought to stymie investigations by the Government Accountability Office (GAO) into Trump’s illegal withholding of billions in congressionally appropriated funds. The GAO is a legislative branch agency required by law to investigate illegal impoundments of appropriated funds. Read more about this developing story HERE. Read more about the Impoundment Control Act HERE.
Former Fed Chairs Bernanke and Yellen on the Fed’s Independence: “In the long run, preserving the Fed’s independence from politics is not about protecting a few individuals or a Washington bureaucracy. It’s about protecting America’s prosperity.”
This week’s must read, by David Pressman, former U.S. ambassador to Hungary: “I Watched It Happen in Hungary. Now It’s Happening Here.”
(6) WHAT YOU CAN DO THIS WEEK TO MAKE A DIFFERENCE:
In the wake of the Trump Administration zeroing out funds for public broadcasting, keep free speech alive by contributing to your local PBS television or NPR radio station or contribute directly to the PBS NewsHour. Mention Trillions in your donation!
Carefully consider your daily decisions. Caving in to tyranny happens slowly and quietly as decisionmakers at institutions of all types cut deals with tyrants and bullies to protect short-term financial interests. The Rule of Law—democracy’s bedrock—is slow to build and easy to lose.
**NOTE TO SUBSCRIBERS**: The Trillions Week-in-Review on Substack will resume after Congress’s August recess--giving the author time to work on the 2025-2026 edition of Trillions: A Primer on Federal Spending, Taxes, Debt, Presidential Impoundment, and Fiscal Law. This year’s edition will include a summary of the “One Big Beautiful Budget Act,” (OBBBA) and presidential actions blocking, canceling, or rescinding congressionally appropriated funds.
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 AmeriCorps; 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. Click here to purchase.
He is also Publisher of Appropriations.com which tracks appropriation bills; and GovBudget.com which tracks 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.
Chuck, you are doing an immense public service, there is no other place I know of that comprehensively puts all the information you have compiled in a single place. Kudos