(1) A TURNING POINT? GOP Senate Appropriations Chair Joins Ranking Democrat in accusing Administration of violating Congress’ spending authority;
(2) 10-YEAR ENTITLEMENT & TAX CHANGES (“Budget Reconciliation”): House and Senate GOP negotiators poised to move vastly different budget reconciliation bills on parallel tracks—putting off key decisions on Medicaid, Food Stamps, and taxes until a late spring or summer reconciliation conference.
(3) DEBT CEILING X-DATE: CBO estimates Treasury will face default in August or September without a debt limit increase.
(4) ECONOMY: Major new tariffs this week will steer the economy into an inflationary spike.
(5) MAJOR DEVELOPMENTS: Unsustainable Debt Growth, House Speaker Threatens Independence of the Judiciary, Massive HHS cuts, Social Security Breaking Down, FEMA dissolution, USAID shutdown, Student Loans at risk, Removal of Independent Agency Leaders, Federal Unions Suppressed, Smithsonian Censored, WH Budget Office Hides Spending Allocations.
(6) DEMOCRACY UNDER FIRE: Law Firms and Universities need to take collective action—not strike deals that embolden an autocrat.
(Total Read-Time: 15-minutes)
1. A TURNING POINT? GOP Senate Appropriations Chair Joins Ranking Democrat in accusing Administration of violating Congress’ spending authority.
Until last week, Republicans in Congress had been mute about the Trump Administration’s repeated violations of Congress’s constitutional authority over appropriations and the defunding of USAID, CFPB, DoEd and numerous other agencies and programs—all a clear violation of the Impoundment Control Act.
This dangerous Republican silence began to lift last Thursday when Republican Senate Appropriations Committee Chair Susan Collins (R-ME) joined her Democratic Ranking Member Sen. Patty Murray (D-WA) in a letter to Office of Management and Budget (OMB) Director Russell Vought strongly objecting to the Administration’s refusal to execute $2.9 billion worth of emergency spending in the FY 2025 funding bill passed in mid-March.
The Republican and Democratic senior appropriators said, “Just as the President does not have a line-item veto, he does not have the ability to pick and choose which emergency spending to designate…It is incumbent on all of us to follow the law as written — not as we would like it to be.” (Author’s note: the Supreme Court struck down the line-item veto as unconstitutional in 1998.)
The prior day, a similar letter was sent by House Appropriations Committee Ranking Democrat Rosa DeLauro (D-CT) to OMB. Unfortunately, Republican House Appropriations Chair Tom Cole (R-OK) elected to continue his abdication of Congress’s appropriations authority and did not join his three senior appropriations colleagues in challenging OMB’s action. More background.
This Executive-Legislative struggle over appropriations authority is central to whether our democracy will survive and will continue until resolved by the Supreme Court. Congress’s “power over the purse” was regarded by the Founders as “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.”
For daily updates see Appropriations.com.
2. 10-YEAR ENTITLEMENT & TAX CHANGES (“Budget Reconciliation”): House and Senate GOP negotiators poised to move vastly different budget reconciliation bills on parallel tracks—putting off key decisions on Medicaid, Food Stamps, and taxes until a late spring or summer reconciliation conference.
House and Senate GOP negotiators have been working to resolve their differences on a budget resolution framework for enactment of President Trump’s multiyear budget agenda: (1) hundreds of billions in new spending for mass deportations, border control and missile defense; (2) extending the 2017 tax cuts and enacting new tax cuts; (3) partially offsetting the tax cuts with cuts to entitlement spending, likely to include Medicaid and food stamps (SNAP); and (4) increasing the debt limit by $4 trillion.
Republicans want to advance this agenda using the fast-track “budget reconciliation” process which allows tax and entitlement changes to move forward in the Senate with 50 votes, rather than the 60 votes normally needed for major legislation (this is key to the GOP which holds only 53 seats in the Senate).
Before the budget reconciliation process can begin, House and Senate Republicans must negotiate a joint House-Senate budget resolution which includes “budget reconciliation instructions” to committees of the House and Senate. The instructed committees then draft changes to tax and entitlement programs to meet their budget instructions. The various committees’ legislation is then packaged together into House and Senate reconciliation bills.
However, House and Senate negotiators have been divided on whether to do spending increases now and put off the more difficult tax and spending cuts until later; whether to use an accounting gimmick to claim the tax cut extensions cost nothing; whether to pay for the tax cuts with Medicaid, food stamp and other entitlement cuts; and whether to increase the debt limit in reconciliation.
According to recent reports, the negotiators have decided to effectively “kick the can down the road” by adopting different instructions to House and Senate committees.
Under this scenario, House committees would draft reconciliation provisions that increase immigration enforcement and defense spending, cut taxes, and cut Medicaid, food stamps and other entitlements. At the same time, Senate committees would begin drafting a “skinny bill” that includes spending increases and tax cuts – but leaves out Medicaid, food stamps and other controversial entitlement cuts.
The result would likely be a House-passed reconciliation bill that includes large cuts to Medicaid, food stamps, and other entitlements, and a Senate bill that does not. The differences would have to be worked out in a lengthy (and perhaps unsuccessful) budget reconciliation conference committee in late spring or summer.
Bottom line: Instead of working out their differences in the current budget resolution framework, House and Senate GOP leaders are kicking the can down the road to a later and more difficult stage of the process—where they will be negotiating enormous differences in detailed legislative language.
The author managed multiple reconciliation bills for the Senate Finance and Senate Budget Committees. see GovBudget.com for updates on Reconciliation.
3. DEBT CEILING X-DATE: CBO estimates Treasury will face default in August or September without a debt limit increase.
On January 17, 2025, the Treasury Department notified Congress that it had reached the statutory debt limit and would undertake so-called “extraordinary measures” to maintain its borrowing authority in order to fulfill U.S. financial obligations.
Last week, the nonpartisan Congressional Budget Office estimated that Treasury will exhaust these extraordinary measures in August or September, the so-called “X-Date.” However, the X-Date could be sooner if revenue collections drop off due to personnel cuts at the Internal Revenue Service.
What is the debt ceiling? The Constitution grants Congress the power to “borrow Money on the credit of the United States,” thus mandating that Congress exercise control over the public debt. Since the ratification of the Constitution, Congress has placed limitations of various types on federal borrowing.
In 1939, Congress enacted the first aggregate limit, commonly referred to as the “debt limit” or “debt ceiling.” Since that time, when the activities of the federal government require a higher limit, Congress enacts a law to raise the debt limit—permanently or temporarily—or in recent years has suspended the debt limit for various periods of time.
The debt limit has required frequent legislative action for three reasons:
· First, total public debt grows whenever Congress approves annual spending that is higher than annual revenues, requiring Treasury to cover the shortfall through borrowing.
· Second, total public debt grows when government trust funds run surpluses which are required to be invested in special Treasury bonds.
· Third, Congress has chosen to increase the debt limit in increments only.
One might assume that a mechanism called “the statutory limit on the public debt” serves as a form of budgetary or fiscal restraint. However, in reality, the debt limit provides no restraint at all because raising the debt limit is simply a consequence of prior decisions on spending and revenues.
Once Congress has enacted spending authority for a fiscal year at levels that exceed annual revenues, the Treasury must raise the necessary cash to fulfill the government’s legal obligations, whether for interest payments on U.S. debt; redemption of U.S. bonds; Social Security, Medicare, and Veterans payments; U.S. troop salaries and materiel; payments to maintain stability in the U.S. farm sector; payments to states for Medicaid, education, and highways (amounting to one-third of most State budgets); and all other federal obligations.
What happens if the U.S. defaults? If Congress refuses to give Treasury the authority to raise the cash necessary to fulfill U.S. legal obligations, the consequences would be devastating:
· Failing to make interest payments on Treasury bonds, or failing to redeem bonds coming due, would undermine Treasury’s credit ratings in the U.S. and across the globe, pushing up interest rates and inflation, and almost certainly leading quickly to a deep recession.
· Running out of cash to pay troops and supply materiel would undermine America’s defense.
· Failing to make federal benefit payments would harm retirees, veterans, disabled, and disadvantaged Americans.
· Missing payments to the states would cause chaos for hospitals, teachers, and companies under contract to repair and build roads, bridges, public transit, water systems, ports and airports.
The author managed debt limit legislation as General Counsel for the Senate Finance Committee. See GovBudget.com/key-debt-ceiling-developments/ for daily updates.
4. THE ECONOMY: Major new tariffs this week will steer the economy into an inflationary spike.
· President Trump announced plans to impose sweeping new import tariffs this week (although he often backtracks at the last minute):
25% tariffs on imports from the European Union (EU), risking a 70% cut in EU exports to the U.S. according to a Bloomberg analysis;
25% tariffs on all cars and parts made outside the U.S. (The White House said vehicles coming into the U.S. under the US-Mexico-CA trade pact will face tariffs based on the foreign-parts content. For example, if 50 percent of a car is made with foreign parts, the tariff would be 12.5 percent); and
25% tariffs on nations that import Venezuelan oil (China, Spain, India)—what the Administration is calling secondary tariffs.
· This week’s new tariffs will be on top of: a 25% tariff on steel and aluminum that went into effect on March 12; an increase to 20% on all products made in China; (which risks a 65% drop in Chinese exports to the U.S.); and a 10% to 25% tariff on USMCA noncompliant goods from Canada and Mexico.
· Everybody loses in a trade war. Tariffs by the U.S. trigger counter-tariffs from our trading partners which hit U.S. companies and workers seeking to export American products. Counter-tariffs thus far include: 25% tariffs from Canada on $155 billion worth of U.S. products; 10% to 15% from China on energy, machinery and agriculture products; and European Union tariffs to go into effect April 1 on beverages, agriculture products, and steel and aluminum.
· Why does the President have authority over tariffs? The Constitution gives Congress authority over tariffs, but Congress has enacted laws delegating its authority to the President to facilitate negotiation of free trade agreements and to respond to “emergency” situations. Trump’s tariff actions are based on “emergency” claims.
· Despite the Administration’s attempt to mischaracterize tariffs as being paid by foreign countries, tariffs are taxes imposed on U.S. companies importing products from other countries and are typically passed on to U.S. consumers as higher prices. (For example, Best Buy pays import tariffs on electronics made in China and passes the tariff tax on to consumers as higher prices.)
· Analysts have estimated that Trump’s import taxes on cars could increase their cost between $5,000 and $15,000 per car. Nearly half of cars sold in the U.S. could be subject to tariffs beginning April 3. But on Saturday, President Trump said he “couldn’t care less” if auto prices rise because of his tariffs.
· Is the car you’ve been shopping for built in the U.S.? Get the answer here.
For daily updates see Bloomberg tariff tracker, GovBudget.com/tariffs and GovBudget.com/economic-news.
5. MAJOR DEVELOPMENTS ACROSS GOVERNMENT: Unsustainable Debt Growth, House Speaker Threatens Independence of the Judiciary, Massive HHS cuts, Social Security Administration Breaking Down, FEMA dissolution, USAID shutdown, Student Loans at risk, Removal of Independent Agency Leaders, Federal Unions Suppressed, Smithsonian Censored, WH Budget Office Hides Spending Allocations.
The following are key developments from last week, including court actions:
· Unsustainable Debt Growth: The Congressional Budget Office last week released it’s long-term budget projections, finding that “federal debt held by the public…will grow far beyond any previously recorded level over the next 30 years.”
· House Speaker Threatens Independence of the Judiciary: Last Tuesday, House Speaker Mike Johnson warned that Congress has the power to stop funding federal courts amid high-stakes White House legal battles—underscoring the Speaker’s willingness to sacrifice democracy in order to expand President Trump’s authoritarian ambitions. Read more.
· Massive HHS cuts terminate 10,000 workers, eliminate agencies and close regional offices without congressional authorization: RFK Jr’s move last week “to gut and reorganize the federal health department shocked many people tasked with making it happen, and left others fearful that everything from the safety of the nation’s drug supply to disease response could be at risk…. Health staffers entrusted with regulating prescription drugs, managing public health programs and conducting scientific research were blindsided by the cuts, with many learning the details from a Wall Street Journal story published early on Thursday.” Read more.
· Social Security breaking down: “The Social Security Administration website crashed four times in 10 days this month because the servers were overloaded, blocking millions of retirees and disabled Americans from logging in to their online accounts. In the field, office managers have resorted to answering phones in place of receptionists because so many employees have been pushed out. Amid all this, the agency no longer has a system to monitor customer experience because that office was eliminated as part of the cost-cutting efforts led by Elon Musk.” Read more.
· Federal Appeal Court allowed Trump’s removal of independent agency leaders at the National Labor Relations Board and Merit Systems Protection Board, in a case likely to be taken up by the Supreme Court. Read more.
· FEMA on the DOGE Chopping Block: The Federal Emergency Management Agency froze $10 billion in disaster aid, without congressional approval, amidst reports indicating the Trump Administration plans to illegally strip FEMA of key functions, including helping communities rebuild in the aftermath of disasters.
· USAID shutdown: A federal appeals court Friday lifted an order blocking DOGE from further cuts at the U.S. Agency for International Development and Secretary of State Marco Rubio said the “era” of USAID is “now over,” but did not say whether he would seek congressional approval for dissolving an agency established in law by Congress.
· Ending Collective Bargaining: Last week, President Trump signed an executive order that would end collective bargaining for hundreds of thousands of workers.
· Moving Student Loans to SBA: In the wake of the Administration’s announced plan to move processing of student loans from the Department of Education to the Small Business Administration, there is widespread concern and confusion, particularly since the SBA has no experience in higher education and is itself, radically downsizing its own workforce.
· Censoring the Smithsonian: Trump directed JD Vance to “remove improper ideology” from the Smithsonian Institution, the world’s largest collection of public museums.
· OMB unlawfully hiding spending allocations to agencies – Budget office since 2022 has been required to publish "apportionments" data. Statement from Appropriations Committee Ranking Democrats.
· Other Key Court Actions Last Week Impacting Government Agencies and Programs, Immigration, and Civil Rights: See the Just Security website or WP Tracker).
6. DEMOCRACY UNDER FIRE: Law Firms and Universities need to take collective action—not strike deals that embolden an autocrat.
· Attention Law Firms and Universities: Read this succinct and compelling explanation of “why collective action is the only way” to save democracy from Trump’s push toward autocracy.
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 an Independent, having served Democratic and Republican Administrations and Senators.
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 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.