Trillions – Week in Review #2
Status of Funding Freeze; House-Senate Split on Budget Strategy; Shutdown Watch; Debt Limit Looming; USAID; Tariffs; Fed Workers; Immigration; Lawsuits Multiply
This is Trillions: Week in Review - Washington’s newest weekly, delivering nonpartisan, factual, plain English explanations and commentary on the week’s developments by Charles S. Konigsberg, counsel and policy adviser to three White House Budget Directors and three U.S. Senate committees.
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1. Status of the OMB Funding Freeze
The Trump Administration threw the federal government, state and local governments, contractors, and citizens into chaos on Jan. 27 when the WH Office of Management and Budget (OMB) issued Memorandum #M-25-13, temporarily freezing federal grant, loan, and assistance payments in order to “review conformance with presidential policies.” The temporary pause was to be effective Tuesday, Jan. 28.
However, the freeze has been temporarily paused by several court orders:
· In a suit brought by small businesses and nonprofits, Federal Judge Loren AliKhan of the District Court for the District of Columbia issued a temporary restraining order pausing the OMB action. The next day WH Press Secretary Karoline Leavitt said that while the OMB memo was rescinded, the funding freeze remained in effect. Last Monday, Feb. 3, Judge AliKhan issued an order clearly blocking the funding freeze and directing OMB to release any frozen funds and report on compliance by last Friday, Feb. 7.
· In a similar suit filed in Federal District Court for the District of Rhode Island, attorneys general of 22 states and DC filed suit seeking preliminary and permanent injunctions against enforcement of the funding freeze. On Friday, Jan. 31, Federal Judge John J. McConnell Jr. issued a temporary restraining order finding that: no law authorized the OMB’s unilateral action; the freeze violated congressional intent in funding the programs and violated the separation of powers and the Administrative Procedure Act; OMB failed to comply with congressional notification requirements under the Impoundment Control Act; and OMB’s duty is to align federal spending with the will of the people as expressed through congressional appropriations—not to align spending with the President’s priorities.
· Despite the two court orders, the funding pause has reportedly continued at the Environmental Protection Agency, Head Start childcare programs, and programs totaling nearly a half trillion dollars as detailed by Senate Appropriations Ranking Member Patty Murray (D-WA).
Outlook: Watch for increasing scrutiny this week on whether OMB is complying with the two restraining orders in place.
2. Senate and House GOP Remain Split on Budget Strategy; Senate Kicks off 2-Bill Strategy This Week, While House Remains Committed to 1 Bill, But Action Delayed
As explained in last week’s inaugural edition of Trillions – Week in Review, Republicans plan to use the filibuster-proof “budget reconciliation” to move the Trump agenda forward. In order to launch a reconciliation bill, the House and Senate first need to pass identical “budget resolutions” – an internal congressional framework that sets overall ceilings and floors for federal spending, revenues and debt, and instructs the various authorizing committees of Congress to report spending or revenue legislation that change funding levels for programs within their jurisdictions.
Passage of budget resolutions and reconciliation bills have special debate limitations and require only a simple majority of 51 in the Senate for passage – not the 60 votes often required for major legislation in the Senate.
House and Senate GOP leadership are split on strategy.
House Speaker Mike Johnson, wants the House Budget Committee to report a budget plan that places all elements of the Trump agenda in a single reconciliation bill (tax cuts; spending cuts; and additional support for defense, immigration operations, border security and fossil fuel production).
Senate Budget Committee Chairman Lindsey Graham wants a two-bill strategy that launches a first reconciliation bill now with money for defense, immigration and border security, and energy production; and pushes the more contentious tax cuts and spending cuts until later in the year. Graham has scheduled committee markups on Feb. 12 and 13 to consider and vote on a budget resolution to enable the first reconciliation bill. Description of Graham Budget Resolution Text of Graham Budget Resolution Budget Levels
Under either strategy, Republicans will have to contend with the Senate’s powerful “Byrd Rule,” which enables any Senator to strike from the reconciliation bill any provision that is a policy change without a budget impact or a merely incidental budget impact. The Byrd Rule also prevents provisions that would increase deficits in years beyond the 10-year budget window (which is why tax cuts typically expire after 10 years).
The author worked on multiple budget reconciliation bills at the Senate Budget Committee, the Senate Finance Committee, and the WH Office of Management & Budget.
3. Immediate Fiscal Issues: Expiring 2025 Funding and Hitting the Debt Limit
We are following two other fiscal issues of immediate importance:
(1) Expiration of the temporary FY 2025 funding resolution on March 14, 2025. The outlook is complicated because Republicans lack the votes to pass an FY 2025 funding measure on their own, while some Democrats may want to use the measure to unwind, or place limits on, actions by Musk’s DOGE team. Follow developments at Appropriations.com.
(2) The “X-date” when Treasury will run out of borrowing authority is looming due to the new debt limit that became effective January 2, 2025. Follow developments at: GovBudget.com/key-debt-ceiling-developments.
4. Dismantling USAID (Agency for International Development)
Contrary to the common misconception that U.S. foreign aid is a substantial portion of the federal budget, it is actually less than one percent (0.6 % to be exact). For that tiny sliver of the federal budget, foreign aid builds goodwill with nations across the world feeding millions who would otherwise starve, providing vaccines for people who would otherwise die of preventable diseases, and training others in agriculture and skills that can lift them out of poverty. In addition to goodwill, these are investments in global stability that help countries avoid wars and discourage countries from aligning with our adversaries, thereby benefitting the national security of the United States.
On Jan. 20, the Trump Administration placed a 90-day pause on foreign development assistance and Sec. of State Rubio issued a stop-work order for USAID. Rubio then named himself acting USAID Administrator and USAID contractors were laid off or furloughed. On Feb. 3, USAID headquarters was closed. On Feb. 4, a message was posted on the USAID website saying all staff would be placed on administrative leave effective midnight Feb. 7.
The American Foreign Service Association sued in U.S. District Court for the District of Columbia on Feb. 6, and on Feb. 7, Judge Carl J. Nichols issued a temporary restraining order until Friday, Feb. 14 preventing USAID from placing employees on leave or evacuating them from foreign countries. The Court will hold a hearing on Wednesday, Feb. 12 on a preliminary injunction.
5. Tariffs
Mexico and Canada - 30-day pause: Last Monday, Feb. 3, after calls with the Leaders of Mexico and Canda, President Trump agreed to pause for 30 days the 25% tariffs he had imposed on those nations just two days earlier.
China-tariffs and retaliation: However, President Trump’s promised 10% tariff on China moved forward, and China responded with 10-15% retaliatory levies on U.S. energy exports and farm machinery, an antitrust probe into Google, and restrictions on Chinese exports of key minerals, effective Monday, 2/10.
The President’s authority to impose tariffs is delegated from Congress by statute as leverage to open up markets.
Last week, the CEO of Ford warned that tariffs on Canada and Mexico could cost the U.S. auto industry billions due to supply chain disruptions and higher prices for auto parts.
Is the EU next? President Trump has promised that tariffs on goods imported from the European Union are next with the vague justification that everyone treats the U.S. unfairly.
In addition, Trump says he plans to announce reciprocal tariffs this week that will affect “everyone.” -
President Trump repeatedly claims that the exporting countries will pay the tariffs – even calling the tariffs “external revenue” – but that is not how import tariffs work. Import tariffs are paid by the U.S. companies importing the products and, in many cases, the costs are passed along directly to U.S. consumers as higher prices.
6. Federal Workers: Deferred Resignation and Stripping Civil Service Protections
On Jan. 28, the Office of Personnel Management (OPM), under the direction of Elon Musk’s DOGE (Dept. of Government Efficiency) staff, sent to career federal employees via email an offer to receive compensation until September 30, 2025, if they resign now, with a deadline of February 6, 2025 (the so-called deferral resignation offer). The American Federation of Gov’t Employees and the AFL-CIO filed suit on Feb. 4 seeking injunctive relief in federal court in Massachusetts asserting violations of the Administrative Procedure Act and the Anti-Deficiency Act (since funds to fulfill such an offer have not been appropriated).
On Feb. 6, U.S. District Judge George O’Toole Jr. issued an order pausing the deferred resignation program and extended the deadline until Monday, Feb. 10, when a hearing is scheduled.
In another move, President Trump’s Executive Order 14171 authorizes OPM to strip civil service protections from thousands of members of the nonpartisan civil service. (The purpose of the civil service is to prevent corruption by barring politicians from handing out jobs as rewards for campaign favors.) Suit has been filed to overturn the Order by the National Treasury Employees Union, the Government Accountability Project, Public Employees for Environmental Responsibility, and a coalition of unions.
7. Immigration: Revoking Birthright Citizenship and Ending Asylum
President Trump issued an executive order on Jan. 20 seeking to revoke birthright citizenship for the children of undocumented immigrants – a right guaranteed by the 14th Amendment – on the grounds that they are not “subject to the jurisdiction” of the U.S. and therefore not protected. The ACLU sued the Administration in federal court in New Hampshire arguing that the 14th Amendment explicitly grants birthright citizenship for all people born in the U.S. Similar suits were subsequently filed in Massachusetts; in Maryland; in Washington State; in the District of Columbia; and in N. Dakota.
On Thursday, Feb. 6, U.S. District Judge John Coughenour in the Western District of Washington State issued a preliminary nationwide injunction blocking implementation of the Executive Order.
In another move, President Trump issued a Proclamation on Jan. 20 barring immigrants from remaining in the U.S. while pursuing asylum claims. Three nonprofits in Texas and Arizona sued in federal court in D.C. arguing the ban violates the Immigration and Nationality Act and other statutes, and violates the separation of powers by exceeding presidential authority.
Related suits have been filed seeking relief from the Administration’s discontinuation of the CBP One App that enabled asylum seekers to schedule appointments to request asylum, and relief from the Administration’s halting of programs providing legal services to unrepresented people facing deportation. Watch for developments in these cases this week on GovBudget.com/immigration-news/ or see the Just Security litigation tracker for developments.
8. Other Pending Lawsuits in Response to Administration Actions:
There are numerous other pending lawsuits challenging:
· the disclosure of personal and financial records to DOGE;
· removal of independent agency leaders;
· removal of information from government websites;
· actions targeting FBI and DOJ employees involved in the investigation of January 6 criminal violations;
· and a range of alleged civil liberties violations.
All of these lawsuits can be followed on the Just Security litigation tracker.
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. (2024-25 edition currently available at LexisNexis.com; 2025-26 edition will be published by Amazon.com shortly after release of the Trump budget.)
He is also Publisher of Appropriations.com and GovBudget.com which track major federal developments, by subject area, each day.
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Press interviews and Washington updates for your organization can be scheduled by calling: (202) 818-8578 or (301) 509-5688. Email comments and suggestions to: charles.s.konigsberg@gmail.com.