Donald Trump’s administrative self-coup

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Greetings. Last week I asked for your ideas of possible “grey swans” of Trumponomics 2.0, and you didn’t disappoint. Your worries included huge costs from new pandemics, a “wild spree of violence and revenge led by the just-pardoned criminals”, Donald Trump’s deteriorating mental health leading to him being replaced by JD Vance, an actual military grab for Greenland, and peace in Ukraine, the Middle East, or both. Oh, and a credit crisis for the US government.

All are huge but conceivable events, and the repercussions would be incalculable. But nobody — me included — predicted the sudden stops in government spending that have taken place since last week. Today’s column offers some thoughts on that.

When I say sudden, I mean sudden. First, Trump signed an executive order suspending all development aid for 90 days, with reviews determining what spending should be reinstated. Then the Office of Management and Budget announced an indefinite freeze on all federal grants and financial aid, with the exception of Medicare, social security and aid directly to individuals — but including all aid given through states, NGOs and so on. Naturally, chaos ensued, to the point where the administration U-turned, cancelling the across-the-board domestic grant freeze while pointedly reasserting the intention of aligning spending with Trump’s Maga agenda.

The original sweeping instruction on federal spending was imprecise, got the numbers wrong (it said the federal government spent “nearly $10tn” in the 2024 fiscal year, while the true number is $6.75tn), and was wildly ideological. Here are some excerpts from the OMB’s memo:

The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve . . . Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.

Don’t let the over-the-top silliness or the U-turn distract from the enormity of what was attempted. First, in sheer economic terms, chaos was guaranteed. Steve Bannon’s call from eight years ago for a “deconstruction of the administrative state” is back on.

Already the foreign aid freeze (which remains in force, as far as I can tell) seems to have stopped a lot of programmes in their tracks, with many development agency staff apparently ordered to stop working. And hardly any work in international development will be unaffected, since the US is the rich world’s largest donor of development aid — largely as a function of its huge economic size; it’s near the bottom of the list on a per capita basis. (Secretary of state Marco Rubio has now also approved some exceptions from the foreign aid freeze for some humanitarian assistance.)

The effects of the domestic financial assistance “pause” were bigger and more chaotic still. Medicaid — providing the healthcare of nearly one-fifth of Americans — seems to have been affected. I am told universities and health research bodies were thrown into disarray. A federal judge immediately blocked part of the order. But the uncertainty remains, beyond the possible economic fallout.

For the second type of chaos that the Trump White House has plunged the nation into is a legal and constitutional crisis, and one that more of us should frankly have seen coming. Back in November, Matt Glassman of Georgetown University warned against “potentially the biggest executive threat to the separation of powers of them all”. He was talking about violating the 1974 Impoundment Control Act, which makes it illegal for the president to simply refuse to spend money that Congress has appropriated. Shortly after the election, the newly announced heads of the “Department of Government Efficiency”, Elon Musk and Vivek Ramaswamy, wrote in the Wall Street Journal that Trump regarded the act as unconstitutional. There is no reason to see this week’s backtracking as a change of mind, rather than a mere tactical retreat.

The federal spending freeze was, in other words, the opening salvo of a huge constitutional battle over the separation and balance of legal power in the US, in which Trump and his team are aiming to shift as much power from the legislative to the executive branch of government. That is of a piece with their support for the “unitary executive” theory which rejects limits on the president’s authority over the entire executive branch.

Third, and most important, is the political significance. A shift of power from the legislature to the executive, and a concentration of executive power in the president — what does that look like to you? I was struck by one sentence in the OMB memo in particular:

“Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities.” It also directed federal agencies to put political appointees in charge of ensuring that grants “conform to Administration priorities”.

What if “administration priorities” run counter to congressional ones? This conflict arises automatically in this case, where the presidential priority is not to spend money Congress has decided to spend. The memo could not be clearer about the answer: the will of the people is expressed through presidential priorities — not, then, those of the elected houses of Congress. The rule, in short, of one man.

The OMB memo did, to be fair, include this qualifier: “to the extent permissible under applicable law”. That extent will now be tested, and fought over, perhaps to destruction. For the stakes can hardly be exaggerated. This assault on both Congress’s power of the purse and on the US’s administrative state is as much of a self-coup as was the spurring of insurrectionists on January 6 2021.

Other readables

• Trump 2.0 presents the EU with opportunities to make the reforms it has long neglected. Grasp them instead of panicking, I argue in my FT column.

• The EU has a new productivity strategy — sorry, a “competitiveness compass”.

• The EU and Switzerland have settled on new trading arrangements. Read an explainer of what they are and what they mean for the relationship with the UK.

• Forget what others are doing: the domestic costs of climate change are so high that unilateral decarbonisation is optimal, according to new economic research.

• The baby gap: why governments can’t pay their way to higher birth rates.