3 Takeaways - Government by Deal: What Happens When Everything Becomes Negotiable? (#291)

Episode Date: March 3, 2026

The government feels louder and faster than ever: executive actions, constant disruption, everything happening at once. But Yuval Levin of the American Enterprise Institute argues that all this motion may be masking something deeper. He explains why durable change comes from laws passed by Congress - not one-off deals- and why the shift from rule-making to deal-making could shape the future in unexpected ways.

We're living through a moment that feels loud, chaotic, and nonstop. Daily headlines, constant disruption, a sense that everything is happening all at once. It feels like government is moving at the speed of light. But all this motion is masking something quieter and more consequential. What if government has shifted from changing the system to cutting deals, from writing rules to making calls. And if everything starts to feel negotiable,

what happens to institutions and to the idea of law itself? Hi, everyone. I'm Lynn Toman and this is three takeaways. On three takeaways, I talk with some of the world's best thinkers, business leaders, writers, politicians, newsmakers, and scientists. Each episode ends with three key takeaways to help us, understand the world, and maybe even ourselves a little better. Today I'm excited to be with Yuval Levin.

Yuval studies how American institutions actually work, and what happens when they start to change shape? He's the director of social, cultural, and constitutional studies at the American Enterprise Institute and the founding editor of National Affairs. He's also the author of American Co-Colts, covenant and a time to build, which argues that our biggest political problem isn't polarization. It's the slow erosion of the institutions we rely on, but rarely notice.

Yuval, it's great to have you back again on three takeaways. Thank you very much for having me. It's great to be back. It is my pleasure. Yuval, this presidency feels nonstop. The headlines, the executive actions every week. And yet you argue something counterintuitive that it may actually be doing less than recent presidencies. Can you explain? I think there is a difference when it comes to the American presidency between action and durable change. And there's no doubt that there's a lot of action in this presidency.

There's an enormous effort constantly to try to drive the news, to control every news cycle, to make announcements, to try to declare actions taken. But to actually act in American government requires working through a particular process that our constitutional system puts in place and that the laws put in place. And while we see a lot of action from this administration, we actually don't see a whole lot of durable change driven through that system. Our laws being enacted, the answer is no. We're seeing a lot of administration.

action, we're certainly seeing some, but we're actually seeing less, not more, than we normally do at this point in an administration. And so the question we always have to ask ourselves is, what of this will still be here in a few months, in a few years? And that question does allow us to separate some of the noise we're seeing from real durable change. We are seeing change, And we're seeing change in habits and norms and behaviors in government that I do think will stick around in ways that will create problems for American government going forward. But we're not seeing nearly as much durable policy change as the daily news cycle might suggest. When you step back from the day-to-day news, what's the biggest misconception about how this White House actually exercises power? I think the deepest misconception is that there's,

a plan being pursued that is being put into effect. I think that's not quite right. There do appear to be a variety of plans, all kinds of ideas about what people in the administration want to do, but the putting into effect has been pretty frantic and unfocused. There's been a lot of back and forth. There have been a lot of trial and error. What there's not been a lot of is concerted administrative action, and what there's been essentially none of is legislative action. and ultimately that's actually how change works. I would just ask people, think about the presidents we think of as most transformative, and ask yourself why?

Among modern presidents, you might think of Franklin Roosevelt and the New Deal. You might think of Lyndon Johnson and the Great Society. You might think of Ronald Reagan and the defense buildup or the tax reforms. Those were actually all legislative changes driven by assertive presidents who knew what they wanted. That kind of change is not happening now. And I do think it's worth our seeing that as we think about the meaning of what's in front of us. You describe this as governing retail instead of wholesale. For someone listening, what does that distinction actually mean?

A lot of what we're seeing are direct interventions in the government's relationship with specific institutions. And so dealmaking with pharmaceutical companies, with energy companies, with law firms, with universities, these individual deals that affect the government's relationship with a particular institution in American life. Now, these matter. They're real, but they're generally not how our presidents govern. And for a reason, this is a huge, vast society. There are 330 million people here.

There are 5,000 universities. Are they making deals with 5,000 universities? No. They're focused on what often makes the news, on what's on people's minds. there's an increase in pharmaceutical costs, and so they make a deal with three companies. Well, that's not actually how the American economy operates. It's retail in the sense that it's directed to where the news stories are and tries to govern one by one. But our presidents make the most difference when they govern in a wholesale well,

which is to say they make rules for whole sectors of American life. They create arrangements that govern entire parts of the way our economy works. And we're seeing less, not more of that than usual in this case, but a lot more individual kind of retail dealmaking. It's good if what you're trying to do is win the news cycle of the day, but it's actually not the way that our presidents usually drive durable change. We hear almost nonstop talk of disruption. The big, beautiful bill, doge, budget fights, yet federal spending in 2025 was higher than under President Biden. how does an anti-big government president end up spending more than the Democrat he replaced? The interesting thing about this past year was that it was essentially identical to the year before,

if looked at from the point of view of federal spending. Obviously, it wasn't identical in many other ways. But if the idea is we're going to slash and drive down federal spending, which is how the administration spoke at least in the first six months of this presidency, while Doge was the big story in Washington, and that just simply didn't happen at all. And it didn't happen for a simple reason, which is that the appropriation of federal funding is done by Congress. And our actual federal budget was on a continuing resolution for the entirety of 2025.

And that means that spending in a formal sense was at the same level in 2025 as in 2024. Now, there were changes at the margins. There was the big beautiful bill, which was a reconciliation bill. So it was outside the appropriations process. it actually increased spending, not by a huge amount, but by a significant amount. Spending on defense and on immigration enforcement increased. And as a result, overall spending for the year where appropriations were unchanged and you had this reconciliation bill, overall spending was about three and a half percent higher in 2025 than in 24.

The thing to notice there is really the distance between the talk and the action. Doge was doing a lot of things. They were cutting a lot of contracts, but on the scale of American government spending, they were, as a statistical matter, doing nothing. They did make more of a difference when it comes to federal employment. Federal employment is almost 9% lower now than it was a year ago. But look, that too. There was a big hiring spree in the Biden years, and federal employment now is just about

its average for the 21st century. So what we've seen has not been a new world in terms of. of spending and the federal workforce, despite the way it's been talked about by the people engaged in it throughout the year. You've said that this White House prefers making a phone call and private deals to passing a law. Why do you think a one-on-one arrangement is more appealing than creating rules that apply to everyone?

First of all, it's much more doable by the president on his own. It's hard to get Congress to do anything. And ironically, it's actually become harder, the narrower that the majorities in Congress have grown. And so it is hard to move legislation, and the administration sees ways that it can move things without it and just goes for those. It's also much easier to take actions that are not accountable to anybody when they're dealmaking. So a deal made between the administration and a recipient of federal funding or a corporation that's regulated doesn't have to answer to congressional oversight. It generally, for the most part, is not even reviewed.

by the courts. The president can just do it. And so, although it's small, it is under his control in a way that legislation and even regulation are not entirely. And, you know, I think it just speaks to the president's conception of himself as a dealmaker. The idea is he's a negotiator. So when there's a problem facing the country, he's going to negotiate with the institutions involved and change how it works. But it's disconnected from the basic realities of how American government works, which means that it's achieving less than it seems to be. Universities, law firms, businesses, and countries have all been threatened in different ways. If the White House offers a private deal, why do you think most people are strongly tempted to

agree? I think a lot of these institutions would rather not do it that way. Universities would love to have predictable rules that they can plan around, but the fact is this is what they're being presented with. The federal government has a lot of leverage over them, and it seems as if the administration is willing to act in accordance with the president's personal whim, to use federal law enforcement that way, to deploy the government's power to reach arrangements with individual institutions, basically according to what the president wants. And so, you know, CEOs naturally in a situation like this are going to be protective and defensive. They're going to want to minimize the damage. And if they're being offered a deal,

that will turn the administration's attention away from them and towards somebody else, there's a strong inclination to take that deal, even when it's not the ideal way to engage with the federal government. And so the sheer leverage of the government, the weight of the government, creates a lot of pressure on all of these institutions to play ball. And when your responsibility is to a board or to a set of stakeholders in an institution, you at least want to show that you're protecting your interests. and I think these institutions are doing that. Do you think that the federal government has too much power, too much leverage over all these different types of institutions?

Very much so, absolutely. And look, I think in some ways there will be some advantage to this period of uncertainty and abuse of leverage and power because it is showing a lot of these institutions that they shouldn't just assume that their relationship with the federal government is stable and that they can therefore count on it for as much as they do. Universities do depend on federal money for too much, depend on the federal government for too much. Many other institutions in American life do, too. They do need to learn that lesson. I don't think this is the ideal way for them to learn it, but they are learning it.

And I don't think that a lot of these institutions are going to be able to look at their relationship with Washington in the same way again, regardless of who the next president is and what our politics look like. Absolutely. The federal government has too much leverage, too much of a role in the operation of the American economy and in American life in general. And if we end up with it having a little bit less of a role here, I think that would be great. But for the moment, what we're ending up with is the federal government abusing that role and that leverage, exercising leverage over institutions that was not intended by law. That is not what Congress wanted and that is not what we should want.

And so I'm more worried than hopeful on this front at this point. How could the power of the federal government over all these different types of institutions be scaled back? Part of it, of course, would require legislative changes, and that's hard to envision at the moment, but it's never impossible. And I do think that for the problems with our constitutional system in general to be addressed, Congress will have to assert itself to a much greater degree than it has. But there's also a role for the institutions involved to try to pull themselves, out of the kinds of relationships they've had with the federal government. It's easier for some than for others. Regulated institutions can't really do that very easily,

but there are companies that can. There are certainly universities can find ways to rely less on federal power and federal large S because they can recognize now that those give the government leverage that can be used in ways that are unpredictable and counter to the interest of the institutions involved. And I think that is a lesson we all need to see. I mean, that's always been true, but we now have a president who is willing to use it as a source of leverage,

and that underlying fact that's always been there is now inescapable, and I do think we should learn some lessons from it. The tech companies, such as Apple, Google, and Amazon, are some of the largest and most profitable companies in the world. What power does the government have over them? Well, the government has a lot of regulatory power over them in all kinds of domains, because it can regulate the economy by its control over the application of federal law, the federal government has huge leverage over any company in America,

but more so over these large global companies that have to respond to general rules and that have to account for the role that government can play in trade policy, the role that it can play in the regulation of the communication sector, in the regulation of securities and the economy. these are areas that most companies don't touch at the same time, but that these large global, particularly information technology companies, are affected by all at once. And so if you're the CEO of Apple,

you really do need to be on the good side of the American government. And at the moment, that really means making a personal appeal to the President of the United States. That's not how our system should work, but it's how it's working now. And so I think these companies really do have to think about the kind of relationship they have. with the Trump administration, their own success does depend on it. There's no doubt about it.

And you believe that even if federal laws were scaled back, the government is still going to have immense power over all of these types of businesses and institutions? Yes, but I think that there is a role for some scaling back of regulatory power, and there's a role for scaling back of presidential power. Look, the government's role in these sectors is not supposed to be exercised in a personalist way like this, where you get good treatment, essentially if you're nice to the president personally. That is not how our system is meant to work. That is not how the laws require our system to work. We're seeing here a bending of presidential power to the whim of the president personally that is absolutely an abuse of power.

That's especially true with regard to federal law enforcement power, the notion that you'll be investigated and sued by the government if you're on the wrong side of the president just simply is not how American law enforcement has generally worked. And that change creates a tremendous problem in our society. I think there is room for Congress to rein that in. What's lacking is the will. And really, will in Congress has been what's lacking in our constitutional system for a long time. I don't think there's a way out of the problem we face now as a result of Trump's abuses of power.

that doesn't involve Congress reasserting itself. The next president, whoever he or she might be, is going to use these powers if they are available. And so really only Congress can change the situation. And yet we have a lawmaking vacuum in Congress that has persisted for decades now. Exactly. That's, I think, where people who are worried about the health of our system need to focus. It's very easy in this moment to say the action is in these titanic struggles between the president and the courts. And these are very important, but the real problem emanates from the underactivity of Congress, more even than from the hyperactivity of the president.

The absence of Congress creates vacuums that the president rushes into, that to some degree the courts are forced to rush into. The institutions are not built to do that. They're trying to play the role that only our national legislature is meant to play. and we have seen in American history periods of extreme presidential excess like this, followed by periods of congressional reassertion, after Andrew Jackson, to some degree after Woodrow Wilson, particularly maybe after Franklin Roosevelt, also after Richard Nixon. There have been times when Congress has stepped up and recognized that it has been missing in action. And I am hopeful that a period like the one we're living through now could be followed by such a reassertion. But hope is not a strategy, and we need to think about how to change the incentives that members of Congress confront so that they will see it as in their interest to assert their own institutions place in the system

rather than to just play a supporting role in a drama that is fundamentally about the president. If everything becomes a deal instead of a rule that applies to everyone, what are the implications? Well, I think the implications is a loss of the rule of law. ultimately, if everything becomes a deal, then everybody's looking for advantage. And it's in the nature of a market economy for people to look for advantage. But the advantage should be, how do I appeal to consumers in a way that provides them with the best product at the best price? If instead the advantage is, how do I put myself in the best position in relation to the President of the United States, then our economy becomes deformed by corruption.

And I think that word corruption has to be first and foremost for us in thinking about the implications of all. all this. What it creates is corruption, is people trying to gain an advantage for themselves in relation to the government when the strength of our system of government is that it treats everyone equally thanks to neutral rules and laws. Obviously, it's never worked perfectly in that way, but it is intended to be a system that provides a neutral setting of rules that creates a marketplace in which everyone can compete on an equal footing. That is what we're losing when we move in the direction of this kind of individual deal making. And the costs would be tremendous, just enormous. We absolutely have to fight against this trend. You describe stability and

predictability as a kind of invisible support for how the country functions. What happens to government, business, and institutions when that support is replaced by a focus on short-term individual deals. The ability to make long-term planning is an incredibly important, I would say, invisible subsidy provided for us by a stable system of government. It means that when you're thinking about taking a risk as someone starting a business or taking a job as an investor, as an employer, you can assume that you kind of know what the rules are going to be next year and in 10 years and after that. Things change sometimes. There are new laws, but it's actually quite rare. And the basic arrangements of the way in which our economy works and is governed don't change that much

on short notice. That means you can plan, and that's really the underlying secret to the dynamism of our society. That dynamism, which feels so often like instability, is made possible by tremendous stability, by being able to trust in your sense of what the future would be like. And so you take risks. When we don't have that kind of predictability, we We take fewer risks. We feel unsafe. We protect ourselves and roll ourselves up into a ball and hope for the best. And that is not how a dynamic economy works. And so the costs could be enormous, quite apart from direct abuses of power. I really worry that if we end up in a place where we can't have stable expectations when it comes to law and regulation, our economy will suffer a lot. And what are the implications for future presidents here?

Ironically, I think future presidents should see that they would actually benefit from lowering public expectations about what they can do on their own. And if you look at American history, that's actually an easy point to make. Presidents generally have been strongest when they've explained to the public that they can only advance things by working with Congress. that the old line, I need you to write your congressman. I think for a president to say, these are my objectives. I know I have to work with Congress to do it. I need you to elect that Congress and pressure them in this direction. For a president to be able to say, I'd love to do this, but I can't do it on my own,

is a way to use the pressure that can be created by the bully pulpit of the office to advance change. Our presidents now don't see that. They don't use that tool. they think they can do it on their own. And so they, as I say, set themselves up for failure. I think presidents need to see that there's real strength in restraint. Successful leaders understand that. There's real strength in restraint.

It's not easy to see, but it's important to see. And I would hope that any future president can recognize that. It's a lot of where the strength of the office comes from in our system. I hope so. I mean, I hate to see us going from one party to another with all of these different individual executive actions and deals. Yeah, that's no way to govern ourselves. It certainly isn't.

Evalve, what are the three takeaways? One takeaway, I'd say, is you have to think about change in the medium term. Don't just think about this moment, and don't just think, well, it'll all be different in a generation. Ask yourself, what are we doing that's going to endure five years from now? That's the way that real change happens, especially in and around American political life. Secondly, I would say, always think about the distance between talk and action. It's very easy to talk. It's very hard to act in American political life. And it's in the distance, the difference between the two that you can actually come to understand the way our politics works. The final

takeaway I suggest to people is really the hardest lesson for me of the last 25 years of working in Washington has been that everybody means well, almost all the time. I think it's absolutely essential for understanding American politics is that just about nobody gets out of bed in the morning to make somebody else's life miserable. That's really not how this works. And when you find someone doing something, you can't explain in your own terms. You have to think, how is this a good thing in their terms? Why do they think this is good for the country? Because they probably do. That's not only a way to approach people more humanely in a more civilized way, though it is that. It's also a way to understand them better and to make yourself more effective in thinking as a

citizen or in thinking about someone engaged in politics. Thank you, Yuval. This has been great. It's a pleasure to have you back on Three Takeaways. Thanks very much. Great to be with you. If you're enjoying the podcast, and I really hope you are, please review us on Apple Podcasts or Spotify or wherever you get your podcasts.

It really helps get the word out. If you're interested, you can also sign up for the Three Takeaways newsletter at Three Takeaways.com, where you can also listen to previous episodes. You can also follow us on LinkedIn, X, Instagram, and Facebook. I'm Lynn Toman, and this is Three Takeaways. Thanks for listening.