The Journal. - Trump 2.0: A Whiplash on Federal Spending

Episode Date: January 31, 2025

Ryan Knutson and Molly Ball round up the week’s news including nomination hearings, inspectors general firings and the airplane crash in D.C. Plus, they speak to WSJ’s Washington coverage chief Damian Paletta about the administration's freeze on potentially trillions of dollars in government financial assistance. Further Listening: - Trump 2.0: A Fast Start to a Second Term  - Trump’s Immigration Overhaul  Further Reading: - White House Budget Freeze Tried to Flip Script on Busted Budget Process  - Trump Blames DEI, Democrats for Deadly Plane Crash  Learn more about your ad choices. Visit megaphone.fm/adchoices

How are you? Molly Ball, senior political correspondent. How are you? Pretty good, Ryan. How you doing? Great. So Donald Trump has been president for 11 days. Is it just me or does it feel like he's trying to do everything everywhere all at once?

Just like the movie, which means we're also going to get a proliferation of like clones with weird appendages. Is that how this is going to go? Yeah, with hot dog fingers? Is that coming soon? Yeah, that's right. The hot dogs. Uh-huh.

That must be the next executive order we should all look out for. How would you say overall that things are going for him so far with the strategy? I would say mixed I mean Republicans and people in the administration are pretty thrilled with how it's going. They feel like he's racking up wins Democrats are also sort of getting their moxie back because They see him as doing too much too fast and they feel like this is gonna cause a backlash that's going to Bring them back to relevance. All right. Well, there's a lot to cover here on the show today, so let's get right to it. — Let's do it.

— From The Journal, this is Trump 2.0. I'm Ryan Knudson. — And I'm Molly Ball. — It's Friday, January 31st. Coming up, Trump tries to freeze federal spending, and it doesn't quite go as planned. Or does it? Calling all sellers, Salesforce is hiring account executives to join us on the cutting edge of technology. Here, innovation isn't a buzzword. It's a way of life.

You'll be solving customer challenges faster with agents, winning with purpose, and showing the world what AI was meant to be. Let's create the agent-first future together. Head to salesforce.com slash careers to learn more. All right, so before we get into this temporary freeze in federal spending, there are a few other things I want to talk about. First, Trump is putting his cabinet together. There are seven positions now confirmed. And this week, a few of his more controversial nominees had their Senate confirmation hearings. There's Keshe Patel for FBI Director,

Tulsi Gabbard for Director of National Intelligence, and Robert F. Kennedy Jr. for Health Secretary. How big of a battle do you think lies ahead for the administration in these nominees? Well, it's been a bit of a battle do you think lies ahead for the administration in these nominees? Well, it's been a bit of a battle on Capitol Hill this week. These nomination hearings were pretty rocky. These nominees got grilled pretty hard, particularly by Democrats, of course. But there was some skepticism from Republicans as well. And you can tell that while these Republicans want to be loyal and give the president his team,

some of them have misgivings. And you heard them pressing, you know, RFK, for example, not just for his views on issues important to them, like abortion, like agriculture, but also just his basic knowledge of the way the department works that he's going to be tasked to run. And he stumbled over things like understanding what Medicaid does and how it relates to Medicare. And that, of course, is something he would be tasked with overseeing. So I think there's a real sense on Capitol Hill that these are sort of going down to the wire and could really go either way. It seems like from the hearing so far that most Democrats are most likely to oppose these

nominees. But what Republicans do you think might present the biggest hurdles? We saw a few of them flip on Pete Hegseth, the defense secretary, who barely cleared his nomination, needing a tie-breaking vote from Vice President JD Vance. So, I think what we saw with Hegseth is there are Republican senators who feel relatively impervious to Trump's threats. There are at least three, Lisa Murkowski, who has survived a primary challenge before, Susan Collins, who represents a very blue state, and Mitch

McConnell, who's not running for reelection again and has strong views particularly on national defense. So that's three. And if there is one more senator who feels that one of these nominees is a bridge too far, that's it, they're not going to get through. All right, well, we'll keep our eyes on that. [♪ music playing on video game console, with a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat-up beat and a beat nerd like Molly and I, inspectors general are the internal government watchdogs who are supposed to make sure federal agencies comply with the law and don't misuse their authority

or taxpayer money. So, Molly, why do you think Trump did this? Well, he was asked about this on Air Force One, and he said... Some people thought that some were unfair or some were not doing the job, and it's a very standard thing to do. on Air Force One and he said, — Some people thought that some were unfair or some were not doing the job. And it's a very standard thing to do.

— We don't really know a lot about what was behind this, but it's a sort of part of this general house cleaning that we're going to talk more about today. This idea that the whole federal bureaucracy is sort of rotten and has to be cleaned out sort of root and branch. To critics, of course, it's not a way to make the government more effective or efficient cotton and has to be cleaned out sort of root and branch. To critics, of course, it's not a way to make the government more effective or efficient or take out potential internal dissent. It's about enabling corruption and malfeasance by taking off the proverbial cop on the beat

who would be overseeing these agencies and making sure, as you said, that they don't violate the law. So I think there's still more to know about why this has happened, and there's some concern about this that is somewhat bipartisan. Is there any indication that these inspectors general will be replaced quickly, or are these jobs just going to be vacant now for the foreseeable future? I don't think we know yet. They haven't appointed new people to these positions yet. And as we said at the beginning, they're doing a lot very fast. They're still trying to confirm the cabinet.

So this doesn't seem like necessarily the highest priority. All right. So I also want to talk to you about this deadly plane crash that happened late Wednesday night in D.C. More than 60 people are presumed dead. This is the first tragedy in Trump's second term, and it's actually not something that I would expect that we would be talking about on this podcast, but President Trump weighed in on it in a press conference on Thursday morning in a way that has drawn a lot of attention. It's all under investigation.

I understand that. That's why I'm trying to figure out how you can come to the conclusion right now that diversity had something to do with this crash. Because I have common sense, okay? And unfortunately, a lot of people don't. We want brilliant people doing this. This is a major change.

What did you make of what the president had to say about this? Well, it was certainly striking how political the president immediately chose to make this. I think the normal thing to do in these situations is to refrain from seeming to politicize a tragedy and to focus on the people dealing with the loss of their loved ones. Just a horrible tragedy that does raise a lot of potential policy questions. It raises questions about the crowding of the DC airspace, about the staffing levels and the funding and the personnel in the

Federal Aviation Administration. And then there also have been questions for years about the diversity initiatives undertaken by the FAA. Trump wasn't making that up. But, you know, he is not waiting for an investigation to say whose fault this actually is, right? We don't know if it was the air traffic controller's fault at all. We don't know if it was, as Trump also said on social media, if it was the helicopter pilot's fault. We don't know if those diversity initiatives, while real, had anything to do with any of the staff who were

involved in this. So I think it was shocking to a lot of people that the president didn't hold off on sort of casting blame for this, but also deeply familiar. You know, Trump was president before for four years. He has been on the political scene for a decade. He has never hesitated to point to his enemies and point to scapegoats for whatever is happening on his watch. And so in a lot of ways, I think this felt deeply familiar in Trump's political style. And I think those some of his allies would say this is what people like about him is that he's not politically correct. He's not

pulling punches. He's not going to sort of be unifying and nice when when what you need is actually a fighter. All right. So one of the big stories of the week was the Trump administration's effort to temporarily freeze a big chunk of federal spending. And we are going to talk about that right after this break. T.D. Direct Investing offers live support. So whether you're a newbie or a seasoned pro, you can make your investing steps count. And if you're like me and think a TFSA stands for Total Fund Savings Adventure, maybe reach

out to T.D. Direct Investing. investing. So on Monday, the Trump administration issued a memo that said it was going to pause a big chunk of federal spending, the ballpark of three trillion dollars worth of federal grants and loans. And there has been a whole lot of development since then.

So to help us understand it, we brought on Damian Paletta, our Washington, D.C., coverage chief. Hi, Damian. Thank you so much for being here. My pleasure. Thanks for having me. Hey, boss. Thanks for being here. So can you walk us through what happened here? What is the Trump administration trying to do and why? Sure.

So, when it's numbers, it's easy to unpack it a little bit if we just talk. We start with the numbers. So the federal budget's about $7 trillion. We know that the Trump administration wants to cut the budget dramatically from $7 trillion down to who knows what. You know, Elon Musk said he wants to lop $2 trillion off the budget so that we could get it down maybe to $ knows what. You know, Elon Musk said he wants to lop two trillion off the budget so that we could get it down maybe to five trillion. So we know they want to do this, but obviously spending stuff all runs through Congress. But what happened here is one week, exactly one week after Trump was sworn in, they put out this memo, this two-page memo, and it says, first of all, it says

there's a $10 trillion budget, which is not true. There's a $7 trillion budget, which is still a lot of money, but like every trillion counts. There's a ten trillion dollar budget. Three trillion of the ten is used on woke stuff and this and that, financial assistance. And so we're going to freeze it and it's going to be frozen effective tomorrow at five o'clock. The only thing they really said, the only exemptions that they offered in this memo and deep in the footnotes were Social Security and Medicare. And so for a lot of us who follow the budget closely, that said everything else was fair game.

And so what happens after this memo goes out? Well, I mean, Head Start programs that get money for, you know, the children, community centers, states felt like their money was going to get frozen. And then so the memo went out on Monday. By Tuesday, it appeared that the Medicaid system in this country had completely frozen up and seized up. And so the system that paying the hospitals, paying the healthcare providers for all those people completely seized.

I've never seen anything like that before. That happened less than 24 hours after this memo went out. There was a ton of questions. The White House couldn't answer the questions. And so they had to put out another memo on Tuesday, essentially blaming the media for the confusion and offering a few clarifications, essentially saying this would not apply to Medicaid and it would not apply to food stamps or the supplemental nutrition assistance programs. So then a federal judge put a pause on this order and then the Trump administration came

out and said they were rescinding the memo. Yeah, this is kind of a tale of three memos. The Monday memo that didn't make a ton of sense, the Tuesday memo, which tried to walk a little bit back. And then there's the Wednesday memo that said we rescind the Monday memo. Let's just pretend this never happened. And then Caroline Levitt tweets out, well, we're not actually rescinding it. We're just doing something else.

And the judge saw the tweet and said, wait second. We're still gonna have a hearing on this so I think you know, this is a great example of the Trump administration kind of coming out guns blazing you know following this Silicon Valley ethos of move fast and break things and It shows it doesn't quite work that way in Washington I mean obviously the Trump administration Elon Musk everyone wants to change the way Washington works and there's a lot of bipartisan support For attacking the budget and attacking government spending in a much different way But this way that they tried to completely claw back all power over government spending in a hastily written

Memo that obviously had some factual errors in it, I think shows that moving too fast in some key spaces like this could actually backfire on them. Had they rolled it out differently? Do you think that it might have had a different outcome? Well, I wonder, you know, because I can see both sides of this. On the one hand, the whole move fast and break things idea is that if you try to go at these things slowly, deliberately, incrementally, they'll just never get done, right? They'll get caught up in this bureaucratic black hole where everyone in the agency

finds a reason to object to it and, you know, you spend 10 years writing memos about something that never actually gets implemented. So the idea is you rip off the Band-Aid, you go extreme all at once, and then you can always walk back the parts that people object to, and then whatever you do end up doing looks relatively moderate by comparison. I don't know if we're going to get to that point with this given that the whole thing's been undone, right? I mean, I think it's important to recognize that like this didn't actually affect anyone, right? And even then, there's a question about whether the executive branch has the power to do this, right?

I mean, Damien, I wonder what you think about the potential for a constitutional crisis here, right? If the courts are telling the administration they can't do something, you know, the Constitution says it's up to Congress, there's a law in the books that says presidents can't just do this. But what if the administration just goes ahead and does it anyway when the courts have said that they can't? I mean, there's a clear strategy by the Trump administration to take some of these things, birthright citizenship is one, and this impoundment act of 1974 is another, and get them out into

the courts as quickly as possible. And the impoundment act just to say is this idea that Congress controls the purse strings, they decide how much money should be spent, but there's a view that the executive branch should say, okay, that's a ceiling, but we'll set the floor. We're going to not spend money that you've allocated. Exactly. The Empowerment Act of the 1970s essentially puts restrictions around what the White House can do once the money has already been authorized by Congress and put into law.

And Russ Vogt, who's Trump's nominee to be the budget director and President Trump himself, both believe that that law is unconstitutional and that the commander in chief should have the power to do that. So what they want is to get this into the courts. They wanted a lawsuit about this, just like they wanted a lawsuit about the birthright citizenship executive order, which the Constitution appears to say, you know, should not go into effect. But if there's a lawsuit and it gets into the courts and they get in front of a friendly Supreme Court,

and actually Elon Musk and Vivek Ramaswamy wrote an op-ed in the journal saying exactly this, that they want this into the courts so that if a friendly Supreme Court rules on it, then they get everything they want. They actually can't do these things without the court kind of ruling in their favor. So the sooner they can do it,

even if it's kind of a messy memo, although that might not help them in the courts if they have a messy memo, but the sooner they can get the courts involved, the sooner they can kind of get down to business. But what I'm saying is, you say they can't do it unless the court rules in their favor, but why not?

Why don't they just, I mean, look at what they're doing with TikTok. The Supreme Court already unanimously said that the law of the land is that TikTok cannot operate, but it still is because the administration is just ignoring that, right? I mean, the inspector's general, same thing, right? Lindsey Graham was on television and was asked, wasn't this illegal because in the law it says they have to give 30 days notice before they fire these people. And he said, well, yeah, technically.

Very quickly, the law says he's supposed to give 30 days notice. He didn't do that. Do you think he violated the law? Well, technically, yeah, but he has the authority to do it. So I'm not losing a whole lot of sleep that he wants to change the personnel out. I just want to make sure. And the idea is like, well, but who's going to do anything about it? Great question. I mean, in the TikTok example, we believe that it's hard to find someone with standing to sue. So yes, it does seem completely different from what the law says a law that was overwhelmingly approved by Congress last year and signed by President

Biden. But it's hard to find like who could who would have the standing to file a lawsuit to get it gummed up in the courts. And the same thing with the inspectors general. Yes, you have to notify Congress within 30 days before and you have to give specific reasons. Trump did none of that. I suppose some of the inspector's generals could sue, but in this example, the spending example, many people would have the standing to sue

because it would impact them. And that's what got this case in front of a federal judge so quickly. So another thing that happened this week that sort of related to this idea of cutting back on government spending was these buyout offers for federal employees, which is not something that I recall seeing much happen in the federal government. You see in the private sector all the time.

But what do you think is going on here? Is this just sort of like, let's cut back on government spending, let's shake loose the people that are maybe not on board with the Trump administration's vision? So it looks like this came right out of Elon Musk's shop and the Office of Personnel Management. And one of the issues with this, so the idea is they email this kind of buyout offer, although it has the same subject line that Elon Musk used in his sort of similar buyout offer when he took over Twitter in 2022. Right, right. Fork in the road, it said. Yeah.

And so it goes out to over 2 million federal employees. Democrats immediately said, whoa, whoa, this seems like kind of a trick. A rope a dope. You can't, because you have to respond, resign in the email. And so what if you respond that this isn't a legally binding contract? Also Congress is only author, or the government's only authorized to pay employees through March 14th, because that's when a shutdown would happen if there's not a deal. And so there's no money. There's actually no money to pay people through September

30th. Now, Congress could do a new bill, but people would be agreeing to something when there's actually no money to pay them. And so there's a lot of questions that was done without real press releases, without an explanation, without any clarification, and even without a follow up, without real answers about how it's going to work. And so that's just led to confusion and even a little bit of paranoia about what the administration is really up to. All right. Well, before we go, we've got a question from one of our listeners.

Hey Molly and Ryan, I'm Bill from Seattle. And my question is with the recent actions taken by President Trump, particularly around TikTok, pardons and other executive actions, do you think Trump is using his political capital too quickly? Specifically with some longtime Republicans already breaking party lines, could this put Republicans in a tough position as they defend these actions during midterms? Or do you think he's trying to expose anyone in his party who might not agree with his positions?

Thanks. Yeah, thanks, Bill. That's such a great question. And I think it's something that people in Washington are thinking about a lot, particularly Republicans. You know, the entire House of Representatives is going to be on the ballot in less than two years. Most of the Republicans have to worry more about a primary

than a general election, which is part of why you see them being so loyal to Trump. But there are some of them who are in swing districts and they remember, you know, during Trump's first administration, when Republicans lost those 2018 midterms, they lost 40 seats and handed the House to the Democrats in part because of the backlash to what people

saw as the chaos and dysfunction of that first Trump administration. Trump now is a lame duck and he's doing a lot of things that are not necessarily popular on an individual basis. His approval rating is underwater even in this so-called honeymoon period. So this stuff starts to pile up and has the potential to drag down the administration. And I think a lot of Republicans, as they look forward to this giant mass of legislation and deadlines that they've got to take care of this year, are wondering if they really ought to be in lockstep with an administration that may be rapidly losing

its political capital. Do you mean anything you'd like to add to that? Yeah, I would just say to be, he's 78 years old. He's older than Biden was at the beginning of his term. And so I kind of understand why he's moving so quickly. He wants to do a trade war this year. He wants to do tax reform this year He's got to kind of empty the tank in

2025 and you know who knows what an 80 year old Trump who's lost the midterms will be able to accomplish in 2027 so I think he's gonna go for broke. He doesn't really take advice to slow down and be cautious, you know But I think this is what Americans knew was gonna to happen. This is what they voted for. This is what they saw in his first term. This is the personality. He's very gregarious and energetic. And this is what Americans wanted. And so this is what they're getting.

They want disruption. Great. All right, well, thanks so much for your time, Molly, Damian. And we'll see you in a week. See you next week. Thanks a lot. Thanks. Before we go, do you have any questions

about what the Trump administration is doing? How is it affecting you? Email us and let us know. Please send a voice note to thejournal at wsj.com. That's thejournal at wsj.com. Trump 2.0 is part of The Journal, which is a co-production of Spotify and The Wall Street Journal. This episode was produced by Piersinghe and edited by Catherine Whalen,

with help from Tatiana Zamis. Molly Ball is the Wall Street Journal's senior political correspondent. I'm Ryan Knudsen. This episode was engineered by Griffin Tanner. Our theme music is by So Wiley and remixed by Peter Leonard. Additional music in this episode by Peter Leonard and Griffin Tanner. Fact-checking by Kate Gallagher. Artwork by James Walton. Thanks for listening. Trump 2.0 will be back with a new episode next Friday morning.

See you then.