Bloomberg Audio Studios, podcasts, radio news. Two weeks into his presidency, Donald Trump has shown that he has every intention to rewrite the way the federal government spends its money.
White House Budget Office has ordered all federal agencies to cease any financial assistance if they believe the program might conflict with President Trump's executive orders.
Last week we saw the dramatic freezing and then unfreezing of all federal loans and grants.
We're getting word that the White House has now rescinded that freeze on federal loans.
Then over the weekend came the news that staff from Elon Musk's DOGE had gained access to critical federal payment systems.
And this is essentially the government's checkbook, and this is the system that issues the cash to contractors and vendors.
Bloomberg's Gregory Cordy has been reporting on Musk DOGE and the larger Trump effort to put the presidency, instead of Congress, at the center of federal spending.
If the president can withhold spending, it would really give him unfettered control over everything that the executive branch does. He could really unilaterally just shrink the size of the government with the stroke of a pen.
I'm Salamosen and this is the big take DC from Bloomberg News Today on the show Inside Trump's attempts to splash government spending and the questions they raise about what a president can and can't do with money that Congress has approved. First, Gregory just lay out the basics for us. How does Congress and the government usually spend its money.
Well, as we all know from Schoolhouse Rock, the Congress passes a bill, the President signs a bill, and then the president executes the bill and on spending, that's pretty much the way it goes. Congress has we all know the power of the purse. The president can't spend money unless Congress gives him the authorization to do so. That's the way it works in theory. But the question that's emerging now is what happens if the president doesn't want
to spend all of that money. Does he have the power to hold it back or in the terminology in use to impound it. That's the question that we're going to find out the answer to sooner or later if President Trump forces this issue to try to get greater control over federal spending.
So we have separation of powers. But tell me about the idea of impoundment, specifically in the history of it. Where did it come from? What is it?
So this is a debate that goes back to the very early days of the Republic, and advocates for a broader presidential power to impound money go all the way back to George Washington and especially Thomas Jefferson. The President was that Congress authorized the President to spend money for
gunships on the Mississippi River. At the time, there are tensions between Spain and France for control of the western territories, and in the meantime, President Jefferson signed, as we all know, the Louisiana Purchase and instantly doubled the size of the US geographically. President Jefferson said, I don't need gunships anymore. I've worked out a peace deal. Didn't spend the money, and Congress was only too happy to have that money just reverting back to the Treasury so they could spend
it somewhere else. And there are examples like that that people can point to for the first really two hundred years of the Republic. But then in the nineteen seventies, during the height of Watergate, President Richard Nixon decided he didn't want to implement some of the Great Society programs that his predecessor Lyndon Johnson had implemented, and so didn't want to spend money on housing programs, on certain environmental programs.
And as a result, Congress, to get more congressional power over the budget process, passed the Budget and Empowerment Control Act of nineteen seventy four. Then one of the things it says is if the Congress says to the President you have to spend the money, you have to spend the money.
Gregory, can you tell me how Trump tried to push the limits of that law in his first term.
Well, the most famous example led to his impeachment and eventual acquittal by the Senate, where he wasn't removed from office. But this was the controversy over the aid to Ukraine. President Trump was trying to pressure the president of Ukraine to investigate the business dealings of Hunter Biden. Essentially, Trump wanted to use foreign aid to Ukraine as leveraged to get a prosecutor in Ukraine to look into these business dealings.
That the argument went by Congress and formed the basis of the amended articles of impeachment was that that violated the Impowerment Control Act and that was an impeachable offense.
Trump was acquitted on that first impeachment. This time around, he's much more familiar with how the government works. That means that he and his team know where the roadblocks are as they search for ways to take control of spending authorities. On the campaign trail, Trump revealed just how much he knew about a wonky subject like impoundment.
The then former and future President Trump put out a campaign video where he said he wants to challenge this whole notion that the president can't withhold money that Congress tells him to spend.
When I returned to the White House, I will do everything I can to challenge the Impoundment Control Act in court and if necessary, get Congress to overturn it.
We will overturn it.
Didn't really get a whole lot of attention at the time. There are a lot of other issues obviously in this campaign.
Thomas Jefferson famously used this power, as did many other presidents, until it was wrongfully curtailed by the Impoundment Control Act of nineteen seventy four.
Not a very good.
Act and then when we got elected, people went back to this campaign statement and said, hey, wait a minute, this is actually a pretty broad power that he is potentially claiming here.
With impoundment, we can simply choke off the money. This policy is anti inflation, anti walk, anti globalist, and it's pro growth, pro taxpayer, pro American, and profrier.
And if he's right on this question that the Impoundment Control Act is unconstitutional and the president can withhold spending for a good reason, a bad reason, or no reason, that really would fundamentally change the entire concept of the separation of powers that we thought we knew for the first two hundred and fifty years of the Republic.
Coming up after the break, Trump's plans to overturn the nineteen seventy four Impoundment Control Act and the man who's helping him do it spoiler alert, it's not Elon Musk. Just days into his second term, Donald Trump began pushing the limits of his authority over spending the first sign and came through a memo on January twenty seventh from an office that most Americans probably aren't familiar with.
Yeah, the Office of Management and Budget, which is really kind of where the rubber meets the road. In the federal government, the president sets broad policy, but then it's up to the Office Management Budget to really make sure that agencies are following that policy. And so the Office Management Budget sent out a memo to all the federal agencies saying, put a hold on dispersing any grants or loans until we can sort out which things we want to fund and which things we don't want to fund.
That's potentially something in the neighborhood of three trillion dollars a year of federal spending that was put on hold, But it's really a baby with the Bathwater kind of situation. There were a lot of grants that could have gotten held that go to local police departments, which presumably President Trump wants to support. This was sort of a blunt tool to try to put a frieze on a lot of different and things all at once until they could
sort it out. Because President Trump has signed a number executive orders to free spending on, say, things that promote what he calls gender ideology or DEI or abortion or other things that he finds unpalatable, the O and B wanted some time to sort out where those grants are in the federal government and therefore put on this freeze.
So why was that memo then withdrawn though?
Well, a group called the National Council of Nonprofits went to court and asked for an injunction to stop this grant freeze memo. The judge didn't rule on the merits, but put a temporary hold on the grand freeze memo. And so the White House very quickly capitulated, actually and didn't want to pick this fight this early in the administration.
So is what Trump tried to do basically impoundment?
Well, that's the question, right. So the argument from congressional Democrats is yes, absolutely, if it acts like a duck and quacts like a duck, it's a duck. He's refused to spend money that Congress has duly authorized. The counter argument is that no, this was just a short term programmatic delay, and we know his short term. They with
threw it forty eight hours later. I suspect that this is not the legal battle that is going to decide once and for all the present's power to impound, but that there may be a new battle.
On the horizon, as we saw over the weekend when Dose staff gained access to the Treasury payment system. This spending fight has more than one front, but the Office of Management and Budget or OMB, is one of the offices central to federal spending, which means Trump's pick to run it will have a pivotal role.
The presence nominee for the Director of OMB is a guy by the name of Russell Vote. He is sort of a true believer in the presidence Maga agenda, that make America Great Again agenda, but he's also a little
bit of a technocrat. He's a sort of bespectacled professorial manner, but he understands, perhaps better than anyone else where, those levers of power are between the presidencies and the agencies how the Office of Management and Budget can use its authority on everything from spending power, to regulations to the
size of the federal government. He was O and B Director in Trump's first term towards the end, and he has been for the past four years at an organization, a think tank that really has been thinking about how we're going to attack this in the second Trump administration. He was one of the key authors of this project twenty twenty five manifesto about how to create a new muscular presidency to accomplish all of the things that Trump wants to do, and so this impoundment power was key
to all of that. Now, Vote was on Capitol Hill for his confirmation hearings.
It is a profound honor to be nominated a second time by President Trump to serve as the Director the Office of Management and Budget.
And he was asked repeatedly by members of Congress, will the President try to assert presidential power to impound Will you, if confirmed as director Director, faithfully follow the law the Empowerment Control Act?
Yes or no?
And Vote's answer was, the President campaigned on that, but then it was a little squishy about when and where and how and what his legal authorities were.
Center we will faithfully uphold the law. The President ran on the notion that the Empowerment Control Act is unconstitutional. I agree with that.
As the Empowerment Law.
Ever been said to be unconstitutional.
By a court of law, not to my knowledge, it has not, so it.
Is the law of the land. I don't care what the president, but it's been clear from the President himself that this is something that he believes he has the right to do, and he's promised to challenge the constitutionality of it, one way or another.
Another key figure in Trump's fight over spending is Elon Musk, and as Gregory says, Musk's new DOGE office is right in the middle of this budget fight.
One of the President's first executive orders was to create this Department of Government Efficiency. And that's where Elon Musk, the richest man in the world, the Tesla CEO that supported Trump in the campaign, that's where he's hanging his hat, is an office within the Eisenhower Executive Building within omb And so Vote and Elon Musk are going to be partners in this joint mission to figure out how to use presidential power to greatly curtail the size and the scope of the federal government.
Gregory, how big of a change would it be in Washington if Trump wins the fight over how money is spent.
I don't think it's an exaggeration to say that it would be the biggest change to our understanding of the separation of powers between Congress and the president, really, perhaps in a century or even more.
In a press conference at the White House on Monday, Trump was asked to why it was important for Musk to have access to Treasury's payments system.
Well, we're trying to shrink government, and he can probably shrink it as well as anybody else, if not better. Where we think there's a conflict or there's a problem, we won't let him go near it. But he has some very good ideas that we have a lot of very other talent.
Also on Monday, the Senate voted to take up the confirmation of Russell vote, a procedural sign that vote is likely to be confirmed as the Director of the Office of Management and Budget. That means Vote could be working inside the White House fully approved by the Senate as soon as this week. This is The Big Take DC for Blueberg News. I'm Salaamosen. This episode was produced by Alex tie. It was edited by Aaron Edwards and Chris Anstey. It was fact checked by our editorial team and mixed
and sound designed by Alex Sugia. Your producer is Naomi Shaven and our senior editor is Elizabeth Ponso. Our executive producer is Nicole Thamesterboer Stage Bouman is Bloomberg's head of Podcasts. If you like this episode, make sure to subscribe and review The Big Take DC wherever you listen to podcasts. It helps people find the show