Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Two weeks into his presidency,
Speaker 1: Donald Trump has shown that he has every intention to
Speaker 1: rewrite the way the federal government spends its money.
Speaker 2: White House Budget Office has ordered all federal agencies to
Speaker 2: cease any financial assistance if they believe the program might
Speaker 2: conflict with President Trump's executive orders.
Speaker 1: Last week we saw the dramatic freezing and then unfreezing
Speaker 1: of all federal loans and grants.
Speaker 3: We're getting word that the White House has now rescinded
Speaker 3: that freeze on federal loans.
Speaker 1: Then over the weekend came the news that staff from
Speaker 1: Elon Musk's DOGE had gained access to critical federal payment systems.
Speaker 4: And this is essentially the government's checkbook, and this is
Speaker 4: the system that issues the cash to contractors and vendors.
Speaker 1: Bloomberg's Gregory Cordy has been reporting on Musk DOGE and
Speaker 1: the larger Trump effort to put the presidency, instead of Congress,
Speaker 1: at the center of federal spending.
Speaker 3: If the president can withhold spending, it would really give
Speaker 3: him unfettered control over everything that the executive branch does.
Speaker 3: He could really unilaterally just shrink the size of the
Speaker 3: government with the stroke of a pen.
Speaker 1: I'm Salamosen and this is the big take DC from
Speaker 1: Bloomberg News Today on the show Inside Trump's attempts to
Speaker 1: splash government spending and the questions they raise about what
Speaker 1: a president can and can't do with money that Congress
Speaker 1: has approved. First, Gregory just lay out the basics for us.
Speaker 1: How does Congress and the government usually spend its money.
Speaker 3: Well, as we all know from Schoolhouse Rock, the Congress
Speaker 3: passes a bill, the President signs a bill, and then
Speaker 3: the president executes the bill and on spending, that's pretty
Speaker 3: much the way it goes. Congress has we all know
Speaker 3: the power of the purse. The president can't spend money
Speaker 3: unless Congress gives him the authorization to do so. That's
Speaker 3: the way it works in theory. But the question that's
Speaker 3: emerging now is what happens if the president doesn't want
Speaker 3: to spend all of that money. Does he have the
Speaker 3: power to hold it back or in the terminology in
Speaker 3: use to impound it. That's the question that we're going
Speaker 3: to find out the answer to sooner or later if
Speaker 3: President Trump forces this issue to try to get greater
Speaker 3: control over federal spending.
Speaker 1: So we have separation of powers. But tell me about
Speaker 1: the idea of impoundment, specifically in the history of it.
Speaker 1: Where did it come from? What is it?
Speaker 3: So this is a debate that goes back to the
Speaker 3: very early days of the Republic, and advocates for a
Speaker 3: broader presidential power to impound money go all the way
Speaker 3: back to George Washington and especially Thomas Jefferson. The President
Speaker 3: was that Congress authorized the President to spend money for
Speaker 3: gunships on the Mississippi River. At the time, there are
Speaker 3: tensions between Spain and France for control of the western territories,
Speaker 3: and in the meantime, President Jefferson signed, as we all know,
Speaker 3: the Louisiana Purchase and instantly doubled the size of the
Speaker 3: US geographically. President Jefferson said, I don't need gunships anymore.
Speaker 3: I've worked out a peace deal. Didn't spend the money,
Speaker 3: and Congress was only too happy to have that money
Speaker 3: just reverting back to the Treasury so they could spend
Speaker 3: it somewhere else. And there are examples like that that
Speaker 3: people can point to for the first really two hundred
Speaker 3: years of the Republic. But then in the nineteen seventies,
Speaker 3: during the height of Watergate, President Richard Nixon decided he
Speaker 3: didn't want to implement some of the Great Society programs
Speaker 3: that his predecessor Lyndon Johnson had implemented, and so didn't
Speaker 3: want to spend money on housing programs, on certain environmental programs.
Speaker 3: And as a result, Congress, to get more congressional power
Speaker 3: over the budget process, passed the Budget and Empowerment Control
Speaker 3: Act of nineteen seventy four. Then one of the things
Speaker 3: it says is if the Congress says to the President
Speaker 3: you have to spend the money, you have to spend
Speaker 3: the money.
Speaker 1: Gregory, can you tell me how Trump tried to push
Speaker 1: the limits of that law in his first term.
Speaker 3: Well, the most famous example led to his impeachment and
Speaker 3: eventual acquittal by the Senate, where he wasn't removed from office.
Speaker 3: But this was the controversy over the aid to Ukraine.
Speaker 3: President Trump was trying to pressure the president of Ukraine
Speaker 3: to investigate the business dealings of Hunter Biden. Essentially, Trump
Speaker 3: wanted to use foreign aid to Ukraine as leveraged to
Speaker 3: get a prosecutor in Ukraine to look into these business dealings.
Speaker 3: That the argument went by Congress and formed the basis
Speaker 3: of the amended articles of impeachment was that that violated
Speaker 3: the Impowerment Control Act and that was an impeachable offense.
Speaker 1: Trump was acquitted on that first impeachment. This time around,
Speaker 1: he's much more familiar with how the government works. That
Speaker 1: means that he and his team know where the roadblocks
Speaker 1: are as they search for ways to take control of
Speaker 1: spending authorities. On the campaign trail, Trump revealed just how
Speaker 1: much he knew about a wonky subject like impoundment.
Speaker 3: The then former and future President Trump put out a
Speaker 3: campaign video where he said he wants to challenge this
Speaker 3: whole notion that the president can't withhold money that Congress
Speaker 3: tells him to spend.
Speaker 4: When I returned to the White House, I will do
Speaker 4: everything I can to challenge the Impoundment Control Act in
Speaker 4: court and if necessary, get Congress to overturn it.
Speaker 5: We will overturn it.
Speaker 3: Didn't really get a whole lot of attention at the time.
Speaker 3: There are a lot of other issues obviously in this campaign.
Speaker 4: Thomas Jefferson famously used this power, as did many other presidents,
Speaker 4: until it was wrongfully curtailed by the Impoundment Control Act
Speaker 4: of nineteen seventy four.
Speaker 5: Not a very good.
Speaker 3: Act and then when we got elected, people went back
Speaker 3: to this campaign statement and said, hey, wait a minute,
Speaker 3: this is actually a pretty broad power that he is
Speaker 3: potentially claiming here.
Speaker 4: With impoundment, we can simply choke off the money. This
Speaker 4: policy is anti inflation, anti walk, anti globalist, and it's
Speaker 4: pro growth, pro taxpayer, pro American, and profrier.
Speaker 3: And if he's right on this question that the Impoundment
Speaker 3: Control Act is unconstitutional and the president can withhold spending
Speaker 3: for a good reason, a bad reason, or no reason,
Speaker 3: that really would fundamentally change the entire concept of the
Speaker 3: separation of powers that we thought we knew for the
Speaker 3: first two hundred and fifty years of the Republic.
Speaker 1: Coming up after the break, Trump's plans to overturn the
Speaker 1: nineteen seventy four Impoundment Control Act and the man who's
Speaker 1: helping him do it spoiler alert, it's not Elon Musk.
Speaker 1: Just days into his second term, Donald Trump began pushing
Speaker 1: the limits of his authority over spending the first sign
Speaker 1: and came through a memo on January twenty seventh from
Speaker 1: an office that most Americans probably aren't familiar with.
Speaker 3: Yeah, the Office of Management and Budget, which is really
Speaker 3: kind of where the rubber meets the road. In the
Speaker 3: federal government, the president sets broad policy, but then it's
Speaker 3: up to the Office Management Budget to really make sure
Speaker 3: that agencies are following that policy. And so the Office
Speaker 3: Management Budget sent out a memo to all the federal
Speaker 3: agencies saying, put a hold on dispersing any grants or
Speaker 3: loans until we can sort out which things we want
Speaker 3: to fund and which things we don't want to fund.
Speaker 3: That's potentially something in the neighborhood of three trillion dollars
Speaker 3: a year of federal spending that was put on hold,
Speaker 3: But it's really a baby with the Bathwater kind of situation.
Speaker 3: There were a lot of grants that could have gotten
Speaker 3: held that go to local police departments, which presumably President
Speaker 3: Trump wants to support. This was sort of a blunt
Speaker 3: tool to try to put a frieze on a lot
Speaker 3: of different and things all at once until they could
Speaker 3: sort it out. Because President Trump has signed a number
Speaker 3: executive orders to free spending on, say, things that promote
Speaker 3: what he calls gender ideology or DEI or abortion or
Speaker 3: other things that he finds unpalatable, the O and B
Speaker 3: wanted some time to sort out where those grants are
Speaker 3: in the federal government and therefore put on this freeze.
Speaker 1: So why was that memo then withdrawn though?
Speaker 3: Well, a group called the National Council of Nonprofits went
Speaker 3: to court and asked for an injunction to stop this
Speaker 3: grant freeze memo. The judge didn't rule on the merits,
Speaker 3: but put a temporary hold on the grand freeze memo.
Speaker 3: And so the White House very quickly capitulated, actually and
Speaker 3: didn't want to pick this fight this early in the administration.
Speaker 1: So is what Trump tried to do basically impoundment?
Speaker 3: Well, that's the question, right. So the argument from congressional
Speaker 3: Democrats is yes, absolutely, if it acts like a duck
Speaker 3: and quacts like a duck, it's a duck. He's refused
Speaker 3: to spend money that Congress has duly authorized. The counter
Speaker 3: argument is that no, this was just a short term
Speaker 3: programmatic delay, and we know his short term. They with
Speaker 3: threw it forty eight hours later. I suspect that this
Speaker 3: is not the legal battle that is going to decide
Speaker 3: once and for all the present's power to impound, but
Speaker 3: that there may be a new battle.
Speaker 1: On the horizon, as we saw over the weekend when
Speaker 1: Dose staff gained access to the Treasury payment system. This
Speaker 1: spending fight has more than one front, but the Office
Speaker 1: of Management and Budget or OMB, is one of the
Speaker 1: offices central to federal spending, which means Trump's pick to
Speaker 1: run it will have a pivotal role.
Speaker 3: The presence nominee for the Director of OMB is a
Speaker 3: guy by the name of Russell Vote. He is sort
Speaker 3: of a true believer in the presidence Maga agenda, that
Speaker 3: make America Great Again agenda, but he's also a little
Speaker 3: bit of a technocrat. He's a sort of bespectacled professorial manner,
Speaker 3: but he understands, perhaps better than anyone else where, those
Speaker 3: levers of power are between the presidencies and the agencies
Speaker 3: how the Office of Management and Budget can use its
Speaker 3: authority on everything from spending power, to regulations to the
Speaker 3: size of the federal government. He was O and B
Speaker 3: Director in Trump's first term towards the end, and he
Speaker 3: has been for the past four years at an organization,
Speaker 3: a think tank that really has been thinking about how
Speaker 3: we're going to attack this in the second Trump administration.
Speaker 3: He was one of the key authors of this project
Speaker 3: twenty twenty five manifesto about how to create a new
Speaker 3: muscular presidency to accomplish all of the things that Trump
Speaker 3: wants to do, and so this impoundment power was key
Speaker 3: to all of that. Now, Vote was on Capitol Hill
Speaker 3: for his confirmation hearings.
Speaker 6: It is a profound honor to be nominated a second
Speaker 6: time by President Trump to serve as the Director the
Speaker 6: Office of Management and Budget.
Speaker 3: And he was asked repeatedly by members of Congress, will
Speaker 3: the President try to assert presidential power to impound Will you,
Speaker 3: if confirmed as director Director, faithfully follow the law the
Speaker 3: Empowerment Control Act?
Speaker 1: Yes or no?
Speaker 3: And Vote's answer was, the President campaigned on that, but
Speaker 3: then it was a little squishy about when and where
Speaker 3: and how and what his legal authorities were.
Speaker 6: Center we will faithfully uphold the law. The President ran
Speaker 6: on the notion that the Empowerment Control Act is unconstitutional.
Speaker 6: I agree with that.
Speaker 3: As the Empowerment Law.
Speaker 1: Ever been said to be unconstitutional.
Speaker 6: By a court of law, not to my knowledge, it
Speaker 6: has not, so it.
Speaker 3: Is the law of the land. I don't care what
Speaker 3: the president, but it's been clear from the President himself
Speaker 3: that this is something that he believes he has the
Speaker 3: right to do, and he's promised to challenge the constitutionality
Speaker 3: of it, one way or another.
Speaker 1: Another key figure in Trump's fight over spending is Elon Musk,
Speaker 1: and as Gregory says, Musk's new DOGE office is right
Speaker 1: in the middle of this budget fight.
Speaker 3: One of the President's first executive orders was to create
Speaker 3: this Department of Government Efficiency. And that's where Elon Musk,
Speaker 3: the richest man in the world, the Tesla CEO that
Speaker 3: supported Trump in the campaign, that's where he's hanging his hat,
Speaker 3: is an office within the Eisenhower Executive Building within omb
Speaker 3: And so Vote and Elon Musk are going to be
Speaker 3: partners in this joint mission to figure out how to
Speaker 3: use presidential power to greatly curtail the size and the
Speaker 3: scope of the federal government.
Speaker 1: Gregory, how big of a change would it be in
Speaker 1: Washington if Trump wins the fight over how money is spent.
Speaker 3: I don't think it's an exaggeration to say that it
Speaker 3: would be the biggest change to our understanding of the
Speaker 3: separation of powers between Congress and the president, really, perhaps
Speaker 3: in a century or even more.
Speaker 1: In a press conference at the White House on Monday,
Speaker 1: Trump was asked to why it was important for Musk
Speaker 1: to have access to Treasury's payments system.
Speaker 5: Well, we're trying to shrink government, and he can probably
Speaker 5: shrink it as well as anybody else, if not better.
Speaker 5: Where we think there's a conflict or there's a problem,
Speaker 5: we won't let him go near it. But he has
Speaker 5: some very good ideas that we have a lot of
Speaker 5: very other talent.
Speaker 1: Also on Monday, the Senate voted to take up the
Speaker 1: confirmation of Russell vote, a procedural sign that vote is
Speaker 1: likely to be confirmed as the Director of the Office
Speaker 1: of Management and Budget. That means Vote could be working
Speaker 1: inside the White House fully approved by the Senate as
Speaker 1: soon as this week. This is The Big Take DC
Speaker 1: for Blueberg News. I'm Salaamosen. This episode was produced by
Speaker 1: Alex tie. It was edited by Aaron Edwards and Chris Anstey.
Speaker 1: It was fact checked by our editorial team and mixed
Speaker 1: and sound designed by Alex Sugia. Your producer is Naomi
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