Update 838 — Trump’s Barrage of EOs
Invite Legal Challenge; Many Infeasible
Immediately following his presidential inaugural on Monday, Donald Trump signed dozens of Executive Orders this week, many with drastic economic and fiscal implications, including several drawing legal challenges and others that may simply be infeasible without Congressional funding that Democrats may be able to thwart.
Congress meanwhile heard additional confirmation testimony from Russell Vought, Trump’s nominee for Director of the Office of Management and Budget, who has raised alarms with views on executive branch impoundment of Congressionally appropriated funds. We review the above as well as the 119th Congress’ first bill approved, the Laken Riley Act, below.
Good weekends all…
Best,
Dana
Headline
Trump’s First Week in Review
Trump issued a barrage of executive orders (EOs) this week following his inauguration Monday as the 47th President of the United States. While there is still much to be learned about their scope and impact, they lay the early groundwork for Trump’s extreme agenda. We offer insight into EOs with economic implications – which could range from increased inflation, stretched resources at federal departments and agencies, and reduced spending on critical assistance programs.
Trump’s Immediate Spotlight: Immigration
Following up on his campaign promises, President Trump introduced sweeping EOs related to immigration and border security promptly after taking office on Monday.
In declaring an undefined “national emergency” at the border, the President sought to unlock various authorities and even funding to continue construction of a border wall. The declaration also enables the deployment of military personnel to support border enforcement – 1,500 troops were ordered to be sent to the border in the days following the EO with Trump considering sending up to 10,000 military personnel. The role of the military at the border should be closely followed – the legal limitation on providing logistic and general support is clearly unrelated to any involvement in enforcing laws, per the Constitution.
In a drastic move, the “Protecting The Meaning and Value of American Citizenship” EO asserts that the 14th Amendment has been misinterpreted and directs federal agencies not to recognize the automatic citizenship of all individuals born on American soil. The 14th Amendment clearly states “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” A federal judge on Thursday temporarily blocked the President’s action on the grounds it is “blatantly unconstitutional.”
Trump also declared the situation at the southern border as an “invasion,” which technically allows him to suspend the admission of anyone entering at the border until he determines the “invasion” has ceased. His orders essentially halt asylum applications and refugees seeking to enter the country. Within hours of Trump’s presidency, the CBP One app was disabled and the appointments of an estimated 30,000 individuals applying for asylum were canceled.
We have already seen expanded ICE enforcement abilities with hundreds of arrests across the country including over 500 yesterday alone. Trump revoked the Sensitive Location Policy which protects spaces like courthouses, hospitals, places of worship, and schools from ICE enforcement activities.
Trump is laying the groundwork for what he hopes will be a complete restructuring of the United States immigration system. His actions – which are already being challenged in courts across the country – have stoked fear and confusion in many communities.
Trump Blocks IRA and BIL Funds
On Monday, Trump also directed federal agencies immediately to “pause the disbursement of funds” from both the Inflation Reduction Act of 2022 and the Bipartisan Infrastructure Law of 2021. While in keeping with Trump’s campaign promises to roll back Biden-era projects to promote clean energy and electric vehicles, the halt was met with concern from Finance Committee Chair Senator Mike Crapo (R-ID) and other GOP members of Congress whose states and districts are the overwhelming beneficiaries of these projects.
Partially in response to these concerns, OMB issued a memo on Wednesday narrowing the scope of the order, stating that it only applies to funds that go to supporting policies established in Section 2 of the EO, which specifically targets funding for climate change mitigation and incentives for electric vehicle charging. More general infrastructure projects, such as bridges and highways, are left unaffected. It remains to be seen whether Trump will roll back this EO even further as recipients of project funding in red states become aware that such funding is in jeopardy.
Democrats including Senate Budget Ranking Member Jeff Merkley (D-OR) are already pushing back against the EO, arguing that the Trump administration is illegally impounding funds appropriated by Congress. This practice, which has been deemed unconstitutional by the Supreme Court and is regulated by the Impoundment Control Act (ICA), led to Trump’s first impeachment in 2019. Still, Trump and OMB nominee Russell Vought continuously assert that putting this “pause” on funds is well within the constitutional authority of the executive.
Trump Legitimizes DOGE in EO
Also on his first day in office, Trump signed an EO renaming the United States Digital Service to the United States DOGE Service (USDS). This move established the Elon Musk-led Department of Government Efficiency as an official government office, ending months of uncertainty over DOGE’s (un)official status. The EO outlines the structure of DOGE and charges it with “modernizing Federal technology and software to maximize governmental efficiency and productivity”, a narrow directive believed to be an attempt to skirt transparency requirements for groups advising the president. The “department’s” ultimate focus will likely still be on its previously stated mission of cutting government spending.
Minutes after Trump’s inauguration, multiple lawsuits were filed against DOGE before it was officially brought into the executive branch. The lawsuits accused the department of operating as an advisory committee to the executive without following the guidelines set in the Federal Advisory Committee Act (FACA). FACA’s guidelines focus on increasing transparency by requiring public meetings and disclosure, among other things. The future of these lawsuits remains uncertain now that DOGE has been formally moved into the government, but Musk/DOGE’s leadership may still need to comply with requirements for official offices within the executive (e.g. divestiture requirements), potentially inviting an onslaught of new lawsuits before the efficiency effort is scheduled to terminate in 2026.
Trump EO to Freeze, Review Federal Regs.
On Monday, President Trump issued an EO instructing all executive departments and agencies to refrain from proposing or issuing rules pending review by newly Trump-appointed leaders and to immediately withdraw any rules that have been sent to the Federal Register but not published.
The EO also instructs departments and agencies to consider postponing the effective date of issued rules that have not yet taken effect for 60 days from the date of the order – that is, until March 21 – to allow “questions of fact, law, and policy that the rules may raise” to be reviewed. The EO further instructs departments and agencies to consider opening a comment period within those 60 days or even delaying rules beyond the initial 60 days “where necessary.”
The EO could delay the implementation of recently finalized rules, including the Consumer Financial Protection Bureau’s (CFPB) rule banning medical debt from being listed on credit reports which is set to go into effect on March 17.
Trump Declares National Energy Emergency
On Monday, Trump issued an executive order declaring a “national energy emergency” — also undefined. Trump’s order invokes the National Emergencies Act, which gives the president special powers to address a national crisis by allowing him to go around usual bureaucratic processes. In this case, there is no strong argument that America’s energy needs are even in crisis at the moment. US oil production is near an all-time high, and as of 2023, US energy production was exceeding its energy consumption. There is some indication that Trump’s push for greater energy production is to meet the energy needs of artificial intelligence, as data centers in particular are set to drastically increase the tech center’s electricity consumption.
Trump’s declaration is light on specific details. It orders federal agencies to identify and exercise their lawful emergency authorities but does not lay out a specific plan. What is more telling is what Trump’s EO omitted. The definition that Trump’s EO uses focuses on fossil fuels, but omits solar and wind energy. As both of these constitute a growing share of America’s energy production, it seems that the only rationale for the EO is Trump’s own well-established hostility toward renewable energy, which seems not to extend to some renewables such as geothermal. Also absent is any mention of climate change in the justification for declaring an emergency, instead focusing on high energy costs. It is entirely possible that environmental groups will challenge Trump’s EO in court, but that will not happen until federal agencies actually decide on what actions to carry out the order.
Tariff Announcements Delayed
Contrary to his earlier Day 1 immigration and border security promises, Trump punted any tariff-setting announcements. In a memo on his first day in office, the President outlined his “American First Trade Policy” and directed key agencies – Treasury, Commerce, USTR, Defense, and others – to review a wide array of existing trade policies and provide subsequent recommendations for executive action. These recommendations are not due until April 1 – notably after his rhetorical threats of February 1. On Monday, Trump reiterated his threat of 25 percent universal tariffs against Canada and Mexico while continuing to eye a 10 percent tariff on Chinese goods but delayed the formal announcement until February 1. He also took to the World Economic Forum in Davos this week to threaten tariffs on the European Union.
Crypto
On Thursday, Trump signed an executive order to advance the crypto industry and create a working group to explore a “national digital asset stockpile” — Trump’s first step to promote the U.S as the “crypto capital of the world, during a campaign season where the industry flexed its newfound political muscle and supported dozens of pro-crypto candidates, including Trump himself. Trump has even launched his own meme coin, giving him a personal stake in the industry’s wellbeing. The EO itself is scarce on the details, though it establishes a working group to create a plan to lay out “regulatory and legislative proposals.” It would also consider the aforementioned stockpile, which would bring the administration one step closer to fulfilling Trump’s campaign promise of creating a cryptocurrency reserve.
Other Developments
Nominations and Agency Leadership Changes
Russel Vought, Director of OMB
On Wednesday, Russell Vought came before the Senate Budget Committee as it considered his nomination for Director of the Office of Management and Budget (OMB). Vought, who served in this position during Trump’s last administration, currently runs a right-wing think tank and was one of the authors of Project 2025 – a document many consider to be a blueprint for an extreme Republican agenda in Trump’s second term.
Similar to his confirmation hearing last week in front of HSGAC, Democratic Senators expressed concern about impoundment – the withholding of funds Congress appropriates by the executive. Not only did the Government Accountability Office (GAO) find that the OMB illegally impounded funds under Vought’s leadership (leading to Trump’s first impeachment), but Vought advocated for the strategy in past writings like Project 2025. In response to questioning, Vought asserted he would follow the law but that Trump “ran on the notion that the Impoundment Control Act is unconstitutional” and that he agrees. The Impoundment Control Act (ICA) establishes a procedure for congressional oversight over the unilateral withholding of funds by the executive (impoundment) but the Supreme Court has, separately, deemed impoundment unconstitutional on multiple occasions.
Newfound concerns circulating in the hearing over Trump’s recent executive order that paused funding from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law, actions Vought argued were not impoundments but “programmatic delays.” Budget Committee Democrats like Ranking Member Jeff Merkley (D-OR) disagreed with the notion that the EO does not constitute the impoundment of funds appropriated by Congress, stating “Congress makes the law, not the president.”
Despite concerns over the executive encroaching on Congress’s power of the purse under Vought’s leadership, he was confirmed by HSGAC and is expected to be confirmed by the Senate Budget Committee along party lines.
Travis Hill Replaces Gruenberg as FDIC Chair
On Monday, President Trump appointed Federal Deposit Insurance Corporation (FDIC) Vice Chair Travis Hill to lead the federal banking regulator on an acting basis.
Hill intends to direct the FDIC to conduct a wholesale review of regulations, guidance, and manuals. His agenda will likely focus on innovation, including reinvigorating FDiTech, the FDIC’s innovation lab which was established under Trump-appointed Chair Jelena McWilliams, and laying out expectations for banks engaging in activities related to digital assets and tokenization.
Hill has also said it is possible that federal banking regulators will consider a new proposal to implement the 2017 Basel endgame agreement later this year. Hill has strongly opposed the Basel III Endgame proposal put forward in 2023 and supports a proposal that is roughly capital neutral – therefore neither effectively increasing nor decreasing bank capital requirements – as a starting point.
Laken Riley Act Heads to President’s Desk
Congress has officially sent its first bill of the 119th Congress to the White House. On Wednesday, the House voted to approve the amended version of the Laken Riley Act at a 236-156 vote with 46 Democrats joining Republicans in what is the start of the GOP’s border security legislative campaign.
The bill requires the federal government to detain all unauthorized immigrants accused of theft and other related crimes. Last week,12 Democratic Senators voted to amend – by expanding detainable offenses to include larceny, shoplifting, assault of a law enforcement officer, or any crime that causes bodily harm – and eventually send the bill back to the House for final approval. The requirement of detention of those accused, not convicted, raises real concerns over immigrants’ rights to due process within the American legal system.
The Laken Riley Act also gives state Attorneys General broad rights to sue the federal government for harm caused by its immigration policies. Such power given to state governments allows them to challenge any immigration policy with which they do not agree, creating opportunities for floods of lawsuits against the federal government.
The Department of Homeland Security estimates the Laken Riley Act – which does not provide additional funding – would cost $26.9 billion in its first year and would require an increase of 110,000 ICE detention beds. Although Republicans maintain that the price tag is of no concern to them on the issue of border security, ICE estimates the bill would require hiring 40,000 personnel and a 25 percent increase in deportation flights. Most Democrats, on the other hand, highlight the reality that this plan is simply not feasible. ICE estimates the first-year cost to execute the provisions of this bill would require an increase of 174 percent from their current level of funding.
This is the first bill sent to Trump for his signature which comes days after he enacted sweeping EOs relating to border and immigration policy, as outlined at the top of this newsletter. We can expect to see a flurry of related bills introduced in Congress which could be funded through the reconciliation process as the Republican party attempts to hold true to their campaign promises to completely restructure the immigration system.
Look Ahead
Tuesday, January 28
- Federal Open Market Committee meeting Day 1
Wednesday, January 29
- Federal Open Market Committee meeting Day 2
Thursday, January 30
- Q4 2024 GDP Advanced Estimate
Friday, January 31
- December Personal Consumption Expenditures (PCE) price index report