Update 843 — Trump, Musk Shutter CFPB;
Fork in the Road for Reconciliation Process
The stop-and-start effort on the Hill to act on Donald Trump’s legislative priorities — tax, border security, defense, and energy — via the reconciliation process hit a fork in the road this week. The GOP may have a trifecta but the House and Senate are now proceeding along two markedly different tracks, with plans to mark up proposals so different in scope and scale as to be, for the moment… irreconcilable.
And in the space of less than two weeks, Trump administration officials have ground work to a halt at the Consumer Financial Protection Bureau (CFPB), ending all supervision, examination, and enforcement activity, declaring no immediate need for further funding, and ordering all employees to remain at home this week, sparking outcries in Congress and protests among activists. We cover these developments below.
Best,
Dana
House, Senate on Reconciliation Collision Course?
Republicans may have secured a trifecta in the 2024 elections and unified control in Washington, but not a unified approach to enacting the Trump legislative agenda. Congressional Republicans have turned much of their attention toward crafting a reconciliation package to pass their biggest priorities along party lines —circumventing the 60-vote threshold required to avoid a filibuster in the Senate — but the two chambers remain at odds on priorities and strategy. In any event, the final product is likely to yield tax cuts stacked in favor of the wealthy, which will be paid for by significant cuts in federal spending on working- and middle-class Americans.
House and Senate leaders have yet to agree on the most basic decision regarding reconciliation and moved further apart this week. House Speaker Mike Johnson (R-LA), wants a one-bill reconciliation to limit the House to one tough vote with his two-seat majority. Such a package would combine key Trump priorities like increased funding for defense and immigration with an extension of expiring provisions of the Tax Cuts and Jobs Act (TCJA) and enactment of new tax cuts.
Senate Majority Leader John Thune (R-SD) wants two reconciliation bills; the first focusing on immediate needs on immigration, defense, and energy, and the second addressing tax extensions and additional cuts. Senate Republicans expect the second package will require many months to negotiate and face pushback from a divided House GOP, and they want to secure Trump an early win on a less controversial package. President Trump previously came out in favor of the House approach, saying he wants “one big, beautiful bill,” but has since walked back his support saying he cares more about final passage than how Congress gets there.
Congress ISO Agreement on Procedural First Step
To initiate the reconciliation process, the House and Senate must first pass identical budget resolutions (i.e. a concurrent budget resolution conference report), which instruct specific committees to report proposals that add to or reduce the deficit by a specified amount. House and Senate committees have been working on negotiating the substance of their reconciliation plan for months. While the House Budget Committee traditionally initiates the budget resolution process, Senate Budget Chairman Lindsay Graham (R-SC) has grown impatient waiting for House Budget Chairman Jodey Arrington’s (R-TX) plan.
This frustration came to a head last Friday when Chairman Graham released a draft proposal of a Budget Resolution to set up a first measure consistent with the two-bill framework. The resolution, which is being marked up in committee today and tomorrow, instructs:
- each of the following committees to report proposals that decrease the deficit by at least $1 billion: Agriculture, Energy and Natural Resources, Finance, and Health, Education, Labor, and Pensions (HELP).
- the Homeland Security Committee to report proposals that increase the deficit by no more than $175 billion.
- the Judiciary Committee to report proposals that increase the deficit by no more than $175 billion.
- the Armed Services Committee to report proposals that increase the deficit by no more than $150 billion.
- the Commerce, Science, and Transportation Committee to report proposals that increase the deficit by no more than $20 billion.
- the Environment and Public Works Committee to report proposals that increase the deficit by no more than $1 billion.
Yesterday, Speaker Johnson objected, insisting that the House would not take up the Senate proposal. House Budget Chair Arrington noticed a markup for his own House resolution tomorrow morning. The proposed budget resolution, a draft of which was released this morning by Arrington, instructs each of the following committees to report proposals that increase the deficit by no more than the listed amount ($4.8 trillion total):
- House Ways and Means Committee – $4.5 trillion
- Armed Services Committee – $100 billion
- Homeland Security Committee – $90 billion
- Judiciary Committee – $110 billion
As for spending cuts, the draft instructs the following committees to report proposals that decrease the deficit by at least the listed amount ($1.5 trillion total):
- Agriculture Committee – $230 billion
- Education and Workforce Committee – $330 billion
- Energy and Commerce Committee – $880 billion
- Oversight and Government Reform Committee – $50 billion
- Transportation and Infrastructure Committee – $10 billion
- Financial Services and Natural Resources Committees – $1 billion each
Also included is a $4 trillion increase in the debt limit, which Republicans tried to address in last December’s CR but failed due to pushback from GOP fiscal hawks (more on this below).
Spring Agenda Risks Further Reconciliation Delay
Even if the House and Senate come to a swift agreement, FY25 appropriations and the debt limit threaten to complicate progress on reconciliation in the coming months:
- FY25 Appropriations – The government is only funded until midnight, March 14 under the last of many “continuing resolutions” (CRs) for FY25 that simply extend funding at prior-year levels. If Congress fails to act, the government will shut down. Some Democrats have threatened to withhold their support at the risk of a shutdown in an attempt to force the Administration to spend previously enacted appropriations, including staffing Veterans’ Hospitals, clean energy grants to farmers, disaster relief, and other high-priority items. Discretionary funding is addressed outside the reconciliation process, meaning that Republicans will have to get 60 votes in the Senate and a simple majority in the House to advance a proposal, necessitating a degree of bipartisan support given the slim margins in both chambers. The deadline will certainly distract from Republicans’ work on reconciliation, especially if Democrats withhold their support as suggested or demand serious concessions not agreeable to President Trump.
- Debt Limit – The suspension of the debt limit – enacted in the summer of 2023 as part of the Fiscal Responsibility Act (FRA) – expired on January 1 of this year, so the Treasury Department is now using cash on hand and “extraordinary measures” to pay the federal government’s obligations. While the date the Treasury Department will run out of these funds and default (i.e. the “X-date”) is still unknown, it is widely expected to land sometime this summer. While Republican efforts to negotiate debt limit action as a part of reconciliation fell flat earlier this year, House Republicans have renewed these efforts in Arrington’s proposed budget resolution. Still, it’s not certain that concerns from Republican fiscal hawks like Chip Roy (R-TX) have been resolved, meaning Republicans may have to get bipartisan support for the debt limit next month as a part of a potential deal including government funding and emergency appropriations for the border and disaster relief. It remains to be seen if and how Republican leadership in the House and Senate will be able to navigate this process given considerable Democratic leverage if they fail to tie the debt limit into reconciliation.
While the roads ahead for action on reconciliation, the debt limit, and FY25 appropriations remain uncertain, Republican blueprints put forth in the last few weeks outline a clear effort to cut significant spending in key areas like healthcare and food assistance. Whether they choose to take the one- or two-bill approach, Republicans will ultimately be trading investments in working- and middle-class Americans for tax cuts that will mostly benefit wealthy individuals and corporations. Trump received considerable backlash for similar actions in his first term when the TCJA was passed using reconciliation, and Republicans should not expect Americans to give away much of their crucial federal funding to the rich without a fight.
Trump and Musk Shut Down Consumer Financial Protection Bureau
In an almost three-week blitzkrieg, the Trump administration has effectively shut down the Consumer Financial Protection Bureau (CFPB) in an illegal attack on the federal consumer watchdog Congress created in the aftermath of the 2008 financial crisis and its critical work to protect Americans. The administration’s suspension of the agency’s rulemaking, enforcement, supervision and examination activity effectively blindfolds the bureau to fraud and abuse by big banks, fintech firms, payday lenders and institutions throughout the financial industry, defangs its ability to respond, and endangers the broader economy.
Trump and Elon Musk’s CFPB Incursion
President Trump and Elon Musk have been clear. They want to eliminate the agency entirely. Trump answered yes to a question from a reporter “Can you confirm that it’s your goal to eliminate the agency?” Musk has posted “Delete CFPB.” But only Congress can do that. Instead, the administration has directed the bureau’s operations to grind almost to a halt.
On February 3, then-Acting Director of the CFPB Scott Bessent directed staff to largely pause its rulemaking, litigation, enforcement investigations, and public communication unless authorized by Bessent or required by law. On Friday, representatives from Musk’s U.S. DOGE Service were at the CFPB headquarters accessing sensitive consumer and business data and Musk declared on his social media platform “CFPB RIP.” On Saturday, OMB Director and Acting CFPB Director Russell Vought – who has since replaced Bessent as Acting Director – went further, instructing staff to cease “all supervision and examination activity,” and on Sunday, employees were directed to remain at home with the agency’s office closed this week. The home page of the CFPB’s website has been taken down (though other pages remain accessible) and the CFPB’s X account has been deactivated.
Vought has since announced that the agency will not request funding from the Federal Reserve, claiming that its existing funding level is excessive.
Consumers, Honest Businesses, Economy at Risk
The effective shutdown of the CFPB will leave consumers and honest businesses without a federal watchdog safeguarding their rights in the financial arena, and what’s more, a largely inoperational CFPB threatens the broader economy.
The pause in the CFPB’s work creates a dangerous gap. As Federal Reserve Chair Jerome Powell acknowledged yesterday, the Dodd-Frank Act “moved all authority for examinations in the consumer space to the CFPB.” Therefore, as Senator Elizabeth Warren (D-MA) highlighted, without the CFPB, no one is examining the largest banks to make sure they are following the law.
The CFPB was created following the 2008 financial crisis because lawmakers recognized that federal financial regulators like the Fed, then charged with enforcing consumer protection laws, failed to prioritize that mandate and were not best suited to achieving that goal. They instead formed a dedicated agency focused squarely on consumer protection. Dismantling the CFPB would erase the hard-learned lessons of the recession and undo hard-won systemic reforms.
Consumers Back CFPB, Which Protects Consumers
The CFPB has secured over $21 billion in monetary compensation, principal reductions, canceled debts, and other relief for consumers. When Wells Fargo repeatedly misapplied loan payments, wrongfully foreclosed on homes, and illegally repossessed vehicles, among numerous other account handling failures, the CFPB ordered the bank to pay more than $2 billion in redress to consumers.
The agency’s overdraft fee rule finalized just last year will cap big bank overdraft fees at $5 and save consumers $5 billion annually or $225 per household that pays overdraft fees. Another recently finalized rule would stop credit reporting companies from sharing medical debts with lenders and prohibit lenders from making lending decisions based on existing medical debt.
That’s why voters across the political spectrum overwhelmingly support the agency.
Source: Americans for Financial Reform
Fighting for the CFPB
The National Treasury Employees Union, which represents employees of the CFPB, has filed a lawsuit claiming that the administration’s order for employees to stop work is unlawful. On Monday, a group of Congressional Democrats rallied alongside hundreds of concerned citizens at the CFPB’s headquarters to support the agency and its employees. And just this morning, Senator Warren, Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, and Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee led nearly 200 members of Congress in sending a letter to Acting Director Vought and Treasury Secretary Bessent calling on them to remove Elon Musk’s operatives from the CFPB, restore all internal and external systems and operations, and allow the CFPB to continue to do its job of protecting consumers.
It is critical that Democrats continue to unite, build on this momentum, and stand up for everyday Americans and protect the CFPB in this historic moment.