
Ben Curtis/AP Photo
People protest against a funding freeze of federal grants and loans, January 28, 2025, near the White House in Washington.
Donald Trump’s most extreme attack so far on America’s basic constitutional structure, as my colleague David Dayen explains, is his recent attempt to halt some portion of the federal loans and grants that Congress has legally obliged to be spent. An order from the Office of Management and Budget (OMB), first reported by independent journalist Marisa Kabas, demanded a halt to all grants and loans throughout the government, supposedly pending some McCarthyite purge of Marxism, “transgenderism,” and climate policy.
This is illegal. As Article I of the Constitution states, “All Bills for raising Revenue shall originate in the House of Representatives,” and what’s more, the Impoundment Control Act of 1974 specifically forbids what Trump is trying to do. He is attempting, like the English King Charles I before him, to seize the power of the purse for himself.
But there are also practical questions involved here. Depending on how one defines “grant” or “loan,” literally over a trillion dollars in annual spending could be caught up in Trump’s illegal order, which has now been put on hold temporarily by a federal judge. By far the biggest single grant program is Medicaid, the largest health insurance program in the nation, with 72 million enrollees. It is funded by individual states at varying levels, but also by some $607 billion in federal spending as of 2023.
In the initial order, it was not specified directly whether Medicaid was subject to the funding freeze, but as a grant program, it seemed to qualify. Sure enough, Sen. Ron Wyden (D-OR) reported on Tuesday that all states had lost access to the federal Medicaid reimbursement portal. By later that day, a White House spokesperson asserted that this was only a temporary hiccup, and access would be restored shortly.
Merits of this order aside, it is astounding that the Trump goons did not bother to figure out beforehand whether or not they intended to defund the biggest insurance program in the country. As budget expert Bobby Kogan points out, OMB was internally demanding a halt to various programs, while externally claiming it wasn’t doing anything. It’s a telling indication of how they will attempt to run the government from here on out.
I suspect there are two factors at work here. First is a total lack of understanding as to the vast scale of the federal government. If Medicaid were to be illegally defunded, it would instantly cause multiple simultaneous crises. Most obviously, about 20 percent of Americans would be thrown off their insurance. Medical providers, particularly hospitals in rural and low-income urban regions, would lose a major source of funding, leading to mass bankruptcies. And the American economy writ large would suffer a massive austerity shock, with over 2 percent of GDP vanishing overnight. All the businesses that relied on the spending of Medicaid-funded doctors, nurses, and so on would go belly-up, and so on, quite possibly triggering a recession.
What is true of Medicaid is only somewhat less true of hundreds of other government programs also under assault from Trump. By protecting the purity of our food, water, and medicines; the safety of road and air travel; the integrity of our financial system; and in hundreds of other ways, the government enables modern society to function. It could be improved, of course, but simply ripping it out by the roots would cause untold disaster.
Now, it is true that America has the most complicated and deliberately obscurantist government structure in the rich world, and so it is not easy for laymen to get to grips with it. As Suzanne Mettler writes in her book The Submerged State, for decades now America has been addicted to hiding its social spending in the tax code and other low-profile programs, so that Americans can pretend to be rugged individualists while also collecting large government handouts.
But presidential administrations are not supposed to be run by ignorant laymen, which brings me to my second factor. In his first term, Trump, who had not expected to win, largely had to rely on Republican Party lifers to staff his administration. These at least provided some brake on his most deranged impulses. This time, however, Trump was ready with his own coterie of sycophants and loyalists, who are plainly some of the most dog-brained imbeciles ever to occupy federal office. Wired reports that the Office of Personnel Management (OPM) is now under the control of sundry Elon Musk toadies, one of whom only recently graduated from high school.
An OPM order this week, demanding that all federal workers basically sign a loyalty oath to Trump or get a buyout (also in flagrant violation of all federal employment law), bears a marked resemblance to the demand that Musk made to Twitter employees, driving most of them out and running the company’s business model into the ground.
Donald Trump, and the people around him, are clearly attempting to establish a dictatorial regime. It’s a common pattern in history: Some would-be autocrat wins an election, and sets to work undermining all the democratic systems of accountability that might prevent him from holding total power. But typically, autocrats are more considered than this. Lashing around from his first day in office, yanking the wiring out of the federal government with no regard to how it might harm key constituencies, is not how Vladimir Putin ended Russian democracy. Let’s hope the American people wake up soon to what they voted for.