Trump’s Budget Director Gets Grilled Again

Russ Vought (USA Today Network)
Russ Vought (USA Today Network)
By Yuval Rosenberg and Michael Rainey

Good evening. We hope you had an okay day. Here's your fiscal update.

Trump's Budget Director Pick Defends Spending 'Pause'

Russell Vought, President Donald Trump's pick to lead the Office of Management and Budget, faced tough questions from Democrats on the Senate Budget Committee Wednesday.

Vought led the OMB in the first Trump administration and was one of the main contributors to Heritage Foundation's controversial Project 2025 blueprint for conservative rule. He's expected to be confirmed by Republicans - "I think all of us are going to vote for you," Budget Committee Chair Lindsey Graham told Vought on Wednesday - but even some in the GOP have expressed concern about efforts to undermine congressional power of the purse.

Democrats homed in on the issue, much as they had during a hearing last week. Sen. Jeff Merkley of Oregon, the top Democrat on the committee, asked about executive orders recently issued by Trump that "pause the disbursement of funds" provided by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, two major pieces of legislation signed into law by former President Joe Biden. Merkley wanted to know if the pause amounted to an impoundment, which he said would be "illegal." Vought said they were "programmatic delays," not impoundments.

As Merkley and other Democrats noted, Vought attempted to hold back funds appropriated by Congress during the first Trump administration and has argued that the president has unilateral authority to impound funds. Vought told lawmakers that the administration will "faithfully uphold the law," but also said that Trump "ran on the notion that the Impoundment Control Act is unconstitutional. I agree with that."

Vought added that Trump will be exploring "the parameters of the law with regard to the Impoundment Control Act," the 1974 law that prevents presidents from not spending money appropriated by Congress.

Merkley pushed back against Vought's assertion of executive power. "Congress makes the law, not the president," he said. "The fact that you continue to advocate for this impoundment strategy, that is completely in violation of our Constitution."

Sen. Tim Kaine of Virginia asked Vought about a budget proposal he produced at a conservative think tank that referred to ending "woke and weaponized government," an effort that included a proposal to make deep cuts in social programs including Medicaid and SNAP, the Supplemental Nutrition Assistance Program. "Is providing nutrition assistance to low-income kids 'woke and weaponized?'" Kaine asked. Vought did not answer directly.

GOP support: Republican committee members took a very different approach, effusively praising the nominee. "I do not know a single person who knows more about the federal budget than you do," Sen. John Kennedy of Louisiana told Vought.

"Bottom line is, I think you're qualified for the job. I know why he picked you," Graham said. "And again, we just had an election. And when you win, you get to pick people. And I'm glad he picked you."

Trump Admin Pauses Health Agency Communications: Reports

The Trump administration on Tuesday ordered an "immediate pause" of public communications by federal health agencies. The instructions, first reported by The Washington Post, were delivered to staff across the Department of Health and Human Services, including officials at the Centers for Disease Control and Prevention, the Food and Drug Administration and the National Institutes of Health.

The order effectively freezes regulations, health advisories, scientific reports, press releases, data updates and social media posts until February.

The Associated Press reports that it obtained a memo from Dorothy Fink, the acting Health and Human Services secretary, which says the communications must be approved by a political appointee. Fink reportedly wrote that communications about "critical health, safety, environmental, financial or nation security functions" would be permitted, subject to review.

Both the Post and the AP note that the pause isn't necessarily a cause for concern and may simply be a reasonable effort by administration officials to get up to speed on the information being produced by the agencies - or an indication of a disorganized or slow-moving transition process rather than nefarious intent.

"The only concern would be is if this is a prelude to going back to a prior approach of silencing the agencies around a political narrative," Dr. Ali Khan, a former CDC outbreak investigator who is now dean of the University of Nebraska's public health college, told the AP.

But some public health experts warned that any confusion or delay surrounding the publication of time-sensitive alerts could pose risks.

"Local health officials and doctors depend on the CDC to get disease updates, timely prevention, testing and treatment guidelines and information about outbreaks," Dr. Jeffrey Klausner of the University of Southern California told the AP. "Shutting down public health communication stops a basic function of public health. Imagine if the government turned off fire sirens or other warning systems."

JPMorgan CEO Jamie Dimon on Tariffs: 'Get Over It'

JPMorgan Chase CEO Jamie Dimon on Wednesday largely dismissed concerns that President Donald Trump's promised tariffs would drive inflation higher.

In an interview with CNBC from the World Economic Forum in Davos, Switzerland, Dimon downplayed the dangers of Trump's tariff agenda. The president has said he will impose 25% tariffs on imports from Canada and Mexico on February 1 and he indicated he may add a 10% tariff on all goods from China on the same date. Trump did not impose new tariffs on his first day back in office, as he had previously promised to do. He has linked the tariff to the issue of fentanyl trafficking.

Economists have warned that Trump's tariff plans along with elements of his immigration agenda are likely to result in higher U.S. consumer prices.

Dimon told CNBC that tariffs can be used to negotiate more favorable trade terms. "They are an economic tool. That's it," he said. "They're an economic weapon, you know, depending on how you use it and why you use it, stuff like that. People argue, is it inflationary or not inflationary. I would put it in perspective. If it's a little inflationary, but it's good for national security, so be it. I mean, get over it. National security trumps a little bit more inflation."

Dimon's comments about inflation represent a shift, given that he warned against tariffs during Trump's first term. Dimon, who makes more than $35 million year, had been the highest-paid U.S. bank CEO until Goldman Sachs recently gave its CEO, David Solomon, a big pay raise.

In his CNBC interview, Dimon also explained recent comments that he's "cautiously pessimistic" about the economy, pointing to the growth of American bureaucracy, concerns about the level of deficit spending in the United States and the related prospect that inflation doesn't fade away. He emphasized geopolitical fears involving Ukraine, Russia, China and Iran.

Quote of the Day: A New Economic Regime?

"Gone is the era of secular stagnation characterized by low inflation, low interest rates, a global savings glut and sagging aggregate demand.

"In its place is a new framework featuring scarce capital, insufficient aggregate supply, higher inflation and higher interest rates.

"Taken together, these changes have significant implications for monetary and fiscal policies as a new Trump administration takes over."

– RSM Chief Economist Joseph Brusuelas, writing Wednesday on his firm's blog. In his analysis, Brusuelas argues that a significant shift has occurred in the aftermath of the pandemic, one that marks the end of the era in which low interest rates made it easier to maintain relatively high social welfare spending levels and low taxes. As a result, policymakers will need to adjust their outlooks and expectations.

"The regime change that is occurring in real time across the U.S. and global economies is going to upend policy frameworks that have characterized the past generation," Brusuelas writes. "Whether one is a left wing or right wing populist economies that have rested on plentiful fiscal space and easy monetary policy now face a difficult period of adjustment to an era of intensifying competition for capital, insufficient aggregate supply, higher inflation and higher interest rates."

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