Trump’s USAID Purge Halted by Federal Judge

USAID signage was removed and covered at the agency's headquarters.
(Reuters)
By Yuval Rosenberg and Michael Rainey

Happy Friday! Here's what you should know going into Super Bowl weekend.

Trump's USAID Purge Temporarily Blocked by Federal Judge

The Trump administration's efforts to disrupt, shrink or dismantle vast portions of the federal government continued apace Friday. President Trump today told reporters that Elon Musk's DOGE would also target the Pentagon as well as the Department of Education and "just about everything." Asked if there are any limits on Musk's effort, Trump said, "Well, we haven't discussed that much" before praising the DOGE team. Trump also claimed that Musk is finding "tremendous fraud and corruption and waste."

Still, some of Trump and Musk's efforts continue to face pushback from the courts. A federal judge on Friday temporarily blocked parts of the administration's plan to shut down the United States Agency for International Development, pausing a directive placing 2,200 USAID employees on administrative leave as of tonight. The administration plans would reduce employment at the agency from about 10,000 workers and contractors to about 600.

The court ruling comes in response to a lawsuit filed by labor unions and calls for "expedited" arguments on the legality of the Trump plans. "Not a single one of defendants' actions to dismantle U.S.A.I.D. were taken pursuant to congressional authorization," the union filing said. "And pursuant to federal statute, Congress is the only entity that may lawfully dismantle the agency."

The Trump administration argued that these were personnel matters over which Congress should have no say.

Even as the case proceeds, USAID signage was removed today from the agency's D.C. headquarters building.

Trump Admin Appoints Musk Ally to Oversee Treasury Payments System

The Trump administration has placed a key ally of Elon Musk's U.S. DOGE Service in charge of the Treasury Department's financial management and payment systems as legal questions and privacy concerns swirl about the sweeping Musk-led DOGE infiltration of federal agencies.

The department's website now lists Tom Krause, a Silicon Valley executive who still serves as CEO of Cloud Software Group, as performing the duties of the fiscal assistant secretary. Krause has reportedly been overseeing the DOGE review of federal payments. He is taking over the responsibilities of David Lebryk, a longtime official at the Treasury Department who resigned last week after a dispute with Musk allies, reportedly over Krause's demands to halt foreign aid payments, a step that Lebryk said was illegal.

"Krause's position will give him control over the Treasury Department system responsible for disbursing more than $5 trillion in annual payments, including for Social Security, Medicare, tax refunds and thousands of other measures," The Washington Post reports. "Musk has demanded on social media that Treasury unilaterally stop sending these payments, accusing the department's career staff of breaking the law."

Treasury Secretary Scott Bessent defended the DOGE involvement in an interview with Bloomberg Television on Thursday. He insisted that the government efficiency team's review was "operational," not ideological. "These are highly trained professionals. This is not some roving band running around doing things. This is methodical and it is going to yield big savings," he said.

One of the engineers reporting to Krause resigned from his role on Thursday after being linked to racist social media posts. On Friday, Musk posted a poll to his social media site asking if DOGE should rehire the staffer, 25-year-old Marko Elez. President Donald Trump and Vice President JD Vance said he should be reinstated, and Musk later announced he would be brought back.

Why it matters: "The decision puts Musk's DOGE in a potential position to make sweeping changes to the federal budget, with implications for tens of millions of Americans," The Washington Post says. "The payment system, run by the Bureau of the Fiscal Service, contains sensitive taxpayer information, and some former Treasury officials have expressed concerns about granting access to individuals with private business interests." And Politico notes that the installation of Krause into such a powerful role at Treasury "will likely inflame an ongoing backlash over the DOGE team's access to the sensitive payments system."

More targets for DOGE: At a news conference Friday, Trump was asked why DOGE needs access to the Treasury payment systems used to disburse trillions of dollars a year. Here is his response in full, but be forewarned that it's not exactly clear:

"Well, it doesn't, but they get it very easily. I mean we don't have very good security in our country, and they get it very easily. And what we're doing, if you look at what has just taken place with respect to some of the investments that have been made on another agency that people have been talking about for years but nobody did anything about it, it's absolutely obscene, dangerous, bad, very costly. I mean, virtually every investment made is a con job. There's nothing of value to anybody unless there's a kickback scheme going on, which is possible. And we're going to be doing more and more of that. We're going to be looking at the Department of Education. We're going to be looking at even our military. We're going to be looking at tremendous amounts of money ... being spent on things that bear no relationship to anything and have no value. We're talking about trillions of dollars. It will be in the end trillions of dollars being absolutely wasted and perhaps illegally, I would say certainly in many cases illegally, but perhaps illegally overall. And I'm very proud of the job that this group of young people, generally young people, but very smart people, they're doing. They're doing it at my insistence. It would be a lot easier not to do it, but we have to take some of these things apart to find the corruption, and we found tremendous corruption."

Senate Unveils Budget Plan, Teeing Up Clash With the House

As Republican senators head to Florida to meet with President Trump on Friday night, the chair of the Senate Budget Committee released the outline of a 2025 budget resolution that would increase spending on defense and immigration enforcement by about $342 billion. The resolution, the first part of a two-bill strategy for passing the bulk of Trump's agenda, would pave the way for a reconciliation bill that the Senate could pass quickly by simple majority vote while jumping ahead of Republicans in the House still scrambling to finalize a single massive bill of their own.

The proposal from Sen. Lindsey Graham would increase spending for border enforcement by $175 billion, with funds for a border wall, detention facilities and immigration personnel. Military spending would increase by $150 billion, with an emphasis on force readiness, shipbuilding, missile defense and nuclear deterrence. The proposal also seeks to boost energy production through lease sales and tax rule changes.

Graham said the House - which has fallen behind on its aggressive timeline for passing Trump's agenda through a single bill that includes defense and border security but also complicated tax and spending provisions - is running out of time, forcing the Senate to move first with a smaller, simpler bill addressing key parts of Trump's agenda while leaving the tax elements for later in the year.

"I hope the House will move forward soon, but we cannot allow this moment to pass, and we cannot let President Trump's America First Agenda stall," Graham said on social media.

Senate Majority Leader John Thune seconded the call for the House to step aside, saying, "The time to act is now, and Senate Republicans are ready to roll."

The House, however, still wants to lead the way on the legislation while sticking to its one-bill strategy. But House Republicans have been unable to agree on a budget resolution.

"We've got a few more people we've got to talk with and a couple of boxes to check, but we are almost there. I'm very encouraged by this," Speaker Mike Johnson told reporters Friday. "The expectation is we'll be marking up a budget early next week, potentially as early as Tuesday, the resolution. And that will, of course, begin the process."

Johnson said he plans to brief Trump on the House plan this weekend, when he attends the Super Bowl with the president in New Orleans. Trump could end up playing the deciding role in which strategy takes precedence if the House and the Senate pass dueling budget resolutions next week.

Trump Admin Complains About 'Stunningly Bad' Jobs Report

U.S. payrolls increased by 143,000 in January, according to government data released Friday, falling short of expectations closer to 170,000. At the same time, the unemployment rate edged lower to 4.0%, wages rose sharply and upward revisions to the November and December numbers more than made up for the disappointing January figure.

Sectors showing significant job growth included healthcare (44,000 jobs added), retail (34,000), government (32,000) and social assistance (22,000). Extractive industries including mining and oil saw payrolls shrink by about 8,000.

The report included unusually large long-term revisions that adjust the story about hiring over the last two years. Totals for 2023 and 2024 were revised downward by about 655,000 jobs, leaving growth still robust at 4.5 million during that period.

Gregory Daco, the chief U.S. economist at EY-Parthenon, said the labor market appears to be in good shape overall, even if employers have started being more careful about expanding. "We have robust fundamentals, and relatively moderate hiring, but it's very judicious," he said, per The New York Times. "The unemployment rate is historically low, but frozen in the sense that you're not seeing much churn - businesses are being cautious as to how they manage their work force."

Investors hoping to see clear signs of weakness in the report that could spur the Federal Reserve to resume interest rate cuts were disappointed and, rattled by fears of tariffs and inflation, they drove markets lower Friday, with the S&P 500 falling nearly 1%.

The Trump White House was disappointed, as well. National Economic Council Director Kevin Hassett said the numbers were weak and called the downward revisions "really, really stunningly bad."

"The truth is that we're inheriting a very difficult jobs market because of Joe Biden's terrible policies," Hasset said.

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