Down, Down, Down
Minus 26%. Minus 22%. Minus 15%. When BGOV analyst Maika Ito sifted through federal contracting data for the early months of the Trump administration, she found numbers that remind us how government actions don’t stand alone — each one tips a domino.
Consider President Donald Trump’s gutting of the US Agency for International Development: The cuts affected USAID’s own staff, of course. On top of that, it affected for-profit companies hired to handle deliveries of food, supplies and other items overseas.
Chemonics International, which managed major global aid programs including those targeting HIV, infant health, and food assistance, has laid off hundreds of employees. It tops our analyst’s tally of so-called deobligated contract revenue, funds that were previously tied to a specific grant or contract, but that are now free to be reallocated.
Across all civilian agencies, deobligations from contract terminations — including those ended for cause and other reasons unrelated to Trump’s cuts — have totaled a record $1.32 billion since Jan. 20. Read More
Always Be Prepared
Trump told reporters he prefers to make the “final decision” on Iran “one second before it’s due,” and he wants the whole of government ready to respond when he does.
Senior US officials are preparing for a possible strike against Iran in the coming days, sources tell Bloomberg — a sign Washington is assembling the infrastructure to directly join Israel’s conflict with Tehran. The situation is still evolving and could change, said the people, some of whom pointed to potential plans for a weekend strike. Top leaders at a handful of federal agencies are getting ready for an attack, one person said.
- “He gave them a chance for diplomacy. I think they made a miscalculation,” Sen. Lindsey Graham (R-S.C.) said about Iran Wednesday. He’s been a key voice urging Trump to act, according to people familiar. “The sooner we end this threat to mankind, the better.” Read More
Meanwhile, talk of US involvement is splitting some Republican supporters of Trump. Read More
A missile from Iran on Thursday struck an Israeli hospital for the first time since the war started almost a week ago, a reminder of the risks to civilians in both countries. Israel’s Health Ministry said there were a number of light injuries in the incident at Soroka Medical Center in the south of the country.
Eye on the Economy
Federal Reserve officials issued the first quarterly economic forecast since Trump started slapping new tariffs on US trading partners. Here are three key numbers:
- Inflation: officials raised their median estimate for what to expect at the end of 2025 to 3%, up from 2.7%.
- Economic growth: They marked down their forecast to 1.4% from 1.7%.
- Unemployment: They forecast a rate of 4.5% by the end of the year, up slightly from a previous estimate.
Those projections are contradictory. Generally the antidote to rising prices is considered to be higher interest rates to cool things down. Weak growth? The opposite tends to be prescribed: lower interest rates to encourage consumers to buy things (That’s what Trump has repeatedly said he wants).
Fed Chair Jerome Powell said it’ll take some time to see the full impact of Trump’s tariffs.
“Ultimately the cost of the tariff has to be paid and some of it will fall on the end consumer,” he said. “We know that’s coming and we just want to see a little bit of that before we make judgments prematurely.”
- Also Read: Fed’s Powell Says Tariff Impact is Coming
Tariffs Hit the Road: Car buyers will bear the brunt of the $30 billion cost of tariffs, driving up already high US auto prices by almost $2,000 per vehicle, according to consultant AlixPartners. The firm predicted that these higher prices will result in about 1 million fewer vehicles sold in the US over the next three years, and also cautioned that the administration’s anti-electric vehicle policies risk relegating American automakers to bit players in the global EV market.
- General Motors and Ford have already said they expect a $5 billion and $2.5 billion tariff impact this year, respectively. Read More
Trump to SCOTUS: No Hurry
The Trump administration is urging the Supreme Court to keep a case challenging the new tariffs off the fast track.
Two family-owned businesses hit hard by supply chain disruptions asked the court to set an unusually quick schedule, without waiting for a federal appeals court to rule. In a seven-page response, Solicitor General D. John Sauer said the companies “have not justified such a stark departure from established practice.” Read More
Before You Go
The law requiring a Chinese company to divest TikTok’s US unit is still in place and also still not being enforced. Trump said he’s going to give ByteDance a third time extension. According to the law, the president could grant a one-time delay for as many as 90 days if “significant progress” was demonstrated toward securing a deal, so there are some questions about the legality of adding another 90 days. Read More
A federal judge described as unprecedented the scale of an executive order seeking to end collective bargaining agreements between federal agencies and employee unions. Judge James Donato said he hadn’t heard a compelling reason why he shouldn’t issue an injunction, but he didn’t rule from the bench. Read More
PAC Targets Fetterman: A Democratic activist who briefly worked on Sen. John Fetterman’s 2022 campaign set up a super-PAC to unseat the Pennsylvania lawmaker who’s vexed some progressives, Greg Giroux reports. David Austin, the 21-year-old executive director of Forward Blue, a Gen-Z focused group, organized the “Fire Fetterman” committee, according to a filing to the Federal Election Commission Wednesday.
Fetterman has “become everything he once opposed — absent, corporate-aligned, and more loyal to Trump’s rhetoric than the voters who elected him,” the group said in a statement sent to Bloomberg Government. Fetterman’s not up for re-election until 2028, but he’s drawn scrutiny for missing hearings, voting for some of Trump’s nominees, and defending Israel.
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