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President Donald Trump in the Oval Office at the White House on Feb. 5, 2025.
DOGE deal and funding deadlines create chaos in Washington
Thursday is the deadline for federal employees to accept the Trump administration’s offer of eight months of pay and benefits in exchange for abandoning their posts. As of Wednesday, more than 40,000 employees, less than 2% of the federal workforce, had reportedly accepted the buyout.
The offer has pitted the Office of Personnel Management – which is working in conjunction with Elon Musk and the Department of Government Efficiency – against unions and lawmakers who are advising people against taking the offer, citing its vagueness, that it waives employees rights to challenge the terms of the deal in the future, and questions about where the money for a new, expensive buyout program will come from – especially since the government is only funded through mid-March.
And the budget battles are already heating up. The odds that the government shuts down on March 14 are high, as neither side has yet to even agree on what the top-line budget 2025 amount should be. Republicans disagree on the size and scope of Trump’s ambitious demands for cuts, and razor-thin margins in the House mean they can’t afford any defections. Just last week, they had to table a preliminary vote on advancing Trump’s agenda over disagreements about how much spending could be cut.
Meanwhile, any budget bill will need to be bipartisan to pass the Senate (the partisan breakdown is 53 Republicans, 45 Democrats, and two independents who normally caucus with the Dems, and 60 votes are required). Democrats, who are outraged over Trump’s efforts to freeze funding that was previously allocated by Congress, want to use the deadline to push back on Trump's agenda.The far-reaching impact of Trump’s funding freeze
A judge in the District of Columbia on Tuesday blocked Donald Trump’s move to freeze federal funding until Feb. 3. District Judge Loren AliKhan’s decision dropped just minutes before the order was meant to take effect.
Trump’s directive, issued late Monday, applied to a vast swath of federal funding recipients – including disaster relief, education grants, and transportation funding – putting 2,600 programs under review. And while Medicaid was not supposed to be impacted, states said Tuesday that the online portals that supply Medicaid funding were down briefly in all 50 states.
Tuesday’s decision temporarily blocks the Trump administration’s order freezing federal funding and halting US foreign aid – and will hold through Monday afternoon. In the interim, the Trump administration offered approximately two million federal workers payouts to resign, warning that the majority of federal agencies will be facing downsizing.
Aid groups abroad fear that a halt to US-funded work could have dire and broad-reaching consequences – like NGOs and refugee camps losing funding. The State Department did restart the worldwide HIV program on Tuesday, citing the deadly effects of stopping the distribution of medication in low-income countries.
While critics are sounding the alarm that Trump is overstepping his presidential authority, Eurasia Group US expert Jon Lieber said we need to keep an eye on the legal process. While the president is “exercising a very muscular interpretation of executive power,” many of Trump’s executive orders will be challenged and shut down in the courts, he explained, as seen by the DC court decision. “They will be sued, and the courts will rule on what powers they have to fire civil servants, to cut spending, to upend the federal bureaucracy, etc.”
“The real test for the system will come when they are faced with a court order that curtails their agenda, and they either follow the law or continue to flout it.”
Graphic Truth: Where the US government gets its revenue
The US government currently raises about $5 trillion a year in revenue. That plus another $2 trillion in debt are what make up the nearly $7 trillion that Uncle Sam spends annually.
But where does that revenue actually come from? Here’s a look at the breakdown.
Bear in mind, as you look at this, that incoming US president Donald Trump has suggested he wants to replace the income tax with his new tariffs. Would that be possible?
It’s true that until the income tax was implemented in the early 20th century, tariffs provided the lion’s share of US government revenue. But that was a time before social security, medicare, or a modern military when the government spent barely $500,000 a year.
With Trump’s tariffs expected to raise, at best, about $300 billion per year, using them to replace income taxes would entail an unfathomably radical shrinking of the US federal government.
SUQIAN, CHINA - MARCH 4, 2024 - Illustration Mistral AI, March 4, 2024, Suqian, Jiangsu Province, China.
Hard Numbers: Mistral gets money, Amazon’s investments, Disco time!, Wary of AI news
6 billion: Europe has just one major player in the generative AI space: Mistral. The French startup raised a new $640 million funding round last week that boosts its overall value to $6 billion. While OpenAI, Anthropic, and other startups have largely proprietary or closed-source models, Mistral has focused on open-source models, marking a more open approach that might suit regulators in Brussels better.
230 million: On Thursday,Amazon pledged $230 million to invest in generative AI startups. That number includes $80 million for its second Amazon Web Services Generative AI Accelerator program, designed to incentivise AI startups to use Amazon’s cloud services.
5: Disco Corp., a Japanese semiconductor company, has seen its stock quintuple since 2022 on increased demand for chip packaging services. The profit margins are thinner for packaging compared with other facets of the chip industry, but increasingly in demand with ever-shrinking chip sizes.
52: Roughly half of Americans are okay with news written by AI. Some 52% of US respondents told surveyors at the Reuters Institute for the Study of Journalism that they’re uncomfortable with news largely written by AI. Even more respondents felt uncomfortable in the UK, with 63% shaking their heads at AI-written news. Trust in the media is at historic lows in the US, and ambivalence to whether it’s written by humans or machines may be the clearest sign yet.Hungary's Prime Minister Viktor Orban and Luxembourg Prime Minister Luc Frieden attend a European Union summit in Brussels, Belgium February 1, 2024.
The EU stares down Orban
Serial political blackmailer Viktor Orban, Hungary’s prime minister, upset other EU leaders in December by vetoing a plan meant to provide Ukraine with a multi-year €50 billion EU aid package. The EU must, Orban insisted, pledge to revisit the plan each year the money was scheduled for disbursement – with any member retaining the right to veto the plan midstream.
This is money Kyiv needs to keep the lights on, and to pay pensions and salaries, as its war with Russia grinds on. Growing uncertainty over the future of US aid for Ukraine tied to America’s November elections added urgency to the request.
Leaders of the other 26 EU member states had decided that Orban wanted to use future veto threats to give himself more long-term negotiating leverage to win new EU concessions, and at a summit meeting on Thursday, they drew a line. Possibly in exchange for quicker disbursement of the remainder of €20 billion in EU funds already earmarked for Hungary – money currently locked up over corruption and human rights concerns – Orban accepted a plan that allows for future reviews of the Ukraine plan, but without a future veto.
In short, the EU played hardball, and Orban caved.
FILE PHOTO: A truck, marked with United Nations Relief and Works Agency (UNRWA) logo, crosses into Egypt from Gaza, at the Rafah border crossing between Egypt and the Gaza Strip, during a temporary truce between Hamas and Israel, in Rafah, Egypt, November 27, 2023.
A dozen countries suspend UNRWA funding over Oct.7 allegations
On Sunday, France, Austria and Japan announced they were joining the US, Germany, Canada, Italy, the UK, the Netherlands, Switzerland, Australia and Finland in pausing their funding for the UN Relief and Works Agency for Palestinian Refugees. At least a dozen employees of UNRWA allegedly cooperated with Hamas in planning the Oct. 7 attacks.
Together, the countries that have pulled their money made up well over 60% of the funds for UNRWA in 2022, and representatives of the organization say they will not be able to function long without the support. Norway and Ireland, however, agreed to continue funding UNRWA, saying their work supporting the displaced and devastated population of Gaza is too important.
What happens now? UNRWA has fired nine of the 12 employees accused of cooperating with Hamas, though the details of their alleged collaboration are not publicly known. The US did frame its suspension of funding as temporary, leaving the door open to resumption. But UNRWA is already regarded with deep distrust within Israel, and the Biden administration may face pressure from its ally not to resume funding.
In the meantime, however, over 2 million Gazans are in desperate straits, displaced from their homes and reliant on UNRWA for what food and medicine they can get. Some are calling for the Gulf states to step in with funding to replace what the West has withdrawn, but no signs yet the money is forthcoming.