2025 U.S. Government Transition Update

Admittedly, it is not easy to follow political news developments in the United States. President-elect Donald Trump continues to have an uncanny way of driving the news cycle, while the media follows along writing about every detail. Along the way there is analysis about the actions Trump intimates he may take with hopes that each indication is either a threat or simply leverage, but not really something that will ever happen. In this context, we cannot hope to compete. Instead, each month we will attempt to explain what is likely to happen—below the noise.

Between now and January 20, 2025, President Biden will continue to govern and complete projects, regulations, and policies attempting to cement reset of the U.S. economy from the bottom up rather than the top down.  In contrast to the so-called “trickle-down economics” approach first instituted by former President Ronald Reagan, President Biden dedicated his term in office to turning trickle-down economics literally upside-down. Unfortunately, slightly more than 50% of the voters in the U.S. did not experience the change in the fundamentals of the economy and President Trump and the Republicans in Congress will seek to reverse “Bidenomics” and extend the Trump tax cuts passed in 2018 and institute other policies to recreate the trickle-down approach.

Trump’s agenda will begin with a series of “executive orders” and directives that eliminate any existing executive orders that were issued by President Biden. Additionally, Trump will issue executive orders for his agenda, including measures aimed at stopping the flow of immigration and beginning deportations. Many of his executive orders will be challenged in the U.S. courts by immigration, civil, and human rights attorneys.

Unlike his previous president election in 2016, Trump will have a plan to guide his actions throughout his administration. The plan is known as “Project 2025” and was authored by several policy leaders and supported and promoted by the Heritage Foundation, a conservative public policy institution. In over 900 pages, Project 2025 outlines a series of executive actions to strengthen the Executive Branch, the Presidency, and eliminate what it has termed as liberal or “woke” policies. Trump may also issue trade tariffs by executive order, although it may be risky to do so without complete investigations by the U.S. Department of Commerce. While Congress has delegated much of its tariff and trade authority to the Executive Branch, existing laws require specific findings and other preliminary determinations before tariffs are implemented. Trump, as many hope, may also delay tariffs to use as leverage against trading partners and U.S. corporations seeking exemptions.

Additionally, on day one of the new administration, January 20, 2025, Trump’s White House staff will assume their roles, including his national security advisor and economic and domestic policy advisors, immigration czar, chief of staff, and others. Even though the Senate will begin holding cabinet confirmation hearings as early as January 6th, this process will take time and will not be completed by January 20th. Therefore, Trump will not have his entire cabinet in place. The less controversial members of Trump’s Cabinet, including his nominee for Secretary of State, Marco Rubio, as well as his nominees for Treasury Secretary and Commerce Secretary will likely be approved by the Senate more quickly.

The U.S. Congress is moving to implement President Trump’s economic agenda as quickly as possible. Typically, legislation has to pass the U.S. House of Representatives by a simple majority, but it has to pass the Senate by 60 votes (there are 100 members of the U.S. Senate). But Congress can use a procedure called “reconciliation” to pass legislation that either raises revenue or cuts spending. However, Congress can use this procedure only two times. The problem is that House Republicans and those in the Senate are not in agreement on how to use this procedure.

The Senate wants to use the reconciliation procedure two times: first to enact energy and immigration policies, and second to extend President Trump’s tax cuts that are set to expire in 2025. The Senate’s rationale for both procedures is to implement policy changes early to ensure President Trump keeps his promises. But, more importantly, two procedures would allow the Senate to offset taxes with cuts that will not cut so deeply. The House plan is to enact tax cuts and policy changes together and not be concerned about the cuts to policies that may impact the working class and poor, including cuts in health care.

Moreover, the margin for Republicans in the House is very thin and leadership is concerned that it will not be able to keep its votes together if there are two reconciliation votes. It is likely that no Democrats will vote for reconciliation, even those who won election by slim margins, because the policy changes that will be included will be harmful to the poor, low, and middle class workers and will fund deportation of non-U.S. citizens. While there have been many discussions among Republican leaders, they have not reached an agreement.

We are monitoring these developments closely and will have updates in our forthcoming monthly newsletter editions.