Cozen Currents: Follow the Money

“At the heart of President Trump’s effort to expansively redefine the power of the presidency is a struggle for control of the government’s purse strings, underscoring the aphorism that money is power.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• A fight between the two parties over the power of the purse is increasing the odds of a government shutdown later this month.
• Several contributors to Project 2025 have gone on to major roles in the Trump administration, and the policy document offers a guide to understand the policies of Trump 2.0.
• Republicans have their very own ideas about what types of energy they prefer, even within the category of renewables.

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Who Really Controls the Power of the Purse?

Shutdown Mode. With government funding set to run out on March 14th, congressional negotiators are all but out of time to reach an agreement on FY25 appropriations, making a continuing resolution (CR) or a shutdown the two most likely outcomes at this point.

• The bipartisan leadership of the House and Senate appropriations committees have been locked in negotiations over the “topline” number, or the total amount of government funding for FY25, since early January. For weeks, negotiators have said they are “close” to a deal, but by all accounts that optimism is misplaced. Even if lawmakers strike a deal this week, it would take roughly a month to draft the actual legislative text of all twelve appropriations bills, meaning a CR will be required to keep the government funded no matter what.
• GOP leadership in Congress is well aware of the low likelihood that negotiators reach a topline agreement in time to avoid a shutdown. Both House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) have directed GOP appropriators to begin work on a full-year CR, a move that would keep spending flat through the end of the fiscal year in September. Johnson and Thune pitched President Trump on their preferred approach to the looming March 14th deadline last week resulting in a public endorsement of the full year CR by President Trump on Truth Social last Thursday night.
• Despite GOP leadership’s unity around a government funding strategy, there are significant roadblocks to getting a full-year CR over the finish line. Government funding deals are typically bipartisan due to the need for 60 votes in the Senate, and even in the House, the GOP majority historically has been unable to advance a funding bill on its own due to opposition from fiscal conservatives. Johnson is hoping that Trump’s public backing for the CR will encourage hardliners to fall in line, but he’s separately called on Democrats to negotiate, hinting at the challenges a GOP-only approach could face.

Why This Shutdown Fight is Different. On the surface, a fight over government funding between the two parties isn’t unusual, but this time around the real divide is over the executive branch’s authority to impound congressionally-appropriated funds.

• The holdup in this winter’s funding negotiations has been over Democrats’ demands to include language in the spending bills that would require the Trump administration to spend the money Congress appropriates. Democratic lawmakers have been outraged by the Trump administration’s decision to impound already appropriated funds, an issue that is playing out in the courts. But with the party in the minority in both chambers of Congress and the courts moving slowly, Democratic lawmakers have limited recourse to challenge the Trump administration’s impoundment actions, making their leverage over government funding talks of greater importance.
• For their part, GOP lawmakers are unwilling to include language that would limit the Trump administration’s authority in the government funding bills. Even moderate lawmakers who believe the Trump administration doesn’t have the authority to impound funds don’t want to be seen as tying Trump’s hands. House Appropriations Committee Chair Tom Cole (R-OK) told Politico, “Our differences with our Democratic colleagues on some of the restrictions they’re demanding on what we consider legitimate presidential authority — we’re not moving on that.”
• The fact that the impasse in negotiations is over the much larger question of the power of the purse, not simply government funding levels, is increasing the odds of a shutdown. In a statement on Sunday, House Minority Leader Hakeem Jeffries (D-NY) blamed House Republicans for “walking away from the negotiating table,” going on to suggest that “it appears that Republicans…are once again determined to shut the government down and hurt everyday Americans.” Whether or not one party folds on codifying Congress’ power of the purse into law through the appropriations process may well determine whether a shutdown occurs.

Revisiting Project 2025

Project 2025 in 2025. The Heritage Foundation-led policy blueprint provides a guide to understand the policies that are being pursued by the Trump administration.

• As a candidate, President Trump disavowed Project 2025, which was not an official campaign initiative, but since winning he has staffed his administration with people who contributed to the effort. Office of Management and Budget (OMB) Director Russ Vought and Federal Communications Commission Chair Brendan Carr both wrote chapters. Central Intelligence Agency Director John Ratcliffe; border czar Tom Homan; Pete Hoekstra, nominated for ambassador to Canada; and retired Brigadier General Anthony Tata, nominated for a top Pentagon role, are credited as contributors.
• Despite being politically charged during the election, Project 2025 can be a useful tool to assess an often unpredictable administration. Since taking office, Trump has pursued standard Republican priorities, such as supporting domestic fossil fuel development and advancing tax cuts, but many of his flurry of early executive orders (EOs) closely mirror Project 2025 goals.
• Some of Project 2025’s prescriptions are more feasible to accomplish than others, but as a whole, it suggests directions that the administration may take next.

Project 2025 Actions Underway. In Trump’s first weeks in office, the White House has followed some elements of the Project 2025 playbook.

• In his chapter, Vought called for giving politically-appointed OMB officials the ability to review spending appropriated by Congress and to “use every possible tool to propose and impose fiscal discipline on the federal government.” Trump’s assertion of greater executive branch control over the power of the purse by freezing federal funding (currently paused by the courts) advances this expansive view of presidential power.
• Trump’s EO that brings independent agencies under White House authority aligns with Vought’s description of agencies being “wrongly regarded as ‘independent.’” Last month, the Department of Justice formally informed Congress that it considers a Supreme Court precedent on independent agencies to be unconstitutional, a step advocated by Project 2025.
• While Trump hasn’t gone so far as to push for the abolition of the Consumer Financial Protection Bureau (CFPB) as Project 2025 sought to do, the White House last month ordered the agency to halt work and closed the building. CFPB processing of consumer complaints has steeply fallen, per a recently published Democratic report.

Project 2025 Proposals to Watch For. Project 2025 takes a comprehensive agency-by-agency approach. These are just two areas where its recommendations could have an impact.

• Project 2025 calls for ending the federal conservatorships over Fannie Mae and Freddie Mac. Privatization of these government-sponsored enterprises (GSEs) is a possibility during Trump’s term but there are no current indications. In his confirmation hearing, Federal Housing Finance Agency Director-designate Bill Pulte touched on GSEs and suggested that conservatorship “should not be indefinite,” though his exact views on GSE privatization are not totally clear. Treasury Secretary Scott Bessent has not been vocal on this issue and it did not come up at his confirmation hearing.
• Project 2025 dives deep into the weeds in outlining specific policy actions for a narrower role for the Environmental Protection Agency (EPA). Some of Trump’s early moves, including the freezing of climate funding and an EO that eliminated an interagency working group on the social cost of carbon and directed the EPA to consider dropping it from consideration in regulations, are direct Project 2025 proposals. EPA Administrator Lee Zeldin has reportedly pitched Trump on revisiting the EPA’s 2009 endangerment finding, the scientific basis for climate change regulations – also a Project 2025 recommendation. In a statement to the media last week, the White House indicated plans to cut EPA spending by 65 percent. Project 2025 provides a laundry list of potential policy actions that in association with major cuts could transform the EPA.

The Least Dirty Clean Energy According to the GOP

Shoe’s on the Other Foot. The survival of the Inflation Reduction Act’s (IRA) tax credits depends on Republicans reliance on their largesse to save them.

• Not a single Republican voted for the IRA when it was passed in 2022. At its core, the IRA is an energy law powered by tax credits. Now, the marquee accomplishment of the Biden administration faces not only ideological opposition from the GOP but practical concerns as well. Republicans’ number one priority is tax cuts — the bigger the better. One of the lowest-hanging fruits for them to find offsets to pay for cuts is to take an ax to the IRA.
• The coming IRA repeal attempt is not going to go down like the attempted repeal of Obamacare in 2017. For one thing, the IRA is a hodgepodge of easily severable tax provisions rather than a single comprehensive framework. The IRA is much less a salient issue than Obamacare was, its benefits flow less to individuals directly, and the law has had less time to entrench itself.
• At the same time, most of the IRA’s funding is flowing to red states and districts. Additionally, there are credits in the law that Republicans affirmatively like. Don’t bet against tax reform getting done, but the coming IRA repeal isn’t an all-or-nothing affair — it’s a spectrum of possibilities. The survival of federal support for various types of energy is about to come down to the GOP’s willingness to strip away the credits in the IRA for them.

The GOP Energy Tier List. Not all renewables are equal in the eyes of Republicans. Those preferred forms have a better chance of retaining their tax credits in the IRA.

• The crux of the IRA are the new tech-neutral production and investment credits for clean energy, folding all forms of green power into one. These credits hang on the razor’s edge. Despite an onslaught of criticism, it is red states and districts that are disproportionately reaping the green money the IRA has unleashed and there will be intense lobbying to keep the funds flowing. At the same time, it’s equally hard to believe that a contingent of lawmakers will demand the credits be untouched against the pressure of the rest of the party. As a result, the modal outcome is probably some level of the credit being rolled back: perhaps reducing the credit, shortening its active time window, restricting eligibility, or pairing harsh cuts with grandfathering in current projects. Additionally, not every renewable is alike. Tech-neutrality, by its nature, covers a wide waterfront: biogas and biomass are almost GOP darlings; hydropower and geothermal have managed to escape the ravaging culture wars (so far).
• Republicans are actually generally more pro-nuclear than Democrats. During the House Ways and Means Committee’s member day in January, Rep. Dan Meuser (R-PA) said it would be a “mistake” to repeal the IRA’s nuclear power production tax credit, Section 45U. That said, there are 92 currently operating commercial nuclear plants spread across states and districts Congress will fight to preserve. Were one of these to close, the likely result would be higher energy prices and unemployment — an unpopular position for a representative. As a result, credits for nuclear power are one of the safer provisions of the IRA.
• Other forms of energy are supported by the GOP due to their importance to crucial constituencies. It is notable that even during the essentially symbolic debt limit proposal by the House GOP in 2023, Midwestern lawmakers objected to repealing biofuel credits that benefit ethanol producers. Two Republicans specifically name-dropped clean fuel credits during the House Ways and Means Committee’s member day. Credits for hydrogen and carbon capture, meanwhile, are popular with the oil and gas industry, who see both as critical steps towards diversifying towards net-zero. The fossil fuel sector has repeatedly made it clear it’s willing to fight to keep these subsidies in place. In fact, these tax credits may even be more useful under a Republican administration than a Democratic one. In a reversal of the typical scenario, it’s actually Republicans who’ve been complaining that the Biden administration wasn’t generous enough with its interpretation of the credit.

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