“President Donald Trump tends to see all issues from a zero-sum perspective. But when it comes to the global competition for natural resources, this has long been the reality, even as the scope of resources has evolved over time.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies
The Cozen Lens
- In times past, the world revolved around oil. Global power still does but it is increasingly entwined with other forms of power that feed both the grid and the technology that drive the Information Age.
- Normally, the enactment of all 12 annual appropriations bills is the end of the road for federal spending negotiations in any given year, but in Trump 2.0, it’s only just the beginning of the process.
- The Infrastructure Investment and Jobs Act will expire this September so lawmakers will have to consider a new surface transportation reauthorization bill.
The Great Game in the Information Age
The Spice (Oil) Must Flow. The world has long seen competing powers split it up, commonly over energy assets.
- One of the most compelling motivations for states to exercise their influence has been in pursuit of resources. What the resource was in particular has varied. Sometimes it was spices, sometimes silver (even bananas). But frequently, the most sought-after and fought-after materials have been those that power the world. In recent times, that’s been oil.
- Examples abound. In 1914, the British government purchased a controlling stake in the Anglo-Persian Oil Company, which held a 60-year monopoly on oil prospecting in Iran. In 1928, the Red Line Agreement between major European oil companies (some state-owned) established an oil cartel over vast swaths of the Middle East. America fought and eventually won the ability for their firms to operate in this area. The establishment of OPEC and the successful nationalization of these Western firms had major ramifications for the second half of the 20th century. The oil embargo of the 1970s contributed to global stagflation while Iranian nationalization partly led the UK to back a coup there in 1953.
- Energy has been no less relevant to the conduct of war. The US’s 1941 oil blockade of Japan instigated the latter’s invasion of the Dutch East Indies and set the two nations on a collision course while Germany and the USSR fought over oilfields in the Caucasus. The Iraqi invasion of Kuwait was motivated by alleged slant drilling across borders and overproduction that brought down the commodity’s price. The Suez Crisis, Tanker War, and Carter Doctrine were all brought about by the necessity of keeping vital energy trade routes open.
Energy Still Powers the World. The Great Game continues anew, with the supply chains undergirding renewable energy and other essential items joining the fray.
- The major reason for the Trump administration’s interest in Greenland and Ukraine is access to critical minerals and rare earth metals that are essential to practically all modern electronics, computers, and vehicles. Decades of state investment has propelled China to a virtual monopoly on the mining, refining, and processing of many of the resources that the world runs on. The increasing export controls China is imposing on them illustrates its willingness to use them as leverage in geopolitics and President Trump always wants to have maximum leverage of his own.
- The transformation of these metals into forms of renewable energy has reshaped China into a green energy powerhouse. It produces and installs more solar and wind energy capacity than the rest of the world combined, and these forms of generation make up more than half of its total output. The country also dominates production and sales of batteries, as well as electric vehicles. Not only does this provide China a potential off-ramp from its current heavy reliance on vulnerable petroleum imports, but it also is a pathway to control the value chain for the energy technology of the future, perhaps even flipping around the formula of dependence such that others rely on China for its green infrastructure.
- While one of Trump’s foreign policy priorities is to increase US access to critical minerals-based supply chains from a technology and national security perspective, he continues to focus his quest for energy resources narrowly on fossil fuels. And fossil fuels’ staying power in geopolitics has been reaffirmed by recent events. The 2009 Russia-Ukraine gas dispute proved to be a mere appetizer for what was to follow; the 2022 invasion led to a spike in natural gas prices globally and sanctions on Russian petroleum. Ukraine eventually terminated all Russian gas transit through its territory while in the Baltic Sea, the Nord Stream pipelines were destroyed in an act of sabotage. The requisition of the sales of Venezuelan oil and the redirection of petroleum supplies away from Cuba are examples of this phenomenon, and Trump’s particular emphasis on controlling the supply of oil, in the Western hemisphere.
Keeping the Lights on at Home. Despite Trump’s prioritization of fossil fuels, the US is facing an impending energy crisis in which every electron possible will be needed by the grid, with projections of demand far outstripping current supply.
- After decades of flat consumption, US electricity demand is spiking. “The last time the US electricity industry saw unexpected new demand growth like this was during World War II,” per a Wood Mackenzie vice chairman. The largest US grid nearly broke its all-time winter demand peak last week. National electricity demand is expected to grow by 25 percent by 2030 and 78 percent by 2050. In large part, this surge is due to one source alone: AI data centers.
- The former Biden administration’s response to China’s stranglehold on renewable supply chains, as with many other Western industrialized democracies, was to incentivize domestic industry and manufacturing along these lines. The Trump administration’s response to this threat, meanwhile, has been to abandon clean energy sources entirely, with the stark exception of nuclear power. As the White House sees it, they’ve eliminated countless unnecessary obstacles imposed by the prior Biden administration to stem fossil fuel development; now that they’re gone, US production should explode. The goal in theory is a win-win-win where the government supercharges the fossil fuel industry by deregulating which lowers prices for consumers — achieving oil sector success, energy independence, and consumer confidence in one fell stroke. Going forward, we may see the White House vastly expand the use of emergency powers to keep fossil fuel plants open.
- The Trump administration is a major booster of AI, even as the political backlash is now making them say data centers should pay for all the extra costs they impose on society. The tech industry’s number one solution is co-location, where they would build new private power plants on-site to directly power their data centers. All eyes are on the Federal Energy Regulatory Commission, which will rule on the co-location issue (in response to a White House request) by the end of April, potentially setting guidelines that would govern and unleash ‘bring your own generation’ for data centers.
- The White House is nearly as enthusiastic about nuclear power as it is for oil and gas. Like with renewables, much of the US’s uranium and fuel processing was reliant on a single troublesome source (in this case, Russia). A bipartisan coalition in Congress has passed bills both setting an end date for the importation of Russian uranium (2028) as well as providing government incentives to encourage the buildout of homegrown fuel supply chains.
Passing Appropriations is Just the Start of Spending Under Trump 2.0
What’s Next for Federal Spending. The House is set to send five of the six outstanding FY26 spending bills, alongside a two-week extension of current funding levels for the Department of Homeland Security, to President Trump’s desk as soon as today, bringing this year’s appropriations process nearly to a close.
- The successful enactment of at least 11 of the 12 annual appropriations bills for FY26 marks a major victory for congressional leaders who have struggled in recent years to find a bipartisan consensus on funding for federal programs and agencies. This year’s slate of spending bills came in just slightly above funding levels for FY25, largely satisfying GOP lawmakers who oppose major increases in discretionary spending, while also rejecting steep cuts sought by the Trump administration and House Republicans, moves that appealed to congressional Democrats. Billions of dollars in earmarks helped further grease the wheels for passage.
- In a typical year, the enactment of the annual appropriations bills marks the end of the process; lawmakers will take some time to reset and then look ahead to the FY27 funding process, although the midterm elections could delay any work on that front this year. But as last year demonstrated, the Trump administration’s interest in cutting federal spending and the creative tools it’s willing to use to achieve that goal go well beyond influencing congressional negotiations.
- Following last year’s enactment of a year-long continuing resolution to cover FY25 spending, the Trump administration leaned on the GOP congressional majority to pass legislation rescinding roughly $9 billion in congressional spending. Months later, when Congress’ appetite for rescissions had dried up, the administration used a novel procedural measure dubbed a “pocket rescission” to unilaterally rescind billions more in congressionally-approved spending. Those moves were in addition to other freezes, reviews, and delays in spending funds, all of which administration officials have signaled will come to bear again in 2026.
The Fight to Stave Off Further Cuts. Given the Trump administration’s interest in unilaterally reining in spending, lawmakers and stakeholders interested in preserving this year’s enacted funding levels will need to remain engaged with the process throughout the obligation and disbursement of funds.
- The Trump administration’s efforts to obtain greater control over the federal spending process, all with an aim of reducing spending, originate with Office of Management and Budget Director Russ Vought. At various points throughout the last year, Vought has said that he views the funding levels in enacted appropriations bills as ceilings for federal spending, not as the required spending levels lawmakers understand them to be. As a result, Vought and the administration view the process of actually obligating and spending the money as a key lever which they can pull to delay or altogether freeze the disbursement of certain funds.
- To understand where Vought may be interested in freezing or cutting FY26 funds, the best starting point is the president’s FY26 budget which Vought is the chief architect of. Released in May, the president’s budget outlined a roughly $163 billion reduction in non-defense discretionary spending with a focus on cutting education, housing, climate, and biomedical research programs. Funds for programs in cities and states run by Democrats are also at risk, particularly in an election year, evidence of which can be seen in the ongoing pause of the Gateway Tunnel Project, the recent review of federal funding to programs in 14 blue states plus the District of Columbia, and the effort to dismantle the National Center for Atmospheric Research.
- Despite Vought’s efforts to further cut spending, forceful pushback from Capitol Hill and stakeholders has demonstrated a proven ability to reverse some of the administration’s unilateral funding freezes. Last year, the administration reversed course on freezes to National Institute of Health grants following bipartisan anger at the funding review in Congress. Cuts to the entire Community Development Financial Institutions Fund program were similarly restored as part of the deal to end the November shutdown following outcry from lawmakers and banks to the administration’s termination of all program staff.
Infrastructure Spending Outlook Post-IIJA
Replacing the IIJA. The Infrastructure Investment and Jobs Act (IIJA) will expire on September 30th.
- The next surface transportation reauthorization is likely to have a smaller scope than the IIJA, which took an expansive definition of “infrastructure” to include both traditional surface transportation programs and other areas such as broadband, climate resiliency, and electric vehicle (EV) charging. These Biden-era priorities will likely not have much of a path forward under unified Republican control of Congress or divided government (if lawmakers don’t finish work on a bill this year and punt it until next year, when Democrats may hold at least a House majority after the midterms). Traditional hard infrastructure is likely to have more bipartisan support.
- The bipartisan FY26 spending bill for the Department of Transportation (DOT) provides an idea of what post-IIJA infrastructure spending could look like. The FY26 DOT spending bill repurposes $2.3 billion from the IIJA and would give $1 billion in repurposed highway infrastructure funds, including over $800 million originally intended for EV chargers, to the Federal Highway Administration. The bill would cut the Federal Railroad Administration budget by $1.1 billion and the Federal Transit Administration budget by $165 million. Amtrak would not face major cuts, though the legislation would rescind $929 million for high-speed rail. This bill was approved on a bipartisan basis, reflecting acknowledgement on the part of Democrats that Biden-era policies are no longer feasible in the current political environment.
Risks to Infrastructure Spending. Regardless of what Congress passes, there is a risk of the Trump administration not spending funds on infrastructure projects.
- In recent months, the White House has flexed its leverage over infrastructure spending. For example, during the government shutdown last October, the administration froze federal funding for the Gateway Tunnel Project connecting New York and New Jersey. Senate Minority Leader Chuck Schumer (D-NY) and President Trump reportedly discussed it earlier this month and news outlets have reported that work on the tunnel will soon stop unless federal funding is restored. The White House sought to make cooperation with Immigration and Customs Enforcement a condition of receiving federal transportation funding last year but dropped an appeal of a court ruling against the move last month.
- Federal transportation spending for California has been a frequent target. Last year, Secretary of Transportation Sean Duffy canceled over $4 billion in federal funding from the Golden State’s high-speed rail project and withheld $40 million over the enforcement of English-language proficiency rules for truckers. Last month, the DOT withheld $160 million from California for the state’s delay in revoking commercial driver’s licenses for immigrants.
