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The Senate confirmed four of President Trump鈥檚 nominees, including Scott Bessent to serve as Treasury Secretary, former Wisconsin Congressman Sean Duffy to serve as Transportation Secretary, former New York Congressman Lee Zeldin to serve as Environmental Protection Agency (EPA) Administrator and former North Dakota Governor Doug Burgum to serve as Interior Secretary (see below). The House was out of session this week, with House Republicans holding their annual policy retreat in Florida.

The Senate will continue to confirm Trump administration nominees. The House will vote on a bill to permanently classify fentanyl-related substances as Schedule 1 controlled drugs.

Flooding the Zone.

In the first ten days of President Trump鈥檚 second term, he has issued dozens of federal orders, actions and declarations covering a wide range of policies. All cover issues he talked about on the campaign trail. The daily announcements have dominated media coverage. With a couple of exceptions, Democrats have had a tough time effectively responding to the frenetic pace and the fast-moving media environment. One exception was Senate Democrats鈥� rejection this week of a bipartisan bill passed by the House that would sanction officials with the International Criminal Court who issued arrest warrants to much of the Israeli government for its pursuit of the war in Gaza. We had predicted a few weeks ago that this would be the second bill that Trump signed into law in his new term. Senate Democrats opposed the measure due to Trump鈥檚 executive order on a federal funding freeze (see below). With the media focusing so much on Trump, Democratic opposition to his actions will likely best reside in the Senate, where Democrats can slow the confirmation process for Trump nominees and legislation that will require their support.

Some Will Fail.

While most of the federal actions that President Trump has put in motion through his orders will go forward as he intends, some may need to be revised substantially while others may be stopped in their tracks by the courts. The durability of the directives ultimately will depend on whether they rest upon firm legal authority. While some likely do not, Trump may see political value to issue them anyway. One example is the President鈥檚 proposed action to eliminate birthright citizenship in the US for children of a parent without legal status. This action will likely not pass legal muster, but it fulfills a campaign pledge and shows the President is fighting the status quo on an issue that was pivotal in getting him reelected 鈥� immigration.

Shaky Ground.

The proposed action to eliminate birthright citizenship order is one of many that will be challenged in court. His actions to fire certain federal workers and reshape the federal workforce will face legal challenges by government employee unions. His order to delay the ban on TikTok in the US may also be subject to legal action. His attempt to freeze federal funding previously approved by Congress has faced a legal challenge and opposition by many in Congress (including some Republicans). Courts acted to delay that action, and the pushback ultimately forced a retreat (see below). While many executive orders ultimately will be carried out, it鈥檚 important to look at them on a case-by-case basis to assess their legal validity and future.

Federal Funding Freeze.

On Monday, the Trump administration ordered a freeze on federal spending, which a judge temporarily halted. A memo from the Office of Management and Budget laying out this funding freeze caused significant confusion among federal agencies and federal aid recipients. The confusion and opposition prompted the administration to rescind the order later this week. Many lawmakers were frustrated by the move and cited the prerogative of Congress to fund the government. This tension between the White House and Congress about whether the President must spend money appropriated by lawmakers will continue this year. The big takeaway of this order is that it was sloppily proposed and rolled out without taking into account a bigger picture and was never likely to prevail. Democratic lawmakers consider it their first successful resistance of a Trump federal action.

Reconciliation on Deck.

The House and Senate will very soon begin a months-long process of trying to pass comprehensive 鈥渞econciliation鈥� legislation that will cover a wide range of important policy issues, including taxes, immigration, energy and defense. A primary goal is to provide President Trump with funding to implement key parts of his agenda, especially in the area of immigration. Republicans may also try to extend and expand upon tax cuts from 2017 that are set to expire this year, but that may need to happen in a separate reconciliation package later in the year. While the reconciliation process is a very complicated one, it allows the Senate to pass legislation with a simple majority rather than the de facto 60-vote threshold for most bills. The first step is a budget resolution, which sets the budgetary parameters and provides instructions for more detailed legislation to follow. House Republicans have ambitious plans of passing a budget resolution by the end of February and then working on the reconciliation bill(s) in March. Particularly with a very slim majority in the House and with the need to address other must-pass bills (like an overall spending bill by March 14), it will be difficult for Republicans to get over all of the hurdles in this lengthy and complicated process. Passage of these bills will be needed to advance much of the Trump agenda, but it is unlikely to be a quick or easy process.

Debanking.

Frustrations from cryptocurrency and other businesses about access to banking services has brought the issue of debanking into the forefront. President Trump expressed concern about it when talking to bank executives last week. Next week, House and Senate committees will hold hearings that will include testimony from businesses that say they were denied accounts or other services. For its part, the banking industry indicates that it shares the concerns and has argued that the problem stems from regulations and supervisory practices that make it very difficult for banks to provide relevant services to customers that could be deemed 鈥渉igh risk.鈥� Potential responses include rescinding existing regulatory guidance restricting banks鈥� ability to engage in activities related to digital assets and imposing 鈥渇air access鈥� rules that would prohibit banks and other financial firms from discriminating against specific businesses and industries. While legislation on the latter will face obstacles, particularly in the Senate, the Trump administration could push it forward through regulatory changes.

Tariffs and February 1.

President Trump reiterated this week that he would look to apply higher tariffs to imports from Mexico, Canada and China around February 1. However, we believe February 1 will come and go without those higher tariffs in place. The President has already demurred on action with China in pursuit of a more comprehensive deal later this year. Mexico and Canada have made some concessions over the past week that we believe will result in the temporary sidelining of the new tariffs next week. We expect to see a recurring pattern of tariff threats, negotiations and then withdrawal of the threats (if concessions are made to Trump鈥檚 satisfaction) throughout the second Trump term. Every tariff threat is a trigger for a negotiation with another country to address a US grievance that most likely (but not always) will be eventually resolved. This is becoming obvious to most Trump observers by now, but it bears repeating for those who are concerned about broad-based tariff action (which we believe is over-stated).

Federal Income Tax System Repealed?

President Trump said this week he鈥檇 like to scrap the federal income tax system and replace it with revenues from tariffs and foreign sources. He cited the experience of the US in the 18th and 19th centuries when the US relied on this type of revenue to fund its government (before an income tax was imposed). This idea should not be taken seriously as something that will happen. The income tax system will remain, as imperfect as it might be. The idea does reflect the President鈥檚 penchant to challenge the status quo and trigger a national debate. The idea will be rejected by most policymakers and academicians, but the debate will appeal to those who think Washington is broken and want to consider new ideas.

Energy Policy Revamp About to Begin.

President Trump made it clear when he was sworn in last week that US energy policy would be changing course, starting with a withdrawal (again) from the Paris Agreement. By the end of this week, he should have the top members of his team in place with the confirmations of Lee Zeldin as head of the EPA and Doug Burgum as the head of the Department of the Interior and the imminent confirmation of Chris Wright to lead the Department of Energy. The trio will be responsible for implementing the goals of increased drilling in the US, reforms to the permitting processes and weakened or reversal of Biden-era climate initiatives. Many of these goals were from Trump鈥檚 first presidency, but his administration appears much more prepared for implementation this go-around. Additionally, one factor in his favor this time is the dramatically increased need for more energy to power the AI boom, which didn鈥檛 exist the last time Trump was in office. This doesn鈥檛 mean the agenda will be confined to these items; already we鈥檝e seen Elon Musk attempt to push him toward solar and big tech has begun to heavily invest in nuclear.

Trump Loyalty Tests.

In the last week, various House Republicans who strongly support President Trump have introduced legislation to show their fealty to the President. Congressman Andy Ogles (R-TN) introduced a constitutional amendment designed to allow Trump to serve a third term. The proposed amendment would change the 22nd amendment to allow a president to serve three terms. Additionally, Congresswoman Anna Paulina Luna (R-FL) introduced a bill to add聽a carve-out of the President鈥檚 face to Mount Rushmore. Both bills are symbolic and stand no chance of becoming law, particularly the first bill since it would require a two-thirds majority vote in both the House and Senate, followed by ratification from three fourths of the states (38). The majority of Republican lawmakers will resist both bills, but some will use them as purity tests to determine who supports Trump the most.