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In an effort to balance the federal budget and fund the tax cuts President Trump implemented in 2017 and promised to deepen, Trump is now acting to cut the federal workforce with a goal of reducing it by 10%. Since taking office, Trump has implemented a hiring freeze for federal workers, offered a buyout plan with the promise of layoffs in the future, targeted employees at the Department of Education, and dismantled institutions like USAID. But what does this mean for the average American, and are these cuts effective reforms? Here’s what you need to know.

Hiring Freeze

Trump wasted no time getting right to cleaning house from day one, signing an executive order which placed a freeze on the hiring of federal civilian employees. This means that any vacant position as of noon on January 20th cannot be filled and no new position can be created, however the executive order, “does not apply to military personnel of the armed forces or to positions related to immigration enforcement, national security, or public safety.” The order states that within 90 days the director of the Office of Management of the Budget (OBM), the Director of the Office of Personnel Management (OPM), and the United States DOGE Service (USDS) must submit a plan to reduce the federal workforce. This is with the exception of the IRS, for which the Secretary of the Treasury must submit a plan in consultation with the OMB and USDS directors.

The head of USDS, a non-government organization created by Donald Trump to reduce federal spending, is directed by Elon Musk. Trump appointed Musk to this position without congressional approval, a position through which he is spearheading many of Trump’s efforts to cut the federal workforce, grants, and programs.

Buyouts

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As part of the plan to reduce the federal workforce, more than 2 million federal employees received an email with the subject line, “Fork in the Road”, which offered employees the option to resign and retain full pay and benefits until September while they remain on administrative leave. The email also warned that this offer was a part of, “restructurings, realignments, and reductions in force. These actions are likely to include the use of furloughs and the reclassification to at-will status of a substantial number of federal employees.”

Union officials warned employees that although the deal sounded nice in theory, there was no guarantee that they wouldn’t get shortchanged, primarily because it may be outside of the president’s power to offer such a deal without congressional approval. The government has the power to offer buyouts of up to $25,000, due to a bill signed by President Clinton in 1994, but buyouts for employees in the deal offered would exceed this amount. Union officials and 11 attorney generals across the nation urged caution, pointing out that without the backing of congress, the 60,000 people who have already accepted the resignation may be stiffed if congress does not include the funds to pay them in their budget.

Hours before the deadline to accept the deferred resignation offer, U.S. District Judge George O’Toole Jr. in Boston directed the Trump administration to extend the deadline until after the legality of the offer could be weighed in court on Monday.

Former and current Twitter employees had a warning for federal employees who received the “Fork in the Road” email, as they received an email with the same subject line after Musk bought the company in 2022. Thousands of former Twitter employees took the company to court, alleging they were promised higher severance payments than those that were paid out. The similarities between the two situations cannot be ignored, and these employees echoed the concerns of union officials, urging employees not to take the deal.

Layoffs

While the deferred resignation offer is labelled an offer, it is laced with threats of layoffs and furloughs to accompany the layoffs and dismissals that have already taken place since Trump took office. Layoffs, often called “Reductions in Force” as stated in the deferred resignation offer email, are “likely” according to Elon Musk. Trump has demanded lists from government organizations of a “bare minimum” full-time staff they would need if their funding was cut in half and lists of employees who received less than “fully successful” on their job performance ratings in the last three years. This combined with the many employees who have already been put on administrative leave raises concerns over the massive layoffs that will likely hit government employees across the country.

Dismissals and DEI

While layoffs may loom in the future for many federal employees, dismissals are already the reality for federal employees in the Department of Education and USAID. At least 55 Department of Education employees received an email last Friday that they were being put on paid leave; these employees also lost access to their government email accounts and were told not to come into the office. The email stated that this was not being done for, “any disciplinary purpose”, but the action appears to be in association with a voluntary diversity training seminar. The dismissals may be due to the executive order passed to rid the federal government of DEI programs, which called to eliminate positions associated with diversity, equity, and inclusion. Some of the employees affected by the leave have said that the order could affect the managing of federal student loans and processing of FAFSA applications for student financial aid. Additionally, 1,100 EPA employees have been placed on probation with notice that their position can be terminated at any time, though whether this is in association with Trump’s DEI executive order or reductions in force or both is yet unclear.

Furthermore, 500 employees were locked out of the US Department of International Development’s system and 2,200 were set to be put on administrative leave as Musk moved the dismantle the institution which distributes humanitarian aid and foreign assistance. These actions have caused tens of thousands of programs around the world to be shut down, causing widespread layoffs and furloughs.

In response to these actions, a Trump appointed U.S. District Judge, Carl Nichols, issued a temporary restraining order preventing DOGE from putting the 2,200 employees on leave and reinstating the 500 employees already placed on administrative leave. The order also stated that no USAID employee can be evacuated from their home country until Feb. 14th at 11:59 pm. The plaintiffs who filed the civil suit against Trump argued that without congressional approval, Trump cannot dismantle the USAID, and that doing so would actively harm the employees and people around the world who depend on the services they provide like education, healthcare, and food security. Experts also argue that the USAID spreads a positive US influence to stabilize other parts of the world and prevents drawing the US into conflict. The removal of this aid will create a power vacuum, where adversaries like China can step in and spread their influence.

The Impact

The impact of such major reforms and reductions in force will be twofold. Experts warn of not only the economic impact of such massive job loss, but also of the decreased ability of government organizations to function and carry out their duties to citizens.

The Economy

The United States Government employs around 2.4 million people, providing substantial stimulus to the economy and job market, not only in Washington, DC, but across the nation. Although about 459,000 people are employed through the federal government in the Washington, DC area, 80% of civilian positions are scattered elsewhere throughout the United States. There are 115,000 federal civilian employees in Florida alone, and places like Kansas City and Alaska warn that layoffs will have a substantial impact on their economy. According to an article published in the Kansas City Beacon, “Frank Lenk, director of economic research at the Mid-America Regional Council, estimates that each federal job, and the income it creates, fuels another job in the region. That means if 3,000 federal jobs permanently went away, Kansas City’s economy could lose about 6,000 workers overall.” The following map shows the distribution of civilian government jobs around the country. One can’t help but imagine the impact of a 10% loss in these government jobs multiplied times two across the nation.

Government Efficiency

Equally as concerning as the economic impact of such a massive reduction in force is the question over how layoffs will ultimately impact how well the government functions. Most of the employees being urged to leave their jobs or that will be laid off are not political appointees but individuals in nonpartisan roles who simply keep the government running. This includes processing student loan payments and tuition assistance, processing Medicare and Medicaid claims, paying Social Security payments, and much, much more. These civil servants implement policy, and with no plan to replace them or maintain essential services, Trump could be setting his own administration up for disaster.

In the mid 1990s, Bill Clinton tried a similar downsizing effort using similar tactics. The result? According to a 1997 report by the United States General Accounting Office, “This contributed to a variety of adverse operational impacts. For example, 15 agencies said that they had experienced a loss of corporate memory and expertise, and 11 agencies said that there were work backlogs because key personnel had separated.” According to Don Moynihan, a professor at the Ford School of Public Policy at the University of Michigan, these agencies lost vital skills and ended up having to hire outside consultants to make up for the loss at a higher cost to taxpayers, “because people who had the most capabilities and most value on the private sector job market were the first to leave.”

Employees in these organizations will be short staffed and under great pressure by the citizens who are in need of essential services, and the impact will be a noticeable one at the cost of the American people.

Is it Worth It?

These cuts are being done in order to balance the federal budget, but just how much money will these reductions in force save the federal government? The government spends about $350 billion on the federal workforce every year out of its $6.5 trillion budget. If Trump meets his goal of a 10% reduction in force, it may result in roughly $35 billion in savings each year to the federal government, however, this is a small fraction of the $1.9 Trillion in revenue loss caused by Trump’s Tax Cuts and Jobs Act since 2017 and the $400 billion a year the tax bill will cost if made permanent. That extends to an estimated $3.9 Trillion cost over the next ten years, which will only increase if Trump accomplishes his promise to deepen the tax cut to corporations and America’s most wealthy.

Essentially, these cuts to the federal workforce an ineffective way to pay for Trump’s tax cuts, which primarily benefit corporations and the wealthy, and they will likely result in negative economic impacts, increased unemployment, and hinder agencies from providing essential services to American citizens.

The Trump Budget Series

This is the second post in a series of posts on how the Trump administration plans to balance the budget, what is on the chopping block, and how it will affect you. To gain a better understanding of why these cuts are happening in the first place, I highly recommend checking out my first post, The Trump Tax. Subscribe to stay tuned and get a deeper look into political issues like this one.