Quick hits: Policies to think about as the administration changes

Trade, civil service protections, Medicaid waivers, retirement security, the Paperwork Reduction Act, and more

Photo by Roberto Nickson on Unsplash

This week, we’re bringing you brief discussions of several policy areas in which the Trump administration could face important challenges or pursue significant changes, even if they won’t necessarily be in the headlines. Feel free to suggest additional topics you would like to see covered in the comments, and please respond to the quick poll at the end of this post.

Tariffs could increase under additional legal authorities

The president has broad powers to unilaterally raise tariffs against trade partners through various statutory provisions under U.S. trade law. Several authorities were invoked to raise U.S. import tariffs selectively over 2018 and 2019 and still remain in place: Sections 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. There are several additional authorities that may be invoked (see here for a comprehensive list). In particular---Section 338 of the Tariff Act of 1930---would allow for broad-based tariff increases. Under Section 338, the president can impose additional tariffs up to 50 percent on any country that discriminates against U.S. products including a complete ban of imports from any country that increases their discrimination against U.S. products. While it remains to be seen which suite of new and existing tariff authorities may ultimately be invoked, it is already evident that the uncertainty associated with U.S. trade policy has been rising steadily through 2024. The dramatic increase in trade policy uncertainty in 2018 lowered aggregate U.S. investment. Thus, it will be especially important to track business decisions to assess the macroeconomic impacts of future U.S. trade policies.

— Fariha Kamal

Removing civil service protections could risk the credibility of federal statistics

Many of the nation’s most important policy and private decisions rely on evidence produced by the federal government. The Trump administration intends to resurrect Schedule F appointments immediately, which would affect the trustworthiness of federal statistics. Schedule F is a job classification in the excepted service of the U.S. federal civil service that existed briefly late in the first Trump administration. It makes many senior civil servants easy to dismiss. Never fully implemented, it was repealed early in the Biden administration. Tens or hundreds of thousands of career employees could have been reclassified, increasing political appointments by a factor of ten.

In April 2024, the Biden administration adopted a regulation that would prevent most of the effects of a reinstatement of Schedule F, the repeal of which would delay implementation by several months. Professional autonomy for U.S. national statisticians currently relies heavily on norms established and reinforced by their leaders. Conversion of the leaders into political appointees could allow the spinning of language in releases, altering the timing of releases, special (early or granular) access for nonstatistical purposes, use of untested methods, or appointment of unqualified employees. Such actions would undermine trust in objectivity. They could also reduce the quality of federal statistics by reducing response rates, introducing non-statistical priorities (political or financial) into decision-making, and degrading the competence and institutional knowledge of statistical agency leaders.

— Erica Groshen

Eliminating the Department of Education could have far-reaching consequences

Elimination of the Department of Education has long been on the Republican policy agenda, and is the subject of a chapter in the Project 2025 document. But what this would mean in terms of specific programs remains somewhat unclear, in part because it could not be done without Congressional action. The three biggest programs in the Department are Title I funding for schools serving low-income students, Pell Grants to support tuition and living expenses for low-income college students, and the federal student loan program. Project 2025 contemplates moving Title I funding to HHS, converting it to a block grant (which would give states more flexibility to reallocate the funds to lower-poverty schools), and phasing it out altogether over ten years. This could lead to dramatic declines in funding in high-poverty schools, and to increased disparities in educational outcomes.

Project 2025 is silent about the $22.5 billion Pell Grant program; it seems likely that the size of Pell Grants, which have failed to keep up with the cost of college, would be reduced, and it is not clear which agency would administer them. The student loan program might be outsourced to a new government corporation, with a larger role for private banks in loan issuance. In the past this has generated large profits for banks and substantially more complexity in student borrowing with no benefits for students. Project 2025 also proposes eliminating interest rate subsidies and loan forbearance for students unable to afford to pay off their loans. While student loans are in need of substantial reform, making them more expensive and more punitive without providing an alternative mechanism for college finance would worsen the student loan crisis and generally make college less accessible for students who depend on loans to finance it. Outside of these three big programs, elimination of the Department would likely mean much less effective enforcement of civil rights and antidiscrimination laws in education.

— Jesse Rothstein

States will likely seek different kinds of waivers from Medicaid rules

Federal laws and regulations guide states in managing Medicaid and the Children’s Health Insurance Program (CHIP), which provide health coverage to low-income individuals, children, pregnant individuals, and people with disabilities. Under Section 1115 of the Social Security Act, Medicaid demonstration waivers allow states to propose modifications to certain Medicaid provisions, including eligibility, benefits, cost-sharing, and payment structures. The Secretary of Health and Human Services (HHS) has the authority to approve state waiver proposals, which are reviewed to ensure alignment with Medicaid’s objectives and adherence to a federal spending cap. Approved waivers are typically granted for five years, with potential extensions, contributing to considerable variation in Medicaid programs across states. The Biden administration encouraged states to pursue waivers that expand coverage, promote health equity, and address whole-person care, including health-related social needs services and supports like food insecurity, housing instability, and transportation needs.

The incoming Trump administration is likely to prioritize eligibility restrictions and potentially reducing the emphasis on social needs services. For example, during its previous term, the Trump administration approved Section 1115 waivers allowing 13 states to impose work requirements for Medicaid eligibility, which the Biden administration later rescinded. However, the incoming administration may reinstate these waivers, though legal challenges could arise. Future waivers will reflect the new administration’s goals, with some existing waivers withdrawn if misaligned. Since Medicaid waivers do not require legislative action, they hold significant potential to influence healthcare access for millions of Americans.

— Victoria Udalova

How will the Trump administration use place-based policy levers?

Geographic inequality in the US has been widening for decades, with richer places pulling farther ahead and poorer places lagging behind. At the same time, geographic mobility has declined. Tech and other high-paying industries have agglomerated in a relatively small number of areas, many of which build too little housing to accommodate growth. Two types of federal programs invest in specific places. First are programs targeting the neediest or most distressed areas, in order to improve infrastructure, employment, and other economic conditions in these areas. Such programs include broadband investment in unserved and underserved areas, job creation in distressed areas through the Recompete program, and preferential tax treatment for investments in targeted areas through the Opportunity Zones program. Second are programs that direct investments to high-capacity places in order to achieve national economic security, innovation, or climate goals, through competitive grant processes. These include the Tech Hubs program, the Regional Clean Hydrogen Hubs program, and CHIPS investments in semiconductor manufacturing and research.

— Jed Kolko

Will recent bipartisan progress on retirement security continue?

Over the last five years, one area where there has been successful legislative efforts with bipartisan support is retirement security. President Donald Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into law on December 20, 2019 and SECURE 2.0 was signed by President Biden on December 29, 2022. Both were passed by Congress with support from both sides of the aisle and include a package of policy changes aimed at increasing access to and participation in retirement savings vehicles, such as requiring automatic enrollment and escalation for new employer savings plans, providing tax credits to small businesses to offer plans, and expanding catch-up contributions. While some of the provisions of SECURE 2.0 haven't even been completely rolled out, there are already discussions about what could form the basis of a third iteration of this legislation that could incorporate the lessons learned from prior changes and address remaining gaps in retirement plans that leave a about 14 percent of individuals reliant on Social Security for over 90 percent of their retirement income.

— Gopi Shah Goda

Pay attention to the subtle power of paperwork requirements

The Paperwork Reduction Act (or PRA) sets requirements for how federal agencies can collect information from the public, with the goal of reducing the burden that agencies pose on the public whether through surveys, application forms, reporting requirements, or other information collections. In recent years, the Office of Management and Budget (OMB), which oversees implementation of the PRA, has sought to use that law to more proactively reduce the burdens faced by members of the public when accessing public benefits and services. For example, OMB has worked with the Small Business Administration to streamline access to the Administration's loan assistance and has also worked with the U.S. Department of Agriculture to streamline paperwork required for farmers to apply for farm loans. OMB has also sought to encourage greater public participation in the design of federal paperwork to better identify potential sources of burden and how to streamline forms. (Most federal agencies must solicit public comments on new or revised forms before they can be approved, as well as periodically on existing forms.) It will be interesting to see how the incoming Trump Administration implements the PRA, especially whether it continues efforts to streamline access to government programs and encourage greater public feedback on forms.

— Alex Hertel-Fernandez

Families still need help with child and elder care

The incoming administration should direct attention to the country’s (inadequate) infrastructure to support caregivers for young children, aging adults, and those with disabilities. The care economy supports the U.S. economy through (1) direct investments in the health, development, and wellbeing of those receiving care, and (2) by allowing family caregivers to engage in the workforce or their own education and training. With an aging population, prime working-age adults increasingly find themselves “sandwiched” between care for children and for parents. More than half of U.S. workers, or an estimated 90 million people, have care responsibilities outside of their full-time jobs, and these care responsibilities impose career costs, particularly for women. The current care patchwork is a fragmented system of supports that is difficult for families to navigate and highly variable in quality. Without reliable, affordable care for young children and older and disabled loved ones, families are likely to make compromises on either the type or quality of market-based care they use or in their own balance of caregiving and work responsibilities.

Beyond care services and settings, caregiving families also rely on and benefit from paid family and medical leave, flexible work arrangements, and paid sick days which comprise a comprehensive care infrastructure. Both presidential campaigns acknowledged the importance of care, particularly childcare, in supporting family caregivers on the trail. In April 2023, following the narrow legislative failure of the care provisions of the Build Back Better Act, President Biden issued an executive order to align the efforts of nearly every federal agency toward strengthening the care workforce. Improving families’ ability to afford high-quality care—via expansions to current subsidies through the Child Care and Development Block Grant and Temporary Aid to Needy Families, and through new coverage of long-term care and home care for Medicare beneficiaries—is an important component of a care policy agenda. In addition, enlarging the availability of high-quality care through supply-side investments in a stable workforce and in expanding capacity will not only help working families, but also contribute to our nation’s productivity.

— Chloe Gibbs

Early action on procurement rules could shed light on the administration’s approach to labor

The president has the authority to make efficiency-enhancing changes to the procurement process unilaterally via executive order. President Biden used this authority several times, largely to establish requirements around hiring and employment practices used by federal contractors and most notably to require that they pay at least $15 per hour for work under federal contracts. President Trump revoked multiple similar orders issued by President Obama (though not the 2014 order that increased the contractor minimum wage to $10.10). It will be interesting to see which, if any, Biden procurement orders are revoked, and whether and how the second Trump administration might use this authority to pursue other policy goals. Actions taken under this authority can serve as both proof of concept and proof of effort when broader action on an administration's preferred policies is difficult or impossible. Also, the federal government spends hundreds of billions of dollars per year on services procurement, so improvements to the contracting process can have meaningful benefits. Finally, executive orders of this kind are often implemented by the Department of Labor and deal with labor standards. The AFL-CIO has praised Labor Secretary-designate Lori Chavez DeRemer for her pro-labor record in Congress. Early procurement-related executive orders could help clarify how that record will translate to the executive branch.

— Kevin Rinz