Appeals court keeps block on Trump administration's downsizing of the federal workforce
SAN FRANCISCO (AP) — An appeals court on Friday refused to freeze a California-based judge's order halting the Trump administration from downsizing the federal workforce, which means that the Department of Government Efficiency-led cuts remain on pause for now.
A split three-judge panel of the U.S. 9th Circuit Court of Appeals found that the downsizing could have significant ripple effects on everything from the nation's food-safety system to veteran health care, and should stay on hold while a lawsuit plays out.
The judge who dissented, however, said President Donald Trump likely does have the legal authority to downsize the executive branch and there is a separate process for workers to appeal.
The Republican administration had sought an emergency stay of an injunction issued by U.S. Judge Susan Illston of San Francisco in a lawsuit brought by labor unions and cities, including San Francisco and Chicago, and the group Democracy Forward.
The Justice Department has also previously appealed her ruling to the Supreme Court, one of a string of emergency appeals arguing federal judges had overstepped their authority.
The judge's order questioned whether Trump's administration was acting lawfully in trying to pare the federal workforce.
Trump has repeatedly said voters gave him a mandate to remake the federal government, and he tapped billionaire Elon Musk to lead the charge through the Department of Government Efficiency.
Tens of thousands of federal workers have been fired, have left their jobs via deferred resignation programs, or have been placed on leave. There is no official figure for the job cuts, but at least 75,000 federal employees took deferred resignation, and thousands of probationary workers have already been let go.
Illston's order directs numerous federal agencies to halt acting on the president's workforce executive order signed in February and a subsequent memo issued by DOGE and the Office of Personnel Management.
Illston, who was nominated to the bench by former President Bill Clinton, a Democrat, wrote in her ruling that presidents can make large-scale overhauls of federal agencies, but only with the cooperation of Congress.
Lawyers for the government say that the executive order and memo calling for large-scale personnel reductions and reorganization plans provided only general principles that agencies should follow in exercising their own decision-making process.
__
Associated Press writer Lindsay Whitehurst in Washington contributed to this story.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
7 minutes ago
- Yahoo
Can Trump fix the national debt? Republican senators, many investors and even Elon Musk have doubts
WASHINGTON (AP) — President Donald Trump faces the challenge of convincing Republican senators, global investors, voters and even Elon Musk that he won't bury the federal government in debt with his multitrillion-dollar tax breaks package. The response so far from financial markets has been skeptical as Trump seems unable to trim deficits as promised. 'All of this rhetoric about cutting trillions of dollars of spending has come to nothing — and the tax bill codifies that,' said Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank. 'There is a level of concern about the competence of Congress and this administration and that makes adding a whole bunch of money to the deficit riskier.' The White House has viciously lashed out at anyone who has voiced concern about the debt snowballing under Trump, even though it did exactly that in his first term after his 2017 tax cuts. White House press secretary Karoline Leavitt opened her briefing Thursday by saying she wanted 'to debunk some false claims" about his tax cuts. Leavitt said that the "blatantly wrong claim that the 'One, Big, Beautiful Bill' increases the deficit is based on the Congressional Budget Office and other scorekeepers who use shoddy assumptions and have historically been terrible at forecasting across Democrat and Republican administrations alike.' But Trump himself has suggested that the lack of sufficient spending cuts to offset his tax reductions came out of the need to hold the Republican congressional coalition together. 'We have to get a lot of votes,' Trump said last week. 'We can't be cutting.' That has left the administration betting on the hope that economic growth can do the trick, a belief that few outside of Trump's orbit think is viable. Tech billionaire Musk, who was until recently part of Trump's inner sanctum as the leader of the Department of Government Efficiency, told CBS News: 'I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing." Federal debt keeps rising The tax and spending cuts that passed the House last month would add more than $5 trillion to the national debt in the coming decade if all of them are allowed to continue, according to the Committee for a Responsible Financial Budget, a fiscal watchdog group. To make the bill's price tag appear lower, various parts of the legislation are set to expire. This same tactic was used with Trump's 2017 tax cuts and it set up this year's dilemma, in which many of the tax cuts in that earlier package will sunset next year unless Congress renews them. But the debt is a much bigger problem now than it was eight years ago. Investors are demanding the government pay a higher premium to keep borrowing as the total debt has crossed $36.1 trillion. The interest rate on a 10-year Treasury Note is around 4.5%, up dramatically from the roughly 2.5% rate being charged when the 2017 tax cuts became law. The White House Council of Economic Advisers argues that its policies will unleash so much rapid growth that the annual budget deficits will shrink in size relative to the overall economy, putting the U.S. government on a fiscally sustainable path. The council argues the economy would expand over the next four years at an annual average of about 3.2%, instead of the Congressional Budget Office's expected 1.9%, and as many as 7.4 million jobs would be created or saved. Council chair Stephen Miran told reporters that when that growth is coupled with expected revenues from tariffs, the expected budget deficits will fall. The tax cuts will increase the supply of money for investment, the supply of workers and the supply of domestically produced goods — all of which, by Miran's logic, would cause faster growth without creating new inflationary pressures. 'I do want to assure everyone that the deficit is a very significant concern for this administration,' Miran told reporters recently. White House budget director Russell Vought told reporters the idea that the bill is 'in any way harmful to debt and deficits is fundamentally untrue.' Economists doubt Trump's plan can spark enough growth to reduce deficits Most outside economists expect additional debt would keep interest rates higher and slow overall economic growth as the cost of borrowing for homes, cars, businesses and even college educations would increase. 'This just adds to the problem future policymakers are going to face,' said Brendan Duke, a former Biden administration aide now at the Center on Budget and Policy Priorities, a liberal think tank. Duke said that with the tax cuts in the bill set to expire in 2028, lawmakers would be 'dealing with Social Security, Medicare and expiring tax cuts at the same time.' Kent Smetters, faculty director of the Penn Wharton Budget Model, said the growth projections from Trump's economic team are 'a work of fiction.' He said the bill would lead some workers to choose to work fewer hours in order to qualify for Medicaid. 'I don't know of any serious forecaster that has meaningfully raised their growth forecast because of this legislation,' said Harvard University professor Jason Furman, who was the Council of Economic Advisers chair under the Obama administration. 'These are mostly not growth- and competitiveness-oriented tax cuts. And, in fact, the higher long-term interest rates will go the other way and hurt growth.' The White House's inability so far to calm deficit concerns is stirring up political blowback for Trump as the tax and spending cuts approved by the House now move to the Senate. Republican Sens. Ron Johnson of Wisconsin and Rand Paul of Kentucky have both expressed concerns about the likely deficit increases, with Johnson saying there are enough senators to stall the bill until deficits are addressed. 'I think we have enough to stop the process until the president gets serious about the spending reduction and reducing the deficit,' Johnson said on CNN. Trump banking on tariff revenues to help The White House is also banking that tariff revenues will help cover the additional deficits, even though recent court rulings cast doubt on the legitimacy of Trump declaring an economic emergency to impose sweeping taxes on imports. When Trump announced his near-universal tariffs in April, he specifically said his policies would generate enough new revenues to start paying down the national debt. His comments dovetailed with remarks by aides, including Treasury Secretary Scott Bessent, that yearly budget deficits could be more than halved. 'It's our turn to prosper and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it'll all happen very quickly,' Trump said two months ago as he talked up his import taxes and encouraged lawmakers to pass the separate tax and spending cuts. The Trump administration is correct that growth can help reduce deficit pressures, but it's not enough on its own to accomplish the task, according to new research by economists Douglas Elmendorf, Glenn Hubbard and Zachary Liscow. Ernie Tedeschi, director of economics at the Budget Lab at Yale University, said additional 'growth doesn't even get us close to where we need to be.' The government would need $10 trillion of deficit reduction over the next 10 years just to stabilize the debt, Tedeschi said. And even though the White House says the tax cuts would add to growth, most of the cost goes to preserve existing tax breaks, so that's unlikely to boost the economy meaningfully. 'It's treading water,' Tedeschi said. Josh Boak, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
7 minutes ago
- CNBC
Apple's China rival Xiaomi still has major upside, analysts say, even after record earnings
Chinese smartphone company Xiaomi in the last week reported record net profit for a second-straight quarter, bolstering several analysts' conviction on the Hong Kong-listed stock. In absolute dollar terms, Xiaomi's earnings are still a fraction of Apple's . But the Chinese company has a larger smartphone market share in China , and has built an electric vehicle business, while the iPhone maker dropped its car plans . Apple in recent months has also come under pressure from the Trump administration over its overseas supply chain. Apple shares are down 20% year-to-date to around $200. Xiaomi's have gained more than 45% to 50.95 Hong Kong dollars ($6.50) a share. Following Xiaomi's earnings report on May 27, Jefferies analysts raised their price target to 73 HKD, up from 69.50 HKD previously — for upside of 43% from Friday's close. The analysts attributed the company's earnings beat to outperformance in "AIoT." The category refers to Xiaomi's appliances, which incorporate artificial intelligence functions and can be controlled remotely over the internet using an app. Xiaomi's adjusted net income for the first quarter was 10.68 billion yuan ($1.48 billion), beating the expected 9.48 billion yuan, according to a FactSet analyst poll. Revenue of 111.29 billion yuan also came in above the 108.49 billion yuan predicted by the poll. In smartphones, Xiaomi has become more conservative about the global outlook, but the Jefferies analysts pointed out the company will likely continue to gain market share in the high-end China market with its new Xring O1 chip. Xiaomi officially revealed the chip on May 22 and said it would power its new 15S Pro smartphone, which sells for far less than Apple's iPhone 16 Pro in China. CEO Lei Jun claimed at the event that Xiaomi's Xring O1 Apple's A18 Pro on several metrics, including the ability to operate a game with less heat. Smartphones account for just under 40% of Xiaomi's revenue. Appliances and other products make up nearly 22%. "We believe appliances represent major upside in the next two years, but [Xiaomi's electric SUV] YU7 sales will be [the] key [short-term] catalyst," the Jefferies analysts said. Xiaomi revealed its YU7 SUV at the same May 22 event. While the company didn't announce a price, it said an official launch would be held in July and that the new car would come with a longer driving range than rival Tesla's Model Y. "We believe the launch of YU7, scheduled for July 2025, will likely be the most important catalyst for Xiaomi this year," Morgan Stanley analysts said in a May 27 report. They expect the SUV can garner a higher price point than Xiaomi's SU7 electric sedan that hit the market last year. "If sales volume is strong, it could help Xiaomi achieve higher ASPs, better margins, and ongoing earnings growth," the Morgan Stanley analysts said. They rate Xiaomi overweight and have a price target of 62 HKD. In addition to the YU7 release this summer, several analysts said they are looking forward to Xiaomi's investor day, scheduled for June 3. Those are both potential positive catalysts, Macquarie said. "We believe Xiaomi is a beneficiary of rising EV demand, changing consumer behavior, and industry consolidation in China." "The company is widening its core business product offerings, expanding overseas and controlling [operating expenses] to drive profitability," the report said. Macquarie rates the stock outperform, with a price target of 69.32 HKD. JPMorgan analysts kept their neutral rating, however, as they said Xiaomi's ecosystem-related revenue growth was the slowest among major categories — not supportive of a high valuation in their view. They cautioned that while Apple was able to gain value once services started driving growth instead of hardware, Xiaomi has seen accelerating hardware growth while services has grown more slowly. Their price target is 60 HKD, still about 18% above where the stock closed Friday. — CNBC's Michael Bloom contributed to this report.
Yahoo
8 minutes ago
- Yahoo
Trump's Transportation Sec Warns More Airport Outages Are Coming
Rolling blackouts at Newark International Airport have continued to erode confidence in America's airports, and while the Trump administration is promising that New Jersey's flight problems will soon be a thing of the past, the problems are just beginning for the rest of the nation. In an interview with MSNBC's Meet the Press Sunday, Transportation Secretary Sean Duffy had only more warnings for the future of America's commercial aviation industry. 'The lights are blinking, the sirens are turning.… What you see in Newark is gonna happen in other places across the country,' Duffy said, pointing to telecom and software issues at air traffic towers across the country. 'It has to be fixed.' He noted that, at least at Newark, 'we believe we can have it up and running in short order.' 'We're going to be able to fix that glitch, and we feel a little more comfortable about our primary line that gets the data in on radar,' Duffy said. Duffy also mentioned that America's airports are operating on equipment so outdated that the parts are no longer manufactured for replacements, telling host Kristen Welker that the government has to search online for alternatives. 'I'm concerned about the whole airspace. The equipment that we use, much of it we can't buy parts for new, we have to go on eBay and buy parts if one part goes down. You're dealing with really old equipment,' he said. Duffy further acknowledged that while U.S. airspace is safe, a major outage could pose a 'risk to life.' Newark has experienced several significant disruptions since late April, causing hundreds of cancellations and delays, which officials have blamed on aging infrastructure and a shortage of air traffic controllers. The shortage of air traffic controllers is nothing new, however: It's been a problem decades in the making. A large bulk of controllers retired over the last 10 years—a coincidence made possible due to the fact that the majority of the staff onboarded simultaneously as replacements for the 11,350 controllers fired by President Ronald Reagan in 1982. In 2015, the National Air Traffic Controllers Association told Congress that the situation had reached a 'crisis' level and that, at the time, the Federal Aviation Administration had missed hiring targets five years in a row. For years, the federal government has failed to properly incentivize younger generations to view the famously high-stress, high-education, and relatively antisocial job as desirable—and similar to other industries, that lapse between the aging workforce and the stalling youth is contributing to a brain drain. (To address this, Duffy also said he'd told the union that air traffic controllers will be allowed to work past the age of 56.) On top of that, the massive worker shortages have forced controllers to do double duty, for instance at Reagan International Airport, where controllers were reportedly tasked with handling both the flight paths of commercial airplanes and helicopters—work typically done by two separate controllers. 'The Congress and the country haven't paid attention to it, and they expect it to work,' Duffy told MSNBC. In February, the administration erased 400 FAA roles, including positions that supported air safety. Duffy confirmed the cuts that time, though he attempted to minimize them by highlighting the overall staffing of the agency, which he claimed employs some 45,000 workers. At the time, Duffy said he would 'supercharge' air traffic controller hiring, hoping to shave four months off the typically arduous onboarding process. But that likely wouldn't make a dent in America's air traffic staff anytime soon: It currently takes about four years to become a certified air traffic controller. Questions have emerged as to whether Elon Musk and the Department of Government Efficiency directed the FAA cuts. But when asked directly about the issue, Duffy skirted the question. 'We were having a conversation about 'Who do we preserve',' Duffy said Sunday. 'We went back and forth, and Elon agreed; the president agreed, 'Of course you want to keep air traffic controllers.' We're trying to hire more of them. But I think the key is: Can your government be more efficient?' 'You can actually be more efficient and still accomplish the mission of safety,' Duffy told MSNBC. On Thursday, Duffy released an eight-page framework to replace America's antiquated aviation infrastructure, revealing at a press conference that the Trump administration would be investing in a 'brand new, state-of-the-art air traffic control system that will be the envy of the world.' Unfortunately, the pitch did not mention how the agency would fund the massive technological overhaul.
