When Donald Trump triumphed in the U.S. presidential election, a consultancy called Penta set up a “war room” to monitor which policies truly resonated. “In a world overflowing with information, attention becomes a scarce resource,” said Kevin Madden, a strategist at Penta, to the FT. “The challenge for corporate leadership lies in setting priorities.”
This sentiment rings true. The past week has unleashed a torrent of developments: a proposed 25 percent tariff on Europe, a controversial mineral deal with Ukraine, and threats of federal worker terminations, among others.
This flurry of activity reflects a calculated strategy by Trump’s team to “flood the zone” with headline-grabbing news, throwing opponents off balance. For investors, the critical question is what crucial matters are being overshadowed amid this chaos — dismissed as too mundane or intricate to seize attention.
Consider the formerly obscure concept of “impoundment.” This refers to a president’s refusal to spend funds allocated by Congress, instead choosing to withhold or “impound” them.
Historically, this practice rarely raised eyebrows. As Princeton historian Julian Zelizer notes, presidents like Thomas Jefferson, Harry Truman, and John Kennedy occasionally withheld modest sums, primarily from military budgets. However, after Richard Nixon’s resignation, Congress passed a law in 1974 to outlaw impoundment, reasserting its fiscal authority.
Last year, Trump declared his opposition to the 1974 legislation. In January, his budget-cutting team tested the waters by freezing some funding — an initial foray into “impoundment.”
While courts partially reversed those moves, the issue may resurface on a grander scale this March, potentially igniting a constitutional showdown or shaking markets. “It’s a crisis in the making,” a legal scholar warned, pointing to the 2025 and 2026 budget deliberations. This week, Republican House Speaker Mike Johnson passed a budget resolution promising sweeping spending cuts and tax reductions.
On the surface, this appeared to be a political coup. Johnson’s narrow majority, combined with staunch Democratic opposition and internal Republican divisions — spanning techno-libertarians like Elon Musk, Maga populists like Steve Bannon, and traditional conservatives — seemed insurmountable obstacles.
In reality, Johnson’s success was more symbolic than substantive. The detailed budget negotiations must now meet a March 14 deadline, a task fraught with challenges.
Despite flashy cost-cutting measures, Trump’s team has identified only a few billion dollars in “waste.” Meanwhile, the national debt stands at $36 trillion and growing, with an annual deficit of roughly $1 trillion.
Meeting Maga demands for reduced debt will require drastic measures: slashing benefits, cutting military spending, or increasing taxes on the wealthy. Populists like Bannon advocate taxing the rich, while techno-libertarians push for spending cuts. Treasury Secretary Scott Bessent optimistically claims higher economic growth could resolve the impasse, but waning consumer confidence undermines that prospect.
As March 14 approaches, the political forecasting platform Kalshi estimates a 56 percent likelihood of a government shutdown — odds that have risen since Johnson’s budget resolution passed.
Government shutdowns are not unprecedented and usually end with a congressional compromise. But this time may be different. If a deadlock occurs, Trump’s team is reportedly considering invoking “impoundment,” not just for this budget but for future financial plans as well.
This would trigger legal and constitutional battles. Maga adviser Eric Teetsel remains confident of victory. “We’re in uncharted territory,” he told Bannon’s radio show. “The core principle of impoundment has never been tested by the Supreme Court, and we believe it will stand.”
If Trump prevails, three significant outcomes could follow. First, the presidency would gain unprecedented control over federal spending. Second, tensions between Maga populists, techno-libertarians, and traditional conservatives would intensify. Finally, bond investors would need to reevaluate fiscal policy. Accustomed to analyzing risks tied to congressional processes, they are ill-equipped to price in fiscal autocracy.
Optimists might see an opportunity here. A president unencumbered by congressional gridlock could theoretically implement a decisive debt-reduction strategy. This is the vision Trump’s team champions.
However, fiscal autocracy carries inherent risks. Under Trump’s leadership, unpredictability is the norm. For now, investors would do well to familiarize themselves with “impoundment.” It might prove to be the real battleground — overshadowing the day-to-day political theatrics.
