“Democrats are arguing that the current shutdown is a battle over healthcare, an issue they believe will be a winning one in their midterm campaigns. However, the real casus belli is a battle over the power of the purse, an issue that Trump seemingly has already won.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• While negotiations to reopen the government are centered on both government funding levels and an extension of expiring healthcare subsidies, much of Democrats’ impetus for the shutdown is related to the White House’s impoundment of congressionally-appropriated funds.
• The Supreme Court’s 2025-26 term began yesterday and the Court’s docket includes major cases on presidential power, elections, and social issues.
• President Trump’s antitrust enforcers have sought to reset competition policy from where it stood under the Biden administration. However, there has not been a complete break, with significant attention still focused on Big Tech.

What the Shutdown Is Really About

Not Out of the Woods Yet. The government shutdown is nearing a week in length as lawmakers search for a path forward that would alleviate the pressure both parties feel to hold firm in the funding fight.

• Several times now since the government shut down last Wednesday, senators have failed to advance either of the two short-term funding bills that the parties have put forward, both of which would reopen the government for a matter of weeks. The prolonged impasse in the government funding fight is the function of a set of circular political incentives that add up to a pro-shutdown feedback loop. Democrats, egged on by a base eager to see the party stand up to President Trump, won’t fold without first securing a concession from the GOP. For their part, GOP leadership and the White House see no immediate reason to make such a concession, believing that they hold the upper hand in negotiations as the party working to keep the government open.
• The issue is further complicated by Democrats’ decision to make an extension of the Affordable Care Act’s (ACA) expiring premium subsidies their primary ask in negotiations. GOP lawmakers are deeply divided over whether or not to extend the subsidies at all, making it difficult for party leadership to commit to addressing the issue as part of government funding negotiations.
• How and when the funding standoff will resolve itself depends on how long lawmakers feel comfortable with their political position. Democrats aren’t used to being the party of shutdowns and moderates are under significant pressure to find a way out of the current impasse. For now though, polling that shows voters are placing more of the blame for the shutdown on the GOP is giving weary Democrats enough reassurance to stay firm in their positions. The other factor is President Trump, who has yet to engage in the negotiations, but will need to bless any verbal or written commitment regarding the ACA subsidies given the GOP’s fractured position on the issue.

It’s All About Impoundment. Although Democrats are centering their shutdown messaging around healthcare subsidies, what led them to a shutdown in the first place had more to do with anger over the White House’s impoundment of congressionally-appropriated funds.

• Back in July, GOP lawmakers passed a rescissions package requested by the White House, canceling roughly $9 billion in foreign aid and public media funding. Democrats were angered by the decision, believing it undercut the intent of the appropriations process, but the move was well within the bounds of the statutory authority created by the 1974 Impoundment Control Act (ICA).
• Simmering frustration with the July rescission reached a boiling point in August when the White House used its so-called “pocket rescission” authority to impound an additional roughly $5 billion in foreign aid funding without congressional approval. Although the ICA doesn’t establish a clear pathway for the president to unilaterally cancel appropriated funds, Office of Management and Budget Director Russell Vought is drawing on a novel interpretation of the statute to claim the authority to rescind unspent funds at the end of the fiscal year without congressional approval. Moreover, Democrats claim that Vought has gone well beyond the $14 billion of rescissions by unilaterally impounding more than $400 billion in additional FY25 funding.

You Haven’t Seen Anything Yet. Between the Supreme Court, the White House’s grip over the GOP, and leadership turnover at the Government Accountability Office (GAO), the administration could have plenty of leeway to ramp up its use of impoundment in the coming years.

• Serving in the minority in both chambers of Congress, Democrats have few to no pathways to rein in the administration’s appetite for impoundment. GOP lawmakers largely oppose legislative fixes that would limit the White House’s ability to impound funds, something President Trump wouldn’t sign into law even if the party felt otherwise. Adding to Democrats’ woes, the Supreme Court indicated last month that it may side with the administration in an ongoing legal battle over the pocket rescission, allowing the administration to continue impounding the funds as the case plays out.
• Equally important and less well known, Politico reports that the head of the GAO, Comptroller General Gene Dodaro, is set to retire at the end of this year. Ever since a federal appellate court ruling this summer, only Dodaro and the GAO have standing to sue the administration for the impoundment of funds. That means that the White House, which will have an opportunity to nominate Dodaro’s replacement, could select a candidate more closely aligned with the administration’s position on impoundment, neutralizing the one body that can wage a legal battle against the practice.

The Supreme Court’s Consequential Docket

Presidential Power. After backing President Trump in significant cases via its emergency docket this year, the Supreme Court (SCOTUS) begins its first full term of Trump’s second presidency this week and will consider cases on presidential authority.

• SCOTUS has accepted cases relating to Trump’s bids to fire two Democratic appointees to independent federal agencies: Rebecca Slaughter, a former commissioner on the Federal Trade Commission, and Lisa Cook, a member of the Federal Reserve Board of Governors. The justices could revisit and potentially overturn a 90-year-old precedent, Humphrey’s Executor, which held that the president could not remove members of independent agencies without cause. A reversal of this precedent would erode the independence of federal agencies, expanding presidential power over the executive branch.
• Unlike Slaughter, the Court has allowed Cook to remain in her position for now while the litigation is pending. In a ruling in a separate case earlier this year, the justices in the majority said that the Fed was “uniquely structured” with a “distinct historical tradition.”
• SCOTUS will also consider legal challenges to Trump’s “reciprocal” tariffs and his tariffs on Canada, China, and Mexico over fentanyl. The consolidated cases ask whether the International Emergency Economic Powers Act gives the President sufficient authority to impose tariffs in response to the national emergencies Trump declared. Oral arguments are scheduled for November 5th.

Elections. The justices have accepted three major cases on federal elections this term.

• Mid-decade redistricting is heating up and a redistricting case has made its way to SCOTUS. This case asks whether the creation of a second majority-minority congressional district in Louisiana violates the Constitution. A ruling against Louisiana’s map could spark lawsuits in other states over majority-minority districts under Section 2 of the Voting Rights Act and contribute to the redistricting wars.
• On Wednesday, the Court will hear oral arguments in a case that has to do with mail-in ballots, specifically, whether a congressional candidate can sue in federal court over an Illinois rule about counting mail-in ballots postmarked by Election Day that arrive within 14 days. Oral arguments are scheduled for October 8th. A third elections case, brought by the National Republican Senatorial Committee, challenges limits on political parties’ spending in coordination with candidates.
• These cases could reshape the campaign environment for the 2026 midterms and the 2027 presidential election.

Social Issues. The Court will wade back into the culture wars with three cases on LGBTQ rights.

• Oral arguments are scheduled today for a case that challenges a Colorado law that bans so-called “conversion therapy,” the practice of seeking to change an individual’s sexual orientation or gender identity. The lawsuit makes an argument on First Amendment grounds. SCOTUS has also accepted two cases relating to laws in Idaho and West Virginia that bar transgender athletes from participating on girls’ and women’s sports teams.
• These cases will bring the culture wars to the forefront in advance of the 2026 midterm elections. This raises the question of whether the social issues seen as benefitting Trump’s campaign last year will remain effective messaging for Republicans in the next election cycle.

Competition Policy Under Trump

Resetting Antitrust Enforcement. President Trump’s antitrust enforcers are aggressive by Republican standards, but the regulators are still a far cry from the strict environment exhibited under the Biden administration.

• Part of the change emerging under Federal Trade Commission (FTC) Chair Andrew Ferguson and Assistant Attorney General for Antitrust Gail Slater is a return to more conventional approaches of antitrust enforcement, including a re-emphasis on the consumer welfare standard and traditional theories of harm. The result is that challenges from Trump’s regulators will likely be more predictable and rely on fewer novel arguments.
• Another emphasis in the new administration is on using behavioral remedies as viable solutions, which fell out of favor during the Biden administration, which viewed them as at best partial fixes. The significance of this is that, even with a higher degree of scrutiny than typical under a Republican administration, there appears to be a willingness among regulators to pursue settlements that avoid litigation.

Protecting the Consumer. One of the top priorities for Ferguson and Slater is consumer-facing transactions, with these deals likely to face a higher degree of scrutiny than those between primarily business-to-business companies.

• As a result of this focus on deals affecting consumers, some industries are likely to come under particular scrutiny, especially those tied to Trump’s key constituents, such as the healthcare and agriculture sectors. Although cases in these areas have not been brought yet, there are indications that they are being closely monitored. Additionally, other recent challenges in the live entertainment and housing markets underscore the focus on consumer-facing deals.
• In addition to protecting constituencies through antitrust enforcement, there is a broader political upside for Trump in having his regulators focus on these deals, given the relatively straightforward messaging they offer. It is much simpler for Trump to sell the idea that his regulators are fighting for consumers when the deals they challenge include companies and markets that most Americans will recognize or have experience with, rather than when they focus on companies operating in a business-to-business space that many voters may not regularly interact with.

Spotlighting Big Tech. Another primary focus for Trump’s antitrust enforcers is Big Tech, much of which has been consistent with their predecessors, except on AI, where the new regulators have taken a friendlier stance. 

• In many of the antitrust lawsuits targeting Big Tech, Ferguson and Slater have continued with the more aggressive approach supported during the Biden administration, pushing for structural remedies in several instances. However, given the complex nature of these cases and expected appeals, many may not be resolved during Trump’s term unless settlements can be struck. The recent FTC settlement with Amazon suggests a willingness to deal with these companies, although the issues in these antitrust cases will be more challenging to resolve.
• One of the significant changes pushed by Trump’s antitrust enforcers is for a lighter touch on AI, aligning with the White House’s hands-off approach. Still, there have been remarks suggesting that they will monitor the space and may limit existing large platforms from making deals that allow them to consolidate their dominant positions. However, consolidation outside of that will likely not be resisted by regulators, who see the emergence of new platforms as creating more competitors.