Just in: The Justice Department agreed to temporarily restrict workers from Elon Musk’s cost-cutting team from gaining access to information in the Treasury Department payment system.
The news comes as Washington grapples with a big debate: Can President Trump unilaterally decide to spend less on an area than what Congress has approved? It has taken on more significance amid the torrent of headlines about what Musk’s panel has discovered about where taxpayer money is going — and in some cases what should be “deleted.”
This question is likely to determine how successful Musk can be in reducing government spending. The Impoundment Control Act, passed in 1974, appears to limit the president’s ability to freeze funds allocated by Congress, but the Trump administration appears ready to challenge it. Here’s some background to get up to speed on the battle that seems likely to play out.
Following the TikTok playbook for DeepSeek
The emergence of DeepSeek in recent weeks as a force in artificial intelligence took Silicon Valley and Washington by surprise, with tech leaders and policymakers forced to grapple with the Chinese phenom. (President Trump has said the app is a “wake-up call.”)
American tech giants have had to respond to DeepSeek’s technological breakthroughs. Now, according to The Wall Street Journal, lawmakers will seek to put restrictions on the app over security concerns — a similar step to what they did to TikTok years ago.
Legislators want to ban DeepSeek from government-owned devices, citing concerns that it could send user information to Beijing. The authors of the forthcoming House bill cited analysis by Feroot Security, a cybersecurity firm, that found intentionally hidden code that could send user login details to China Mobile, a state-owned telecommunications company.
“This should be a no-brainer in terms of actions we should take immediately to prevent our enemy from getting information from our government,” Representative Josh Gottheimer, Democrat of New Jersey and one of the legislation’s sponsors, told The Journal.
The bill mirrors steps that others have taken. Australia and South Korea blocked DeepSeek from some government devices, while Italy and Taiwan have also imposed restrictions. Some U.S. government entities, including the Navy and NASA, have barred the chatbot.
And several cybersecurity companies said that scores of their corporate clients had asked for the app to be blocked from their systems.
Washington has been worried about DeepSeek for some time, particularly after the start-up said that its A.I. model’s performance challenged those of top-tier American companies, with a fraction of their resources. (Whether that’s true remains hotly debated.)
Although tech companies have professed little existential worry about DeepSeek — and indeed have announced that they’ll continue to spend heavily on A.I. infrastructure, despite their Chinese rival’s claim to do more with less — U.S. policymakers have confronted multiple worries.
One is that China has obliterated the U.S. technological lead in A.I. But the other is that DeepSeek could become another way for Beijing to suck up Americans’ personal information — concerns that were also raised about TikTok.
The bill echoes Washington’s TikTok playbook. Legislation to ban the video app from government devices passed in 2022, after concern about its national security implications by lawmakers, Trump and former President Joe Biden.
You remember what happened next. Washington then passed and enacted legislation that barred TikTok from the United States, which Trump has now held off on enforcing as he seeks to broker some sort of deal. It’s far from clear yet whether DeepSeek would meet the same fate, as it’s nowhere near as popular.
But any significant steps to check DeepSeek’s rise may meet blowback from China. Consider that TikTok’s parent company, ByteDance, is said to be slow-walking efforts to reach a deal over the app amid hardening resistance to such a move by Beijing, according to The Washington Post.
HERE’S WHAT’S HAPPENING
Trump administration officials try to walk back the president’s Gaza comments. Secretary of State Marco Rubio; Steve Witkoff, the Middle East envoy; and Karoline Leavitt, the White House press secretary, sought to play down elements of President Trump’s hastily devised plan for the United States to take over the territory and create a “Riviera of the Middle East.” But Trump reiterated his commitment to a U.S. takeover of Gaza on social media today.
Google scraps diversity goals, citing Trump’s anti-D.E.I. mandate. The tech giant said that its decision to eliminate employee diversity targets was tied to its status as a government contractor that was subject to executive orders barring diversity, equity and inclusion policies at such businesses. Google is the latest company to unwind D.E.I. programs since Trump’s victory, following the likes of Meta.
Banks finally sell $5.5 billion worth of loans to X. Lenders who helped finance Elon Musk’s $44 billion takeover of the social network sold more debt at a lower discount than expected amid strong demand from investors, according to The Wall Street Journal. That underscored the rise in fortunes for X, particularly after Trump’s election win — and an infusion of cash into the company from xAI, Musk’s artificial intelligence start-up.
Friday’s jobs report is going to be, well, a mess.
Forecasters think employers added about 170,000 jobs in January, down from December’s 256,000 — but that’s not the messy part.
It’ll be all of the revisions.
Veteran jobs-report watchers know that February is when the employment data undergoes its big annual revisions. That can make the numbers hard to parse in the best of times. But this year’s revisions will be unusually large, and they’re taking place in an already fraught political environment. Democrats are worried the Trump administration is mucking with economic data. Republicans are distrustful of the numbers published under President Biden’s term.
It’s a recipe for confusion, or worse, The Times’s Ben Casselman reports for DealBook. (Several economists described the report using a word that begins with “cluster” and ends with a rhyme for “duck.”)
Here’s what you need to know:
The payroll numbers will be revised down. This shouldn’t come as a surprise. Back in August, the Bureau of Labor Statistics published its “preliminary benchmark revision,” estimating that employers added roughly 800,000 fewer jobs in 2023 and early 2024 than it initially reported. On Friday, those revisions will be incorporated into the official numbers.
The final revision will almost certainly be the largest in years. That is most likely because the bureau’s “birth-death model” — which tries to account for businesses that open or close and therefore aren’t captured in the monthly surveys — was overstating the number of jobs being created. That model will now be updated based on the new numbers, which means that going forward, it shouldn’t overstate job growth by so much.
The household numbers will be revised up. This is where things get really messy. The monthly household survey — which provides data on things such as unemployment — is weighted so that it matches population estimates from the Census Bureau. At the start of each year, the Bureau of Labor Statistics updates the employment numbers to reflect the Census Bureau’s latest estimates.
This year, the population update will be huge. That’s because the Census Bureau recently revised its methodology to more accurately capture the wave of immigration over the past few years.
But unlike with the payroll numbers, the B.L.S. won’t revise the historical household survey figures. That means it will look like the population suddenly added three million people in January. Estimates of employment, unemployment and the labor force will all jump, too.
Fortunately, indicators that are based on ratios — like the unemployment rate and the labor force participation rate — should be mostly unaffected by the population update. But be on the lookout for anyone making claims about changes in the level of employment or other measures. Those numbers cannot be compared over time.
The bottom line. None of this should change the big picture: The job market was strong in 2024 by pretty much any measure.
And as confusing as these revisions could be, they are a sign of a statistical system that is working: The updates were announced far in advance and are based on clear, transparent methodologies that aim to align high-frequency data with more authoritative sources.
“There’s no doubt that the president appears to have empowered Elon Musk far beyond what I think is appropriate.”
— Senator Susan Collins, Republican of Maine and the chair of the Senate Appropriations Committee. In related Musk news: The White House said that Musk would police any potential conflicts of interest between his government work and his businesses.
The paper chase
Executives across industries are watching closely to see if President Trump’s 30-day delay of steep tariffs on goods from Mexico and Canada will become permanent. If the tariffs do eventually go into effect, their impact will be sweeping.
The most visible effect of the tariffs may show up on big ticket items like new cars, but they’ll also have a more subtle, pervasive impact on small components used throughout the economy, reports DealBook’s Sarah Kessler.
Take the paper industry, which plays a role in packaging for products from orange juice to iPhones and also manufactures the boxes that e-commerce giants like Amazon pile on doorsteps.
Canada and Mexico are the paper industry’s closest trading partners. Last year, the United States and Canada traded more than $14 billion in pulp and paper products between them, and the United States and Mexico traded more than $5 billion, according to the American Forest and Paper Association, an industry group.
A paper product may cross borders multiple times. The paper and cardboard manufacturing process involves many stages that can each happen at different facilities: The steps of turning wood chips into pulp; turning that pulp into “base stock” like giant rolls of containerboard or paperboard; turning that raw material into a box; and finally putting a product like orange juice into that box may each be done at a different location.
“At many stages in that manufacturing process, there’s potential for a product to cross the border,” Terry Webber, the vice president of industry affairs at the American Forest and Paper Association, told DealBook. That could mean multiple levies on one product.
“People are concerned,” Webber said of how paper companies were contemplating the possibility that tariffs would eventually be imposed. “It’s a pretty widespread impact on our industry,“ he said.
The same story is playing out in countless industries. Supply chains have become so complex that many products, like auto parts (which are also packaged in cardboard), may cross borders several times during the manufacturing process and beyond.
“I think we’re just one example among probably many,” Webber said.
THE SPEED READ
Deals
Politics and policy
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House Republicans are said to be weighing extending President Trump’s 2017 tax cuts for as few as five years, counter to what the Treasury Department and Senate counterparts want. (WSJ)
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Senator Elizabeth Warren, the Massachusetts Democrat who has long opposed many of Trump’s policies, called on the president to collaborate on a pet issue of his: “debanking.” (Bloomberg)
Best of the rest
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The insurer Allstate expects the California wildfires to cost it $1.1 billion. (WSJ)
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Evan Spiegel, the C.E.O. of Snap who has long complained about Meta copying his company’s features, took a jab at his rival in his LinkedIn bio. (LinkedIn)
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