By Joe Light

President Donald Trump and Elon Musk's Department of Government Efficiency have moved at lightning speed in an attempt to severely cut back the size of the federal government. In order by order, federal judges are moving to stop them.

The latest block came Thursday, when U.S. District Judge George O'Toole, Jr. said that the Office of Personnel Management couldn't implement a deadline by which federal employees could choose to accept an offer of a "deferred resignation." O'Toole said he wasn't yet ruling on the merits of the claim, and that there is another hearing on Monday.

In an attempt to get a broad swath of civil servants to voluntarily quit, Trump's agencies last week told employees they could resign and still get paid until September without having to perform much, if any, work. Federal employee unions sued, saying the offer and deadline were illegal.

According to the White House, at least 40,000 employees have accepted the deferred-resignation offer.

"We encourage federal workers in this city to accept the very generous offer. If they don't want to show up to the office, if they want to rip the American people off, then they're welcome to take this buyout, and we'll find highly competent individuals who want to fill these roles," White House Press Secretary Karoline Leavitt told reporters.

O'Toole's decision is just the latest setback for Trump and DOGE, which moved fast to freeze funding and shrink the government's head count since the inauguration.

Late Wednesday, the Justice Department agreed to a proposed order that would prevent the Treasury Department from sharing sensitive financial data with DOGE. Two special government employees employed at Treasury associated with DOGE could continue to get "read-only" access to the information. That order was in response to a lawsuit by federal employee unions alleging DOGE employees were violating privacy laws by accessing the government systems.

Last week, Trump's Office of Management and Budget froze funding across the government but rescinded the memo after lawsuits and widespread confusion as to how it would be implemented. At least two judges have issued temporary restraining orders prohibiting the White House from instituting the freeze, or anything like it, while litigation unfolds.

Though the restraining orders could go away, courts will generally reject arguments that Trump can unilaterally withhold funding without Congress passing a law, said Columbia Law Professor Gillian Metzger.

"There is lots of precedent that emphasizes that the executive branch is required to follow Congress's specifications on spending.," Metzger said. She added that she didn't believe the Supreme Court would be sympathetic to any broad assertion that the president could choose not to spend appropriated funds.

Some of the groups that sued to stop the freeze say that some funds aren't being disbursed despite the government orders. In a hearing in a Rhode Island federal court on Thursday, a lawyer from the New York attorney general's office said the federal government had asserted that the judge's restraining order didn't apply to some federal funds appropriated by Congress.

"Our agencies are quite concerned and they haven't been able to access any of that money and are being told that the funds are frozen," said Rabia Muqaddam, a special counsel for the New York State Attorney General.

The judge, John McConnell, Jr., said the attorneys could formally request that the court clarify the order.

The White House didn't respond to a request for comment on whether some funding was still being withheld.

Even if the courts reject Trump's expansive views of his power over spending, as a practical matter, it might be too late for some federal employees or organizations that rely on government funding.

"This is a problem with relying on courts to be doing what at some level needs to come from political pushback," Metzger said. "There is certainly damage that is done that can't be remedied."

Write to Joe Light at joe.light@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 06, 2025 14:46 ET (19:46 GMT)

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