By Joe Light and Mackenzie Tatananni

The Social Security Administration, Consumer Financial Protection Bureau, and myriad other agencies are preparing layoffs as part of the Trump administration's attempts to slash federal spending. Though federal judges have said some of the ongoing layoffs are illegal, it remains to be seen whether courts will slow the process down.

The Social Security Administration on Thursday said it would soon implement plans for "organizational restructuring" that includes "significant workforce reductions." The release didn't provide the number of positions impacted. Multiple news outlets have reported that the layoffs could affect up to 50% of the agency's workforce of 60,000, citing people familiar with the matter.

The Social Security Administration didn't respond to a request for comment from Barron's.

In a letter sent to the agency's employees, the Social Security Administration offered payments between $15,000 and $25,000 to employees who voluntarily resign. In addition to the reductions in staffing, some employees will face "directed reassignments" that "may be involuntary and may require retraining for new workloads," the agency said.

In the meantime, CFPB employees stated in court documents filed late Thursday that this month they attended meetings where agency leaders and members of Elon Musk's Department of Government Efficiency discussed firing nearly all of the department's 1,700 employees and winding the agency down.

Earlier on Thursday, Jonathan McKernan -- Trump's nominee to head the agency -- said during his confirmation hearing before the Senate Banking Committee that if confirmed he would ensure the agency performed its congressionally-mandated functions.

The White House didn't respond to a request for comment.

It's still unclear whether DOGE and the Trump administration will succeed in excising the hundreds of thousands of employees from government as it has promised. A month into the administration, courts are just now beginning to decide whether the efforts are illegal, and thus far the Trump administration has received several rebukes from judges that its actions violate the law.

U.S. District Judge William Alsup on Thursday said the U.S. Office of Personnel Management must rescind directives to federal agencies ordering them to fire probationary employees -- typically those in the first or second year of their jobs. He added that the OPM has "no authority to tell any other agency in the U.S. government who it can hire and fire." The judge stopped short of ordering the agencies themselves not to fire employees but suggested they should be stopped.

Earlier in the week, the Merit Systems Protection Board, a quasi-judicial independent federal agency meant to protect the civil service from partisan political practices, temporarily reinstated probationary employees from six federal agencies, with the order saying there was "reasonable grounds to believe that each of the six agencies engaged in a prohibited personnel practice." Lawyers for the employees said the decision could ultimately apply to thousands of workers that have been laid off.

Lawsuits fighting DOGE-tied layoffs and agency closures could ultimately hit the Supreme Court. In addition to potentially violating laws meant to protect civil service workers from partisanship, DOGE is seeking to wind down agencies -- such as the CFPB and U.S. Agency for International Development -- created by Congress.

Attempts to shut down the CFPB, which was created by the Dodd--Frank Wall Street Reform and Consumer Protection Act, are "a brazen violation of both Dodd-Frank and the Constitution's fundamental principle of separation of powers," wrote congressional Democrats in an amicus brief filed Friday.

Democrats' -- and federal employees' -- problem is that while Musk and DOGE are moving to fire employees at lightning speed, the courts are moving much slower. If judges rule the actions are illegal, there might be little left to save and a long slog to recreate agencies Trump has no interest in reviving.

Write to Joe Light at joe.light@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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February 28, 2025 13:36 ET (18:36 GMT)

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