This is the second in a series of 4 posts looking at the Trump administration’s goals for its first year and to what degree they have been accomplished — all with an eye toward investment. It has long been anticipated that the midterm elections would be decisive in determining whether President Trump’s radical revision of American politics will last. Now is the beginning of the midterm campaign season, and this raises the question of whether we are approaching Peak Trump. The first post considered foreign affairs; this one looks at the domestic scene with regard to government (IRS, SEC, Justice Department, ICE, etc.). The third post will analyze the domestic political economy, while the fourth will examine the implications of the arguments for investors.
The first post in this series considered foreign affairs and stressed two points. The first was that the aggressive acts early in the term (February to June), followed by peacemaking efforts (May to September), revealed a pattern only in the sense that they showed a president believing he had a special role to play on the world stage. His actual actions (a peace initiative in Thailand, a bombing in Nigeria) were primarily opportunities for the president to show himself behaving in a particular way. Analytically, it is a mistake to over-interpret them. The second point was that an administration ideology in foreign affairs does exist but on a separate track having much more to do with immigration and what might be called civilizational issues: arguing for the fairness of modern imperialism, followed by the self-inflicted decline of the West, which the Trump administration feels it is in a position to redress.
The second point was discussed in SIGnal almost a year ago (“The Importance of Ideology,” 22 Feb. 2025). At that time, White House policies expressed ideas earlier published by the Center for Renewing America, an NGO founded by Russell Vought, the president’s budget director. At the end of December 2022, the center published “A Commitment to End Woke and Weaponized Government”; Vought and his center went on to strongly influence the Heritage Foundation’s Project 2025, which despite the president’s early denials has proved to be a useful guide to his administration’s policies. As discussed in SIGnal, the center’s research claimed to have identified a wokeness virus that had originated abroad then entered the US via the State Department and CIA with the willing help of Silicon Valley tech platforms. Wokeness was thought to be fundamentally anti-American and to have permeated government to such a degree that it needed to be dramatically cut back, as if one were removing cancerous tissue. This Vought and the White House set out to do, with no important opposition from State, CIA, or any other part of the supposedly powerful “deep state” — with no effective pushback from Democratic or other political opponents — and with the passive assent or active collaboration of supposedly liberal Silicon Valley, most famously Elon Musk and Peter Thiel. This was the DOGE era. Vought’s Office of Management and Budget, as expected, proved to be the key actor in the reduction of government.
With regard to international institutions and the domestic agencies that interact with them, the administration did not so much seek to advance its views as to withdraw money and participation. Since the US was the principal actor in binding the international system together, non-participation and budget cuts were enough to cause it great harm. Congressional misgivings mattered little: the president had no respect for Democratic views or the established rules of the game; court decisions on the scope of executive powers take too much time; and perhaps most important, the president had no respect for Republican politicians who might oppose him, while he nonetheless had influence with their constituents and an eagerness to use it.
Defunding of State or USAID paralleled the defunding of domestic governance. Defunding was never just about State or USAID. It was about shrinking government commitments generally. The Securities and Exchange Commission was targeted; by the end of FY 2025 the commission had an attrition rate of 17.8% (a fivefold increase year-on-year) and had lost more than a quarter of its contractor personnel. The Internal Revenue Service lost just over half ($40.8 billion) of the monies appropriated for modernizing it as well as 25% of its workforce. The Treasury Department, US military branches, and the Veterans Administration also experienced significant attrition in 2025, according to federal Office of Personnel Management reporting, with the military shedding 63,400 men and women. DOGE-enforced layoffs (“reductions in force”) were a very small part of this broad picture. Most people either quit, took buyout offers (counted in public OPM statistics as quitting), or retired. Overall, the US government workforce since President Trump’s second inauguration shrank (Jan-Nov 2025) by 335,000.
The ideological justification for this shrinkage, apart from a simple reduction in costs and corporate regulation, was to combat “wokeness” and the “weaponization” of government. That was Vought’s great theme and shaped the trimming of government agencies. The main proximate enemy was Diversity, Equity, and Inclusion (DEI), which proved to have remarkably few defenders. President Trump’s very first moves were to eliminate DEI from government wherever possible, to use the stick of federal funding to accomplish something similar in universities and the educational system, and to deploy the Justice Department to make companies who had adopted DEI, often at federal direction, to now eliminate it, also at federal direction. The Trump administration was itself weaponizing government, but against wokeness.
Implicit in anti-woke initiatives was the idea that there had been a pre-woke equity based on merit that liberal woke efforts had disturbed and which would now be restored. This was symbolized by the official revival of a classic painting, John Gast’s 1872 American Progress, which features a white-draped flying goddess, Miss Columbia, leading a group of white male settlers west as Native Americans and wild animals flee. It was anti-woke trolling, but the Supreme Court’s decision in Ames v. Ohio — that a majority group, such as straight people, can be discriminated against, and be legally protected from discrimination, in just the same way as a minority group — was more substantial. So were the Justice Department’s investigations into discrimination against majority groups. “White people,” the president said, had been “very badly treated.” According to a Justice Department spokesperson, a decade of “DEI insanity” had “led to blatant, widespread race and sex discrimination.” The department and the administration seek to restore what they see as the pre-DEI balance. Since the only groups that could be seen as discriminated against by wokeness were white Americans, straight people, and men, the restoration aimed at by the Trump administration would need to benefit them if it were to be successful.
Is it working? Early evidence suggests it might not be. Consider the US Army. The method used in the case of the US military was to eliminate preferences based on gender or race. These were believed to have led to poor recruitment. US military recruitment did indeed surge in FY2025, and defense secretary Pete Hegseth attributed it to getting rid of “this politically correct garbage” in favor of “war fighting.” So it is striking that US Army statistics for the regular army show an FY2025 increase from FY2024 in female and non-white recruits, and a decrease, as a share of the total, in white recruits and men. Even under the presumably optimal conditions of a Trump administration, then, white-male recruiting at the US Army is down. The female share of recruits under Hegseth has climbed from 18.1% to 19.7%. The “Caucasian” share declined from 40.5% to 40%, continuing a downward trend from at least 2020, when the share was 52.7%.
Something similar has happened in the “DMV” region: Washington DC, Maryland, Virginia. It is the sixth-largest economic region in the country and naturally sensitive to declines in federal employment. In the DMV, white unemployment has risen faster than black unemployment under the Trump administration, a reversal of the usual relationship. In another departure from the norm, unemployment has concentrated in suburbs; black unemployment in DC itself has actually gone down. Bear in mind that the bulk of the shrinkage in federal unemployment under this administration has been through quitting or taking buyouts. What this suggests is that white unemployment in DMV has grown under Trump, primarily from white workers quitting his government.
The Department of Homeland Security (DHS) is the exception to the pattern of federal agency shrinkage. While DHS itself is down slightly and most of its subagencies have declined, Immigration and Customs Enforcement (ICE) is up by 5,200 for the administration to date, and Customs and Border Protection (CBP) is up 1,746. These are OPM figures; ICE itself claims to have hired 12,000 new officers and agents. Either way, it is the one area of federal employment that bucks the downward trend.
DHS is, of course, also the agency charged with enforcing President Trump’s promised mass-deportation policy. DHS has not released demographic statistics on who is working for ICE or CBP. But in 2023 DHS was 51.7% white (below the national average), 22.8% Hispanic (above the average) and 16.7% black (above the average). The new hires might change this balance. Expensive and sophisticated recruitment efforts, according to an internal ICE document, have been focused on people identified as being near UFC fights, gun shows, and NASCAR races as well as country-music fans, self-identified conservatives, the followers of conservative influencers, and so forth. That does sound like a white-male recruiting effort. Then again, the non-white audiences for NASCAR, UFC fights, and country music have all been growing in recent years, and in some cases the female audiences are growing as well.
It therefore seems more than possible that in the federal government, over which the president has considerable control, the elimination and denunciation of DEI policies has not led to an increase in white-male hiring. Several explanations suggest themselves. The main one is that white men either don’t need or don’t want the jobs. The white male unemployment rate over the first year of this administration has been steady and consistently lower than the unemployment rate for most other groups. That needle does not seem to have moved at all. The standout group for worsening job prospects over the same period has been black Americans, particularly women. At the same time, the labor-force participation rate of immigrant men has been significantly higher (roughly 76% versus 65%) as compared to native-born men, and the unemployment rate slightly lower (3.9 versus 4.3). The demographic group that stands out the most in the available BLS statistics for the first year of the second Trump administration is Hispanic men, more than 79% of whom participate in the labor force, with an unemployment rate of 4.3. When you combine these employment figures with the fact that employment improves with education — people with a bachelor’s degree or above have the highest participation rate (72.6) and lowest (2.8) unemployment rate — the picture that emerges is of a growing Asian presence in the upper reaches, as Asians devote far greater resources to education than any other group (including white Americans), and a more Hispanic middle class as Hispanic education rates and English proficiency steadily improve.
So far, the Trump administration’s war on woke, which has been the leading motif in its remaking of US government agencies, does not seem to have made much of a difference in economic terms for white people, straight people, or men. But it has succeeded in showing the weakness of Congress, state governments, and the rest of the American political system when faced with a ruthless executive willing to use physical force and budgetary power to suppress American political traditions of separation of powers and free political speech. This activity looked as though it was directed at undeserving foreigners and an unlamented wokeness. It was really directed at seizing domestic power, supposedly on behalf of the needs of white men — who so far have very little show for it, at least in economic terms.