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White House budget office reverses order to pause spending on federal grants after public outcry in addition to temporary suspension of the order by a federal judge.
On Monday, Jan. 27, President Donald Trump ordered a freeze on all funding of federal grants and loans as Trump’s administration begins an across-the-board review of its spending, causing many programs like HeadStart, Medicaid, WIC and other federal funded programs to panic and wonder how they will operate, make payroll, provide services and even pay rent.
On Wednesday, Jan. 29, that order was abruptly reversed. In a memo by Matthew J. Vaeth, acting director of the Office of Management and Budget, he stated that OMB M-25-13 “is rescinded.”
Administration officials said the original decision was necessary to ensure that all funding complies with Trump’s executive orders, which are intended to undo progressive steps on transgender rights, environmental justice and diversity, equity and inclusion, or DEI, efforts.
The White House did report that direct federal assistance to individuals would not be affected including Social Security, Medicare, food stamps, student loans, and scholarships.
However, the funding freeze would have affected trillions of dollars, at least temporarily, and cause widespread disruption in health care research, education programs and other initiatives. Even grants that have been awarded but not spent are supposed to be halted. On Tuesday, state agencies and early education centers appeared to be struggling to access money from Medicaid and Head Start, stirring anxiety with answers hard to come by in Washington.
Court battles are imminent, and Democratic California Attorney General Rob Bonta and New York Attorney General Letitia James both said they had plans to ask a federal court to block the Republican president’s moves.
“My office will be taking imminent legal action against this administration’s unconstitutional pause on federal funding,” she said on social media.
The issue dominated the first briefing held by White House press secretary Karoline Leavitt. She said the administration was trying to be “good stewards” of public money by making sure that there was “no more funding for transgenderism and wokeness.”
“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” wrote Vaeth, OMB acting director.
Democrats and independent organizations described the pause as capricious and illegal because Congress had already authorized the money.
California Congresswoman Sydney Kamlager-Dove said in a statement “After spreading disinformation about Democrats withholding FEMA funding, Trump himself just froze all disaster aid.
“Fires are still raging in California and communities across the country are still recovering from disasters, and now Donald Trump is leaving us all out to dry.”
Senate Minority Leader Chuck Schumer, a Democrat from New York, called it “more lawlessness and chaos in America.”
It’s unclear from the White house memo how sweeping the pause will be. Vaeth said all spending must comply with Trump’s executive orders,
Vaeth wrote that “each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders.” He also wrote that the pause should be implemented “to the extent permissible under applicable law.”
The Environmental Protection Agency, which distributes billions of dollars, confirmed that it would implement the pause to “align federal spending and action with the will of the American people as expressed through President Trump’s priorities.”
Washington is a hub of spending that flows to various departments, local governments, nonprofits and contractors, and the memo has left countless people who are dependent on that money wondering how they will be affected.
The pause is the latest example of how Trump is harnessing his power over the federal system to advance his conservative goals. Unlike during his first term when Trump and many members of his inner circle were unfamiliar with Washington, this time he’s reaching deep into the bureaucracy.
While the executive order was originally slated to take effect on Tuesday at 5 p.m. EST, a United States judge has now temporarily blocked the order from Trump to freeze funding for a wide range of federal programs.
Those opposing the budget freeze said that these freezes on funding could have disrupted education, healthcare, poverty reduction and disaster relief programs.
Trump officials however argued that the funding freeze was necessary to ensure that all funding complies with Trump’s priorities, including his plans to remove all diversity, equity and inclusion (DEI) initiatives.
The Office of Management and Budget, which oversees the federal budget, said in a memo that the freeze included any money intended “for foreign aid” and for “nongovernmental organizations,” among other categories.
Local non-profits and other agencies that rely on federal funding to provide service and support to thousands if not millions of individuals, families, children, and seniors will be affected by the freezes.