A federal judge has temporarily blocked a move by US president Donald Trump to pause trillions of dollars in federal loans, grants and other financial assistance, moments before it was due to take effect.
Trump’s acting head of the office of management and budget (OMB), Matthew Vaeth, had earlier instructed all federal agencies to “temporarily pause all activities related to obligations or disbursement of all federal financial assistance” in a two-page internal memo. The directive was seen as part of Trump’s desire to unravel programs related to diversity, equity and inclusion (DEI).
Is the pause currently in effect?
The court order prevents the Trump administration directive from being implemented until at least next Monday, 3 February.
US district judge Loren AliKhan granted the temporary halt after several advocacy groups argued the freeze would devastate programs ranging from healthcare to road construction.
Federal grants and loans reach into virtually every corner of Americans’ lives, with hundreds of billions of dollars flowing into education, healthcare and anti-poverty programs, housing assistance, disaster relief, infrastructure and a host of other initiatives.
A coalition of non-profits, businesses and others in affected sectors grouped under a coalition called Democracy Forward are expected to proceed with a case that argues the Trump policy is unconstitutional.
The court will revisit the issue on Monday.
What did the memo say?
The White House issued the directive in a circulated memo as part of an across-the-board ideological review of its spending.
“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,” the memo reads.
The memo was met with widespread confusion in Washington where civil servants struggled to understand its full extent scope and application.
How did Washington respond?
The White House did not immediately comment on the court order. It has said the freeze was needed to ensure federal aid programs were aligned with the Republican president’s priorities, including executive orders he signed ending diversity, equity and inclusion efforts.
Democrats have called the Trump directive “unprecedented” and “devastating”, with Chuck Schumer, the Democratic Senate leader, describing it as “a dagger at the heart of the average American families, in red states and blue states, in cities and suburbs and rural areas”.
The US constitution gives congress control over spending matters, but Trump said during his campaign that he believes the president has the power to withhold money for programs he dislikes.
What were the immediate effects?
Even before the policy had come into effect it has caused widespread disruption to social provision in education, housing, and healthcare, and left millions fearing they would lose their jobs and access to healthcare and other services.
Despite the court-ordered pause, reimbursement portals for Medicaid, the largest program providing medical and health-related services to low-income people, were down on Tuesday. White House press secretary Karoline Leavitt said on X that the government was aware of the Medicaid portal outage and no payments had been affected.
If the legal challenges against the Trump directive fail, everything from cancer research, food assistance, suicide hotlines, community health, universities, federal student aid (FAFSA), and the non-profit sector is expected to be affected.
