President Donald Trump’s budget office on Monday ordered all federal agencies to temporarily block disbursement of grants and loans — other than for Social Security, Medicare and other programs providing direct aid to individuals.
The memo says the temporary pause, effective starting at 5 p.m. on Tuesday, is intended to ensure agencies are complying with Trump’s executive orders to root out “Marxist equity, transgenderism, and green new deal social engineering policies” from programs within their purview.
It’s not immediately clear how wide-ranging the pause will be in practice, due to the Office of Management and Budget’s ability to grant exceptions on a “case-by-case basis,” language exempting direct aid to individuals and a clause that states the pause is subject to what’s “permissible under applicable law.”
But the new administration is clearly painting with a broad brush, at least at the outset.
“Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities,” acting OMB director Matthew Vaeth wrote in the memo. “This memorandum requires Federal agencies to identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.”
The memo also makes clear that oversight of each federal assistance program will be assigned to “a senior political appointee to ensure Federal financial assistance conforms to Administrative priorities.”
At face value, the memo represents a major halt to the flow of funds from programs that could equal around 20 percent of all federal spending, not including interest on the debt. The memo said total spending on programs meeting the definition of “federal financial assistance” that could be impacted reached $3 trillion in fiscal 2024, though exemptions are likely to reduce that figure.
Still, as written the pause could affect a big swath of programs that aid lower-income households, including: Medicaid; school breakfast and lunch programs; Section 8 rental assistance; Title I education grants; Temporary Assistance for Needy Families; state grants for child care; Head Start; and the Special Supplemental Nutrition Program for Women, Infants and Children.
The Department of Housing and Urban Development’s Community Development Block Grant Program and EPA grants to states and localities for clean water infrastructure — both of which fund a large chunk of congressional earmarks each year — could also be impacted.
Foreign aid grants are likely to be put on hold as well as clean energy projects, as those are specifically named in earlier executive orders.
State highway reimbursements, while technically part of the federal financial assistance category, could get an early exemption based on the reaction last week to Trump’s executive order halting outlays from the 2021 infrastructure package.
Reports from each agency on all accounts subject to the pause are due back to OMB on Feb. 10.
Federal agencies are additionally ordered to withdraw previously published award solicitations and “cancel awards already awarded that are in conflict with Administrative priorities” to the extent allowed by law. Despite that last stipulation, observers believe a flood of lawsuits is likely from aggrieved parties who’ve signed contracts or otherwise have been promised federal funds by the prior administration.
The move is as broad as Democrats feared Trump’s orders to “impound” federal funds would be, former Biden budget official Bobby Kogan said.
“It seems to be far reaching and affect critical programs that Americans rely on, such as nutrition assistance for pregnant moms and newborns, money to keep our drinking water safe, and funding to ensure poor school districts can hire enough teachers,” said Kogan, who’s now with the left-leaning Center for American Progress.
Kogan said the administration is likely to face lawsuits as a result, arguing the OMB pause violates both the the 1974 law restricting presidential impoundment of funds appropriated by Congress as well as various individual appropriations and authorization statutes.
Senate Minority Leader Charles E. Schumer, D-N.Y., said in a statement late Monday that Trump was “blatantly” disobeying the law by holding up funds to programs across the country.
“Donald Trump’s Administration is jeopardizing billions upon billions of community grants and financial support that help millions of people across the country,” Schumer said. “It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to nonprofit charities.”
Top Democratic appropriators called the administration’s move “breathtaking” and “unprecedented” in a letter to Vaeth late Monday night, and said it would “have devastating consequences across the country.”
“We write with extreme alarm about the Administration’s efforts to undermine Congress’s power of the purse, threaten our national security, and deny resources for states, localities, American families, and businesses,” Senate Appropriations ranking member Patty Murray, D-Wash., and House Appropriations ranking member Rosa DeLauro, D-Conn., wrote.
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