The Trump administration said it rescinded Wednesday a memo freezing spending on federal loans and grants less than two days after ordering the freeze, sending Washington into a state of confusion over the reach of the measure.
The memo, which was issued Monday by the Office of Management and Budget, provided little detail on the freeze, causing confusion among states, schools and organizations that rely on trillions of dollars from the federal government.
White House press secretary Karoline Leavitt took to X to clarify the new development, explaining that the administration had decided to rescind the memo, but not the order itself, following a judge's decision to temporarily halt the measure.
This is NOT a rescission of the federal funding freeze.
— Karoline Leavitt (@PressSec) January 29, 2025
It is simply a rescission of the OMB memo.
Why? To end any confusion created by the court's injunction.
The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented.
"In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage," she said on social media. "The Executive Order issued by the President on funding reviews in full force and effect and will be rigorously implemented by all agencies and departments."
The 27-year-old press secretary added that the reason for the rescission would deal with the pending court case that sought to stop the motion.
"This action should effectively end the court case and allow the government to focus on enforcing the President's orders on controlling federal spending. In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding," Leavitt continued.
The White House's change in direction caught Congress off guard, particularly Trump's Republican allies who had defended him throughout the brief saga, The Associated Press reports.
"This is Donald Trump. He throws hand grenades in the middle of the room, and then cleans it up afterwards," said Sen. Kevin Cramer of North Dakota. "I just think the guy's a genius."
The initial Monday directive called for federal agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."
The memo said the pause would allow the administration to review which programs were "consistent" with Trump's agenda. According to Leavitt and other administration officials, key programs like Social Security, Medicare and direct payments to individuals would not be affected, but because the memo was so vaguely worded, some states halted their services.
The lawsuit that inspired the Wednesday rescission was initially filed by Democracy Forward, a progressive nonprofit group, who were pleased to see the new decision.
"While we hope this will enable millions of people in communities across the country to breathe a sigh of relief, we condemn the Trump-Vance administration's harmful and callous approach of unleashing chaos and harm on the American people," Skye Perryman, the CEO of Democracy Forward, said in a statement. "Our team will continue to bring swift legal actions to protect the American people and will use the legal process to ensure that federal funding is restored."
It remains unclear what the state of the funding freeze will look like in the next few days. Some Democrats argue the memo rescission was simply a sleight of hand, and that the Trump administration is seeking to circumvent laws while keeping certain funding frozen, Axios reports.
"This is just more confusion and chaos," tweeted New York Attorney General Letitia James, who is leading a group of states suing the administration. "We will be in court this afternoon."
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