The White House budget office has rescinded its controversial freeze on federal financial aid, lifting the pause that would have gone into effect next Monday evening barring court intervention.
The pause on agency funds, which has been subject to an administrative stay until Feb. 3, was lifted in a memo that acting White House budget director Matthew J. Vaeth sent out to agencies on Wednesday rescinding his earlier directive.
The Monday night memo from the Office of Management and Budget put a hold on thousands of agency accounts pending a review and scrubbing by budget officials to ensure compliance with President Donald Trump’s policies. The pause was initially set to go into effect Tuesday at 5 p.m. before a brief stay was granted.
“In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage,” White House Press Secretary Karoline Leavitt said in a statement Wednesday.
She added that Trump’s executive orders placing holds on certain programs and projects —which include foreign aid, clean energy projects, undocumented migrant assistance and diversity, equity and inclusion initiatives —will continue irrespective of the earlier memo’s withdrawal.
“This action should effectively end the court case and allow the government to focus on enforcing the president’s orders on controlling federal spending,” Leavitt said. “In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding.”
The initial OMB memo blocked disbursement of all federal grants and loans other than for Social Security, Medicare, and programs providing direct aid to individuals. The move sparked outrage from Democratic lawmakers and interest groups and widespread confusion from stakeholders like Head Start agencies and states responsible for Medicaid distribution.
The budget office circulated a questionnaire Tuesday morning identifying over 2,600 accounts it wants examined, targeting any funding for climate, diversity and migrant aid programs, among others. After state Medicaid portals went dark and others reported difficulties accessing funds, the White House followed up with a memo clarifying that a number of sensitive benefits wouldn’t be touched by the missive, including Medicaid, food stamps, Head Start and more.
But litigation brought by the National Council of Nonprofits and others went forward, leading District Judge Loren L. AliKhan to issue a “brief administrative stay” on Tuesday night until another hearing could be held. That case is now moot after the White House’s withdrawal of the original memo.
Senate Appropriations ranking member Patty Murray, D-Wash., said in a statement that rescinding the memo was “an important victory” for the American people. “Still, the Trump administration — through a combination of sheer incompetence, cruel intentions, and a willful disregard of the law — caused real harm and chaos for millions over the span of the last 48 hours which is still ongoing,” Murray said.
Senate Appropriations Chair Susan Collins, R-Maine, said she was pleased with the OMB’s decision to pull back the memo. “While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” she said.
John T. Bennett and Paul M. Krawzak contributed to this report.
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