WASHINGTON: Donald Trump’s White House ordered a pause in all federal grants and loans starting on Tuesday, a sweeping decision that could disrupt education and health care programs, housing assistance, disaster relief and a host of other initiatives that depend on billions of federal dollars.
In a memo on Monday, the acting head of the Office of Management and Budget, which oversees the federal budget, said the money would be put on hold while the Trump administration reviews grants and loans to ensure they are aligned with the president’s priorities, including executive orders he signed last week ending diversity, equity and inclusion (DEI) programs.
Matthew Vaeth, the acting director, said the use of federal resources for policies at odds with the president’s agenda “is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
The memo said the freeze included any money intended “for foreign aid” and for “nongovernmental organisations,” among other categories.
The White House said that federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, student loans and scholarships.
The OMB memo asserted that the federal government spent nearly $10 trillion in fiscal year 2024, with more than $3 trillion devoted to financial assistance such as grants and loans.
However, the funding freeze could affect trillions of dollars, at least temporarily, and cause widespread disruption in healthcare research, education programs and other initiatives. Even grants that have been awarded but not spent are supposed to be halted.
State agencies and early education centres 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 New York Attorney General Letitia James plans to ask a Manhattan 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 pause was scheduled to take effect at 5 p.m. ET, just one day after agencies were informed of the decision.
“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 Matthew Vaeth, the acting director of the Office of Management and Budget.
But the source of those figures was not clear – the nonpartisan Congressional Budget Office estimated government spending in 2024 at a much lower $6.75 trillion.
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The memo is the latest directive in the Trump administration’s campaign to dramatically reshape the federal government, the nation’s largest employer.
In a blizzard of executive actions last week, the new president shuttered all diversity programs, imposed a hiring freeze, sent national security officials home, ordered a pause in foreign aid and sought to strip away job protections from thousands of civil servants.
Senate Democratic Leader Chuck Schumer said the administration did not have the authority to halt spending that had been approved by Congress and that the order, if implemented, would harm millions of Americans.
“It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities, state disaster assistance, local law enforcement, aid to the elderly, and food for those in need,” Schumer said in a post on X late on Monday. – Agencies