The Trump administration on Wednesday rescinded a sweeping order that sought to freeze most federal grants and loans, just one day after issuing it. The decision follows immediate legal challenges and widespread criticism from lawmakers, advocacy groups, and affected agencies.
Federal Aid Freeze Temporarily Blocked by Court
The Office of Management and Budget (OMB) directive, first revealed in a memo obtained by journalist Marisa Kabas, called for a halt to federal financial assistance, including grants tied to diversity programs, foreign aid, and environmental initiatives. However, a federal district judge issued a temporary restraining order Tuesday, blocking the rule from applying to existing grants.
On Wednesday, the Trump administration released a brief memo revoking the freeze, multiple reports confirmed. The initial order had directed agencies to review programs that conflicted with Trump’s executive orders on government spending, including those involving diversity, equity, and inclusion (DEI), foreign aid, and climate initiatives.
Legal Challenges and Political Reactions
The freeze prompted swift legal action. The National Council of Nonprofits, the American Public Health Association, the Main Street Alliance, and LGBTQ advocacy group SAGE filed a lawsuit against the OMB, arguing that the order violated the Administrative Procedure Act and the First Amendment. They claimed it unfairly targeted organizations receiving federal funding that express viewpoints opposed by the administration.
Senate Democrats voiced strong opposition, with Sen. Chuck Schumer (D-N.Y.) stating that federal funding approved by Congress “is not optional, it is the law.” Sen. Patty Murray (D-Wash.) outlined dozens of programs potentially affected, including grants for law enforcement, victims of domestic violence, and transit projects.
Uncertainty Over Impact on Federal Programs
The scope of the now-revoked freeze remained unclear. Initial reports suggested it could have affected funding for education, medical research, infrastructure, small businesses, and housing assistance. While the White House attempted to clarify that only specific programs related to Trump’s executive orders would be paused, concerns persisted over its broader impact.
– Social Security and Medicare: Exempt from the order, according to OMB.
– Student Loans: Federal Pell Grants and direct student loans were not affected.
– Medicaid: The White House insisted Medicaid would continue without pause, but online portals in all 50 states briefly went offline Tuesday, prompting Democratic senators to attribute the disruption to the funding freeze.
– Foreign Aid: Trump separately ordered a 90-day freeze on foreign development assistance. Military aid to Israel and Egypt, as well as emergency food assistance, were exempt. Reports suggested the freeze could impact U.S. aid to Ukraine and Taiwan.
Legal Questions Over Trump’s Authority
Legal experts argue that Trump’s order may have violated the Impoundment Control Act of 1974, which prevents presidents from unilaterally withholding congressionally approved funds. The Supreme Court previously ruled against former President Richard Nixon on similar grounds. If legal challenges continue, the issue could be fast-tracked to the Supreme Court, which has a 6-3 conservative majority.
