White House halts all federal grants, causing widespread confusion
Trillions of dollars could be on hold, according to an Office of Management and Budget memo.
The White House budget office is ordering a pause to all grants and loans disbursed by the federal government, according to an internal memo sent to agencies Monday, creating significant confusion across Washington.
In a two-page document, Matthew J. Vaeth, the acting director of the White House Office of Management and Budget, instructs federal agencies to “temporarily pause all activities related to obligations or disbursement of all Federal financial assistance.” The memo, a copy of which was obtained by The Washington Post, also calls for each agency to perform a “comprehensive analysis” to ensure its grant and loan programs are consistent with President Donald Trump’s executive orders, which aimed to ban federal diversity, equity and inclusion initiatives, and limit clean energy spending, among other measures.
The memo, which goes into effect Tuesday, states its orders should not be “construed” to affect Social Security or Medicare recipients, and also says the federal financial assistance put on hold “does not include assistance provided directly to individuals.”
But the document says programs affected are “including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
Even before taking effect, the broad directive from the White House sent shock waves through Washington and across the country, as organizations dependent on the federal government struggled to understand its impact.
Trump and his aides have long vowed to halt spending on some programs reviled by the right, such as DEI and foreign aid, but the order appears to go far beyond those priorities to affect programs that serve tens of millions of Americans.
Experts said the memo as written was poised to bring a rapid halt to scores of federal functions, from assistance to homeless shelters to financial aid for college students. Health grants distributed by the Centers for Disease Control and Prevention, and state aid for disaster reconstruction, might face delays. Developers expecting federal grants to expand the nation’s energy supply could be disrupted. Questions quickly emerged about whether Medicaid, the health insurance program used by more than 70 million Americans, would see a pause in payments, which are distributed from the federal government to the states.
The feared disruption highlighted the extent of the new Trump administration’s determination to target long-standing functions of the federal government. Though not confirmed by the Senate, Russell Vought, Trump’s nominee to lead the budget office, has vowed to try to move power over spending from Congress to the executive branch — a battle many experts said could be foreshadowed by the budget office’s pause on federal grants and loans.
Vought and other Trump aides have said slashing federal spending is necessary to contain the soaring national debt, though they have ruled out cuts to the federal entitlement programs that are the primary drivers of the long-term deficit and also ruled out most new tax increases.
It’s unclear precisely how much money could be affected by the order. Budget experts put the number at a minimum of tens of billions of dollars, but the White House directive suggests the impact could be even greater. The memo states that of the $10 trillion “that the Federal Government spent [in fiscal year 2024, which ended Sept. 30, 2024], more than $3 trillion was Federal financial assistance, such as grants and loans.” It was not immediately clear where those figures came from; the nonpartisan Congressional Budget Office says the government spent $6.7 trillion in the 2024 fiscal year.
A person familiar with the order, speaking on the condition of anonymity to describe confidential decisions, confirmed the accuracy of the document and said it applied to all grants. The agencies are also required to submit detailed lists of projects suspended under the new order by Feb. 10. Federal agencies must assign “responsibility and oversight” to tracking the federal spending to a senior political appointee, not a career official, the memo states.
The person said Medicaid would not be affected.
“The funding delays are going to prove very difficult for grantees under the impression the money is coming, and have rent and salary payments dependent upon it,” said Brian Riedl, a senior fellow at the Manhattan Institute, a center-right think tank.
“They say this is only temporary, but no one should believe that,” Senate Minority Leader Charles E. Schumer (D-New York) said in a statement. “Donald Trump must direct his Administration to reverse course immediately and the taxpayers’ money should be distributed to the people. Congress approved these investments and they are not optional; they are the law.”
The order’s legality may be contested, but the president is generally allowed under the law to defer spending for a period of time if certain conditions are met, according to budget experts. To comply, though, Trump must make clear which budget accounts are frozen, and the budget office’s order may not have given sufficient grounds under the law to pause the funding. Pausing it over policy disagreements is not legal, said Bobby Kogan, a federal budget expert at the left-leaning Center for American Progress and a former Biden administration official.
Low-income Americans could still be affected even if direct recipients of aid are meant to be exempt from the order, Kogan said. Federal funding for the early education program Head Start, for instance, goes to child-care facilities, not to individuals, and a federal program providing energy assistance to low-income Americans goes through the states.
Others warned of possible broad impacts.
Donald Kettl, professor emeritus and former dean of the University of Maryland School of Public Policy, said the language in the memo is confusing, making its specific effects unclear. There will be widespread panic, Kettl said, as state and local governments as well as the people most reliant on federal-funded grants scramble to figure out if and when their cash flow will stop.
“In two pages, we’ve got what amounts to 60 years of tradition and policies that are thrown up in the air,” said Kettl, who has consulted for multiple government agencies. “For those suffering most, the uncertainty will be immense.”
G. William Hoagland, senior vice president at the Bipartisan Policy Center, said the administration should be legally able to pause the money temporarily but would need to submit a formal request to Congress to do so beyond a set window.
Still, Hoagland and other budget experts have expressed concern about Trump’s promises to wrest spending control away from Congress. Hoagland said he fears the deferral could be a precursor to a broader assertion of executive spending power.
“I worry this is an effort to hold back on not implementing the law of the land as it relates to the budget process,” Hoagland said. “And in terms of the impact, it could be huge.”
The Trump administration has also acted rapidly to freeze most public communications by federal health agencies, as well as temporarily pausing foreign aid.
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