US judge blocks Trump’s freeze on federal aid spending

Minutes before the order freezing billions of dollars in federal grants, loans and other financial assistance-programs took effect, a Washington judge blocked federal agencies from implementing it.

Donald Trump had ordered billions of dollars in federal aid programs to be frozen. Picture: AFP.

A US judge has temporarily blocked Donald Trump’s freeze on federal aid spending, minutes before the sweeping White House order took effect.

The memo from the White House Office of Management and Budget was set to pause billions of dollars in federal grants, loans and other financial assistance-programs, creating chaos and inviting lawsuits as states struggled to access funding portals dealing with Medicaid, emergency aid and low-income education and nutrition services.

However shortly before it was due to take effect, US District Judge Loren AliKhan in Washington, blocked federal agencies from taking steps to implement it. Ruling at the end of a hastily-arranged court hearing Tuesday, AliKhan said she was issuing a brief stay that would “preserve the status quo” until she can hold an oral argument, which is set for Monday morning.

The order came in response to a lawsuit filed earlier in the day by organisations who represent grant recipients.

Earlier Tuesday, federal, state and local government officials sought to assess the impact of the order issued a night earlier by the White House Office of Management and Budget, which set off a temporary pause of the grants to give agencies time to review spending priorities.

The White House said the order wouldn’t affect individual assistance programs such as Social Security and Medicare benefits, food stamps and welfare benefits.

“This is not a blanket pause on federal assistance and grant programs from the Trump administration,” said White House press secretary Karoline Leavitt. “It is the responsibility of this president and this administration to be good stewards of taxpayer dollars.”

The administration spent Tuesday trying to contain the fallout from the Monday night memo. The initial directive noted exemptions to Medicare, Social Security benefits and assistance provided directly to individuals — but gave few other clues as to what it covered or didn’t cover. The lack of information prompted government officials, lawmakers, nonprofits and others to parse through the two-page document to agencies — down to the footnotes — to try to understand which programs would be halted.

Confusion was so widespread that OMB sent Capitol Hill staff an explanation Tuesday afternoon seeking to make clear to lawmakers that programs such as Medicaid and the Head Start preschool program would continue without delay, and that pauses for other programs might be as short as a day.

Senate Minority Leader Chuck Schumer condemned the spending freeze. Picture: Getty Images via AFP.

Despite the White House assurances, several states said they had difficulty accessing funding portals from the federal government for Medicaid, the federal health insurance program for low-income Americans, community health centres and other funding.

“Connecticut’s Medicaid payment system has been turned off. Doctors and hospitals cannot get paid,” Sen. Chris Murphy (D., Conn.) wrote on X.

Massachusetts Attorney General Andrea Joy Campbell said her state had tried to draw $41 million in Medicaid funds Monday and hadn’t been able to obtain it yet.

Leavitt wrote on X Tuesday that the portals would be back online and payments were still being processed and sent.

Lawmakers and others involved in Head Start said the freeze disrupted reimbursements for the federal program providing early childhood education to low-income children. It wasn’t clear if the freeze would affect the Women, Infants and Children supplemental nutrition program, known as WIC, which provides baby formula and healthy food to low-income mothers and young children.

More than a week into his presidency, the move by President Trump represented his most audacious effort yet to disrupt the nation’s spending priorities, setting up a legal clash with Democrats who called the freeze illegal. Democratic lawmakers said Trump’s move violated Congress’s power of the purse and ability to ensure funding for priorities through the appropriations process.

“President Trump plunged the country into chaos,” Senate Minority Leader Chuck Schumer (D., N.Y.) told reporters. “This decision is lawless, it’s destructive, it’s dangerous, it’s cruel.”

A group of 23 state attorneys general, including those in New York and California, said they planned to file a lawsuit later Tuesday seeking to stop enforcement of the funding freeze, which they called unconstitutional. Advocacy groups, including a public-health organisation, filed a similar suit in federal court in Washington, D.C.

The memo echoed the Project 2025 policy blueprint drawn up last year by conservative activists, which included a proposal calling for the Environmental Protection Agency to “institute a pause and review for all grants over a certain threshold.” It was in line with recent arguments made by Russell Vought, a Project 2025 author and Trump’s nominee to lead OMB, to confront “government waste.” Vought hasn’t yet been confirmed by the Senate, and Democrats said Tuesday that the process should be delayed so that Vought could answer their questions about the freeze.

Trump campaign officials discussed the pause as early as last year, a person familiar with the discussions said. Campaign staff and allied groups helped draft lists of specific grants they considered to be ideological wastes of government money.

Aides on Capitol Hill said Republican lawmakers who write the annual spending bills weren’t given a heads-up about the unexpected OMB move.

Nonetheless, Rep. Dusty Johnson (R., S.D.), said: “This shouldn’t surprise anybody. Donald Trump was talking about doing this throughout the campaign,” adding: “Listen, this guy wants to change how D.C. operates, and I think we need to work through this process to figure out what’s best.”

OMB said that the temporary freeze pertained to programs affected by Trump’s recent executive orders, “such as ending DEI,” or diversity, equity and inclusion programs, “the green new deal, and funding nongovernmental organisations that undermine the national interest.”

Other groups that rely on federal grants, such as the Meals on Wheels program, which provides food to homebound people, said they were unsure Tuesday about the future of those funds.

“There’s real people that depend on these grants, and real people with real jobs, with missions, and I’ve heard from people in my district this morning asking me about it,” said Rep. Don Bacon (R., Neb.), who represents a competitive Omaha area district. “All I could say right now, I hope it’s short-lived.”

The OMB memo said that the federal government spent more than $3 trillion on federal assistance, such as grants and loans, out of nearly $10 trillion spent in the fiscal year 2024. The memo didn’t say where those figures came from.

For the current fiscal year, which ends Sept. 30, the government is expected to spend about $7 trillion, according to the nonpartisan Congressional Budget Office.

Early Tuesday, the OMB sent a separate directive reviewed by The Wall Street Journal notifying federal agencies that they were required to fill out an attached spreadsheet answering a series of questions about programs that might require funding and whether they aligned with Trump’s agenda. One question asked if the program supports abortion “in any way.” The information requested information related to programs with funding or activities planned through March 15.

OMB said it might allow the ability to provide exemptions “on a case-by-case basis,” adding to the confusion among states. The temporary pause became effective at 5pm. Tuesday.

Dan Jacobson, a former OMB general counsel during the Biden administration, said the lack of clarity from the initial memo might have led agencies to go beyond what was intended.

“I assume that agency officials, because they’re afraid in the current environment of being perceived as running afoul of the president’s directives, will be overly cautious and err on the side of freezing funds if they’re unsure whether it’s covered by the directive,” Jacobson said.

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