The White House budget office has directed federal agencies to temporarily halt the distribution of grants and loans issued by the government, according to an internal memo dated Monday.
According to WaPo, The memo, authored by Matthew J. Vaeth, acting director of the Trump White House Office of Management and Budget (OMB), instructs agencies to “pause all activities related to obligations or disbursement of all Federal financial assistance.”
The directive mandates a comprehensive review of grant and loan programs to ensure compliance with President Donald Trump’s executive orders.
“To implement these orders, each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders,” the memo states. It specifies that the orders involve policies on “financial assistance for foreign aid, nongovernmental organizations, DEI initiatives, woke gender ideology, and the Green New Deal.”
Brian Riedl, a senior fellow at the Manhattan Institute, told The Washington Post that the freeze could affect tens of billions of dollars in government funding.
Federal financial assistance accounted for over $3 trillion in fiscal year 2024, including grants and loans, according to the memo, although total federal spending for the year reached $6.7 trillion as reported by the Congressional Budget Office.
“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,” Riedl said. “It seems like a very big deal.”
The memo explains that the pause, effective January 28, will allow the Trump administration to evaluate funding programs to align them with the law and the President’s priorities.
The freeze on financial assistance extends to foreign aid as well. During his campaign, Trump vowed to scale back government spending and reduce unnecessary expenditures.
“This temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities,” the memo reads.
The decision has drawn sharp criticism from Democrats. Senate Minority Leader Chuck Schumer voiced his frustration on X, writing, “Donald Trump’s administration is jeopardizing billions upon billions of community grants and financial support that help millions of people across the country. It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to nonprofit charities, state disaster assistance, local law enforcement, aid to the elderly, and food for those in need.”
Donald Trump’s administration is jeopardizing billions upon billions of community grants and financial support that help millions of people across the country.
It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to… https://t.co/UIwpy4WHJu
— Chuck Schumer (@SenSchumer) January 28, 2025
Schumer argued that the grants are “the law” and not optional. He also dismissed the administration’s assertion that the freeze is temporary, saying, “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.
These grants help communities in red states and blue states and support families, help parents raise kids, and lead to stronger communities. https://t.co/UIwpy4WHJu
— Chuck Schumer (@SenSchumer) January 28, 2025
This move underscores the administration’s broader efforts to recalibrate federal spending in line with its stated goals, though it remains to be seen how long the pause will last and what its long-term effects will be.
You’re just mad because President Trump is cutting your grift. Now these people that are abusing the welfare system can get off the government teat and go to work. There’s gonna be plenty of jobs once President Trump and Tom Homan get rid of millions of illegals.