The White House budget office has directed a suspension of all federal grants and loans, as outlined in an internal memo distributed to agencies on Monday, sparking widespread confusion throughout Washington.
In a two-page memo, Matthew J. Vaeth, the acting director of the White House Office of Management and Budget, directed federal agencies to “temporarily pause all activities related to obligations or disbursement of all Federal financial assistance.”
The document, obtained by The Washington Post, also instructs agencies to conduct a “comprehensive analysis” to ensure their grant and loan programs align with President Donald Trump’s executive orders, which sought to ban federal diversity, equity, and inclusion initiatives and restrict clean energy spending, among other actions. Officials also emphasized that federal assistance to individuals, including Social Security, Medicare, food stamps, student loans, and scholarships, would remain unaffected.
The memo, which takes effect on Tuesday, specifies that its directives should not be “construed” to impact Social Security or Medicare recipients. It also clarifies that the paused federal financial assistance “does not include assistance provided directly to individuals.” The pause also extends to “other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the Green New Deal,” the memo states.
According to the document, the budget office “may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis.”
Memo’s Instructions to Agencies
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The memo further directs agencies to submit “detailed information on any programs, projects or activities subject to this pause” to the Office of Management and Budget (OMB) by February 10. Even before its implementation, the sweeping directive from the White House sent shock waves through Washington and the nation, leaving organizations reliant on federal funding scrambling to grasp its potential impact.
However, the funding freeze could temporarily impact trillions of dollars, causing widespread disruption to healthcare research, education programs, and other critical initiatives. Even previously awarded grants that remain unspent are expected to be halted. State agencies and early education centers, including those relying on Medicaid and Head Start funds, have reportedly faced difficulties accessing money, fueling anxiety as clear answers remain elusive in Washington.
Legal battles are on the horizon, as Democratic New York Attorney General Letitia James intends to petition a Manhattan federal court to block the Republican president’s actions.
My office will be taking imminent legal action against this administration’s unconstitutional pause on federal funding,” Letitia James announced on social media.
Over 2,000 Programs Under Review Amid Controversial Directive
More than 2,000 government programs are currently under review, according to a spreadsheet obtained by CNN. The document outlines the information agencies must provide to administration leaders, requiring them to specify whether each program involves funding related to undocumented immigrants, climate policy, diversity programs, or abortion.
The wide-ranging review encompasses various government initiatives, including emergency grain storage assistance for farmers, the Head Start program for preschool education, cancer center support grants, and even a program that covers the cost of caskets for deceased veterans with no next of kin.
The agencies are required to provide their responses to the Office of Management and Budget in less than two weeks.
Reactions Across Society’s Spectrum
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The order was announced Monday evening with little explanation from the Trump administration, leaving charities that rely on government grants and loans uncertain about which organizations will be impacted.
According to Tommy Sheridan, deputy director of the National Head Start Association, some Head Start programs are already unable to access the federal system used to withdraw their grant funding. This issue could force some programs to shut down as soon as Wednesday, he told CNN on Tuesday. Head Start provides services to nearly 800,000 low-income children from birth to age 5 and their families.
Some programs that I just spoke with are having the discussions and trying to figure out they are going to be able to open their programs tomorrow or not?” Sheridan said, adding that if programs shutter, it could affect parents’ ability to work.
The Association of American Universities, which includes 71 of the nation’s top research universities, such as Notre Dame and Georgia Tech, stated on Tuesday that it is
“still evaluating” the effects of the pause.
The main source of federal funding for senior nutrition programs, such as Meals on Wheels, is the Older Americans Act Nutrition Programs, which are grant-based. If the memo impacts this act, “it would presumably halt service to millions of vulnerable seniors who have no other means of purchasing or preparing meals,” Jenny Young, spokesperson for Meals on Wheels America, told CNN on Tuesday.
“Seniors will panic, not knowing where their next meals will come from,” Young added.
Senate Minority Leader Chuck Schumer also quickly criticized the pause.
“Congress approved these investments and they are not optional; they are the law,” the New York Democrat said in a statement Monday night. “These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities.”
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