A federal judge on Tuesday, January 28, 2025, temporarily blocked a White House directive that ordered a freeze on federal assistance spending, causing widespread uncertainty among government agencies and organizations nationwide. The sudden policy shift, first revealed in a late-night memo, left officials scrambling to assess its impact.
Judge Loren L. AliKhan of the U.S. District Court for the District of Columbia issued the stay while considering arguments from the federal government and plaintiffs who sought an emergency restraining order to halt the freeze.
The directive from the U.S. Office of Management and Budget (OMB) mandated a suspension of federal assistance funding by 5 p.m. Tuesday, potentially affecting grants to nonprofits, universities, small businesses, and state and local governments. However, AliKhan’s ruling pauses enforcement of the directive until at least Monday at 5 p.m., allowing further legal review.
The stay applies only to existing federally funded programs, while new funding allocations remain unaffected. If implemented, the freeze could have far-reaching consequences, with the White House acknowledging that $3 trillion was spent on federal assistance programs in 2024.
White House Defends Policy
White House Press Secretary Karoline Leavitt described the measure as a “temporary pause” to ensure compliance with President Trump’s executive orders.
“This memorandum requires federal agencies to identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements,” the memo states.
The OMB directive specifically targets funding related to “DEI, woke gender ideology, and the Green New Deal,” although it does not clarify which policies fall under these categories, particularly since the Green New Deal was never enacted into law.
“The use of federal resources to advance Marxist equity, transgenderism, and Green New Deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” the memo asserts.
The White House has stated that the freeze will not impact Medicare or Social Security benefits. However, reports emerged Tuesday that Medicaid portals across the country were experiencing disruptions. The administration denied any connection between these technical issues and the spending freeze, while the National Association of Medicaid Directors formally requested clarification from the administration.
Widespread Concern Among Organizations
The sudden directive left numerous organizations uncertain about their funding. Several members of Congress reported receiving a flood of inquiries from concerned constituents. Leavitt pledged to provide a list of affected organizations.
Head Start, which funds preschool programs for low-income children, warned that the memo could “severely disrupt the ability for Head Start programs to serve nearly 800,000 children and their families nationwide.”
Meals on Wheels expressed similar concerns, stating, “If this order includes the Older Americans Act, it could halt service to millions of vulnerable seniors who have no other means of purchasing or preparing meals.”
Diane Yentel, president and CEO of the National Council of Nonprofits, described the order as a potential “five-alarm fire for nonprofits.”
“From pausing research on cures for childhood cancer to closing homeless shelters, halting food assistance, reducing safety from domestic violence, and shutting down suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives,” Yentel warned.
Democrats Condemn Funding Freeze
Democratic leaders swiftly denounced the policy, arguing it was unlawful and harmful to American families.
Senate Minority Leader Chuck Schumer lambasted the move at a press conference, stating, “In an instant, Donald Trump has shut off billions, perhaps trillions, of dollars that directly support states, cities, towns, schools, hospitals, small businesses, and most of all, families.”
“This is a dagger at the heart of the average American family,” Schumer said, adding that his office had received a “deluge” of calls from panicked citizens.
“This decision is lawless, dangerous, destructive, cruel. It’s illegal, it’s unconstitutional,” he added. “Plain and simple, this is Project 2025.”
Sen. Patty Murray, the top Democratic appropriator, called the memo a “brazen and illegal move” with “unprecedented” scope. She urged Senate Republicans, including Sen. Lindsey Graham, to block the confirmation of OMB director nominee Russ Vought until the administration rescinds the order.
Graham, while not outright opposing the freeze, acknowledged concerns. “People are asking, what does this mean? How long does it last? Reasonable questions,” he said, adding that he planned to seek clarification from OMB.
Legal Challenges Mount
By Tuesday afternoon, a coalition of nonprofits, including the National Council of Nonprofits and the American Public Health Association, had filed a legal challenge seeking an emergency court order to prevent implementation of the memo.
“Given the few hours that remain before federal grantees are thrown into disarray, Plaintiffs file this Complaint and seek a temporary restraining order to maintain the status quo until the Court has an opportunity to more fully consider the illegality of the Trump administration’s actions,” the filing stated.
Additionally, a coalition of 23 Democratic state attorneys general, along with Washington, D.C., announced plans to sue, arguing that the freeze violates the U.S. Constitution.
Critics have also pointed to potential violations of the Impoundment Control Act, a 1974 law that limits the president’s ability to withhold funds appropriated by Congress. However, Vought, President Trump’s nominee to lead OMB, recently testified before a Senate panel that he and the president consider the law unconstitutional.
With mounting opposition and pending legal action, the ultimate fate of the funding freeze remains uncertain.
(CBS News)