Federal Aid In Limbo: Trump Administration Freezes Loans And Grants

Just a week into his presidency, President Donald Trump has ordered a pause on all federal loans and grants while the government conducts a review to ensure that spending aligns with his administration's agenda.

A memo issued by acting director of the Office of Management and Budget (OMB) Matthew Vaeth instructs federal agencies to freeze "all activities related to obligation or disbursement of all Federal financial assistance," The Hill reported.

"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 states.

Politico reports that this freeze will affect a wide range of initiatives, including domestic infrastructure projects, energy programs, diversity-related efforts, and foreign aid. However, Social Security and Medicare benefits are exempt from this pause, as are any forms of "assistance provided directly to individuals."

The memo indicates that the pause will take effect at 5 p.m. on Tuesday and could potentially impact trillions of dollars in funding. It also notes that the OMB may grant exceptions for specific awards on a case-by-case basis.

Trump's flurry of executive orders in his first week in office has prompted federal agencies to review how these moves might affect existing loan and grant programs. The orders were related to border security, the federal workforce, ending the "weaponization" of government, the military and other aspects of government.

"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," Vaeth wrote in the memo, according to CNN.

The pause will be extended 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," according to the memo.

"Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities," Vaeth wrote.

Agencies have been asked to provide the OMB with "detailed information on any programs, projects, or activities subject to this pause" by Feb. 10.

Sen. Patty Murray of Washington state and Rep. Rosa DeLauro of Connecticut — the top Democratic appropriators in Congress wrote a letter to the White House on Monday night, warning about the "devastating consequences" of the move.

"The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country," the lawmakers wrote. "We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law."

"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."

Senate Minority Leader Chuck Schumer also quickly slammed the decision, saying: "Congress approved these investments and they are not optional; they are the law."

"These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities," the New York Democrat said in a statement Monday night.

He warned that this action jeopardizes "billions upon billions of community grants and financial support that help millions of people across the country."