President Donald Trump’sWhite House ordered a pause in all federal grants and loans starting on Tuesday, a sweeping decision that could disrupt education, health care and food programs, housing assistance, disaster relief and a host of other initiatives that depend on trillions of federal dollars.
The freeze followed Trump’s suspension of foreign aid last week, a move that began cutting off the supply of lifesaving medicines on Tuesday to countries around the world that depend on U.S. development assistance.
The Office of Management and Budget, which oversees the federal budget, said in a memo that grants and loans would be put on hold while the administration ensures they are aligned with the Republican president’s priorities, including executive orders he signed ending diversity, equity and inclusion efforts.
The memo said Tuesday’s freeze included any money intended “for foreign aid” and for “nongovernmental organizations,” among other categories.
The White House said the pause would not impact Social Security or Medicare payments or “assistance provided directly to individuals.” That would presumably spare disability payments and the SNAP food program for the poor, though it was not clear whether health care programs for veterans and low-income people would be affected.
The OMB memo is the latest directive in the Trump administration’s campaign to dramatically reshape the federal government, the nation’s largest employer, since he took office on Jan. 20.
In a blizzard of executive actions, the new president has shuttered all diversity programs, imposed a hiring freeze, sent national security officials home and sought to strip away job protections from thousands of civil servants.
As part of last week’s 90-day foreign aid suspension, the administration moved on Tuesday to stop the distribution of drugs for HIV, malaria and tuberculosis, as well as medical supplies for newborn babies, in countries supported by the United States Agency for International Development. The U.S. is the largest single donor of aid globally, disbursing $72 billion in 2023.
The spending freeze ordered by OMB takes effect at 5 p.m. ET (2200 GMT) on Tuesday. Agencies have until Feb. 10 to submit detailed information on any programs subject to the suspension.
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The federal government provides money to a broad swath of nonprofits, which reacted with dismay and confusion.
“From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives,” Diane Yentel, president and CEO of the National Council of Nonprofits, said in a statement.
A spokesperson for Meals on Wheels America, Jenny Young, said it was not clear whether the directive would impact their programs delivering food to needy seniors.
The uncertainty is “creating chaos” for community entities providing meals, “which unfortunately means seniors may panic not knowing where their next meals will come from,” she said.
Trump’s order could also cause turmoil in state and local governments that depend on federal aid for everything from highway construction to school lunches and foster care. That money plays an especially large role in low-income states such as Louisiana and Mississippi that voted for Trump by wide margins in the November election.
The memo did not exempt disaster aid to areas like Los Angeles and western North Carolina that have been devastated by natural disasters. Trump pledged government support when he visited both places last week.
Democrats challenge ‘unlawful’ move
The memo asserted the federal government spent nearly $10 trillion in fiscal year 2024, with more than US$3 trillion devoted to financial assistance such as grants and loans. But those figures appeared to include money authorized by Congress but not actually spent – the nonpartisan Congressional Budget Office estimated government spending in 2024 at a much lower US$6.75 trillion.
Trump’s Republican allies have been pushing for dramatic spending cuts, though his vow to spare Social Security and Medicare puts roughly one-third of the budget off-limits. Trump also cannot touch government interest payments, which accounted for another 11 per cent of the budget last year, without triggering a default that would rock the world economy.
Democrats immediately criticized the spending freeze as unlawful and dangerous, and Democratic state attorneys general said they were working on a legal challenge.
U.S. Senator Patty Murray, the top Democrat on the Senate Appropriations Committee, said on Tuesday the OMB action could have devastating consequences.
“We could see a screeching halt to resources for child care, housing, police officers, opioid addiction treatment, rebuilding roads and bridges and even disaster relief efforts,” Murray said.
Senate Democratic Leader Chuck Schumer said the administration did not have the authority to prevent spending approved by Congress.
“This decision is lawless, destructive, cruel,” Schumer said in a speech to the Senate. “It’s American families that are going to suffer most.”
The U.S. Constitution gives Congress control over spending matters, but Trump said during his campaign that he believes the president has the power to withhold money for programs he dislikes. His nominee for White House budget director, Russell Vought, who has not yet been confirmed by the Senate, headed a think tank that has argued Congress cannot require a president to spend money.
U.S. Representative Tom Emmer, the No. 3 Republican in the House of Representatives, said Trump was simply following through on his campaign promises.
“You need to understand he was elected to shake up the status quo. That is what he’s going to do. It’s not going to be business as usual,” Emmer told reporters at a Republican policy retreat in Miami.
But at least one Republican centrist, U.S. Representative Don Bacon, said he hoped the order would be short-lived after hearing from worried constituents, including a woman who runs an after-school program that depends on federal grant money.
“We’ve already appropriated this money,” he said. “We don’t live in an autocracy. It’s divided government. We’ve got separation of powers.”
During his first 2017-2021 term, Trump sought to redirect spending to border enforcement, prompting a standoff with Congress that led to the longest government shutdown in U.S. history. He also tried to hold back $400 million in aid to Ukraine to pressure that country to investigate his political rival Joe Biden, which led to Trump’s first impeachment.
—Reporting by Steve Holland and Andy Sullivan in Washington and David Morgan in Miami; Additional reporting by Susan Heavey and Doina Chiacu; Writing by Joseph Ax; Editing by Colleen Jenkins and Daniel Wallis