President Donald Trump speaks to reporters aboard Air Force One en route from Miami to Joint Base Andrews, Maryland, Monday. (AP Photo/Mark Schiefelbein),
A federal aid freeze announced this week by the Trump Administration has been rescinded, multiple sources are reporting Wednesday afternoon.
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CNN reported that it has obtained a memo from a Trump administration official communicating that the freeze is rescinded. That memo was also shared by state officials in New Jersey.
The New York Times also reported the freeze was rescinded, citing two sources familiar with the matter.
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On Tuesday, a federal judge had temporarily blocked the plan to halt the distribution of trillions of dollars in federal grants and loans until a hearing could be held Monday morning.
On Monday, trillions of dollars in federal grants and loans were abruptly paused as President Donald Trump’s administration conducts an ideological review of spending could cause widespread disruption in health care research, education programs and other initiatives in communities across the country.
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Judge Loren AliKhan’s administrative stay pauses the plan for a week and sets up a hearing for further arguments Monday morning. It only applies to the pause of disbursements in open grants, and does not address the legality of the freeze outlined in a memo late Monday from Office of Management and Budget acting director Matthew Vaeth that reflects a theory of presidential power that President Donald Trump clearly endorsed during his 2024 campaign.
The approach was further outlined in the Project 2025 governing treatise that candidate Trump furiously denied was a blueprint for his second administration.
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Vaeth’s memo invoked nakedly ideological terms: “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,” he wrote.
The White House so far has offered few details about the scope of the freeze loans and grants — a financial lifeline for local governments, schools and nonprofit organizations around the country — but was necessary to ensure that spending complies with Trump’s recent blitz of executive orders.
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The vaguely worded memo, combined with incomplete answers from the White House throughout the day, left lawmakers, public officials and average Americans struggling to figure out what programs would be affected by the pause.
The White House so far has offered few details about the scope of the freeze. Trump administration officials clarified Tuesday that programs that provide direct assistance to Americans would not be affected, such as Medicare, Medicaid, Social Security, student loans and food stamps. They also defended the funding pause, saying Trump was following through on his promise to turn Washington upside down if elected to a second term.
Even temporary interruptions in funding could cause layoffs or delays in public services.
“This sort of came out of the blue,” David Smith, a spokesperson for the Shawnee Mission School District in Kansas, one of countless districts that receives federal funding, told The Associated Press. Now they’re trying to figure out what it means “based on zero information.”
Legal Challenges A Certainty
Democrats and independent organizations question the legality of the Republican administration’s funding freeze, characterizing it as capricious and illegal because Congress had already authorized the funding.
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Court battles are imminent, and Democratic New York Attorney General Letitia James plans to ask a Manhattan federal court to block the Republican president’s moves, calling it an “unconstitutional pause on federal funding.”
“More lawlessness and chaos in America as Donald Trump’s Administration blatantly disobeys the law by holding up virtually all vital funds that support programs in every community across the country,” Senate Minority Leader Chuck Schumer, a Democrat from New York, said in a statement. “If this continues, the American people will pay an awful price.”
The grants help people “in red states and blue states, support families, help parents raise kids, and lead to stronger communities,” Schumer said, adding that “it will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities.”
The pause was to take effect at 5 p.m. ET Tuesday, but the federal judge’s stay delays the deadline
Vaeth said that all spending must comply with Trump’s executive orders, which are intended to undo progressive steps on transgender rights, environmental justice and diversity, equity and inclusion, or DEI, efforts. He wrote that “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.”
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Washington is a hub of spending that flows to various departments, local governments, nonprofits and contractors, and the memo has left countless people who are dependent on that money wondering how they will be affected.
The pause is the latest example of how Trump is harnessing his power over the federal system to advance his conservative goals. Unlike during his first term, when Trump and many members of his inner circle were unfamiliar with Washington, this time he’s reaching deep into the bureaucracy.
“They are pushing the president’s agenda from the bottom up,” said Paul Light, an expert on the federal government and professor emeritus of public service at New York University.
He also said there are risks in Trump’s approach, especially with so many voters reliant on Washington.
“You can’t just hassle, hassle, hassle. You’ve got to deliver.”
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“Are you stopping NIH cancer trials?” Sen. Amy Klobuchar, a Democrat from Minnesota, wrote on social media, referring to the National Institutes of Health.
Sen. Patty Murray of Washington and Rep. Rose DeLauro of Connecticut, the top Democrats on the Senate and House appropriations committees, expressed “extreme alarm” in a letter to Vaeth.
“This Administration’s actions will have far-reaching consequences for nearly all federal programs and activities, putting the financial security of our families, our national security, and the success of our country at risk,” they wrote.
OMB Is Linchpin Of Power
The president and his conservative allies made clear long before Vaeth’s memo that they see the Office of Management and Budget as a linchpin of power across the federal government.
Part of the Executive Office of the President, the OMB staff prepares the president’s budget recommendations to Congress and oversees implementation of the president’s priorities across all Executive Branch agencies.
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Lawmakers pass appropriations but executive agencies carry out federal programs and services. The overall process puts OMB on the front and back end of federal government strategy.
Project 2025 authors, including Trump’s pick for OMB chief, Russell Vought, emphasized this function. Writing the Project 2025 chapter on presidential authority, Vought, who awaits Senate confirmation, made clear that he wants the post to wield more direct power.
“The Director must view his job as the best, most comprehensive approximation of the President’s mind,” Vought wrote. The OMB, he declared, “is a President’s air-traffic control system” and should be “involved in all aspects of the White House policy process,” becoming “powerful enough to override implementing agencies’ bureaucracies.”
Elsewhere, Project 2025 authors call for all presidential appointees to control “unaccountable federal spending” and set a course from the West Wing to subdue what Trump often calls “the Deep State” of government civil servants.
“The Administrative State is not going anywhere until Congress acts to retrieve its own power from bureaucrats and the White House,” they wrote. “In the meantime, there are many executive tools a courageous conservative president can use to handcuff the bureaucracy (and) bring the Administrative State to heel.”
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Trump Says He’s Final Arbiter Of Spending
In some ways, the president and his campaign went farther than Project 2025 in asserting presidential power over federal purse strings. In his Agenda 47, Trump endorsed “impoundment.” That legal theory holds that when lawmakers pass appropriations to fulfill their duties laid out in Article I of the Constitution, they simply set a spending ceiling, but not a floor.
The president, the logic goes, can simply decide not to spend money on anything he deems unnecessary, because Article II of the Constitution gives the president the role of executing the laws that Congress passes.
Congress acted during Richard Nixon’s presidency to reject “impoundment” theory. But Trump’s circle wants to challenge that – potentially setting up a constitutional fight that would require the Supreme Court to weigh in.
Vought did not venture into impoundment in his Project 2025 chapter. But, he wrote that the president “should use every possible tool to propose and impose fiscal discipline on the federal government. Anything short of that would constitute abject failure.”
Grants Memo Key Clue To DOGE
The president’s path to impose spending cuts quickly now has become clearer.
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Elon Musk, leading Trump’s new Department of Government Efficiency, has suggested he could find federal spending cuts measuring in the trillions, even as Trump has promised to protect Social Security and Medicare. (That pledge was reflected in the memo pausing federal grants.)
The OMB memo, Trump’s theory of impoundment, and his efforts to strip thousands of federal employees of their civil service protections all add up to a concentration of power in the West Wing that could define his second administration and Musk’s part in it.
For example, Trump cannot on his own repeal legislation like the Clean Air Act or the Clean Water Act. But OMB could effectively cut off money for the programs, jobs and contractors necessary to enforce those laws. (Trump already has issued a wide-ranging federal hiring freeze.)
Similarly, Trump does not have to persuade Congress to change Medicaid laws and appropriations if the White House steps in to adjust or stop Medicaid payments to state governments that administer the programs at ground level.
The Associated Press contributed reporting.
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