Supreme Court allows Trump to freeze dozens of teacher training grants
The decision was 5-4, with Chief Justice John Roberts and the three liberals dissenting.
Trump attempted to cancel the grants based on allegations that the money was being used for programs that take part in diversity, equity and inclusion initiatives – a favorite, if ill-defined, target for the administration. In cancelling 104 of 109 grants, the administration sent a form letter than did not provide specifics about which DEI programs, specifically, it believed the awardees were engaged in.
The two grant programs, Supporting Effective Educator Development and Teacher Quality Partnership, are used to recruit and train teachers to work in traditionally underserved communities.
Eight blue states that rely on the funding – including California, Illinois and New York – sued and a federal judge in Boston issued an order temporarily blocking the administration from freezing the funding while he considered the case. An appeals court declined to overturn that order and the administration appealed to the Supreme Court on its emergency docket last week.
The administration focused its appeal on an argument it has been sounding for weeks to the public as well as for the justices: That a single district court judge shouldn't be able to dictate national policy – even in the short term. Previous presidents have made similar arguments when faced with adverse rulings, though the Trump administration has been doing so in case after case rapidly filed at the Supreme Court.
'This case exemplifies a flood of recent suits that raise the question: 'Does a single district-court judge who likely lacks jurisdiction have the unchecked power to compel the government of the United States to pay out (and probably lose forever)' millions in taxpayer dollars?' acting Solicitor General Sarah Harris, the administration's top appellate attorney, told the Supreme Court in the government's appeal.
The states argued in their own briefing that the district court is considering the case on expedited basis and would likely issue a new order.
The justices are considered several emergency appeals from the second Trump administration touching on similar themes. Three of those appeals deal with the president's efforts to end birthright citizenship and the administration is specifically asking the court to limit the scope of nationwide injunction that bars it from doing so. Another deals with the president's attempt to invoke a wartime authority, the Alien Enemies Act, to rapidly deport alleged members of a Venezuelan gang.
And the court has already resolved two emergency appeals from the Trump administration. In one, the court allowed the head of an independent agency that investigates whistleblower claims to remain on the job temporarily while his case continued. A lower court ultimately ruled that Hampton Dellinger could be removed and he declined to appeal. In another case, the court denied the Trump administration's effort to fight a judge-imposed deadline to spend billions of dollars in foreign aid. Litigation in that case is ongoing.
This story has been updated with additional development.
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In 2024, the average rate of interest paid on U.S. borrowing was 3.32%. As of last month, it cost $1.013 trillion to maintain the borrowing, approximately 17% of federal spending for the fiscal year. According to Treasury data seen by Fortune, the accrued interest expense on Treasury notes in July alone was $38.1 billion. Add to that $13.9 billion in interest on Treasury bonds, $2.85 billion on Treasury Floating Rate Notes (FRN) and a total of $6.1 billion across Treasury Inflation-Protected Securities (TIPS) assets. The bill is alarming: The total comes to $60.95 billion for the month. Professor Gomes said bringing down those rates is 'incredibly important': 'It might be more important than the impact it would have on growth.' 'The Trump administration respects the independence of the Federal Reserve to set monetary policy and achieve its dual mandate of keeping inflation and unemployment low,' White House spokesman Kush Desai told Fortune. 'The Fed's own stated objective, however, is to set policy based on what the data show, and the data clearly show that the president's policies have swiftly tamed Joe Biden's inflation crisis. 'The president has made his view clear that it's high time for the Fed to respond to this objective fact by cutting rates, delivering needed interest rate relief to American families and supporting employment and economic growth.' The mortgage question President Trump's implication that a lower base rate would kick-start the housing market isn't a given, Columbia University's professor Yiming Ma told Fortune, but it could ease some tension for 'locked-in' homeowners. Mortgage rates are partly based on the country's base rate, but over a much longer period of time than the Fed's month-to-month alterations. This means a 0.25bps reduction is unlikely to make a significant difference, professor Ma said. However, lenders may be looking at a potential cut as a sign of a regime change in monetary policy, signaling that future rates could continue to lower, meaningfully impacting the rates lenders can offer. Mortgage offers take into consideration far more than the Fed, professor Ma explained: 'Banks will charge a premium, and that premium depends a lot on how they think the economy is going, what is the likelihood of default, how bad is [the applicant's] funding condition? That all is going to depend on a range of other things within the real economy. The connection between borrowing costs and the short-term interest rate is in theory there, but in practice it depends on so many things.' Ma continued, 'I think in particular the environment we're in right now is one of pretty high uncertainty, and even if you get a rate cut…there's still a long way to go until the market will think that we're going to have—for the longer term—lower interest on accessories or policy rates, and there's going to be a long way to go for people to think the economy is stable enough so that the premium on top of that rate is not going to go higher.' Indeed, when the Fed cut rates last September by 50bps, the average 30-year mortgage rate actually increased per the St. Louis Federal Reserve. 'It seems that in this environment that the mortgage rates can zig even when the Fed zags,' Bankrate analyst Jeff Ostrowski told Fortune. 'There's not a clear connection between the Federal Reserve's benchmark rate and mortgage rates.' That being said, a lower base rate may signal to consumers that a lower rate environment is on the way. This, Ostrowski added, could relieve some of the lock-in effect where homeowners don't want to move houses because their longer-term fixed mortgages are set at a rate offered in a previous period of lower interest. To see rates coming down could foster activity and encourage people to start looking at the market. Would consumers benefit or not? As well as releasing some tension in the housing market, there are some clear upsides for certain demographics when it comes to lower rates, added Ma. There would be some 'immediate relief' for people living 'paycheck to paycheck' and relying on credit cards if rates lowered lightly (and especially if they continued to do so), the economist added. According to a study from the St. Louis Fed, approximately 27% of people in the bottom 10th percentile have a credit card and 40% of those in the second-to-bottom. In the third percentile, approximately 50% of people had credit cards they needed to pay off, representing a significant portion of the population. But consumers aren't necessarily savers or spenders: Many will benefit from a lower rate on the credit card side, but suffer on their savings side. The Fed reported this year that 59% of people had savings accounts and benefited from returns at the higher rate. 'Financial institutions are actually very fast to pass on rate cuts to savings,' observed Ma, with Ostrowski echoing: 'I've got a high-yield savings account, and it's like almost the second the Fed moves I get a notice saying 'Your rate just changed,' so it seems like the variable rates will move pretty quickly.' The net impact on consumers is a 'wash,' added Ostrowski: 'I get the sense that Americans have shifted so much into storing what wealth they have in the stock market that…it doesn't seem like we hear the same outcry from retirees when rates go down. 'It's hard to say that there's a real winner or loser because most Americans are consumers and investors, they're spenders and savers,' he added. Why would the government benefit? If the cost of borrowing is cheaper for everyone that doesn't just mean businesses and consumers, it means the government too. Typically, when interest rates are lower the same goes for Treasury yields (government debt and the interest it pays to lenders to service the debt). That hasn't always been the case. Over the past year, for example, yields climbed when the base rate lowered. This was due to a range of factors, wrote J.P. Morgan, including growth, economic uncertainty, and questions over whether the September 2024 cut would spell a change in the tide of monetary policy. (Spoiler alert: It didn't.) But generally, lower interest rates benefit the government's bottom line because it can issue new debt at a lower premium to maintain the loan. While it's hard to assign a 'weight' to whether Trump's motivation is for voters or his administration, Ma said 'both can be true.' A lower base rate eases 'borrowing for consumers. It's going to ease pressure for companies to borrow, which will stimulate businesses, and some of that will be evident in the stock market. These are all important economic indicators for any country—that's definitely true. 'It's also true that consumers and businesses are not the only ones to borrow…The U.S. government borrows a lot right now, and certainly the interest expense on the U.S. Treasury is going to be affected by the interest rate.' The expert also pointed out that the trickle-through of cheaper borrowing for the government may not be across the board: 'We have Treasury bills that mature within the year, or three months, six months, 12-month horizons. We also have very long-term debts, and so cutting interest rates in the overnight maturity is not going to directly pass through necessarily to the very long end.' This story was originally featured on
