White House orders freeze on 'financial assistance,' unleashing anger, confusion, lawsuit

Yahoo

28-01-2025

The Trump administration caused a rush of confusion and anger Tuesday among Democratic leaders, state officials and federal program managers with a vague order purporting to halt "all federal financial assistance" while it considers whether the funding comports with the new president's agenda.
The directive from the Office of Management and Budget — which the White House released late Monday and quickly began walking back Tuesday — spurred California and other states to announce a lawsuit seeking to block it as an unconstitutional power grab by President Trump that would harm vulnerable populations.
"We will not stand by while the president attempts to disrupt vital programs that feed our kids, provide medical care to our families and support housing in our communities," California Atty. Gen. Rob Bonta said at a news conference. 'We won't stand by while the president breaks the law and oversteps his authority, as outlined in our Constitution."
Bonta said the order threatens trillions of dollars in federal funding, and was "reckless, it is dangerous, unprecedented in scope and devastating in its intended effect."
New York Atty. Gen. Letitia James, who is leading the effort with Bonta, called the memo "plainly unconstitutional."
"The president does not get to decide which laws to enforce and for whom," James said. "When Congress dedicates funding for a program, the president cannot pull that funding on a whim."
Bonta and James spoke after a day of swirling speculation about the scope of the order — which the White House downplayed even as it worked to specify the order's reach.
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The White House issued an updated memo Tuesday that expanded a list of programs exempted from the funding pause, including Social Security, Medicare, Medicaid and the food assistance program known as SNAP. Also exempted would be federal funding for small businesses, farmers, Pell Grant recipients, Head Start, rental assistance "and other similar programs," the White House said.
Karoline Leavitt, Trump's press secretary, said that the directive was "not a blanket pause on federal assistance and grant programs" and that anyone receiving "individual assistance from the federal government" would continue receiving that aid. She also noted that the cuts, which were meant to take effect Tuesday afternoon, were temporary, and that leaders of federal programs were free to call Trump budget officials to make the case that their programs should not be frozen.
She also suggested the administration was clear on the order's scope, and confusion on that front was limited to the media.
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Both James and Bonta said the White House's attempts to minimize the scope of the order after confusing program managers and terrifying benefit recipients across the country did not resolve their concerns or negate the need for their lawsuit.
On the contrary, Bonta said that the initial order had "thrown state programs into chaos," and the White House's attempts to clarify it had "further fueled" the confusion.
James said some states were already reporting that funds had been frozen, including for programs that the White House said would not be affected. Many states had been shut out of their Medicaid reimbursement systems, she said. Other programs affected in different states included Head Start and child development block grants, she said.
California is expected to distribute $168.3 billion in federal funds and grants through the fiscal year that ends on June 30. Officials are assessing what of that funding is at risk. Los Angeles officials were also scrambling at the local level to make sense of the order, which could affect housing vouchers and homeless assistance grants, according to internal emails.
Bonta said he is coordinating with other state officials, and believes that federal disaster relief funding for the recovery from L.A.'s devastating wildfires remains at risk under the order.
The uproar began late Monday, after Matthew J. Vaeth, acting director of the Office of Management and Budget, issued a memo announcing a "temporary pause" on grants, loans and other financial assistance.
Vaeth wrote that voters had given Trump a "mandate to increase the impact of every federal taxpayer dollar," and Trump needed to determine which spending by the government aligned with his agenda.
"Financial assistance should be dedicated to advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending 'wokeness' and the weaponization of government, promoting efficiency in government, and Making America Healthy Again," he wrote. "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."
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Democrats immediately began sounding alarms and calling the directive unconstitutional and far beyond the scope of Trump's power as president, given that Congress generally appropriates funding, not the White House.
Senate Appropriations Vice Chair Patty Murray (D-Wash.) said the fact that "Congress holds the power of the purse" is "very clear in the Constitution."
Sen. Jeff Merkley (D-Ore.), the top Democrat on the Senate Budget Committee, called the White House move "a constitutional crisis." His committee is scheduled to vote Thursday on Trump's nomination of Russ Vought as White House budget chief. Vought is the architect of the spending freeze.
The original memorandum ordered all federal agencies to conduct a "comprehensive analysis" of their spending to determine which of it is "consistent with the President's polices" and the raft of executive orders that Trump has issued in recent days.
In the interim, it said, federal agencies must — to "the extent permissible under applicable laws" — pause all disbursements of funds or "other relevant agency activities" that may be covered by Trump's orders, "including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal," Vaeth wrote.
The pause, the memo said, will give the Trump administration time to "determine the best uses of the funding" moving forward.
Leading Republicans largely defended the move — suggesting it was a normal act for an incoming administration.
"I think that's a normal practice at the beginning of administration, until they have an opportunity to review how the money is being spent," Senate Majority Leader John Thune said Tuesday morning.
Democrats disagreed — issuing especially critical reactions prior to the White House's clarifications.
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Senate Minority Leader Chuck Schumer (D-N.Y.) called the directive "outrageous" and "a dagger at the heart of the average American family in red states and blue states, in cities, in suburbs, in rural areas."
Former House Speaker Nancy Pelosi (D-San Francisco) wrote that Trump's "illegal scheme will raise costs, hurt working families and deny critical resources for Americans in need." Rep. John Garamendi (D-Walnut Grove) said the order will cause Americans to suffer.
A coalition including the American Public Health Assn. and the National Council of Nonprofits are independently challenging the memo in court, as well.
The order followed a separate directive by the Trump administration to halt a broad range of foreign aid.
Mark A. Peterson, a UCLA professor who studies public policy and political science, said the original memo was without precedent and left "extreme ambiguity as to what it affects and how it applies,' as well as its duration.
"Anything that has, from the point of view of the Trump administration, the aroma of dealing with equity or inclusion issues could be put under threat,' Peterson said — and 'there's so much misunderstanding about what those issues are."
Bonta said that he fears the White House's latest directives put federal funding for wildfire disaster relief following L.A.'s fires further at risk. Already, Republicans are talking about conditioning such funding on Democrats acquiescing to certain unrelated demands, Bonta noted — which he said is troubling.
"We need it, we need it now, we needed it yesterday and without conditions," he said.
Illinois, Massachusetts, New Jersey and Rhode Island would join California and New York in the lawsuit, officials said.
Pinho reported from Washington, Rector from San Francisco, Alpert Reyes from Los Angeles. Times staff writer Taryn Luna, in Sacramento, contributed to this report.
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This story originally appeared in Los Angeles Times.