Washington President Donald Trump’s administration imposed a surprise halt on almost all federal grants and loans Monday night, which has caused confusion among Congress, the government, state programs, and non-profits that depend on federal financing.
A two-page, ambiguously worded memo was distributed to all federal agencies Monday night by the Office of Management and Budget, instructing them to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
Additionally, the agency requested information on a variety of programs from federal departments that offer financial help in an 836-page spreadsheet that NBC News was able to receive.
- School meals for low-income students
- The WIC nutrition program for pregnant women and infants
- Wildfire preparedness for the Department of Interior
- The Medicare enrollment assistance program
- USAID foreign assistance
- Mine inspections
- A reintegration program for homeless veterans
OPM requested that the data be turned in by February 7.
According to nonprofit groups contacted by NBC News, some of their money seems to have already been slashed, and they are rushing to determine the potential effects on their programs, which include early childhood education, housing, and health care.
According to Tommy Sheridan, deputy director of the National Head Start Association, some Head Start-funded early childhood education programs reported that they were unable to access previously granted funds that they required to pay their bills that were due on the first of the month because the system seemed to be offline. Several programs have informed him that they will have to close their doors if the funds isn’t made available in the next few days, he added.
Although we recognize that this is a developing story, Yasmina Vinci, executive director of the National Head Start Association, stated that this disruption will, at most, make it more difficult for Head Start agencies to compensate the hundreds of thousands of employees, contractors, and small businesses that support Head Start operations across the nation. Hundreds of thousands of households will, at worst, be unable to rely on the essential services and probably won’t be able to work.
According to Ann Oliva, CEO of the National Alliance to End Homelessness, local housing organizations were also uncertain about whether they would have the money on hand to assist in paying rentals that were due on February 1 for thousands of low-income households in subsidized housing nationwide. According to Oliva, her organization has received reports from a number of members stating that on Tuesday morning, the mechanism that was utilized to withdraw money to cover their housing costs was not operational.
According to Oliva, the grantees are genuinely quite alarmed about what we are hearing this morning. These initiatives are available in both red and blue states, and they will affect disadvantaged individuals in countless communities and in every state in the union.
Organizations would be unable to pay rent to nearby landlords and some tenants would be evicted if those money aren’t made available within the following several days.
Members of the National Low Income Housing Coalition were encouraged to contact members of Congress in order to “push back against the Trump administration’s extreme order to withhold federal investments.”
According to the OMB document released Monday night, the funding review would focus on “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.”
A former official in President Joe Biden’s administration stated, “unless they further clarify it, it’s super terribly written, and for that reason, it’s unclear exactly what it impacts, which is why you’re going to see absolute chaos today and the ensuing days.”
Lawmakers rushed to determine the impact of the funding suspension on their constituents on Capitol Hill.
Rep. Rosa DeLauro, D-Conn., and Sen. Patty Murray, D-Wash., the Democratic leaders of the House and Senate appropriations committees, wrote to OMB, saying, “The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country.” They also claimed that the pause was illegal and unconstitutional.
Murray stated during a press conference Tuesday morning that the Senate Appropriations Committee has been attempting to contact the agencies in order to properly comprehend the effects.
In red states, blue states, cities, suburbs, and rural places, this is a dagger at the core of the typical American family. During a press conference on Tuesday morning, Senate Minority Leader Chuck Schumer, D-N.Y., told reporters, “It is just outrageous.”
According to a Republican operative, the party has long aimed to realign the federal government’s role, but it was noteworthy that Trump was taking on all of this at once.
According to a Republican operative, some of this material has only been discussed in jest at cocktail parties at the Heritage Foundation. In fact, they’re doing everything.
House Appropriations Chairman Tom Cole, R-Okla., backed Trump’s assistance freeze in an interview at the House Republicans’ issues conference at Trump National Doral, saying it allows Republicans to instantly cut spending they oppose.
They’re acting appropriately, in my opinion. He stated, “They’re taking charge of the situation.” “At the end of the Biden administration, a lot of money is leaving. You know, that’s quite normal. Therefore, I believe they want to take charge of that and ensure that nothing is happening that they disagree with. Additionally, they have every right to do so.
Lawmakers and policy experts were unsure whether the freeze would also impact financing for the 72 million Medicaid recipients of health insurance. Medicaid funds are sent directly to states by the federal government, who then manage the program and reimburse hospitals and physicians for the services they render.
According to Brian Riedl, a senior scholar at the Manhattan Institute who has worked on budget matters for Republican senators, the memo is ambiguous and might include Medicaid. “But it s more likely that OMB is focusing on competitive grants, loans, and contracts to private organizations, businesses, and perhaps local governments, rather than formula grants to states where the recipients are further removed from Washington controls.”
The message stated that the freeze would not apply to direct payments to people, Social Security, or Medicare.
Despite being mentioned in the spreadsheet, Madi Biedermann, a Department of Education representative, stated that direct loans and federal Pell Grants will not be impacted.
According to the OMB statement released yesterday, the brief halt has no bearing on aid that people get directly. Accordingly, Biedermann stated that yesterday’s advisory has no bearing on Title IV, HEA funding that are given to specific students, such as Federal Pell Grants and Direct Loans.
Additionally, small firms were unsure of how the moratorium would affect Small Business Administration financing.
In a statement, National Small Businesses Association President Todd McCracken stated, “We’re hearing from members who are concerned and unsure how this could impact existing loans or loans already in the pipeline.”