Washington The Trump administration’s sudden announcement on Monday night to stop federal grants and loans has caused a great deal of consternation among Congress, the government, state programs, and nonprofits that depend on the financing.
All federal agencies received a two-page, ambiguously written document from the Office of Management and Budget on Monday night instructing them to temporarily halt all operations pertaining to the obligation or distribution of any federal financial assistance that might be in opposition to President Donald Trump’s objectives.
Nonprofits said the next morning that they couldn’t access a system that allows them to obtain federal cash for things like rent and salaries.
White House attempts to clarify affected programs
OMB also sent a document to agencies requesting information on over 2,600 programs, including mine inspections, USAID foreign assistance, school meals for low-income students, the WIC nutrition program for pregnant women and infants, and a reintegration program for homeless veterans. It is unclear exactly which programs will be discontinued.
The OMB spreadsheet included questions more specifically related to the Trump agenda in addition to details regarding the distribution of funding, such as:
- Does this program provide funding that is implicated by the directive to end discriminatory programs, including illegal DEI and diversity, equity, inclusion, and accessibility (DEIA) mandates, policies, programs, preferences, and activities, under whatever name they appear, or other directives in the same EO, including those related to environmental justice programs or equity-related grants?
- Does this program promote gender ideology?
- Does this program promote or support in any way abortion or other related activities identified in the Hyde Amendment?
OMB requested that the data be turned in by February 7.
According to a senior administration official, the move is a pause to allow agencies to assess whether government grants and loans are compliant with recent executive measures taken by Trump, rather than a financial block. According to the official, OMB has already been negotiating with agencies to exempt specific programs, and the suspension will begin at 5 p.m. on Tuesday.
At her first news briefing on Tuesday, White House press secretary Karoline Leavitt stated, “It means no more funding for the green new scam that has cost American taxpayers tens of billions of dollars.” “It means no more funding for transgenderism and wokeness across our federal bureaucracy and agencies.”
According to the senior administration official, funding for initiatives that directly affect Americans would not be included in the freeze or subject to the review process. According to a document released by OMB Tuesday afternoon, the programs include federal Pell Grants for college students, Medicaid, food stamps, Head Start, small business support, and rental assistance.
“If you are receiving individual assistance from the federal government, you will still continue to receive that,” Leavitt stated. “However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars.”
In response to a particular question concerning Medicaid, which offers health insurance to over 70 million Americans with disabilities and poor incomes, Leavitt said she would obtain a complete list from OMB for reporters.
The funding review will be related to activities that may be impacted by the executive orders, such as financial assistance for foreign aid, nongovernmental groups, DEI, woke gender ideology, and the green new deal, according to the OMB document distributed Monday evening.
Nonprofits unable to access funds
Nonprofit groups reported that the letter caused them to lose access to federal government systems that were used to withdraw already allocated federal funding, causing a flurry of uncertainty and fear on Tuesday.
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.
One website that early childhood education and health care providers use to collect their federal monies has a warning about potential payment delays at the top.
PMS is taking extra steps to process payments because of Executive Orders pertaining to potentially unallowable grant payments. According to the notification, payments may be rejected or delayed pending reviews of relevant programs and payments.
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 are due on February 1st for thousands of low-income households in subsidized housing nationwide. According to her, a number of members have informed her group that the technology that was used to deduct money to cover their housing costs was not working on Tuesday.
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 will be unable to pay landlords’ rentals and some tenants may be evicted if those monies are not made accessible within the next few days.
Access to federal funding sites and distribution systems, such as Medicaid systems, which are utilized to administer and disburse previously authorized federal monies, was another problem that state agencies noted.
In a post on social mediaLeavitt stated Tuesday afternoon that the White House was aware of the outage on the Medicaid website and was working to resolve it.
“We have verified that there has been no impact on payments; they are still being processed and sent. We anticipate that the gateway will soon be operational again,” she stated.
According to Dr. Erin Sorrell, a senior scholar at the Johns Hopkins Center for Health Security, the aftermath may also have an impact on health initiatives. Clinical trials for important infectious and chronic diseases could be impacted, she added, if funding to the National Institutes of Health is stopped.
“People travel across the country to participate in these trials, some life-saving trials,” Sorrell stated. “The pause doesn t just impact the researcher, their work, their livelihoods, it impacts the patients themselves, potentially life-threatening impacts.”
Pushback to the OMB directive
The National Council of Nonprofits and the American Public Health Association sued OMB in federal court in Washington, D.C., on Tuesday, requesting a temporary restraining order to preserve the status quo until the court has a chance to more thoroughly examine whether OMB’s actions were unlawful.
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.”
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.
“This is a dagger at the heart of the average American family in red states, blue states, cities, suburbs, and rural areas,” Senate Minority Leader Chuck Schumer, D-N.Y., told reporters Tuesday morning. It is simply absurd.
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 the operator, some of this material has only been discussed in jest at Heritage Foundation cocktail parties. 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 Miami, 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.