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Trump administration rescinds freeze on federal grants and loans

Writer's picture: The San Juan Daily StarThe San Juan Daily Star


Outside the White House in Washington on the morning of Tuesday, Jan. 28, 2025. The White House rescinded an order on Wednesday that froze trillions of dollars in federal grants and loans and sparked mass confusion across the country, according to two U.S. officials familiar with the matter. A federal judge had temporarily blocked it on Tuesday. (Doug Mills/The New York Times)
Outside the White House in Washington on the morning of Tuesday, Jan. 28, 2025. The White House rescinded an order on Wednesday that froze trillions of dollars in federal grants and loans and sparked mass confusion across the country, according to two U.S. officials familiar with the matter. A federal judge had temporarily blocked it on Tuesday. (Doug Mills/The New York Times)

By Zolan Kanno-Youngs, Maggie Haberman and Annie Karni


The White House on Wednesday rescinded a directive that froze trillions of dollars in federal grants and loans after the order sparked mass confusion and legal challenges that accused the Trump administration of violating the law.


The order, which was sent Monday night, was an attempt to purge the government of what President Donald Trump has called a “woke” ideology. A federal judge in the District of Columbia temporarily blocked it Tuesday afternoon, but the lack of clarity sent schools, hospitals, nonprofits and others scrambling to understand if they had lost their financial support from the government.


On Wednesday, Matthew J. Vaeth, acting director for the Office of Management and Budget, told federal agencies that the memo freezing aid had been “rescinded.”


“If you have questions about implementing the president’s executive orders, please contact your agency general counsel,” Vaeth said in a memo.


The decision by the Trump administration to pull the directive was a significant reversal and the first major capitulation by a president who since returning to the White House has not hesitated to use his executive power to reshape the federal government in his image and rid the workforce of any dissent.


Karoline Leavitt, the White House press secretary, wrote on social media Wednesday afternoon that “This is NOT a rescission of the federal funding freeze.” She said the president’s executive orders on federal funding “remain in full force and effect, and will be rigorously implemented.”


She appeared to be referring to the fact that the executive orders Trump signed last week — which directed government agencies to review and eliminate spending on so-called woke ideologies — remain in force.


The Office of Management and Budget memo that was rescinded was an effort to implement those executive orders by freezing all spending while the administration determined which programs violated the president’s directive. It is that memo that is no longer in force.


But the underlying presidential intentions remains, and the administration is expected to find other ways to put Trump’s wishes into practice.


Still, the chaotic 48 hours suggested that Trump and his allies had overestimated their ability to impose ideological purity tests on federal funding. The order interrupted the Medicaid system that provides health care to millions of low-income Americans.


The confusion echoed Trump’s haphazard rollout of travel restrictions on Muslim-majority countries during his first term, which ended up being blocked temporarily in court.


The disruption has already reinvigorated a Democratic opposition and allowed Trump’s political opponents to find a unified message.


Sen. Patty Murray of Washington, the top Democrat on the appropriations committee, called the decision to rescind the order “an important victory for the American people,” commending those who spoke out against it and put pressure on the White House.


She accused the Trump administration of sowing chaos through “a combination of sheer incompetence, cruel intentions and a willful disregard of the law.”


The precise scope and impact of the freeze was revealed in party by the declarations of state officials in a lawsuit filed Tuesday to block the administration’s order. In Arizona, $200 million was inaccessible as of midday Tuesday.


Colorado, Rhode Island and New Jersey said they had been locked out of a system known as Payment Management Services, which processes billions of dollars each in year in grant payments to the states.


Washington state said that as much as 32% of its annual budget was potentially at risk and that even a temporary pause “would interfere with critical state programs” including substance abuse treatment, school lunches, highway maintenance and child care for low-income workers.


“Nonprofits throughout the country and the people they serve can breathe a sigh of relief now that the White House has, at least for now, backed off its reckless and harmful plan to halt all federal funding for critical programs from homeless and housing assistance, to disaster relief and rebuilding, to rape crisis centers and suicide hotlines,” said Diane Yentel, president and chief executive of the National Council of Nonprofits. “Now, nonprofits can continue doing their important work through the country.”

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