Panic as Trump's freeze on federal grants, loans takes effect
US funding freeze is feared to affect trillions of dollars and cause widespread disruption in health care research, education programmes and other initiatives while grants that have been awarded but not spent are supposed to be halted.
The White House has paused federal grants and loans as President Donald Trump's administration begins an across-the-board ideological review of its spending, causing confusion and panic among organisations that rely on Washington for their financial lifeline.
Administration officials said on Tuesday the decision was necessary to ensure that all funding complies with Trump's executive orders, which are intended to undo steps on environmental justice and diversity, equity and inclusion, or DEI, efforts.
They also said that federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, student loans and scholarships.
However, the funding freeze could affect trillions of dollars, at least temporarily, and cause widespread disruption in health care research, education programmes and other initiatives.
Even grants that have been awarded but not spent are supposed to be halted. State agencies and early education centres appeared to be struggling to access money from Medicaid and Head Start, stirring anxiety with answers hard to come by in Washington.
Court battles are imminent, and Democratic New York Attorney General Letitia James plans to ask a Manhattan federal court to block the Republican president's moves.
"My office will be taking imminent legal action against this administration's unconstitutional pause on federal funding," she said on social media.
The issue dominated the first briefing held by White House press secretary Karoline Leavitt. She said the administration was trying to be "good stewards" of public money by making sure that there was "no more funding for transgenderism and wokeness."
The pause on grants and loans is scheduled to take effect at 5 pm ET, just one day after agencies were informed of the decision.
"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," wrote Matthew Vaeth, the acting director of the Office of Management and Budget.
'More lawlessness and chaos in America'
Democrats and independent organisations described the pause as capricious and illegal because Congress had already authorised the money.
"The scope of this illegal action is unprecedented and could have devastating consequences across the country," said Senator Patty Murray of Washington, the top Democrat on the Senate Appropriations Committee.
"For real people, we could see a screeching halt to resources for child care, cancer research, housing, police officers, opioid addiction treatment, rebuilding roads and bridges, and even disaster relief efforts."
Senate Minority Leader Chuck Schumer, a Democrat from New York, called it "more lawlessness and chaos in America."
It's unclear from the White house memo how sweeping the pause will be. Vaeth said all spending must comply with Trump's executive orders.
Vaeth wrote that "each agency must complete a comprehensive analysis of all of their Federal financial assistance programmes to identify programmes, projects, and activities that may be implicated by any of the President’s executive orders."
He also wrote that the pause should be implemented "to the extent permissible under applicable law."
The Environmental Protection Agency, which distributes billions of dollars, confirmed that it would implement the pause to "align federal spending and action with the will of the American people as expressed through President Trump's priorities."
Washington is a hub of spending that flows to various departments, local governments, nonprofits and contractors, and the memo has left countless people who are dependent on that money wondering how they will be affected.
The Sierra Club, an environmental organisation, said the freeze could jeopardise funding for everything from disaster relief to home heating subsidies, safe drinking water programmes, and the National Suicide Prevention Hotline.
"In issuing a sweeping halt to federal funding, grants and loans, Donald Trump has... immediately and significantly put Americans in danger," said Sierra Club executive director Ben Jealous.