WASHINGTON — An abrupt freeze on nearly all federal grants and loans announced Monday night by President Donald Trump’s administration has created widespread confusion across the government, Congress, state programs and non-profit organizations that rely on federal funding.
The Office of Management and Budget sent a vaguely worded two-page memo to all federal agencies Monday night directing them to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
The agency also sent an 836-page spreadsheet, obtained by NBC News, asking federal agencies that provide financial assistance for details on a range of programs, including:
- The federal Pell Grant program
- 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 asked for the information to be submitted by Feb. 7.
On Capitol Hill, lawmakers scrambled to figure out what the funding freeze would mean for their constituents.
“The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country,” the Democratic leaders of the House and the Senate appropriations committees — Rep. Rosa DeLauro, D-Conn., and Sen. Patty Murray, D-Wash. — wrote to OMB, going on to say that the pause is unconstitutional and unlawful.
At a press conference Tuesday morning, Murray said that the Senate Appropriations Committee had been trying to get in touch with the agencies to fully understand the impacts.
“This is a dagger at the heart of the average American family — in red states, in blue states, in cities, in suburbs, in rural areas. It is just outrageous,” Senate Minority Leader Chuck Schumer, D-N.Y., told reporters at a press conference Tuesday morning.
Groups representing non-profit organizations and small businesses reached by NBC News said they were also struggling to figure out what the implications could be for their members, like those providing health care, housing and early childhood education.
“While we understand that this is an evolving story, this disruption, at best, will slow down Head Start agencies’ ability to pay hundreds of thousands of staff, contractors, and small businesses who support Head Start operations in every corner of the country,” Yasmina Vinci, executive director of the National Head Start Association, said. “At worst, this means that hundreds of thousands of families will not be able to depend on the critical services and likely will not be able to work.”
The National Low Income Housing Coalition urged its members to call members of Congress to “push back against the Trump administration’s extreme order to withhold federal investments.”
The OMB memo sent out Monday evening said the funding review would be related to “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 Republican operative noted that stopping much of this federal assistance had long been a goal of the party — but the fact that Trump was taking it all on at once was notable.
“Some of this stuff has only been talked about at cocktail parties at the Heritage Foundation in jest,” a Republican operative said. “And they’re actually doing it all.”
In an interview at the House Republicans’ issues conference at Trump National Doral, House Appropriations Chairman Tom Cole, R-Okla., defended Trump’s freeze on aid, arguing that it’s a way for Republicans to immediately stop spending they disagree with.
“I think they’re doing the right thing. They’re getting control of the situation,” he said. “There’s a lot of money moving out right at the end of the Biden administration. That’s, you know, pretty typical. So I think they want to get control of that and make sure nothing’s moving along that they don’t agree with. And they’re well within their prerogative to do that.”
It was unclear if the freeze would also affect funding for the 72 million people who received their health insurance through Medicaid, according to lawmakers and policy analysts. The federal government sends Medicaid funding directly to states, which then administer the program and pay doctors and hospitals for the care they provide.
“The memo is vague — Medicaid could be included,” said Brian Riedl, senior fellow at the Manhattan Institute who has worked on budget issues for Republican lawmakers. “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 memo said Social Security, Medicare and direct payments to individuals wouldn’t be included in the freeze.
Small businesses were also unclear on what the freeze would mean to the loans administered by the Small Business Administration.
“We’re hearing from members who are concerned, and unsure how this could impact existing loans or loans already in the pipeline,” Todd McCracken, president of the National Small Businesses Association, said in a statement.
