The Office of Management and Budget has reversed its call for a halt in payments for federal grants and other programs, the White House announced on Wednesday.
However, the administration stated that only the original memo calling for the freeze had been rescinded, not its effort to review federal spending.
Details about the rescinded order were revealed in a copy of an agency memo shared by Democracy Forward, which led the legal challenge to the effort.
According to the new memo, heads of executive departments and agencies should contact their general counsels “if you have any questions about implementing the President’s Executive Orders.”
“Facing legal pressure from our clients and in the wake of a federal judge ruling in our case last evening, the Trump-Vance administration has abandoned OMB’s ordered federal funding freeze,” Democracy Forward said in a statement Wednesday.
“We are proud of our courageous clients — who represent communities across the nation — for going to court to stop the administration’s unlawful actions.”
However, the White House press secretary, Karoline Leavitt, told reporters that the move simply meant rescinding the original Monday directive.
According to Leavitt, efforts to “end the egregious waste of federal funding” will continue. He also stated that the OMB memo was rescinded “to end any confusion on federal policy created by the court ruling and the dishonest media coverage.”
Confusion and legal challenges
On Tuesday, the original memo caused widespread confusion as recipients of federal assistance tried to figure out what the order meant for everything from Medicaid payments to funding for schools, hospitals, and shelters.
As questions arose, the White House attempted to clarify which programs would be unaffected, eventually stating that the halt would not affect Medicaid or the Supplemental Nutrition Assistance Program, for example.
The White House statement on Wednesday may have added to rather than cleared up the confusion. Leavitt stated that the administration believes that rescinding the memo will end the court case against it, but that President Trump’s executive orders on funding reviews “remain in full force and effect and will be rigorously implemented by all agencies and departments.”
According to the original OMB memo obtained by NPR, a temporary pause in funding was scheduled to begin Tuesday evening, but a senior administration official said the pause could last as little as a day if an agency determined its programs were in compliance.
The official stated that the directive should not be interpreted as a full funding freeze. The official, who was not authorized to speak publicly about the internal memo, stated that agencies are expected to review their grants, loans, and programs to ensure that they are in line with the new administration’s priorities.
Administration officials have insisted that the implications are misunderstood, but the memo’s actual text is broad, and the follow-up guidance has been criticized as ambiguous.
On Tuesday afternoon, the White House issued a fact sheet stating that “the pause does not apply across-the-board” and that “any program that provides direct benefits to Americans”—such as Social Security, Medicare, and food stamps—”is explicitly excluded.”
The developments on Wednesday come after a federal judge issued an order on Tuesday that temporarily halted efforts to halt federal payments for grants and other programs.
The nonprofits that obtained the temporary stay claimed in their filing that the memo “fails to explain the source of OMB’s purported legal authority to gut every grant program in the federal government.”
The groups also claimed that the memo overlooked the interests of grant recipients, “including those to whom money had already been promised.”
Shortly after the federal judge’s decision, 22 state attorneys general and the District of Columbia filed a separate challenge in federal court.
Congressional reaction
The order served as an early litmus test for how willing Republicans in Congress would be to relinquish control of the purse in favor of their party’s leader, even if only temporarily.
The order was issued late Monday night, while House Republicans were attending an annual conference at Trump National Doral Golf Club.
While Democrats such as Washington Sen. Patty Murray condemned the measure as “brazen and illegal,” most congressional Republicans who spoke about it said it was a means to an end to carry out Trump’s agenda, which is within his purview.
House Speaker Mike Johnson, R-La., described it as “an application of common sense” and said it would “be harmless in the end.”
At least one person at the retreat, Republican Rep. Don Bacon of Nebraska, said a heads-up would have been helpful.
“How can we defend [it] if we do not know what is coming out and what it truly means? “And I have constituents calling, so it is just part of life,” he said.
Sen. Susan Collins, who chairs the Appropriations Committee, did not criticize the memo on Tuesday, instead stating that she was “surprised by its breadth.” On Wednesday, she expressed her relief that it had been lifted.
“While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” she told reporters.
Collins, as chair of the committee, will be one of Trump’s primary negotiators on federal spending.
Another member of the appropriations committee, Democrat Chris Coons of Delaware, said the initial order “caused alarm bordering on chaos in my state.” Coons told reporters on Wednesday that he was waiting for the administration’s next step.
“Let us see what the next order is. I will remind you that in his first term, Trump issued a so-called Muslim ban. “It was enjoined or overturned, so they reissued it,” Coons explained.
“There is a persistent attempt at trying to sort of shake the system and see if savings can be identified,” according to him. “I would have urged a profoundly different approach to that.”
Sen. Kevin Cramer, R-North Dakota, acknowledged that the move calls into question Congress’ authority but said he was unconcerned.
“[Trump’s] testing his own authority,” Cramer told reporters on Tuesday. “He is getting some guidance that presidents have more authority than they would traditionally used.”
Cramer said he supports a spending pause, but acknowledged the memo was a “major test of the separation of powers.”
Sen. Jim Risch, R-Idaho, stated it bluntly.
“For all of you who have not noticed, this is a different day in Washington, D.C.,” he told reporters on Tuesday.
