Trump White House rescinds freeze on federal grants, reversing course

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In a memo sent to federal agencies, Matthew J. Vaeth, the acting head of the White House Office of Management and Budget, states that the OMB memorandum M-25-13 is being canceled. That order, issued just a few days ago, instructed federal agencies to put on hold all activities involving committing or spending federal financial aid temporarily.

The measure caused huge disruption and confusion across Washington, appearing to put at risk government programs that fund schools, provide housing, and ensure low-income Americans have access to healthcare. States reported issues accessing Medicaid funds, and as of Wednesday, public housing authorities said they were locked out of their funding system. White House Press Secretary Karoline Leavitt said on Tuesday that assistance for individuals would not be affected.

A day after a federal judge in Washington put a temporary hold on the order until February 3, the Trump administration withdrew it, giving public health advocates, nonprofits, and businesses, represented by the group Democracy Forward, more time to challenge the directive's legality. Additionally, about two dozen state attorneys general filed their own lawsuit against the administration on Tuesday, claiming that the pause in federal funding has caused harm to their citizens.

Tuesday, allowing some foreign aid to move forward despite the pause that had been in effect. Leavitt stated that the order was revoked to make it clear that the administration would comply with the federal order that had paused the freeze, and to bring the court case to a close.

The executive orders signed by the President that relate to funding reviews remain in effect and will be strictly enforced by all government agencies and departments," Leavitt said in a statement that also criticized "misleading media coverage" without mentioning any specific instances. "This move should effectively put an end to the court case and enable the government to focus on enforcing the President's orders regarding federal spending control. Over the coming weeks and months, further executive actions will continue to address the severe misuse of federal funding.

Speaking at the White House, Trump stated that the media had "purposefully" caused confusion over whether the freeze would impact Social Security and Medicare. He referred to the pause as a "temporary hold on certain discretionary spending payments … so we can swiftly examine the scams, dishonesty, waste, and abuse that's plaguing our government for too long."

“Americans wholeheartedly back these efforts,” Trump said. “We're making every effort to squeeze the maximum benefit out of every single tax dollar for our fantastic citizens.”

There was agreement between Republicans in Congress and Trump on this issue. Hours before the White House cancelled the freeze, Rep. Tom Emmer (Minnesota), the third-ranking Republican in the House, termed the coverage of OMB's order as "the first ridiculous media hoax of 2025".

The OMB's review of certain spending priorities should be viewed as good government, Emmer stated during the GOP's policy retreat at a Trump golf resort outside Miami. "I, for one, am pleased to have a president in the White House who is following through on his pledge to put our nation's finances back in order."

The dispute also overflowed into Robert F. Kennedy Jr.s Wednesday confirmation hearing to lead the nation's health department, with lawmakers arguing over whether Medicaid funding had been suspended, as warned by many officials across the country on Tuesday, or if it was a made-up story.

"It's been proven false overnight," said Senator Mike Crapo from Idaho, who chairs the Senate finance committee. Senator Ron Wyden from Oregon countered by citing the "chaos" reported by Medicaid officials on Tuesday.

The revoked order indicates this is likely to be just one of the first fights the Trump administration has to face in their efforts to exert significantly more control over the federal budget. Trump and Russell Vought, Trump's nominee to lead the OMB, argue that the executive branch should have substantially more freedom to cancel federal spending without needing congressional approval.

"While this is extremely welcome news, it only temporarily halts those illegitimate” pauses in government spending previously approved by the budget office, said Bobby Kogan, a former Biden administration official at the Center for American Progress, a left-leaning think tank.

Vought and Mark Paoletta, tapped as an attorney for the White House budget office, say the administration intends to challenge a 1974 budget law that restricts presidential power to cancel spending. Paoletta has stated that the law is "unconstitutional," claiming it overturns a presidential authority to cancel federal funds that has been in place since the nation's founding.

Jacob Bogage and Dan Diamond contributed to this article.