White House Press Secretary Karoline Leavitt takes questions during the daily briefing at the White House on Jan. 28, 2025, discussing the potential impacts of the Trump administration's freeze of federal grants, loans and assistance.

White House Press Secretary Karoline Leavitt takes questions during the daily briefing at the White House on Jan. 28, 2025, discussing the potential impacts of the Trump administration's freeze of federal grants, loans and assistance. ROBERTO SCHMIDT / AFP / Getty Images

Chaos reigns across government as Trump freezes large swaths of federal spending

"It is blatantly unconstitutional," one senator says as agencies grapple with pausing nearly all grants and loan programs.

Editor's note: Minutes before the partial spending freeze was set to take effect, a federal judge issued a temporary injunction on it. 

The Trump administration on Tuesday will freeze vast swaths of federal agency spending, issuing a directive that pauses any funding efforts related to government grants, loans or assistance. 

The memorandum drew quick rebuke from Democrats and organizations that rely on federal funding, who warned the pause would wreak havoc across federal agencies and their constituencies, and may be illegal. The pause is necessary, Office of Management and Budget acting Director Matthew Vaeth said in the memo, to ensure all federal spending and activities are "consistent with the president's policies and requirements." 

Various executive orders President Trump has issued have already frozen spending on foreign aid, Inflation Reduction Act spending and Infrastructure Investment and Jobs Act funding, leading to stop-work orders on contracts and uncertainty inside agencies over how to proceed. 

Legal challenges to Trump’s directive are certain to arrive and Senate Democrats said on Tuesday morning their states’ attorneys general were planning to launch lawsuits. The lawmakers also said they will push their Republican colleagues to hold up a vote on Trump’s pick to lead OMB, Russ Vought, though Taylor Reidy, a spokesperson for Sen. Lindsey Graham, R-S.C., said “the Senate Budget Committee will proceed with Mr. Vought’s nomination as scheduled.” 

Vought has already been advanced by the Senate Homeland Security and Governmental Affairs Committee and will be considered by the budget panel on Thursday. The director-designate drew bipartisan criticism in his confirmation hearing for declining to confirm he would abide by federal statute that requires the executive branch to spend money that Congress appropriates. 

Vaeth noted in his memo the government spent $3 trillion on loans and grants in fiscal 2024, though the directive allows for carve outs and does not include federal assistance provided directly to individuals. 

“Career and political appointees in the executive branch have a duty to align federal spending and action with the will of the American people as expressed through presidential priorities,” Vaeth wrote.

The freeze is not a blanket one across federal spending, White House Press Secretary Karoline Leavitt said on Tuesday. She laid out a few programs that provide direct assistance to individuals that are exempt from the freeze—such as Social Security, Medicare and food assistance—though she repeatedly stated OMB's memo was too new to offer more details. She said she spoke with Vought and he relayed that his office would be open to hearing from agencies wanting to defend programs as necessary and in line with the president's agenda. 

"We think this is a very responsible measure," Leavitt said. "OMB right now is focused on analyzing the federal government's spending, which is exactly what the American people elected President Trump to do." 

All federal assistance spending, he added, should be focused on Trump administration priorities such as making America stronger, reducing the burden of inflation, growing American energy, ending "'wokeness' and the weaponization of government, promoting government efficiency and "making America healthy again." Agencies should not be spending on any programs related to “Marxist equity,” supporting transgender individuals or combatting climate change. 

The pause is therefore necessary, Vaeth said, to ensure federal spending is aligned with Trump's executive orders and other policies. It goes into effect Tuesday at 5 p.m. and does not have a set end date. By Feb. 10, agencies must submit to OMB information on all programs and activities subject to the pause and explain their purpose. Agencies must assign political appointees to oversee each impacted initiative and OMB may grant exceptions to the freeze on a case-by-case basis. 

According to several reports, OMB on Tuesday sent a subsequent directive to agencies asking them to identify for each federal assistance program which political appointee is in charge, when upcoming disbursements and obligations are scheduled and if it deals with issues such as diversity or others covered by Trump executive orders. 

Democratic lawmakers were unequivocal in their denunciation of Trump’s actions. 

“What happened last night is the most direct assault on the authority of Congress, I believe, in the history of the United States,” said Sen. Angus King, I-Maine. “It is blatantly unconstitutional.”

The 1974 Impoundment Control Act prohibits the executive branch from withholding congressionally appropriated funds for policy reasons. It does allow for a narrow set of circumstances when the president can freeze funding, including for unforeseen circumstances, as provided in law or from savings realized by operational efficiencies. In those cases, however, the White House must notify Congress of its deferrals and specify a timeframe for releasing them. It does not appear the Trump administration has made any such formal notice. 

Absent external lawsuits, the impoundment law is enforced by the Government Accountability Office. If GAO uncovers or is made aware of impoundments, it can itself notify Congress of them and sue the executive branch after 25 days. GAO in 2020 found the Trump administration violated the law by withholding aid to Ukraine, an event that led, in part, to Trump’s first impeachment.

In a clarifying document sent to lawmakers, OMB said its freeze did not constitute an impoundment as it was merely a temporary pause that is normal for program implementation. 

Senate Democrats quickly held a press conference on Tuesday and said calls were “flooding in” to their offices from grantees and agency officials panicked about the fallout from the memo. They called the order lawless, unconstitutional and an agent of mass chaos. The lawmakers cited hospitals, cancer research, child care programs, opioid addiction treatment centers, roads, bridges, disaster relief, state agencies, Meals on Wheels and local law enforcement as areas that would be impacted by the freeze. 

“The blast radius of this terrible decision is virtually limitless, and its impact will be felt over and over again,” Senate Minority Leader Chuck Schumer, D-N.Y., said. 

Sen. Patty Murray, D-Wash., who serves as the top Democrat on the Senate Appropriations Committee, said her committee staff was working all night to determine the scope of Trump’s directive.  

Her staff “has been trying to get in touch with the agencies to fully understand the impacts of this, and they're broad and, quite frankly, very poorly written,” Murray said. “The chaos that this is creating is horrendous.”

Sen. Amy Klobuchar, D-Minn., noted the Trump administration has already put employees on administrative leave for perceived interference with its agenda and federal employees are therefore likely to interpret the memo broadly to avoid any retaliation. 

Federal grant recipients on Tuesday were scrambling to determine the impacts of the freeze on their operations. In its guidance to the Hill, OMB said Head Start, small business and farmer aid, rental assistance and other similar programs would not face funding pauses unless they conflict with Trump's executive orders directly. The uncertainty still caused Yasmina Vinci, executive director of the National Head Start Association, to say the federally backed child care centers may not be able to pay hundreds of thousands of staff, contractors and small businesses that support Head Start operations. It could ultimately force families to make difficult child care decisions, she added. 

“The administration’s order, while directed broadly across the federal government, is deeply unsettling and has the potential to severely disrupt the ability for Head Start programs to serve nearly 800,000 children and their families nationwide,” Vinci said. “We call on the administration to urgently reverse course in order to allow Head Start programs to return to doing what they do best—serving our nation’s most at-risk children and their families.”

Rachel Snyderman, a former career OMB official who is now a managing director of economic policy at the Bipartisan Policy Center, noted the impoundment allows for presidents to pause some funding if it provides adequate notice to Congress and complies with certain timeframes. She explained that conversations are now happening behind closed doors between OMB and agencies throughout government as they sort through what is subject to the pause and what is not. OMB is staffed to address agency concerns, she said, but we are seeing some of the confusion "play out in real time." 

"Anytime there is confusion injected into a time of transition," Snyderman said, "there are certainly going to be many agencies looking to OMB looking for additional guidance." 

Sen. Chris Murphy, D-Conn., said the Trump administration was overriding Congress’ power of the purse. 

“What President Trump is doing is seizing control of the federal budget and deciding by himself who gets money and who doesn't,” Murphy said.

Leavitt, in part by citing the OMB memo itself, said on Tuesday the president was acting within the confines of the law. 

"The White House Counsel's Office believes that this is within the president's power to do it, and therefore he's doing it," Leavitt said.