In a move reversing an earlier directive, President Trump rescinded a planned freeze on most federal grants and loans on Wednesday. The reversal came just one day after U.S. District Judge Loren L. AliKhan issued an administrative stay halting the freeze, which had been set to go into effect on Tuesday.
Judge AliKhan's ruling blocked the freeze from taking place until at least Monday, following a legal challenge from a coalition of nonprofit groups. The plaintiffs argued that the freeze would severely impact various federal assistance programs, prompting the court to intervene.
The freeze had been announced by Matthew Vaeth, the director of the Office of Management and Budget (OMB), on Monday evening. The OMB memo ordered federal agencies to temporarily suspend activities related to the obligation or disbursement of federal financial assistance, and to review all assistance programs in light of the President’s policy priorities.
White House Press Secretary Karoline Leavitt defended the freeze as a necessary step for ensuring responsible use of taxpayer dollars. “This is a very reasonable measure,” Leavitt stated on Tuesday, explaining that the freeze was intended to address Trump’s concerns over federal spending on diversity, equity, and inclusion (DEI) programs, which the administration opposes. According to Leavitt, initiatives directly benefiting individuals, such as the Supplemental Nutrition Assistance Program (SNAP), Medicare, and Social Security, would remain unaffected by the freeze.
“The pause is not a blanket freeze on federal assistance,” Leavitt clarified. “It’s about ending funding for illegal DEI programs, stopping taxpayer dollars from supporting what we see as the Green New Scam, and cutting funding for transgenderism and wokeness in government agencies.”
Despite these assurances, the freeze caused confusion, particularly among Democratic lawmakers, some of whom reported technical difficulties with Medicaid portals in their states following the issuance of the OMB memo. Leavitt addressed these concerns, asserting that the Medicaid portal issue was unrelated to the freeze and that payments were still being processed as normal.
On Wednesday, a Trump administration official confirmed the memo’s reversal, sending a notice stating that the freeze was no longer in effect. The memo, titled "OMB Memorandum M-25-13," was officially rescinded, and agencies were advised to reach out to their General Counsels for further guidance.
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