Trump Rescinds Spending Freeze On Federal Assistance

The Trump administration on Wednesday rescinded its sweeping freeze of federal assistance, which roiled Washington and caused widespread confusion about which programs were affected by the move, according to a copy of the memo obtained by POLITICO.

A federal judge had already put a temporary block on the Trump administration’s actions Tuesday afternoon amid the turbulence. The funding freeze sparked chaos across the country Monday as states, agencies and organizations that depend on federal money scrambled to understand the impact to billions in federal assistance to a suite of programs, including those that provide school meals and support homeless veterans.

The memo’s rescission does not rule out a new memo from the White House budget office on another spending freeze, with administration officials arguing that such an action falls within the power of the executive branch.

The Wednesday memo, which was only two sentences, offered no specifics about why the Office of Management and Budget so quickly decided to rescind its original directive, saying only that any questions about implementing the president’s executive orders should be directed to each agency’s general counsel.

White House Press Secretary Karoline Leavitt said in a statement that the budget office pulled the memo “to end any confusion on federal policy created by the court ruling and the dishonest media coverage.” But she said that the president’s more narrowly tailored executive orders “remain in full force and effect and effect and will be rigorously implemented by all agencies and departments.”

“This action should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending. In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding,” Leavitt said.

Senate Appropriations Chair Susan Collins (R-Maine) lauded the move.

“While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” Collins said in a statement.

Democrats, some of whom suggested Trump's move had triggered a “constitutional crisis” earlier in the week, were less conciliatory.

“Despite all the rhetoric about how this time was gonna be smoother and people were going to know what they’re doing, when you have Donald Trump and Stephen Miller in the White House, chaos is gonna happen,” said Sen. Martin Heinrich (D-N.M.).

Sen. John Hickenlooper (D-Colo.) said the funding freeze had caused “serious” confusion.

“When you create awe you often create confusion. People are stunned by how fast things are happening and the magnitude of change,” he said. “For people living closer to the edge having a hard time making their rent, confusion is not their friend. Who knows what he’ll try next.”

In an attempt to diffuse some of the confusion and political backlash that followed the initial memo’s release, the White House’s budget office released a follow-up memo on Tuesday clarifying that benefits to individuals, including the Supplemental Nutrition Assistance Program, formerly known as food stamps, and student loans, would not be affected by the freeze. It also underscored that agencies were only required to pause funding for activities that violate one of several of the president’s new executive orders, including those relating to curtailing foreign aid, ending diversity, equity and inclusion efforts and halting environmental spending approved by Congress during the Biden administration.

And while the second memo said that Medicare, Medicaid and Social Security payments would be unaffected, Medicaid systems on Tuesday experienced a payment outage that contributed to the confusion.

White House officials did not clarify what would happen to social safety net programs that indirectly benefit people or are paid through the states — including many that provide housing assistance and drug treatment.

Trump’s nominee for OMB director, Russell Vought, who has not yet been confirmed by the Senate, has long argued that the executive branch has the authority to ensure that spending aligns with the president’s priorities, regardless of any decisions made by Congress. The funding freeze appeared geared toward teeing up a legal fight over separation of powers and Vought’s argument that a federal law prohibiting the executive branch from withholding funds appropriated by Congress is unconstitutional.

Leavitt, during her first press briefing on Tuesday, defended the sweeping funding freeze, and the budget office’s Tuesday follow-up memo similarly defended the move against accusations that they violate federal law.

“The reason for this is to ensure that every penny going out the door is not conflicting with the executive orders and action that this president has taken,” Leavitt said. “This is a very responsible measure.”

The White House itself seemed to be caught off guard by the Monday memo and did not immediately have answers early in the day on Tuesday about which programs would be affected.

The budget office early Tuesday circulated a 52-page document listing thousands of programs potentially impacted by the freeze, with instructions to agencies to answer more than a dozen questions by the end of next week.

Josh Siegel and Katherine Tully-McManus contributed to this report.