Trump's funding freeze creates widespread confusion

 

WASHINGTON — An abrupt halt on federal grants and loans announced Monday night by the Trump administration has created widespread confusion across the government, Congress, state programs and nonprofit organizations that rely on that funding.

The Office of Management and Budget sent a vaguely worded two-page memo to all federal agencies Monday night directing them to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance" that could conflict with President Donald Trump's agenda.

The following morning, nonprofit organizations said they were unable to get into a system used to access federal funds to pay for expenses, like salaries and rent.

White House attempts to clarify affected programs

It’s not clear exactly which programs will be halted, but OMB also sent a document to agencies asking for details on more than 2,600 programs, including school meals for low-income students, USAID foreign assistance, mine inspections, the WIC nutrition program for pregnant women and infants, and a reintegration program for homeless veterans.

In addition to information about the disbursement of funds, the OMB spreadsheet had questions more specific to the Trump agenda, including:

• Does this program provide funding that is implicated by the directive to end discriminatory programs, including illegal DEI and “diversity, equity, inclusion, and accessibility” (DEIA) mandates, policies, programs, preferences, and activities, under whatever name they appear, or other directives in the same EO, including those related to “environmental justice” programs or “equity-related” grants?
• Does this program promote gender ideology?
• Does this program promote or support in any way abortion or other related activities identified in the Hyde Amendment?

OMB asked for the information to be submitted by Feb. 7.

A senior administration official said the action is not a freeze on funding but a pause to give agencies time to review whether federal grants and loans are in compliance with recent executive actions taken by Trump. The official said OMB has already been working with agencies to exempt certain programs and that pause would take effect Tuesday at 5 p.m.

“It means no more funding for the green new scam that has cost American taxpayers tens of billions of dollars," White House press secretary Karoline Leavitt said Tuesday at her first news briefing. "It means no more funding for transgenderism and wokeness across our federal bureaucracy and agencies."

Funding for programs that provide direct assistance to Americans would be excluded from the pause and exempt from the review process, the senior administration official said. Those programs include Medicaid, food stamps, small business assistance, Head Start, rental assistance and federal Pell Grants for college students, according to a memo sent out Tuesday afternoon by OMB.

"If you are receiving individual assistance from the federal government, you will still continue to receive that," said Leavitt. "However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars."

When asked specifically about Medicaid, which provides health insurance to more than 70 million low-income and disabled Americans, Leavitt said she would get reporters a full list from OMB.

The OMB memo sent out Monday evening said the funding review would be related to “activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

Nonprofits unable to access funds

The memo set off a flurry of confusion and panic Tuesday among nonprofit organizations, which said they were unable to access federal government systems used to withdraw previously awarded federal funds.

“While we understand that this is an evolving story, this disruption, at best, will slow down Head Start agencies’ ability to pay hundreds of thousands of staff, contractors, and small businesses who support Head Start operations in every corner of the country,” Yasmina Vinci, executive director of the National Head Start Association, said. “At worst, this means that hundreds of thousands of families will not be able to depend on the critical services and likely will not be able to work."

A message at the top of one website used by health care and early childhood education providers to access their federal funds warned of possible payment delays.

“Due to Executive Orders regarding potentially unallowable grant payments, PMS is taking additional measures to process payments. Reviews of applicable programs and payments will result in delays and/or rejections of payments,” the message said.

Local housing organizations were also unsure if they would have the funding available to help pay rents due Feb. 1 for thousands of low-income households in subsidized housing across the country, said Ann Oliva, CEO of the National Alliance to End Homelessness. She said her organization has heard from several members that the system used to draw down funds to reimburse their housing expenses was unavailable on Tuesday.

“What we are hearing this morning is, honestly, a pretty good amount of panic by grantees,” Oliva said. “These programs exist in red states and blue states alike, and there are vulnerable people that are going to be impacted in many, many communities and in every state across the country.”

If those funds aren’t made available in the next several days, organizations will be unable to pay rents to landlords and some tenants could face eviction.

The fallout could also affect health programs, said Dr. Erin Sorrell, a senior scholar at the Johns Hopkins Center for Health Security. She said a halt in funding to the National Institutes of Health could impact ongoing clinical trials for critical infectious and chronic diseases.

"People travel across the country to participate in these trials, some life-saving trials," Sorrell said. "The pause doesn’t just impact the researcher, their work, their livelihoods, it impacts the patients themselves, potentially life-threatening impacts."

Medicaid confusion

Medicaid payments appeared frozen Tuesday as access to online portals was blocked across the country.

The Medicaid websites manage the federal health funds used to help provide coverage to nearly 80 million people in the U.S.