White House orders pause on federal grants and loans: What you need to know

According to an internal memorandum dated Monday, the White House budget office has put a pause on all federal grants and loans, possibly affecting billions of dollars in government expenditure and disrupting public programs that benefit millions of Americans.

President Donald Trump.

Getty Images/Jim Lo Scalzo/EPA/Bloomberg

Federal agencies "must temporarily pause all activities related to the obligation or disbursement of all Federal financial assistance," White House Office of Management and Budget acting director Matthew Vaeth said in the memorandum. The memorandum also prevents the issuing of new grants.

The memo specifies that the pause would not impact Social Security or Medicare benefits, nor will it impact "assistance provided directly to individuals."

The government assistance freeze is scheduled to go into force at 5 p.m. on Tuesday. It is the latest step by the Trump administration to gain control over government funds, even that previously approved by Congress.

"This temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President's priorities," according to Vaeth.

The memo suggests that the pause is consistent with President Donald Trump's executive directives from last week.

The pause is also valid for "other relevant agency 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," according to the letter.

"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," according to Vaeth.

The memo states that the budget office "may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis."

It further notes that "to the extent required by law," agencies may take "certain administrative actions" such as cutting out funding.

The memo requests that agencies provide OMB with "detailed information on any programs, projects, or activities subject to this pause" by February 10.

The directive was announced Monday evening without any explanation from the Trump administration, prompting nonprofits that accept government grants and loans to worry whether groups may be affected.

"This order is a potential 5-alarm fire for nonprofits and the people and communities they serve," said Diane Yentel, president and CEO of the National Council on organizations, in a statement released on Monday.

"From pausing research on cures for childhood cancer to closing homeless shelters, halting food assistance, reducing safety from domestic violence, and shutting down suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives," according to Yentel.

The Association of American Universities, which represents America's 71 premier research universities, including Notre Dame and Georgia Tech, said Tuesday it is "still working to assess" the impact of the pause.

Membership-based institutions "earn the majority of competitively awarded federal funding for research that improves public health, seeks to address national challenges, and contributes significantly to our economic strength, while educating and training tomorrow's visionary leaders and innovators," said the association.

Sen. Patty Murray of Washington and Rep. Rosa DeLauro of Connecticut, the senior Democratic appropriators in Congress, issued a letter to the White House on Monday night, explaining their "extreme alarm" at the action.

"The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country," the congressmen said in an email. "We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law."

Senate Minority Leader Chuck Schumer was also quick to condemn the pause.

"Congress approved these investments, and they are not optional; they are the law," the New York Democrat said in a statement late Monday. "These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities."

Schumer also said that the measure threatens "billions upon billions of community grants and financial support that help millions of people across the country."

"It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities," he said.