Politics

Trump Backtracks on Federal Spending Freeze Order After Day of Chaos

THAWED OUT

The move came after the Trump administration spent a day defending the executive order.

Donald Trump speaks at a Hurricane Helene recovery briefing in a hangar at the Asheville Regional Airport in Fletcher, North Carolina, on January 24, 2025.
Mandel Ngan/AFP via Getty Images

The White House on Wednesday rescinded its order to freeze federal grants and loans on after the directive sparked administrative chaos across government agencies.

The order was temporarily halted by a federal district Judge Loren AliKhan on Tuesday night with an “administrative stay.”

White House press secretary Karoline Leavitt, who spent the better part of Tuesday defending the order’s implications, clarified the administration’s walk back on Wednesday.

”In light of the injunction, [Office of Management and Budget] has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage," Leavitt said in a statement.

However, she said, the president’s executive orders on funding reviews will “remain in full force and effect and will be rigorously implemented by all agencies and departments.”

On Tuesday she told reporters in the White House briefing room that the order was necessary to ensure “every penny that is going out the door is not conflicting with the executive orders and actions that this president has taken.”

Senate Minority Leader Chuck Schumer on Wednesday afternoon slammed OMB Director Russell Vought, the architect of Project 2025.

“He should now rescind Russell Vought’s nomination for OMB,” the New York Democrat said. “Russell Vought is the chief cook and bottle washer. We believe they’ll come back and try to do this in other ways.”

Tuesday’s action sparked panic and confusion over which government programs were being suspended. For a time, the Medicaid portal through which federal money flows to states went offline.

The White House budget office ordered the freeze on federal grant and loan programs on Monday, citing an effort to give the administration time to review programs and cut unnecessary spending. But the pause sparked pushback from Democrats and some moderate Republicans who feared it could impact programs for seniors and school programs.

Trump’s congressional allies also weighed in.

Leavitt said suspending the spending freeze “should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending.”

She added, “In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding.”

The Trump administration’s freeze came with an announcement that the Office of Management and Budget would be reviewing all grants, loans and other assistance programs to ensure they comply with the administrations priorities.

Democrats and legal experts slammed the directive as unconstitutional, violating the First Amendment and the Administrative Procedure Act.

The directive caused immediate disruptions to programs that fund schools, provide housing and torpedoed the Medicaid website.

Speaker Mike Johnson applauded the pause in funding on Tuesday, calling it an “application of common sense.”