School meals for low-income students. Cancer treatment trials. Housing assistance for veterans.
These are among the federal programmes that might – or might not – be on the chopping block after the White House issued a sweeping, but vague, January 27 late-night memo that ordered a temporary pause on all grants, loans and financial assistance.
The abrupt freeze prompted widespread confusion among United States government officials, members of Congress, state agencies and nonprofit organisations that rely on federal funding to maintain operations.
“We’re getting panicked calls,” Senate Minority Leader Chuck Schumer said during a January 28 news conference. “Virtually any organisation, school, state, police, office, county, town or community depends on federal grant money to run its day-to-day operations, and they’re all now in danger.”
Legal observers saw the funding pause as the opening volley in a legal battle that centres on a concept called “impoundment,” a power President Donald Trump believes he can exert but which critics argue is not lawful. At its root, an impoundment is an executive refusal to spend funds Congress appropriated.
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“This is an attempt by Donald Trump to seize power,” said Democratic Senator for Connecticut Chris Murphy, who joined Schumer at the news conference. He called it an “illegal and unconstitutional decision to put the president of the United States and no one else in charge of who gets federal money and who doesn’t”.
Moments before the pause was scheduled to go into effect at 5pm on January 28, US District Judge Loren L AliKhan temporarily blocked the action, pausing it until February 3. But AliKhan’s ruling did not address the memo’s legality and it remained unclear what types of programmes would be halted once the deadline passed.
In her first-ever daily briefing, White House Press Secretary Karoline Leavitt characterised the freeze as “not a blanket pause” and said that assistance that goes directly to people, such as Social Security, Medicare, food stamps and welfare benefits, will not be affected.
However, Leavitt did not answer questions about whether Americans could count on receiving federal funds that pass through an intermediary, such as a nonprofit group or a state or city.
Here is what we know so far about the funding freeze and its legality.
What the memo says
The January 27 memo directs federal agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance” until officials ensure that the programmes are consistent with Trump’s policies.
The memo singles out programmes related to foreign aid, diversity, equity and inclusion, “woke” gender ideology and funding related to the “Green New Deal” pending a review. (The “Green New Deal” was a policy blueprint focusing on the environment that was backed by some Democrats in 2019 but was never enacted. Trump has used the term in the past as a catchall for green energy initiatives.)
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The memo says the pause will give the Trump administration time to review the programmes and “determine the best uses” of the funding. It gives agencies until February 10 to submit detailed information on any programmes, projects or activities subject to the pause.
What is impoundment?
Impoundment is a legal term that refers to a president’s attempt to withhold or delay spending money that has been appropriated by Congress.
Legal observers say Trump is pushing the envelope on how much authority he has to act unilaterally against laws that have been passed by Congress and signed into law.
As a 2024 presidential candidate, Trump said, “I will use the president’s long-recognised impoundment power to squeeze the bloated federal bureaucracy for massive savings.” This is included in the list of 75 second-term Trump promises we’re tracking in our MAGA meter.
Russell Vought, the Trump nominee awaiting confirmation as head of the Office of Management and Budget, repeated an expansive view of presidential impoundment powers at his January 15 Senate confirmation hearing.
Impoundment authority has a long history, going back at least to President Thomas Jefferson. Later presidents who claimed independent power to impound funds include Harry Truman, John F Kennedy and Richard Nixon.
Some legal experts suggest that these presidents’ arguments were shut down by the Impoundment Control Act (ICA) of 1974, which Congress passed “after President Nixon abused it,” wrote Zachary Price, a professor at the University of California College of the Law. The law set up a detailed process for what a president could and could not do when there was a disagreement over whether to spend money that had been signed into law.
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If the executive branch wants to cancel spending altogether, the 1974 law says, it must propose a “rescission,” or a cut. Lawmakers may consider those proposed cuts under an expedited process, but the spending cannot be paused for more than 45 days while this process plays out.
Programmes that could be affected
It remains unclear which federal programmes definitely will be affected.
A Department of Education spokesperson clarified in a January 28 statement that the pause would not affect direct student loans and Pell Grants.
Meanwhile, some nonprofits said some of their funding has already been cut off.
Tommy Sheridan, deputy director of the National Head Start Association, told NBC News that some of its early childhood education programmes were unable to access previously awarded funds because the system appeared to be offline.
There were reports that the online portal for Medicaid, the low-income health insurance plan funded by both the federal government and states, was offline on January 28; Leavitt called it an outage and said in an X post that the portal would be “back up shortly”.
Amid the uncertainty about which programmes could be blocked from their funding because of the pause, the Office of Management and Budget sent out a separate, 51-page document on January 28 asking agencies for details on more than 2,500 programmes spanning dozens of agencies and organisations.
The document contains 14 questions seeking information about a programme’s funds disbursement. It also includes questions specific to Trump’s agenda, including whether programmes promote gender ideology, provide diversity, equity and inclusion funding, or promote or support abortion.
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Is the funding pause legal?
Trump’s memo fails to adhere to the process laid out in the 1974 law, said Steven Smith, an Arizona State University political scientist.
The act “makes no provision for a blanket deferral of the kind provided in the OMB memo,” Smith said. It “provides for deferral for a ‘specific purpose or project,’ not a government-wide suspension of budget authority. There is no precedent for the OMB memo’s breadth or stated rationale. Period.”
Keith E Whittington, a Yale Law School professor, agreed. “Regardless of whether the administration is willing to claim that this pause can be justified by some broader presidential impoundment power, it would seem to run afoul of the statutory framework that Congress put in place to manage any spending delays,” he said.
Adhering to the law “requires a case-by-case assessment, and the administration cannot simply refuse to spend funds on the assumption that it eventually might be able to come up with such a statutory authorisation,” Whittington said.
Whatever the memo’s full scope for federal programmes ends up being, it’s clear that the Trump administration wants it to bring a legal case on the full measure of presidential authority over spending.
“The current action would clearly seem to start the clock ticking on such a broader fight,” Whittington said.
What’s next?
Lawsuits were already filed before the pause had officially begun.
The National Council of Nonprofits and the American Public Health Association filed the first lawsuit on January 28, seeking a temporary restraining order against the Office of Management and Budget to “maintain the status quo until the court has an opportunity to more fully consider the illegality of OMB’s actions”.
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Separately, a collection of attorneys general from Democratic-led states including New York, California, Illinois, New Jersey, Rhode Island and Massachusetts said they were preparing to sue the administration to block the memo’s directive and keep funds flowing. Schumer announced the move on January 28.
Legal experts say there is an important precedent against Trump’s position on impoundment, in cases such as Kendall v United States ex Rel Stokes from 1838 and Train v City of New York from 1975. But Trump allies counter that the precedents are not binding for this dispute. The US Supreme Court has also been willing to upend precedent in ways favourable to Trump’s position, as when it overturned the abortion decision Roe v Wade.
PolitiFact Copy Chief Matthew Crowley contributed to this report.
