The White House is pausing federal grants and loans starting Tuesday as President Donald Trump’s administration begins an across-the-board ideological review of its spending, causing confusion and panic among organizations that rely on Washington for their financial lifeline.
Democrats are widely criticizing the surprise order to freeze the funding. Among them is Minnesota Senator Amy Klobuchar (D) who says the freeze is likely to have an impact on everything from small businesses, to local law enforcement and child care.
"People should think about the mom who doesn't know if she can get her kid to child care today," says Klobuchar. "Or they should think about the teenager in a cancer study hoping beyond hope that that's gonna save his life. Or they should think about the people from Minnesota when last week on the day of that inauguration it was minus six degrees who depend on heating assistance."
As an example, according to the Minnesota Department of Management and Budget, the state receives about $39 billion in federal grants in 2024-25.
Administration officials said the decision was necessary to ensure that all funding complies with Trump’s executive orders, which are intended to undo progressive steps on transgender rights, environmental justice and diversity, equity and inclusion, or DEI, efforts.
They also said that federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, student loans and scholarships.
"I think this is a very responsible measure," White House Press Secretary Karoline Leavitt said, defending the order on Tuesday. "This is not a blanket pause on federal assistance and grant programs from the Trump administration. Individual assistance, that includes Social Security benefits, Medicare benefits, food stamps, welfare benefits, assistance that is going directly to individuals will not be impacted by this pause,"
However, the funding freeze could affect trillions of dollars, at least temporarily, and cause widespread disruption in health care research, education programs and other initiatives. Even grants that have been awarded but not spent are supposed to be halted. State agencies and early education centers appeared to be struggling to access money from Medicaid and Head Start, stirring anxiety with answers hard to come by in Washington.
"I hope that our Republican colleagues will join us in taking this on," Klobuchar told WCCO Radio Tuesday. "They have the majority in the Senate. They know what the Constitution says and to add to that, they joined us in voting for this funding and to help with these very important causes. They must join us in stopping this unconstitutional power grab by the Trump administration."
Court battles are imminent, and Democratic New York Attorney General Letitia James plans to ask a Manhattan federal court to block the Republican president’s moves.
“My office will be taking imminent legal action against this administration’s unconstitutional pause on federal funding,” she said on social media.
The issue dominated the first briefing held by White House press secretary Karoline Leavitt. She said the administration was trying to be “good stewards” of public money by making sure that there was “no more funding for transgenderism and wokeness.”
The pause on grants and loans was scheduled to take effect at 5 p.m. ET, just one day after agencies were informed of the decision.
“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” wrote Matthew Vaeth, the acting director of the Office of Management and Budget.
Democrats and independent organizations described the pause as capricious and illegal because Congress had already authorized the money.
“The scope of this illegal action is unprecedented and could have devastating consequences across the country,” said Sen. Patty Murray of Washington, the top Democrat on the Senate Appropriations Committee. “For real people, we could see a screeching halt to resources for child care, cancer research, housing, police officers, opioid addiction treatment, rebuilding roads and bridges, and even disaster relief efforts.”
Senate Minority Leader Chuck Schumer, a Democrat from New York, called it “more lawlessness and chaos in America.”
It’s unclear from the White house memo how sweeping the pause will be. Vaeth said all spending must comply with Trump’s executive orders,
Vaeth wrote that “each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders.” He also wrote that the pause should be implemented “to the extent permissible under applicable law.”
The Environmental Protection Agency, which distributes billions of dollars, confirmed that it would implement the pause to “align federal spending and action with the will of the American people as expressed through President Trump’s priorities.”
Washington is a hub of spending that flows to various departments, local governments, nonprofits and contractors, and the memo has left countless people who are dependent on that money wondering how they will be affected.
The pause is the latest example of how Trump is harnessing his power over the federal system to advance his conservative goals. Unlike during his first term, when Trump and many members of his inner circle were unfamiliar with Washington, this time he’s reaching deep into the bureaucracy.
“They are pushing the president’s agenda from the bottom up,” said Paul Light, an expert on the federal government and professor emeritus of public service at New York University.
He also said there are risks in Trump’s approach, especially with so many voters reliant on Washington.
“You can’t just hassle, hassle, hassle,” Light said. “You’ve got to deliver."
The Associated Press contributed to this story.