Trump Administration Withdraws Federal Aid Freeze Amid Backlash
Donald Trump 45th and 47th U.S. President
WASHINGTON — The Trump administration has rescinded its directive to freeze most federal grants and loans following widespread criticism and legal challenges, according to a new White House memo.
The decision, confirmed by a senior administration official on Wednesday, came after a federal judge temporarily blocked the original order. The Office of Management and Budget (OMB) had initially issued the directive, prompting confusion and push back across Washington.
Democrats, who had fiercely opposed the freeze, welcomed the reversal. Senate Minority Leader Chuck Schumer, D-N.Y., credited public pressure for forcing the administration’s retreat.
"Americans fought back and Donald Trump backed off," Schumer said in a statement. "Though this tactic failed, we know the administration will attempt others, and Senate Democrats will be ready to push back and defend American families."
Initial Order Created Uncertainty
The now-withdrawn memo, issued Monday night, instructed federal agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance." It cited the need to review funding for programs including foreign aid, nongovernmental organizations, diversity, equity, and inclusion (DEI) initiatives, and environmental policies associated with the Green New Deal.
While the directive stated that Social Security, Medicare, and direct payments to individuals would remain unaffected, its vague wording led to uncertainty about which aid programs were included in the freeze.
On Wednesday, White House press secretary Karoline Leavitt clarified that the withdrawal of the OMB memo did not mean an end to the administration’s broader efforts to restrict federal spending.
"This is NOT a rescission of the federal funding freeze," Leavitt wrote on X. "It is simply a rescission of the OMB memo. The President's executive orders on federal funding remain in full force and effect and will be rigorously implemented."
Federal Funding Restrictions Still in Place
Despite the rollback of the blanket freeze, several of Trump’s recent executive orders continue to restrict federal spending. These include measures halting foreign aid, cutting funds for DEI-related initiatives, and pausing funding from the Inflation Reduction Act.
Schumer urged the administration to lift these restrictions as well.
The original freeze had already disrupted funding access for various organizations. Nonprofits working in health care and homelessness reported difficulties accessing online portals for Medicaid payments and grant withdrawals. The resulting confusion led to a lawsuit from Democracy Forward, a progressive advocacy group, which successfully challenged the order in court.
Skye Perryman, the organization’s CEO, condemned the administration’s approach.
"While we hope this reversal will bring relief to millions, the Trump-Vance administration’s reckless actions have already caused harm," Perryman said. "We will continue to take swift legal action to ensure federal funding is restored."
Mixed Reactions from Lawmakers
Some Republican senators also welcomed the decision to withdraw the OMB memo.
Sen. Dave McCormick of Pennsylvania credited constituent feedback for influencing the reversal, while Sen. Susan Collins of Maine criticized the original directive as "overreaching and unnecessarily confusing."
Despite the withdrawal, the administration’s targeted funding cuts remain a point of contention, and legal and political battles over federal spending are expected to continue.
