US federal agencies are preparing to halt the disbursement of hundreds of billions of dollars in domestic grants and loans starting Tuesday, as part of President Donald Trump’s strategy to reduce government spending. This suspension in federal financial assistance, effective at 5pm local time in Washington, poses risks to funding across various sectors including scientific research, small business loans, food assistance, and early childhood education.
The directive from the White House is expected to have significant impacts on communities that rely on federal support, provoking criticism from Democratic lawmakers. They have denounced it as an overreach of executive power that undermines Congress’s constitutional role in budget approval and may adversely affect the US economy.
Senator Dick Durbin of Illinois expressed strong opposition, stating, “Freezing federal funding that has already been allocated by Congress is unconstitutional; above all else, it’s inhumane.” Senior Democrats Patty Murray and Rosa DeLauro also voiced their concerns in a letter to Matthew Vaeth, the acting director of the Office of Management and Budget, asserting that the breadth of the directive is both unprecedented and could have catastrophic repercussions nationwide.
This initiative was outlined in a memo from Vaeth, indicating a continuation of Trump’s executive orders aimed at reshaping civil service and agency policies to align with his administration’s objectives. This follows a prior order halting new funding for clean energy projects and a temporary suspension of almost all foreign aid by the State Department for review against the administration’s criteria.
Vaeth’s memo highlighted contentious issues for conservative circles, framing the use of federal resources to support policies related to equity, transgender rights, and green initiatives as wasteful expenditures that do not enhance the everyday lives of citizens.
Agencies have been instructed to submit details about their grants and loans to the White House by February 10, leaving many programs in uncertainty until then. The White House estimated that the US allocated $3 trillion for federal financial assistance in the 2024 fiscal year, though it remains unclear how much funding will ultimately be affected.
While the order excludes government pensions and senior healthcare programs, it marks a significant effort by Trump to diminish domestic federal spending, focusing solely on priorities endorsed by conservative ideologies.
On Tuesday, White House press secretary Karoline Leavitt reassured the public that the order did not constitute a “blanket pause” and affirmed that it would not impact individual assistance, including welfare benefits.
Russell Vought, Trump’s appointee for White House budget director, has long advocated for a comprehensive reform of the federal government, an idea supported by the Heritage Foundation’s Project 2025, which outlines strategies for a future Republican administration. Although Trump distanced himself from some of Project 2025’s more contentious proposals during the election campaign, elements of its agenda are becoming evident in his recent executive actions.
Additionally, Trump has assigned Elon Musk the task of reducing government expenditures within the newly established “Department of Government Efficiency,” aimed at eliminating waste, fraud, and abuse in federal operations. However, this latest initiative expands beyond that scope.
Democratic strategist Sawyer Hackett remarked that the party must respond decisively to the series of executive actions taken by the Trump administration, particularly in relation to the funding freeze. He urged Senate Democrats to leverage their position by withholding support for any Trump nominees until the funding freeze is overturned.
Senator Jeff Merkley, a prominent Democrat on the Senate Budget Committee, committed to delaying a confirmation hearing for Vought until these issues are addressed, signaling an ongoing dispute regarding the executive directive’s constitutional implications.
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