Trump's temporary freeze on all federal grants blocked by judge

The Office of Management and Budget has rescinded its call for a pause on federal assistance, according to the agency's memo shared by Democracy Forward, which led a legal challenge over the effort. But the White House said that only the original memo calling for the freeze had been rescinded.

The new memo says the heads of executive departments and agencies should contact their general counsels "if you have questions about implementing the President's Executive Orders."

"Facing legal pressure from our clients and in the wake of a federal judge ruling in our case last evening, the Trump-Vance administration has abandoned OMB's ordered federal funding freeze," Democracy Forward said in a statement. "We are proud of our courageous clients -- who represent communities across the nation -- for going to court to stop the administration's unlawful actions."

But Karoline Leavitt, the White House spokeswoman, told reporters that the move simply meant a recession of the memo.

She said efforts to "end the egregious waste of federal funding" will continue. She said the OMB memo has been rescinded "to end any confusion on federal policy created by the court ruling and the dishonest media coverage." The administration expects that rescinding the memo will end the court case against it.

After widespread confusion from the initially very broad memo calling for a halt in federal assistance, pending review, the White House tried Tuesday to further clarify which programs would not be affected, later specifying that it would not impact Medicaid and SNAP programs, for example.

This latest statement from the White House is likely to add to the confusion rather than clarify it.

Wednesday's developments follow a federal judge's order Tuesday that temporarily blocked the effort to pause federal payments for grants and other programs.

Howard Fischer/Capitol Media Services

Arizona Attorney General Kris Mayes has joined 22 other Democratic state AGs to block a pause in federal aid put in place by the Trump administration.

“We are still evaluating the full impacts of this reckless action, but one thing is clear: this is creating chaos for Veterans, law enforcement, domestic violence shelters and the children of working families,” Democratic Gov. Katie Hobbs wrote on social media.

A Trump administration order pausing all federal grants and loans to states caused widespread confusion Tuesday, including concerns about the order's impact on Medicaid.

Not long after the order, many states, including Arizona, reported the portal used to get Medicaid payments was down. Officials with the White House later said payments were not impacted, and the portal was back online later Tuesday afternoon.

A federal judge later blocked Trump’s funding freeze.

A federal judge has temporarily blocked a Trump administration freeze on federal grants and loans that could total trillions of dollars.

U.S. District Judge Loren L. AliKhan blocked the action Tuesday afternoon, minutes before it was set to go into effect. The administrative stay pauses the freeze until Monday.

The White House had planned to start the pause as they begin an across-the-board ideological review of federal spending.

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The White House is pausing federal grants and loans starting Tuesday afternoon, causing confusion and panic among organizations, including in Arizona.

The temporary pause is supposed to ensure that funding complies with Trump's executive orders, which aim to undo things like transgender rights and DEI efforts.

Jessyca Leach is the CEO of Prisma Community Health, which provides HIV and STI testing and HIV prevention.

"As far as I can tell this isn’t legal, so that feels really strange to say out loud. And two, we were not planning on being a target for a couple of months. We knew it was going to come, but we didn't know it was going to come Week 2."

Another concern is her organization’s ability to access money from some sites.

"So, we have portals that we log into to draw down our CDC and SAMHSA funding. And the portals are down, we're getting a proxy server error. So it looks like, and this is a very simplistic way of putting it, somebody reached over and unplugged the server." 

The freeze does not affect Social Security, Medicare, food stamps or student loans.

AHCCCS, Arizona's version of Medicaid issued the following statement:

On Monday January 27, 2025, the federal Office of Management and Budget (OMB) released a memo pausing all disbursement of federal assistance and grants. AHCCCS is in contact with our federal partners and will provide further information as it becomes available.

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Phoenix Mayor Kate Gallego says a directive issued by the Trump administration ordering a temporary freeze on all federal grants and financial assistance. is “reckless” and "unconstitutional."

Phoenix has secured more than $3 billion in federal grants and programs approved by Congress. About half has not yet been paid to the city.

Gallego released a statement saying the freeze would make it harder, if not impossible for local governments to serve their constituents.

She said the city’s police and fire departments could collectively lose more than $35 million. Sky Harbor International Airport is counting on more than $130 million in federal funds for infrastructure projects, including a new taxiway.

“Chaos and confusion when running a government has real consequences, and I strongly urge the President to reverse course and reinstate the flow of federal funding,” Gallego said.

A senior Trump administration official told NPR the directive should not be interpreted as a full funding freeze and agencies are supposed to review their grants and programs to ensure they align with the new administration’s priorities.

Critics call the demand for a funding freeze unlawful because Congress has already approved the money to be spent, but the administration is arguing that this action is not full impoundment – and instead a temporary review.