White House Rescinds Federal Funding Memo, Yet Says It’s Still Pursuing Freeze

Donald Trump. Photo from the White House.

UPDATE: This article was substantially updated with new information that became available while it was initially being published.

President Donald Trump‘s administration today rescinded a memo that froze all federal aid payments. But White House Press Secretary Karoline Leavitt now says the administration is still pursuing a federal funding freeze. The administration hopes that rescinding the memo will avoid a legal fight it already lost in the first round before a judge.

The memo, which could have held up trillions of dollars in funding and caused closures or service cuts at schools, nonprofits and many and various levels of government, was already temporarily held up by a federal judge. Now it’s no more.

“OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel,” says the two-line memo by Matthew Vaeth, acting director of the Office of Management and Budget.

Vaeth was a bit more loquacious when sending out the initial order.

“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 Vaeth in Monday’s memo.

Leavitt now says the goal remains the same, just without a memo.

“This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction. The President’s [executive orders]’s on federal funding remain in full force and effect, and will be rigorously implemented,” said Leavitt in an X post.

The freeze in funding, according to the initial memo on Monday, was only to apply to “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” But it caused panic across the country as officials scrambled to understand the impact. An online portal for Medicaid recipients went offline for several hours, even though Trump officials said the healthcare service wasn’t impacted.

“There are so many questions we don’t have answers to,” said Mayor Cavalier Johnson at a press briefing Tuesday afternoon. “We going to find ourselves in a difficult position if we’re not able to pull these federal resources down.” He estimated the city’s annual federal aid totals “tens of millions of dollars.”

“This is very draconian,” said Congresswoman Gwen Moore (D-Milwaukee). “We can’t pretend that this just has an impact on Democratic cities; this is going to have an impact on farmers, on rural areas and rural hospitals, red, blue or purple, whoever you are, you’re on notice now that the chaos and the suffering across demographics is going to come with this.”

But shortly after the press conference, U.S. District Judge Loren AliKhan froze much of the order. “I think there is the specter of irreparable harm,” she said. She forbid OMB from blocking funding for “open awards,” where a funding commitment has already been made until at least Monday.

A separate lawsuit, in which Governor Tony Evers and Wisconsin Attorney General Josh Kaul are parties among more than 20 other states, was also filed challenging the action. Leavitt’s tweet has been added to that lawsuit as justification for it to continue.

Trump is attempting to cut federal funding to which he disagrees politically. But under the U.S. Constitution Congress has the authority to appropriate funding, with the executive branch in charge of implementation. Trump has already signed an executive order attempting to halt the implementation of the Bipartisan Infrastructure Law.

Milwaukee, in the past two years, won at least $75 million in federal grants for street projects and $15 million for an EV charging network that city officials have openly debated whether Trump would impound. During a December Public Works Committee meeting, administration officials said that if contracts were signed, the money would be issued. But on Wednesday during a Public Works Committee meeting, City Engineer Kevin Muhs said that many of the signed agreements are only for design and engineering and an additional agreement would be needed to issue construction funding.

Other routine federal grants the City of Milwaukee receives include several awards to the Milwaukee Health Department for lead poisoning prevention and other community health efforts, forgivable loan funding to the Milwaukee Water Works to replace lead service lines and multiple public safety grants to the police and fire departments. A substantial number of state grants are funded with federal dollars.