USA: Trump administration rescinds sweeping federal funding freeze after court challenge (Ending Radical and Wasteful Government DEI Programs and Preferencing)

The Administration of US President Donald Trump on Wednesday rescinded a directive to freeze funding across federal agencies just one day after announcing the sweeping measure, which had left agencies and beneficiaries scrambling to determine its impact.

Tuesday’s directive mandated a temporary pause on all federal financial assistance disbursements and obligations, including grants and loans, while agencies reviewed their programs for alignment with new Trump administration priorities. During this pause, agencies were required to halt new funding programs, stop disbursements under existing programs, and pause activities related to open funding opportunities, though certain legally mandated actions could continue with OMB approval.

The order was issued by way of a memo from the Office of Management and Budget (OMB), an executive-branch office responsible for managing the presidential budget and oversight of agency spending. In the memo, OMB Acting Director Matthew Vaeth criticized federal spending under the previous Democratic administration of Joe Biden as the “use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies” and as a “waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”

But the directive lacked specificity that would help agencies and beneficiaries understand which programs might be eligible for exceptions, fueling anxiety about the breadth and scope of the order, including fears that programs critical for providing food and resources to the nation’s most vulnerable populations would suffer as a consequence of the order.

The order was supposed to take effect on Tuesday evening, Eastern US time, but a federal district judge granted an administrative stay, pausing the freeze for several days. The stay was granted in response to a lawsuit filed by the National Council of Nonprofits, which said in a statement: “This reckless action by the administration would be catastrophic for nonprofit organizations and the people and communities they serve. … From pausing research on cures for childhood cancer to halting housing and food assistance, shuttering domestic violence and homeless shelters, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives. This order must be halted immediately before such avoidable harm is done.” The judge said the administrative stay would block the OMB from enforcing the directive pending arguments to take place next week.

Confusion continued to mount in the meantime, with questions about the freeze dominating a White House press briefing on Wednesday. During the briefing, White House Press Secretary Karoline Leavitt said repeatedly that the order would not affect direct beneficiaries of federal programs, but was less clear on indirect individual beneficiaries, such as seniors benefiting from federally funded nutrition programs organized by third-parties. She maintained more information was coming.

Shortly thereafter, reports emerged that the OMB had released a brief memo rescinding its directive from Tuesday. Leavitt took to X (formerly Twitter) to confirm that the OMB memo had been rescinded because of the court order. She added the caveat, however, that Trump’s various executive orders on federal funding “remain in full force and effect, and will be rigorously implemented.” The executive orders named in the OMB memo included the following:

• Protecting the American People Against Invasion (Jan. 20, 2025), which revoked several Biden-era immigration policies while directing federal agencies to prioritize deportations, establish nationwide Homeland Security Task Forces, expand detention facilities, encourage state-local immigration enforcement partnerships, and review funding to NGOs that assist undocumented immigrants;
• Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025), which imposed a 90-day pause on US foreign development assistance disbursements while agencies review all foreign aid programs for alignment with the Trump administration’s foreign policy objectives, with the Secretary of State empowered to grant waivers and approve resumption of funding for programs that pass review;
• Putting America First in International Environmental Agreements (Jan. 20, 2025), which directed the US’ immediate withdrawal from the Paris Agreement on climate change and all related UN climate accords, revokes the US International Climate Finance Plan, and requires federal agencies to prioritize economic efficiency and American prosperity over climate commitments in international energy agreements;
• Unleashing American Energy (Jan. 20, 2025), which mandated a comprehensive review and rollback of climate-related policies, including revoking multiple Biden-era executive orders, pausing Inflation Reduction Act funding disbursements, disbanding the interagency working group on carbon costs, expediting energy permits, restarting LNG export reviews, and directing agencies to prioritize domestic energy production and mineral development while removing restrictions on consumer choice in vehicles and appliances;
• Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025), which mandated the termination of all federal Diversity, Equity, and Inclusion (DEI) and Environmental Justice programs and positions, required agencies to document all such programs and contractors since January 2021, and established monthly meetings to monitor the elimination of these initiatives across the federal government;
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025), which defined sex as binary and biological, mandated federal agencies to use only these definitions, required identification documents to reflect biological sex rather than gender identity, prohibited federal funding related to “gender ideology,” directed changes to prison housing policies based on biological sex, and rescinded multiple Biden-era policies and guidance documents related to gender identity protections; and
• Enforcing the Hyde Amendment (Jan. 24, 2025). which revoked two Biden-era orders related to abortion access and directed the OMB to issue guidance ensuring federal funding complies with the Hyde Amendment’s restrictions on using federal funds for elective abortions.

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