After a powerful backlash, the White House on Wednesday rescinded its Monday night memo that temporarily froze trillions of dollars in federal grants and loans. That order created extensive uncertainty about which programs would be affected and widespread fear that many Americans would suffer once it took effect. The freeze prompted immediate legal challenges accusing the administration of an unconstitutional power grab that violated congressional authority on spending.
A federal judge temporarily blocked the freeze Tuesday afternoon, but the confusion remained, with federal lawmakers in both parties — as well as state officials, nonprofits and other organizations that rely on federal funds — still concerned about what the Trump directive meant.
In a terse new memo issued Wednesday, Matthew J. Vaeth, the acting director of the White House budget office, rescinded the prior order. “If you have questions about implementing the president’s executive orders, please contact your agency general counsel,” Vaeth directed agency leaders.
White House press secretary Karoline Leavitt then posted a clarification: “This is NOT a rescission of the federal funding freeze,” she wrote in a post on X. “It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction.” Leavitt added that Trump’s executive orders regarding federal funding reviews “remain in full force and effect, and will be rigorously implemented.” Those prior executive orders targeted “woke ideologies” and halted implementation of the Inflation Reduction Act and Bipartisan Infrastructure Law as well as certain foreign aid funding, among other things.
Leavitt also told reporters that the rescission of the memo should end the court case, and that Trump would be taking more executive action “to end the egregious waste of federal funding.”
In afternoon remarks at the White House, Trump sought to defend the freeze and touted the actions he has taken quickly in his new term. He told reporters that he was moving to take control of the Washington bureaucracy and “downscale” the government, including by requiring federal workers to return to offices full-time or face termination.
Trump said the short-term funding pause was “only for us to quickly look at the scams, dishonesty, waste and abuse that’s taken place in our government for too long.” He said the pause did not affect Social Security, Medicare or Medicaid — though states had seen Medicaid payment portals closed yesterday — and claimed that the media had purposely created confusion around the issue. “We are merely looking at parts of the big bureaucracy where there has been tremendous waste and fraud and abuse,” he said. (The confusion was not a media creation. At her Tuesday press briefing, Leavitt could not immediately answer a question about whether Medicaid was affected or not.)
Trump said the process had led his administration to stop $50 million from being sent to Gaza for the purchase of condoms for Hamas — though there is no evidence to support that claim and plenty of reason to be highly skeptical about it. Trump added a rather bizarre twist, claiming that Hamas has used the condoms “as a method of making bombs.” He also said his administration had canceled $181 million in DEI training contracts and paused $1.7 billion in unauthorized payments to foreign organizations, including more than $40 million for the World Health Organization.
Republican Sen. Susan Collins of Maine, chair of the Senate Appropriations Committee, welcomed the Office of Management and Budget’s rescission. “While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” she said in a statement.
Her Democratic counterpart, Sen. Patty Murray of Washington, called the rescission “an important victory for the American people whose voices were heard after massive pressure from every corner of this country.” She warned, though, that the fight was not over. She accused the Trump administration of “sheer incompetence, cruel intentions, and a willful disregard of the law” and said that it “is still illegally withholding funding for communities in red states and in blue states.” And she expressed concern about Trump’s choice to lead the White House budget office: “Senate Republicans are still intent on confirming Russ Vought, chief architect of Project 2025 as this country’s budget director. This is a man who time and again has refused to say he will follow the law.”
The bottom line: The White House backtracked after a backlash, but it’s clear that Trump and his allies remain intent on carrying out their agenda and instigating a legal fight over the separation of powers and the president’s authority to withhold funding appropriated by Congress.