President Trump has been extremely active during his first week back in office, but his latest move is the most puzzling by far. An internal email delivered to agencies on Jan. 27 stated that the White House budget office is putting a freeze on all federal grants and loans, causing a great deal of worry around the White House.
Acting head of the White House Office of Management and Budget Matthew J. Vaeth directs federal agencies to “temporarily pause all activities related to obligations or disbursement of all Federal financial assistance” in a two-page statement. The Washington Post was able to obtain a copy of the memo, which also requires each agency to conduct a “comprehensive analysis” to make sure its grant and loan programs align with President Donald Trump‘s executive orders, which, among other things, sought to restrict clean energy spending and outlaw federal diversity, equity and inclusion, or DEI, initiatives.
The statement adds that the federal financial assistance that was placed on hold “does not include assistance provided directly to individuals” and that its directives should not affect Social Security or Medicare recipients. Programs that will be impacted include “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology and the Green New Deal,” according to the document. According to Brian Riedl, a senior scholar at the center-right research tank Manhattan Institute, the directive could affect at least tens of billions of dollars in payments.
So why would Trump do this? There are quite a few reasons. First and foremost, it is to limit the government’s spending. Trump has stated on numerous occasions he doesn’t trust how prior administrations handled money. According to the memo, federal financial aid — including grants and loans — accounted for nearly $3 trillion of the $10 trillion “that the Federal Government spent [in fiscal year 2024, which ended Sept. 30, 2024].” However, those numbers were slightly exaggerated; according to the Congressional Budget Office, a nonpartisan organization, the government spent $6.7 trillion during the fiscal year 2024.
Speaking on condition of anonymity to discuss private matters, a source close to Trump confirmed all this is true. As of Jan. 28, the memo will go into effect. By Feb. 10, all agencies that have been affected by the loan suspension must also give comprehensive lists of the projects that have been suspended under the new order. According to the memo, federal agencies must choose a senior political appointee — not a career official — with “responsibility and oversight” for monitoring federal spending.
Federal grants support a broad range of recipients and causes. They go to universities for education and research programs and to nonprofits for health care and studies, among thousands of other purposes. This ban will affect millions, and the impact could be extremely detrimental for those who are relying on this federal aid to pay bills and or salaries. Some of the federal aid programs affected include SNAP, or the Supplemental Nutrition Assistance Program, Medicaid, WIC and FAFSA, as well as Section 8 and other rental assistance programs.
