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Judge temporarily pauses Trump’s freeze on grants, loans

REUTERS/ELIZABETH FRANTZ
                                President Donald Trump speaks to reporters aboard Air Force One before arriving at Joint Base Andrews, Md., on Monday.

REUTERS/ELIZABETH FRANTZ

President Donald Trump speaks to reporters aboard Air Force One before arriving at Joint Base Andrews, Md., on Monday.

WASHINGTON >> A judge today temporarily paused part of the Trump administration’s sweeping directive to pause federal loans, grants and other financial assistance, granting a win to advocacy groups who said the policy would be devastating.

U.S. District Judge Loren AliKhan ordered the Trump administration not to block funding for ongoing programs until Feb. 3 at a hearing in Washington court.

Groups representing nonprofits, public health officials and small businesses brought the lawsuit, saying Trump’s policy would be devastating.

Trump’s sweeping directive was the latest step in his dramatic effort to overhaul the federal government, which has already seen the new president halt foreign aid, freeze hiring and shutter diversity programs across dozens of agencies.

Democrats castigated the funding freeze as an illegal assault on Congress’ authority over federal spending and said it was disrupting payments to doctors and preschool teachers. Republicans largely defended the order as a fulfillment of Trump’s campaign promise to rein in a bloated budget.

The Trump administration said programs delivering critical benefits to Americans would not be affected. But Democratic Senator Ron Wyden said his office had confirmed that doctors in all 50 states were not able to secure payments from Medicaid, which provides health coverage to 70 million low-income Americans.

White House press secretary Karoline Leavitt said on X that the federal government was aware of the Medicaid portal outage and no payments had been affected. The website will be back online shortly, she said.

Health care industry officials said the interruption could cause lasting damage. “If the federal government stops pushing funds out to state Medicaid contractors, the result would be a complete debacle, with Medicaid providers going out of business,” said Sara Ratner of healthcare company NOMI Health.

The order, laid out in a memo from the White House budget office, was meant to freeze federal grants and loans as of 5 p.m. today while the administration ensures they are aligned with the Republican president’s priorities, including executive orders he signed ending diversity, equity and inclusion efforts.

Federal grants and loans reach into virtually every corner of Americans’ lives, with trillions of dollars flowing into education, health care and anti-poverty programs, housing assistance, disaster relief, infrastructure and a host of other initiatives.

The memo said today’s freeze included any money intended “for foreign aid” and for “nongovernmental organizations,” among other categories. It directed 55 agencies to examine more than 2,600 individual grant programs.

The White House said the pause would not impact Social Security or Medicare payments to the elderly or “assistance provided directly to individuals,” such as some food aid and welfare programs for the poor.

In a second memo released today, the White House said funds for Medicaid, farmers, small businesses, rental assistance and the Head Start preschool program would continue without interruption. But Democratic U.S. Sen. Chris Murphy of Connecticut said the reimbursement system for Head Start had been shut down in his state, preventing preschools from paying staff.

The status of other programs that could be affected, such as scientific research, highway construction and addiction recovery, was unclear.

The freeze followed the Republican president’s suspension of foreign aid, which began cutting off the supply of lifesaving medicines on Tuesday to countries around the world that depend on U.S. development assistance.

The White House memo did not appear to exempt disaster aid to areas like Los Angeles and western North Carolina that have been devastated by natural disasters. Trump pledged government support when he visited both places last week. At her first White House briefing since Trump took office on Jan. 20, Leavitt would not say whether disaster aid would be frozen.

Agencies were trying to understand how to implement the new order.

The Justice Department will pause $4 billion in funding for community-based programs, nonprofits, states and municipalities, according to a person familiar with the matter and a memo seen by Reuters. The affected programs include the National Center for Missing and Exploited Children, which receives more than $30 million a year from the Justice Department. The federal government spent $6.75 trillion in total last year, according to the nonpartisan Congressional Budget Office.

Trump’s Republican allies have been pushing for dramatic spending cuts, though he has promised to spare Social Security and Medicare, which make up roughly one-third of the budget. Another 11% of the budget goes toward government interest payments, which cannot be touched without triggering a default that would rock the world economy.

Democrats immediately criticized the spending freeze as unlawful and dangerous. “This decision is lawless, destructive, cruel,” Senate Democratic Leader Chuck Schumer said. “It’s American families that are going to suffer most.” The U.S. Constitution gives Congress control over spending matters, but Trump said during his campaign that he believes the president has the power to withhold money for programs he dislikes. His nominee for White House budget director, Russell Vought, who has not yet been confirmed by the Senate, headed a think tank that has argued Congress cannot require a president to spend money. Democrats sought to delay his nomination, but would need Republican support to succeed.

U.S. Rep. Tom Emmer, the No. 3 Republican in the House of Representatives, said Trump was simply following through on his campaign promises.

“You need to understand he was elected to shake up the status quo. That is what he’s going to do,” Emmer told reporters at a Republican retreat in Miami.

At least one Republican centrist, U.S. Rep. Don Bacon, said he hoped the order would be short-lived after hearing from worried constituents, including a woman who runs an after-school program that depends on federal grant money. “We don’t live in an autocracy. It’s divided government. We’ve got separation of powers,” he said.


Additional reporting by Luc Cohen in New York.


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