To implement the president’s priorities in the first days of the Trump administration, an Office of Management and Budget memo directed federal agencies to “temporarily pause” nearly all federal financial assistance. The sudden disruption, implicating trillions of dollars across the federal government, was a clear overreach, since Congress alone holds the authority to determine how federal dollars are spent and for whom. It also had real and immediate consequences for thousands of Americans.
A fully implemented funding freeze, according to declarations filed in lawsuits challenging its legality, would destabilize the many businesses and households that rely on the government for financial assistance.
Among them is a Wisconsin daycare facility. Earlier this year, the owner received an email from the state Department of Children and Families with a subject line that read in part, “Child Care Provider Updates – Federal Funding Questions.” While the daycare is a private business, a significant portion of its revenue comes from parents who receive money from federal agencies such as the Department of Health and Human Services. In this case, an HHS grant funds WI Shares, a state initiative that identifies and then sends money in turn to low-income families to help them afford childcare.
The email informed the owner that WI Shares funds would be sent on January 31, as scheduled. But on that day, one parent at the daycare facility who relied on WI Shares told the owner that the funding didn’t arrive. The owner, the parents, and their children found themselves swept up in the Trump administration’s funding freeze.
“Without access to the federal funding program . . . my business will be sliding toward imminent and certain closure. This is not speculative. It is a mathematical fact,” the daycare owner wrote in a declaration for one of several ongoing lawsuits.
The chaos began in late January, with OMB’s vague memo directing federal agencies to suspend “all federal financial assistance,” which includes federal grants and loans. The administration attempted to clarify the ambiguous memo, asserting that federal assistance for programs like Social Security, Medicaid, and food assistance would not be affected. However, following the freeze, Medicaid’s payment portals were briefly shut down, calling these assurances into question.
State agencies, attorneys general, and impacted nonprofits went to federal court to challenge the funding freeze as unreasonable, far beyond OMB’s authority, and a violation of the Constitution’s separation of powers. The suits reflect a long-running legal understanding reflected in Article I of the Constitution: Congress holds exclusive power to appropriate funds and presidents cannot pick and choose which appropriations laws to follow.
Federal courts unsurprisingly agreed, directing the Trump administration to meet its obligations to Congress, states, and grant recipients. A federal judge quickly issued a preliminary order blocking the memo from going into effect, and the following week she and another federal judge fully halted it. But this chaotic episode was compounded by contradictory signals from the administration. The White House rescinded the OMB memo as litigation began, only for the White House press secretary to later say that the funding freeze itself would still be in “full force and effect.”
The conflicting directives, all coming within the space of just a couple of days, created immense uncertainty for beneficiaries, leaving them in the impossible position of not knowing when or how they were receiving critical funding for their businesses and services.
Without proper guidance, and with the possibility that the federal government would — without warning — yank away critical funding if the freeze was fully implemented, providers and states that rely on this funding for state- and community-based programs had to contemplate worst-case scenarios. That’s the picture painted in declarations from public officials in two cases, New York v. Trump and National Council of Nonprofits v. Office of Management and Budget.
“Implementation of the 'pause’ described in the OMB Memo will also have a direct, immediate, and adverse impact on thousands of vulnerable families,” an official from Los Angeles County wrote. Suddenly at jeopardy, he wrote, was more than $5 billion in funding — including $2 billion earmarked for childcare, social services for lower-income families, and direct cash assistance.
An official from Colorado said he worried that funding cuts would imperil the state’s foster care and adoption programs. He further estimated that “approximately 330,000 households and 618,000 people would not have access to the benefits that keep themselves and their families fed” if a broad funding freeze went into effect and impacted food benefits after all. “Even temporary food insecurity leads to significant negative impacts on health and mental health, especially for children,” the official wrote.
State officials in both Connecticut and New Mexico estimated the disruption from a funding freeze could jeopardize the health and wellbeing of more than one million residents in each state, including children.
As it stands, the funding freeze remains blocked by the federal courts. But much of the damage has already been done. And this isn’t the end of the lawsuits. Last week, plaintiffs in New York v. Trump, one of the main challenges to the funding freeze, filed a brief outlining what halting federal funding would mean for state and local programs that rely on these dollars. On Friday, members of Congress, represented by the Brennan Center and co-counsel, filed a friend-of-the-court brief in that case that explains Congress’s exclusive power to appropriate funds and make laws governing their use. The case may reach the Supreme Court during its upcoming term, after the initial appeals process plays out.
As the funding freeze cases make their way through the courts, the real-world consequences remain. The president’s capricious intrusion on congressional authority can be felt viscerally, whether by a small business owner whose livelihood is suddenly threatened or by a working parent who deserves to know whether they will be able to keep their young kids in daycare.
