The White House announced Wednesday that it had rescinded a controversial directive from the Office of Management and Budget (OMB) that called for a pause on payments for federal grants and programs. However, the administration clarified that while the initial freeze was lifted, efforts to scrutinize and realign federal spending with President Donald Trump’s priorities would continue.
The decision to withdraw the OMB order comes after a federal judge issued a temporary block on the measure Tuesday, siding with advocacy groups that argued the freeze was legally unfounded and created widespread uncertainty for states, municipalities, and beneficiaries of federal programs.
“Facing legal pressure from our clients and in the wake of a federal judge ruling in our case last evening, the Trump-Vance administration has abandoned OMB’s ordered federal funding freeze,” Democracy Forward, one of the legal challengers, said in a statement. The nonprofit organization led a lawsuit on behalf of grant recipients who feared the funding halt could jeopardize essential services, from healthcare to education.
Despite this reversal, White House Press Secretary Karoline Leavitt maintained that the administration’s goal remains unchanged. “Efforts to end the egregious waste of federal funding will continue,” Leavitt said, emphasizing that the OMB memo was rescinded “to end any confusion on federal policy created by the court ruling and the dishonest media coverage.”
Confusion Over Federal Spending Continues
The original OMB directive, issued late Monday, caused immediate concern among recipients of federal funding, who scrambled to determine whether essential programs—including Medicaid, school aid, and food assistance—would be affected. On Tuesday, the White House attempted to reassure the public, stating that programs providing “direct benefits to Americans” were excluded from the freeze.
However, Wednesday’s announcement has done little to quell the confusion. While the immediate halt on funding has been lifted, the administration’s continued commitment to funding reviews leaves uncertainty about how and when financial decisions will be made.
According to sources within the administration, federal agencies are still expected to evaluate their spending to ensure alignment with the new administration’s policies. A senior official stated that the original directive “should not be interpreted as a full funding freeze” but rather as a temporary measure for reviewing grants, loans, and expenditures.
Legal and Congressional Pushback
The OMB directive was met with swift legal challenges, culminating in Tuesday’s ruling that temporarily blocked the funding pause. Advocacy groups argued that the directive lacked legal authority and failed to account for the obligations already made to grant recipients.
Shortly after the court ruling, attorneys general from 22 states and the District of Columbia filed a separate lawsuit opposing the measure. They argued that withholding promised funds would disrupt public services and violate congressional spending authority.
On Capitol Hill, the controversy surrounding the OMB memo has highlighted divisions within the Republican Party over presidential authority in budget matters. While some GOP lawmakers defended the measure as a necessary review of federal spending, others expressed concerns about the scope and execution of the directive.
House Speaker Mike Johnson (R-La.) dismissed concerns, calling the measure “an application of common sense” and assuring that “it would be harmless in the end.” However, Senator Susan Collins (R-Maine), chair of the Appropriations Committee, criticized the move, saying she was “surprised by its breadth” and pleased that it had been rescinded.
“While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” Collins said in a statement Wednesday.
Senator Chris Coons (D-Del.), a member of the Appropriations Committee, warned that the administration may attempt to reintroduce similar policies in a different form. “We’ll see what the next order is,” Coons said. “There is a persistent attempt at trying to sort of shake the system and see if savings can be identified. I would have urged a profoundly different approach to that.”
What’s Next?
Despite rescinding the immediate funding freeze, the administration remains committed to reviewing federal spending under Trump’s executive orders. The White House has indicated that agencies will still be expected to scrutinize their programs, meaning the full impact of these budget policies remains uncertain.
The administration’s next steps will likely be closely watched by both legal experts and congressional leaders, as the balance of power between the executive branch and Congress in determining federal spending continues to be tested.