Trump orders all government loans and grants to be put on hold

The White House of Donald Trump issued an order on Tuesday to halt all government grants and loans, a broad move that may affect disaster relief, housing aid, health care and education programs, and a number of other programs that rely on billions of public cash.

As the Trump administration examines grants and loans to make sure they are in line with the president’s priorities, including executive orders he signed last week terminating diversity, equity, and inclusion (DEI) programs, the funds will be suspended, according to a memo released Monday by the acting head of the Office of Management and Budget, which is in charge of the federal budget.

According to acting director Matthew Vaeth, using government funds for initiatives that oppose the president’s agenda “is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
According to the document, the block covered funds designated “for foreign aid” and “nongovernmental organizations,” among other uses.

Social Security, Medicare, and “assistance provided directly to individuals” will not be affected by the suspension, according to the White House.

It was unclear if this would have an impact on low-income and veteran health care programs, but it was assumed that it would spare disability payments and food assistance for the poor.

In fiscal year 2024, the federal government spent around $10 trillion, according to the OMB paper, with over $3 trillion going toward grants and loans. However, the source of those estimates was unclear; the Congressional Budget Office, an impartial organization, projected government expenditure in 2024 to be a far lower $6.75 trillion.

In the Trump administration’s effort to fundamentally transform the federal government, the biggest employer in the country, the memo is the most recent command.

In a flurry of executive measures last week, the new president put a halt to foreign aid, closed all diversity programs, banned recruiting, sent national security personnel home, and attempted to deprive thousands of civil workers of their employment protections.

On Tuesday, the OMB-ordered spending freeze will go into force at 5 p.m. ET (2200 GMT). Agencies must provide comprehensive information about any programs that are suspended by February 10th.

The ‘UNLAWFUL’ move is challenged by Democrats.

Many nonprofit organizations, to which the federal government gives funding, responded with dismay.

In a statement, Diane Yentel, president and CEO of the National Council of Nonprofits, stated, “This order is a potential five-alarm fire for nonprofit organizations and the people and communities they serve.” 

“From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives.”

Trump’s decision was instantly criticized by Democrats as dangerous and illegal.

U.S. Representative Rose DeLauro and U.S. Senator Patty Murray, the leading Democrats on the congressional appropriations committees, wrote to Vaeth late Monday, calling the order “breathtaking, unprecedented, and will have devastating consequences across the country.”

The Democrats said, “We write today to appeal to you in the most forceful manner to respect the law and the Constitution and make sure that all federal resources are provided in compliance with the law.”

Chuck Schumer, the Democratic Leader of the Senate, claimed that the order would hurt millions of Americans if it were to be enacted and that the administration lacked the power to stop legislatively approved expenditure.

“It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities, state disaster assistance, local law enforcement, aid to the elderly, and food for those in need,” Schumer stated in an X post late on Monday evening.

Trump was only fulfilling his campaign pledges, according to U.S. Representative Tom Emmer, the third-ranking Republican in the House of Representatives.

He was chosen to challenge the established quo, and you must realize that. That’s his plan of action. “Business as usual won’t be the case,” Emmer said reporters during a Republican policy retreat in Miami.