White House Budget Office Rescinds Memo on Federal Aid Freeze

The White House on Jan. 23, 2025. Madalina Vasiliu/The Epoch Times

The Trump administration’s memo directing a freeze on federal loans, grants, and other financial assistance has been rescinded, the White House Office of Management and Budget (OMB) said on Jan. 29.

OMB Acting Director Matthew J. Vaeth issued a memorandum on Jan. 28 to all heads of executive departments and agencies rescinding his previous memo that directed them to pause federal aid.

“OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel,” the document states.

White House press secretary Karoline Leavitt confirmed the memo in a statement to The Epoch Times. The OMB is responding to the injunction issued by a federal judge on Jan. 28 to “end any confusion on federal policy created by the court ruling.”

“The Executive Orders issued by the President on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments,” she said.

Leavitt added that the new OMB memo should “effectively end” the case brought by nonprofit organizations and advocacy groups on Jan. 28 so that the government can focus on the president’s agenda.

A White House official emphasized that the move is simply to “END the confusion and END the federal injunction,” but not to halt the intended freeze of federal aid “at odds with the President’s [executive order].”

Leavitt posted on social media platform X minutes later, further clarifying the OMB’s memo.

“This is NOT a rescission of the federal funding freeze. It is simply a rescission of the [previous] OMB memo … to end any confusion created by the court’s injunction,” she said.

“The President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”

On Jan. 28, the same day the lawsuit was filed, U.S. District Judge Loren AliKhan called for an emergency video conference regarding the advocacy groups’ lawsuit one hour before the freeze was to take effect at 5 p.m. ET.

AliKhan granted a “brief administrative stay,” ordering the Trump administration to refrain from blocking “open awards,” or funds that had been slated for disbursement, until at least Feb. 3.

However, she added that the ruling would “maintain the status quo” and does not prevent the Trump administration from suspending funds for new programs, nor does it require resuming expired funding.

Another hearing is scheduled for Feb. 3 at 11 a.m. ET, where AliKhan will determine the next steps for the case.

The National Council of Nonprofits, the American Public Health Association, Main Street Alliance, and SAGE, a New York LGBT nonprofit, filed the lawsuit in the U.S. District Court for the District of Columbia, arguing the Trump administration’s plan would “have a devastating impact on hundreds of thousands of grant recipients.”

Additionally, three Democratic state attorneys general joined to file a separate lawsuit challenging the original OMB memo, which directed all federal agencies to pause grants, loans, and other financial assistance while the administration reviews the affected programs.

Trump Defends Federal Aid Freeze

At the signing ceremony for the first bipartisan bill of his administration, the Laken Riley Act, President Donald Trump defended his decision to temporarily freeze certain discretionary spending. He stressed that his focus is on quickly tackling “scams, dishonesty, waste, and abuse.”

“This in no way affected Social Security, Medicare, Medicaid, or other entitlements that Americans depend on,” he said.

“We are merely looking at parts of the big bureaucracy where there has been tremendous waste and fraud and abuse.”

These actions, he added, included halting $50 million intended for Gaza which he claimed was “to buy condoms for Hamas,” stopping an attempt to make illicit payments for illegal alien resettlement, and canceling $181 million in diversity, equity, and inclusion training contracts.

He also said he paused $1.7 billion in unauthorized payments to foreign organizations, which included blocking over $40 million from being sent to the World Health Organization, as well as stopping $45 million for diversity scholarships in Burma.

The assertion that the Biden administration allocated $50 million to buy condoms for Hamas has been widely disputed.

Emel Akan contributed to this report.