Trump Admin’s Pause on Federal Aid Raises Constitutional Issue

President Donald Trump speaks in the Roosevelt Room of the White House on Jan. 21, 2025. Andrew Harnik/Getty Images

The Trump administration’s pause on federal aid raises legal questions and has prompted Democrats to level charges of overreach.

Matthew J. Vaeth, acting director of the White House Office of Management and Budget, issued a memo on Jan. 27 requiring federal agencies to pause the disbursement of federal financial assistance that may be affected by President Donald Trump’s executive orders.

Medicare and Social Security are excepted.

At issue is whether the temporary pause on distributing financial aid to organizations constitutes an unconstitutional use of the presidential power of impoundment.

Democrats say it does while the White House has defended the action as a reasonable step to ensure financial accountability.

Experts say the matter is not entirely clear-cut and will likely be resolved in the courts.

A federal judge on Jan. 28 temporarily blocked the plan after a group of nonprofit organizations filed a lawsuit.

A hearing is scheduled for Feb. 3 to determine if a longer injunction should be issued.

Impoundment occurs when the president chooses not to disburse funds appropriated by Congress, instead leaving them unspent in the U.S. Treasury.

The practice was strictly limited by Congress under the Impoundment Control Act (ICA) of 1974.

Trump has called that law unconstitutional.

“I will use the president’s long-recognized impoundment power to squeeze the bloated federal bureaucracy for massive savings,” Trump said when announcing his plan in June 2023.

However, Trump has not presented this action as a test of the ICA, and administration officials have denied that it constitutes impoundment.

“No, it is not an impoundment under the Impoundment Control Act,” an OMB memo stated.

“It is a temporary pause to give agencies time to ensure that financial assistance conforms to the policies set out in the President’s Executive Orders, to the extent permitted by law.”

White House Press Secretary Karoline Leavitt reinforced that point to reporters on Jan. 28.

“It is the responsibility of this president and this administration to be good stewards of taxpayer dollars,” Leavitt said.

“The reason for this [order] is to ensure that every penny that is going out the door is not conflicting with the executive orders and actions that this president has taken.”

Senate Majority Leader John Thune (R-S.D.) portrayed the action as typical of incoming presidents.

“I think that’s a normal practice at the beginning of administration until they have an opportunity to review how the money is being spent,” Thune told reporters on Jan. 28.

Sen. Patty Murray (D-Wash.) said the action threatened to erode trust in the federal government.

“We cannot function as a democracy in this country if we cannot respect and abide by our ability to make agreements in Congress,” Murray said.

The ICA was enacted as a response to President Richard Nixon’s apparent attempt to do away with certain government programs by simply starving them of funds, which violated the will of Congress.

Nixon’s use of impoundment represented “a difference in kind, not simply in degree” from his predecessors, according to Joshua Chafetz, a professor of law and politics at Georgetown University.

The purpose of the Jan. 27 memo is to allow time for federal agencies to review the programs and projects that will benefit from federal funds to ensure that they meet presidential priorities.

Vaeth specifically mentioned executive orders related to financial assistance for foreign aid, nongovernmental organizations, DEI, gender ideology, and the Green New Deal.

The OMB memo likely falls within the definition of impoundment because it’s a delay in obligating or disbursing funds appropriated by Congress according to Robert Kravchuk, a professor emeritus at the O’Neill School of School of Public and Environmental Affairs at Indiana University.

He told The Epoch Times: “Though it’s a little muddy because it’s a shared responsibility.”

In the case of financial aid grants, Congress appropriates the funding but generally allows the executive branch to set parameters on the grants and make the awards, he said.

White House Press Secretary Karoline Leavitt takes questions during the daily briefing in the Brady Briefing Room of the White House on Jan. 28, 2025. Roberto Schmidt/AFP via Getty Images

The issue might come down to whether or not the funds have been “obligated.”

Federal law states that “an obligation of funds is a legal liability to disburse funds immediately or at a later date as a result of a series of actions.”

“Obligation is not synonymous with ‘spend,’” according to the law firm Holland & Knight, which has a specialty group focused on public policy and regulation.

The firm’s website notes that “a binding grant or contract alone does not constitute an obligation. Funds that are not obligated within the spending period expire and may not be used.”

The GAO ruled in 2018 that presidents have a responsibility to obligate funds as directed by Congress.

“Unless Congress has enacted a law providing otherwise, the president must take care to ensure that appropriations are prudently obligated during their period of availability.”

Leavitt emphasized to reporters that no payments to individuals are covered under the pause, meaning that payments for Social Security, Medicare, SNAP, and other government benefit programs will continue uninterrupted.

Yet individuals may still be affected by the action and institutions certainly will be, according to Kravchuk.

“Some social science experiments or lab experiments already underway may not be able to continue,” Kravchuk said.

Some researchers may pay for the continuation of the work out of their own pockets, hoping the federal money will eventually come through, he added.

Private agencies that provide food, shelter, or medical care to people in need might also be affected, Kravchuk said.

“The agency might be reluctant to take new applications because they might not know if they’re going to be funded,” he said.

Agencies have until Feb. 10 to report on the specific programs that may be affected by the order. Then, they must assign a senior political appointee to ensure that the program conforms to the administration’s priorities.

Where they do not, the awards may be modified or withdrawn “to the extent permissible by law.”

New York Attorney General Letitia James said she would ask a Manhattan federal court to block the pause in funding.

“Together with a coalition of attorneys general, I’m suing the administration to uphold the law and ensure that essential services across our country will continue,” she wrote on X.