What to Know About Trump’s Pause on Federal Aid

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

The Trump administration issued a memo on Jan. 27 that federal funding for grants, loans, and other financial assistance programs is being paused pending review.

Acting Office of Management and Budget Director Matthew Vaeth said in a memo leaked to media outlets that Trump won “a mandate to increase the impact of every federal taxpayer dollar.”

Of the $10 trillion the federal government spent in the 2024 fiscal year, more than $3 trillion was allocated for grants, loans, and other financial assistance, according to Vaeth.

These pauses, which take effect at 5 p.m. ET on Jan. 28, are all but certain to be challenged in court.

What’s Being Paused

The funds being paused include funding to cities that do not apprehend those in the country illegally for that sole purpose, also known as sanctuary cities.

It also applies to funds for nongovernmental entities assisting illegal immigrants and for initiatives related to diversity, equity, and inclusion (DEI).

These moves are based on executive orders President Donald Trump has signed since taking office.

What Other Funds Have Been Paused?

Additionally, funds for both green energy and infrastructure projects and foreign aid will be paused.

“The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values,” reads the Jan. 20 executive order calling for an evaluation of U.S. assistance abroad.

“They serve to destabilize world peace by promoting ideas in foreign countries that are directly inverse to harmonious and stable relations internal to and among countries.”

Another Jan. 20 executive order calls for agencies to halt funding under the 2021 Bipartisan Infrastructure Law and the 2022 Inflation Reduction Act. This includes pausing funding for the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program.

Federal funding for abortion will also be stopped in accordance with the Hyde Amendment.

Vaeth said in his memo that federal agencies can review pending federal financial assistance awards to ensure administration priorities are carried out. Agencies can modify or withdraw not-yet-published federal financial assistance announcements that conflict with the administration’s priorities, Vaeth wrote, “to the extent permissible by law.”

Questions About Legality

Democrats reacted swiftly to the announcements and promised court challenges, accusing Trump of overreaching his powers.

“The blast radius of Trump’s terrible, unconstitutional, and illegal decision to halt virtually all federal grants and loans is virtually limitless. And its impacts will be felt over and over and over again by families and communities across the country,” posted Senate Minority Leader Chuck Schumer (D-N.Y.) on social media platform X on Jan. 28.

Sen. Patty Murray (D-Wash.), ranking member of the Senate Committee on the Budget, called the action illegal and unprecedented.

“For real people, we could see a screeching halt to resources for child care, cancer research, housing, police officers, opioid addiction treatment, rebuilding roads and bridges, and even disaster relief efforts,” she said.

New York Attorney General Letitia James wrote on social media that she would challenge the move in court.

The lawsuit alleges that the pause violates the Administrative Procedure Act.

Much of the criticism of the pause appears to be related to Trump’s proposed use of the presidential power of impoundment, which is regulated by the Budget and Impoundment Control Act of 1974. Trump has said he thinks the law is unconstitutional.

Impoundment occurs when a president chooses not to disburse funds previously appropriated by Congress. Generally, presidents have done so based on some practical concern, such as reducing inflation, rather than to achieve a political aim.

Trump has not said the pause is intended to challenge the Budget and Impoundment Control Act of 1974. The order targets programs that run contrary to Trump’s previously issued executive orders, such as those concerning DEI initiatives and green energy tax credits.

A number of nonprofit organizations filed a lawsuit against the Trump administration on Jan. 28, stating that the pause “will have a devastating impact on hundreds of thousands of grant recipients who depend on the inflow of grant money (money already obligated and already awarded) to fulfill their missions, pay their employees, pay their rent—and, indeed, improve the day-to-day lives of the many people they work so hard to serve.”

Pause Doesn’t Cover Payments to Individuals

White House press secretary Karoline Leavitt told reporters on Jan. 28 that the temporary pause would not affect program payments made directly to individuals.

“This is not a blanket pause on federal assistance and grant programs from the Trump administration, individual assistance that includes ... Social Security benefits, Medicare benefits, food stamps, welfare benefits,” Leavitt said.

“However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars.”

The Associated Press contributed to this report.