Trump’s Funding Freeze Power Grab Causes Chaos And Legal Firestorm
Trump's unilateral freeze of federal assistance programs is sparking confusion, chaos, and lawsuits. It's an abuse of executive power, causing what Democrats are calling a "constitutional crisis."
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Updated - Tuesday, 5:00 pm EST: Minutes before it was set to take effect, D.C. District Judge Loren AliKhan temporarily blocked Trump’s funding freeze in response to the lawsuit referenced later in this article. This administrative stay is in place until February 3, pending arguments in a hearing set for Monday. The rest of the article remains as written.
The Trump Administration just made its most chaotic move so far this term and ramped up its distortion of the federal government by ordering a freeze on federal assistance programs. The move could impact billions or even trillions of dollars in grants, loans, and foreign aid. It’s also a clear violation of the Impoundment Control Act of 1974, according to legal experts.
Late on Monday evening, President Trump’s Acting Director of the Office of Management and Budget, Matthew J. Vaeth, issued a 2-page memo that sent shockwaves throughout the country. It read:
“Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
The Trump Administration is ordering this freeze on federal assistance while they review if the funding complies with Trump’s culture war executive orders. The freeze is set to take effect on Tuesday, January 28, at 5 pm.
The initial memo made exceptions for Medicare or Social Security and “assistance provided directly to individuals,” but Politico obtained a White House budget document showcasing that the scope of this freeze could impact vulnerable Americans:
“The spreadsheet, obtained by POLITICO, covers thousands of programs, including many that send assistance each month to U.S. households, like food aid to ‘very low-income’ people age 60 and over, the home energy program that helps cover winter heating costs for the poorest households and the WIC program that aids low-income pregnant mothers and babies.”
The funding freeze caused widespread confusion and some immediate real-world impacts. USAID employees were put on leave for resisting the freeze on foreign aid. Multiple reports, including one from ABC Journalist Steven Portnoy, found that states were losing access to Medicaid funding portals. From Portnoy:
“Multiple state agencies report having difficulty accessing funding portals for emergency aid, community health centers, Medicaid and more in the wake of OMB memo ordering grant 'pause.' “This is sowing chaos and confusion everywhere,” one state official told ABC News.”
Amid this outrage and confusion, the White House issued a new memo on Tuesday afternoon seeking to clarify, claiming that mandatory programs like SNAP and Medicaid will not be paused. But even after that memo was sent, more reports of Medicaid portals being down proliferated.
Managing Editor at the Bulwark,
, reported, “One person I talked to -- not a lawmaker -- says this is real and a potential crisis unless fixed. Medicaid providers will not be able to get paid, payrolls will be missed. Red states, ironically, will be hit hardest as they get bigger % of Medicaid funds.”Senator Ron Wyden (D-OR) claimed the entire country has been impacted: “My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze. This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed.”
Senator Chris Murphy (D-CT) replied directly to the clarifying memo in a tweet: “Don’t believe these people. In Connecticut, the Head Start reimbursement system IS shut down. Preschools cannot pay staff and will need to start laying off staff very soon and sending little kids home.”
At 3 pm EST, after hours of backlash, White House Press Secretary Karoline Leavitt finally provided an update that the White House expects the portals to come back online: “The White House is aware of the Medicaid website portal outage. We have confirmed no payments have been affected — they are still being processed and sent. We expect the portal will be back online shortly.”
Democrats are calling this power grab a “constitutional crisis,” and it’s already drawing legal challenges. Nonprofits and health groups have filed a joint request seeking “a temporary restraining order to maintain the status quo until the Court has an opportunity to more fully consider the illegality of the Trump administration’s] actions,”
New York Attorney General Letitia James announced that she will also be taking “imminent legal action.”
President Trump unilaterally freezing congressionally approved funds is rightfully drawing accusations that he is violating the Impoundment Control Act of 1974. This was an argument made effectively in Georgetown University Law Center Professor
’s latest article. It’s also clearly outlined in the Constitution that Congress has the power of the purse.Russell Vought, key architect of Project 2025 and Trump’s pick for OMB Director, was asked about impoundment during a confirmation hearing earlier this month. Vought was asked about Trump’s view that he can use the power of impoundment to unilaterally withhold congressionally approved funds. Vought reaffirmed that Trump thinks the Impoundment Control Act of 1974 is unconstitutional.
It’s clear now that President Trump is testing the boundaries of the law and this Supreme Court’s appetite for further expanding executive power. This funding freeze comes after Trump has made blatantly illegal moves like his firing of 18 Inspectors General or his unconstitutional executive order seeking to end birthright citizenship.
Trump’s violation of the Impoundment Act and his effort to end birthright citizenship have something in common: they both hope to make it up to the Supreme Court.
After the Supreme Court’s shocking immunity decision, the Trump Administration is likely seeking a further expansion of executive power greenlit by its right-wing justices. Given the Supreme Court’s clear openness to the unitary executive theory, Trump wants to see how much they will let him get away with.
In a nutshell, President Trump’s funding freeze isn’t simply a chaotic misstep—it’s a deliberate power grab that tests the boundaries of executive authority and the resilience of America’s guardrails.
By targeting essential programs and ignoring congressional authority, Trump is not only endangering vulnerable communities but also challenging the constitutional principle that Congress controls the power of the purse.
This moment demands bold action from lawmakers, the courts, and the public. If this abuse of power goes unchecked, it will embolden further overreach, cementing a dangerous precedent for the future. America’s institutions are being tested once again, and how we respond will define the course of this presidency—and beyond.
This is another type of overreaching that will blow up in his face. States that overwhelmingly voted for him rely mostly on federal dollars for their state budgets and services (Alabama, Mississippi, Louisiana, etc.)
Additionally, veterans can no longer access their information online like they could before January 20. We have had great difficulty accessing the resources we need as a veteran family, including them not believing my husband, who is a disabled veteran, is who he says he is. This is a catastrophic blow to everyone in the nation. I pray cooler heads prevail. Thank you as always for your excellent reporting.