Democrats are sounding “extreme alarm” over a recent memo issued by the Trump administration directing federal agencies to temporarily pause disbursement of loans, grants and other financial assistance.
In a memo on late Monday, Matthew Vaeth, acting director of the Office of Management and Budget (OMB), said agencies must halt “all activities related to obligation or disbursement of all federal financial assistance” to the “extent admissible by applicable law,” while ordering a review of programs to determine “best uses of the funding” consistent with Trump’s priorities.
But top Democrats are already raising questions over the legality of the move.
In a statement on late Monday, Senate Minority Leader Chuck Schumer (D-N.Y.) accused the Trump administration of “blatantly” disobeying the law “by holding up virtually all vital funds that support programs in every community across the country.”
“Congress approved these investments and they are not optional; they are the law. These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities.”
He said the move could jeopardize “billions upon billions of community grants and financial support that help millions of people across the country.”
“It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities,” he added.
Vaeth said in the memo on Monday that the temporary pause will become effective on Tuesday at 5 pm. But there’s uncertainty over how the two-page order, which uses broad and overtly political language, will be carried out.
The directive requires agencies to identify and “review all federal financial assistance programs and supporting activities consistent with the president’s policies and requirements,” while particularly targeting resources going toward “Marxist equity, transgenderism, and green new deal social engineering policies.”
The OMB also said it may grant exceptions allowing agencies to “issue new awards or take other actions on a case-by-case basis.”
“To the extent required by law, federal agencies may continue taking certain administrative actions, such as closeout of Federal awards (2 CFR 200.344), or recording obligations expressly required by law,” it added.
Democratic spending chiefs raised alarm over the move in a letter to Vaeth, calling the scope of the agency’s actions “breathtaking” and “unprecedented,” while warning of “devastating consequences across the country.”
“As leaders of the House and Senate Committees on Appropriations, we write with extreme alarm about the Administration’s efforts to undermine Congress’s power of the purse, threaten our national security, and deny resources for states, localities, American families, and businesses,” Sen. Patty Murray (D-Wash.) and Rep. Rosa DeLauro (D-Conn.) wrote in the letter.
“This administration’s actions will have far-reaching consequences for nearly all federal programs and activities, putting the financial security of our families, our national security, and the success of our country at risk.”
The outcry comes as Trump is already facing accusations of violating impoundment law from Democrats over an executive order pausing the disbursement of funds approved in two of former President Biden’s signature laws.
