Trump backs down on multitrillion-dollar spending freeze

President Donald Trump's budget office rescinded a memo freezing federal loan and grant spending, a move that sparked widespread confusion and legal challenges across the U.S. in less than two days. The memo, issued by the Office of Management and Budget on Monday, sent panic through states, schools, and organizations reliant on trillions of dollars from Washington.

Government officials stated the spending pause was to review whether expenditures aligned with Trump's executive orders on issues such as climate change and diversity, equity, and inclusion programs. However, they released a two-sentence notice today, retracting the initial memo. This reversal underscores the limits of Trump's plans to rapidly and dramatically reshape the government, even with unified control of Washington.

Government officials insisted that despite the confusion, their actions achieved their intended effect of highlighting federal agencies' obligation to adhere to Trump's executive orders. White House press secretary Karoline Leavitt stated, “The President’s executive orders regarding the review of funding remain fully in effect, and all agencies and departments will rigorously implement them.” She blamed the courts and news media, not the administration, for the chaos. “This action should effectively end litigation and allow the administration to focus on implementing the President’s orders regarding controlling federal spending.”

The White House policy shift caught Congress off guard, particularly Trump’s Republican allies who had been defending him throughout the brief ordeal. “This is Donald Trump. He throws a grenade in the middle of the room and then cleans it up after,” said Senator Kevin Cramer of North Dakota. “I just think the guy is a genius.” Cramer conceded the initial memo may have generated excessive political heat, with states raising alarms about the funding freeze. But the senator suggested Trump “may not have understood” the breadth of what was proposed.

Democrats, however, said the White House’s approach was beyond what the American people wanted. “Most people voted for cheaper eggs,” said Senator Martin Heinrich of New Mexico. “They weren’t voting for this chaos.” The funding pause was scheduled to take effect at 5 p.m. Tuesday, Washington time. But a federal judge suspended it until at least Monday after non-profit organizations requested an emergency hearing. Another lawsuit filed by Democratic state attorneys general is also pending.

Following the initial memo's distribution, federal agencies were required to answer a series of “yes” or “no” questions about each program by February 7. Questions included “Does the program promote gender ideology?” and “Does the program in any way promote or support abortion?” While Trump had promised to upend Washington if re-elected, the impact of his funding freeze effort was felt far from the capital. Organizations like “Meals on Wheels,” which receive federal funding to deliver meals to seniors, feared being cut off. Even a temporary funding disruption could lead to layoffs or delays in public services.

On Tuesday, Trump administration officials stated that programs providing direct assistance to Americans, including Medicare, Social Security, student loans, and food stamps, would not be affected. However, they sometimes struggled to provide clear explanations. Leavitt initially declined to say whether Medicaid was excluded from the freeze, but the administration later clarified that it was. Democratic critics of the order were quick to celebrate the memo’s withdrawal. “This is a major victory for the American people, whose voices were heard under enormous pressure across the country,” said Senator Patty Murray of Washington. She said Trump “caused real harm and confusion for millions.” Senate Democratic leader Chuck Schumer stated, “The American people fought back, and Donald Trump backed down.”