Federal grant freeze memo rescinded but White House says executive order remains in effect | FOX 2 Detroit

Federal grant freeze memo rescinded but White House says executive order remains in effect

The White House Office of Management and Budget has rescinded a Trump administration memo pausing federal loans, grants and other financial assistance.

The order on the federal grant freeze sparked widespread confusion among Americans and organizations that rely on Washington and their financial lifeline.

Memo rescinded, but executive order remains in effect

What we know:

The White House confirmed that OMB pulled the memo Wednesday in a two-sentence notice sent to agencies and departments, but said that Trump's underlying executive orders targeting federal spending in areas like diversity, equity and inclusion and climate change, remained in place.

What they're saying:

Following the news, White House Press Secretary Karoline Leavitt clarified that the rescission was on the memo itself, but not on the executive order.

"This is NOT a rescission of the federal funding freeze," she said on the social media platform X. "It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction. The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented."

Administration officials insisted that despite the confusion, the order still had its intended effect by underscoring to federal agencies their obligations to abide by Trump's executive orders.

Trump issued order to pause federal grants, loans

The backstory:

Trump issued a directive on Monday to temporarily suspend all federal grants and loans, a move that could impact trillions of dollars in government funding and disrupt vital public programs relied upon by millions of Americans.

According to the White House memo, the suspension would begin on Jan. 28 at 5 p.m. EST. However, a federal judge temporarily blocked Trump's freeze minutes before it was set to go into effect on Tuesday.

The memo, written by Matthew J. Vaeth, the acting director of the Office of Management and Budget, said federal agencies would need to temporarily pause all activities related to obligation or disbursement of all Federal financial assistance including, but not limited to, "financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology and the Green New Deal." 

RELATED: States report Medicaid outage amid federal funding drama

Administration officials said the decision was necessary to ensure that all funding complied with Trump's executive orders.

Administration officials said federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, student loans and scholarships.

During the White House press briefing on Tuesday, Leavitt said federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, food stamps, welfare benefits, student loans and scholarships.

What they're saying:

"If you are receiving individual assistance from the federal government, you will still continue to receive that," Leavitt said. "However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars." 

The suspension specifically targeted financial assistance related to financial assistance for foreign aid, nongovernmental organizations, diversity and equity and the Green New Deal. 

However, the sweeping scope of the freeze raised concerns about possible disruptions to educational funding, with education programs potentially being impacted. It also became unclear Tuesday whether Medicaid would be affected.

Medicaid portals were down

The backstory:

On Tuesday, U.S. Senator Ron Wyden and other state officials claimed that Medicaid portals were down in the U.S., following Trump’s pause on federal funding.

"My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze," the senator from Oregon said on the social media platform X on Tuesday. "This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed."

At a news conference announcing a lawsuit aimed at blocking the pause, Attorney General Letitia James said Head Start funding was frozen in Michigan, access to child development block grants was cut off in Maryland and at least 20 states have been unable to access Medicaid reimbursement systems, including New York.

"There is no question this policy is reckless, dangerous, illegal and unconstitutional," said James, who was joined on the call by five other Democratic state attorneys general.

Later, Leavitt confirmed that the White House was "aware of the Medicaid website portal outage" and said no payments were being affected at that time. 

"We expect the portal will be back online shortly," Leavitt said in a post on X on Tuesday. 

PoliticsInstastoriesDonald J. TrumpU.S.News