White House rescinds its memo freezing federal spending — sort of

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  • Jan 29, 2025

The Trump administration rescinded its controversial memo ordering a freeze on federal aid and grant programs Wednesday but insisted it would still follow through on plans to pause certain types of federal spending.

White House officials said they were withdrawing the memo, which had been issued by the Office of Management and Budget, as a legal maneuver in response to a federal judge’s order on Tuesday that temporarily blocked it from going into effect.

“This is NOT a rescission of the federal funding freeze,” press secretary Karoline Leavitt said in a post on X . “It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction. The President's [executive orders] on federal funding remain in full force and effect, and will be rigorously implemented.”

The move added another bewildering wrinkle to an episode that has thrown Washington into an uproar this week, while raising questions about how aggressively the new president will try to assert power over government spending without permission from Congress.

The saga began on Monday night when OMB officials circulated a memo ordering agencies to temporarily pause spending on programs likely to be affected by President Trump’s recent raft of executive orders on issues ranging from climate change to foreign aid to ending diversity, equity, and inclusion programs. The vaguely written missive seemed to leave open questions about whether massive programs such as Medicaid or student loans would be affected, as well as grants for popular but smaller programs like Meals on Wheels for seniors.

Compounding the panic, state officials reported being locked out of the federal websites they use to manage Medicaid and Head Start.

Under attack from Democrats, the administration issued a Q&A late Tuesday afternoon stating that Medicaid, the Supplemental Nutrition Assistance Program, Pell grants, rental help, and other assistance programs for individuals were not affected by the freeze.

“The pause does not apply across-the-board. It is expressly limited to programs, projects, and activities implicated by the President’s Executive Orders,” it stated.

Still, in the evening a federal trial court judge in Washington, D.C., issued a temporary injunction preventing the freeze from going into effect until late Monday. The suit had been brought by a group of nonprofit organizations who argued the administration was preparing to illegally halt their funding.

White House rescinds its memo freezing federal spending — sort of

On Wednesday, the Trump administration issued a two-line order rescinding its memo entirely. In a statement to reporters separate from her tweet , Leavitt framed the decision as an effort to blunt the ongoing lawsuit and allow the administration to continue its plan.

“This action should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending. In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding,” Leavitt said.

Justice Department attorneys also filed a motion in a separate suit challenging the freeze on Wednesday arguing that the case, brought in Rhode Island by a group of Democratic state attorneys general, should be thrown out because the memo had been withdrawn.

However, the judge overseeing that case signaled he was likely to issue his own injunction blocking the spending freeze, in part because Leavitt's statement suggested the spending freeze was still in place.

“I fear … that the administration is acting with a distinction without a difference," said U.S. District Judge John McConnell.

In the meantime, the national group representing state Medicaid officials, as well as several individual state offices, reported on Wednesday that they were once again able to access the program’s website. Trump administration officials had suggested on Tuesday that the website’s “outage” was unrelated to the OMB memo.

Correction: An earlier version of this story incorrectly conflated the lawsuits in Washington, D.C. and Rhode Island.

Jordan Weissmann is a senior reporter at Yahoo Finance.

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