White House Rescinds Federal Aid Freeze In CA

Update, Wednesday, 10:56 a.m. - A federal aid freeze announced this week by the Trump Administration has been rescinded, multiple sources are reporting Wednesday afternoon.

CNN reported that it has obtained a memo from a Trump administration official communicating that the freeze is rescinded. That memo was also shared by state officials in New Jersey.

According to the Associated Press, President Donald Trump's budget office on Wednesday rescinded the freeze on spending on federal grants, less than two days after it sparked widespread confusion and legal challenges across the country.

In California, the order caused immediate alarm among communities devastated by wildfires and dependent on community grants for help. Nonprofits up and down the state also expressed alarm. The Family Assistance Program, the San Bernardino County's only runaway and homeless youth shelter, said it was on the verge of immediate collapse due to the order.

"With the loss of funding, these vulnerable children will be forced onto the streets, exposing them to exploitation, violence, and further trauma," the nonprofit announced.

On Tuesday, a federal judge had temporarily blocked the plan to halt the distribution of trillions of dollars in federal grants and loans until a hearing could be held Monday morning.

Previous reporting:

CALIFORNIA — California is fighting back Tuesday following the Trump administration’s abrupt pause on trillions of dollars in federal grants and loans.

But for now, there is a reprieve from the chaos. A federal judge in the District of Columbia temporarily blocked President Donald Trump's spending freeze and is expected to render a more permanent decision on Feb. 3. Judge Loren AliKhan’s decision Tuesday was in response to a lawsuit filed by the activist group Democracy Forward.

The Trump threat caused nationwide confusion. In California, where rebuilding efforts are underway following this month's devastating wildfires, the administration's move was seen as a cruel blow. The freeze, if implemented, could impact the Golden State's wildfire recovery efforts, as well as public health sectors, education, public safety, research centers, other government programs, green technology companies, and some nonprofits.

On Tuesday, California Attorney General Rob Bonta and New York Attorney General Letitia James announced they were leading a coalition of 23 attorneys general in filing a lawsuit to block the freeze's implementation.

"The Trump Administration is recklessly disregarding the health, wellbeing, and public safety of the people it is supposed to serve," Bonta said. "I will not stand by while the President attempts to disrupt vital programs that feed our kids, provide medical care to our families, and support housing and education in our communities."

Matthew Vaeth, the acting director of the federal Office of Management and Budget (OMB), wrote in a memo late Monday that under Trump's directive, a spending freeze was being enacted at 2 p.m. (Pacific) Tuesday while federal agencies "identify and review all Federal financial assistance programs and supporting activities consistent with the President's policies and requirements."

The White House offered few details about the halt. The memo states that the freeze will include "financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."

During her first press briefing Tuesday, White House Press Secretary Karoline Leavitt fielded a flurry of reporters' questions. She said the freeze is a "temporary pause" to ensure that any funding does not conflict with Trump's executive actions and orders.

Social Security, Medicare, food stamps, welfare, and "assistance that is going directly to individuals will not be impacted by this pause," she said.

But those are hardly the extent of programs impacting American lives.

'Chaos And Confusion'

While the full effect on Golden State programs is unclear, the state's Attorney General Rob Bonta said Tuesday that the memo's "directive is unprecedented in scope and would be devastating if implemented. Already, it has created chaos and confusion among our residents."

Washington, D.C., is a hub of spending that flows to various departments, local governments, nonprofits and contractors, and the memo has left countless people who are dependent on that money wondering how they will be affected.

Medicaid reimbursement portals were down Tuesday in all 50 states, according to Sen. Ron Wyden, D-Ore.

Leavitt said she expected systems to "be back online shortly" without affecting payments.

Leavitt declined to directly answer questions about whether the freeze would affect future Medicaid funding.

"... it is the responsibility of this president and this administration to be good stewards of taxpayer dollars," she said.

After Monday's memo, California students and parents panicked, but the U.S. Department of Education announced that the spending pause does not apply to federal student loans or Pell Grants.

It's unclear whether federal grants for research at California universities would continue under a freeze.

Health Impact?

"Are you stopping NIH cancer trials?" Sen. Amy Klobuchar, a Democrat from Minnesota, posited Tuesday on social media, referring to the federal National Institutes of Health. The White House has not answered the question.

In fact, the NIH canceled meetings last week with very little explanation. The move came after the Trump administration told federal health officials to halt public communications until a presidential appointee could review them.

The NIH is the world's largest public funder of biomedical research, investing more than $40 billion in research every year, including billions awarded to California research centers that employ thousands of people.

Public Safety Concerns

Public safety could be at risk in some areas. Federal grants are regularly dispersed to local police and fire departments across the country, including in California. It's unclear whether the Trump administration would refrain from awarding funds to agencies he deems "woke."

Of the 58 California sheriffs across the state, most say they follow state law when it comes to immigration enforcement. During the previous Trump administration, so-called "sanctuary laws" (AB 2792 and SB 54) took effect in California, limiting how local enforcement agencies interact with federal immigration officers. Both laws were signed by then-Gov. Jerry Brown.

Federal funding cuts are already in place for some agencies. Last week, the U.S. Department of Justice told immigrant rights organizations that receive federal funding to stop work immediately.

A homeless and runaway youth safety net in San Bernardino County was on the verge of collapse Tuesday due to news of the funding freeze. Family Assistance Program, the county's only runaway and homeless youth shelter, would face closure without federal funding, according to the nonprofit.

The shelter provides emergency housing and support services to at-risk youth aged 12-17.

"With the loss of funding, these vulnerable children will be forced onto the streets, exposing them to exploitation, violence, and further trauma," according to the nonprofit.

The funding freeze would extend far beyond the youth shelter. Thousands of federal dollars earmarked for rental assistance in the county's High Desert would likely be withheld.

"This ripple effect will hit everyone — families will lose their homes, landlords will struggle to make mortgage payments, and property management companies will be unable to maintain their buildings," according to Family Assistance Program.

Legal Questions

It's unclear whether Trump has the power to block spending that Congress has authorized. In the lawsuit led by Bonta and James, the attorneys general argue that the OMB directive initiated by Trump violates the U.S. Constitution, violates the Administrative Procedure Act, and is "arbitrary and capricious." The attorneys general sought a temporary restraining order to block the directive from being implemented.

Specifically, the attorneys general argue that Congress has not delegated any unilateral authority to OMB to indefinitely pause all federal financial assistance under any circumstance, irrespective of the federal statutes and contractual terms governing those grants, and without even considering them.

The attorneys allege the directive also violates the "separation of powers" between Congress and the Executive Branch because the Spending Clause of the U.S. Constitution gives the power of the purse exclusively to Congress.

The GOP, which has shown little to no resistance against any Trump initiative since his term began a week ago, controls both the U.S. House of Representatives and the U.S. Senate. The U.S. Supreme Court also enjoys a conservative majority, with Trump appointing three justices during his first presidential term.

In addition to California and New York, the states joining the lawsuit against the administration's spending halt include Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.

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