White House pauses federal grants and loans

The White House has announced a temporary halt to federal grants, loans, and other forms of financial assistance. This decision was revealed in a leaked memo that has been confirmed by CBS News, a partner of the BBC. The memo, which was authored by the acting head of the Office of Management and Budget, instructs government agencies to ensure that their spending aligns with the priorities set by President Trump. While the full implications of this pause are still unclear, the memo explicitly states that Medicare and Social Security benefits will not be affected. This announcement comes just days after the United States suspended nearly all foreign aid. Members of the opposing Democratic Party have criticized this move, warning that it could lead to severe consequences for programs that many people rely on. Diane Yentel, the president of the National Council of Nonprofits, expressed concern that this order could halt critical initiatives such as cancer research, food assistance, and suicide prevention hotlines. Given that the funding currently on hold was allocated by Congress, it is likely that this decision will face legal challenges regarding the extent of presidential authority. The memo, signed by Matthew Vaeth, the acting OMB chief, calls for a temporary pause in financial assistance programs so that agencies can review how their spending may be impacted by the various executive orders signed by Trump. The memo specifies that this includes financial assistance for foreign aid, non-governmental organizations, diversity, equity, and inclusion initiatives, and the Green New Deal. A deadline of 5 PM EST on February 10 has been set for agencies to pause the issuance of new awards and the distribution of funds under existing awards. Furthermore, the memo requires all agencies to report which programs have been paused by that date. The White House has not yet issued an official statement regarding the leaked document. Democrats in Washington DC quickly raised alarms about the plan. The leading Democratic appropriators in Congress, Senator Patty Murray from Washington and Congresswoman Rosa DeLauro from Connecticut, sent a letter to the White House expressing their 'extreme alarm' over the memo. They stated, 'The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country. ' They urged the president to uphold the law and the Constitution, ensuring that all federal resources are distributed in accordance with legal requirements. Chuck Schumer, the Democratic minority leader in the Senate, also criticized the pause, stating, 'Congress approved these investments, and they are not optional; they are the law. ' He added that this decision would result in missed payrolls and rent payments, leading to chaos for various organizations, including universities and non-profit charities. This pause follows last week's announcement that the Department of State had halted nearly all existing foreign assistance and paused new aid, as indicated in an internal memo sent to officials and US embassies abroad. This suspension appears to affect a wide range of aid, from development assistance to military aid, with exceptions made only for emergency food aid and military funding for Israel and Egypt. Earlier, Trump had issued an executive order for a 90-day pause in foreign development assistance while a review of efficiencies and alignment with his foreign policy is conducted. The United States is the largest international aid donor globally, having spent $68 billion in 2023, according to government figures. The State Department's notice seems to impact all forms of aid, from development assistance to military support.