U.S. District Judge Loren AliKhan issued a temporary block on President Donald Trump’s directive to freeze federal aid spending, just minutes before it was set to take effect on Tuesday, January 28, 2025.
The judge’s decision comes as a response to a lawsuit filed by a coalition of nonprofit organizations challenging the administration’s move. The National Council of Nonprofits, American Public Health Association, Main Street Alliance, and SAGE were named as the plaintiffs.
Key points of the legal challenge include:
- The plaintiffs argue that the OMB’s memo violates the Administrative Procedure Act by exceeding the agency’s statutory authority.
- They claim the directive is arbitrary and capricious, failing to provide adequate justification for such a sweeping action.
- The lawsuit alleges that the freeze infringes upon First Amendment rights, potentially targeting specific programs based on their content or viewpoint.
- The plaintiffs are seeking not only to block the implementation of the freeze but also to require the OMB to file regular status reports confirming the continued disbursement of federal funds.
Judge AliKhan, an appointee of former President Joe Biden, granted an administrative stay that will remain in effect until Monday, February 3, at 5 p.m. This ruling prevents the Trump administration from suspending the disbursement of congressionally appropriated funds during this period.
In her decision, AliKhan cited concerns about potentially irreparable harm, stating, “I think there is the specter of irreparable harm”. The judge’s action maintains the status quo while allowing for further litigation to play out.
The temporary block is seen as a victory for nonprofit and public health groups who argued that even a brief implementation of Trump’s freeze could have devastating consequences for people relying on federal funds for essential services. These organizations also contended that the Office of Management and Budget’s order infringes on First Amendment rights by targeting funding for certain programs.
The Federal Aid Pause Memo
The Trump administration’s directive caused widespread confusion and concern among federal agencies, state governments, and organizations dependent on federal funding. The White House justified the freeze as necessary to ensure alignment with the president’s priorities and executive orders.
The Trump administration’s federal funding freeze has sparked confusion and controversy, particularly regarding its impact on Medicaid. While the White House insisted that critical benefit programs would not be affected, reports from across the country suggest otherwise.
Illinois Governor Pritzker’s office reported that they were initially unable to access the portal used for processing Medicaid claims. Medicaid, a government healthcare program for 70 million low-income individuals and families, is jointly managed and funded by federal and state governments. However, by late afternoon, Pritzker confirmed that access to the portal had been restored.
“The intent here is to disrupt,” Illinois Gov. J.B. Pritzker said Tuesday. “The intention here is to make cuts. And it will affect people all across our state.”
“Don’t let them fool you that there was some kind of website outage,” Pritzker said. “What Donald Trump tried to do in the last 24 hours is illegal. This is a demonstration of cruelty against people who depend on us. Working families who rely on federal assistance to pay their rent, people who need help paying their utility bills, parents who need critical programs like Head Start for quality, affordable child care and 3.5 million Illinoisans who get their health insurance through Medicaid.”
In response to the growing concern, White House Press Secretary Karoline Leavitt addressed the issue on social media platform X. She acknowledged the Medicaid website portal outage but assured that no payments had been affected.
Leavitt stated, “We have confirmed no payments have been affected — they are still being processed and sent. We expect the portal will be back online shortly”.
The discrepancy between the administration’s assurances and the reported nationwide outages has heightened tensions and raised questions about the implementation and scope of the federal funding freeze.
Within the memo sent in the middle of the night on Jan. 27, federal agencies were directed to pause the issuance of new awards, disbursement of federal funds under open awards, activities associated with open Notice of Funding Opportunities and other relevant agency actions implicated by executive orders. The pause appeared to apply to a broad range of federal financial assistance, including grants, loans, loan guarantees, cooperative agreements, non-cash contributions, donations of property, direct appropriations, interest subsidies, insurance, and food commodities, but did not affect Social Security, Medicare.
Additional guidance provided later stated assistance provided directly to individuals would not be affected.
“In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause,” the updated guidance said.
The memo adds that funds for small businesses, farmers, Pell grants, Head Start, rental assistance and other similar programs are also exempt.
While it appears that SNAP, which serves roughly 41 million low-income Americans, would not be affected by this, programs like Meals on Wheels, could be affected by the proposed funding pause.
Meals on Wheels expressed grave concerns about the potential impact of the federal aid freeze. The organization stated that if the order affects the Older Americans Act, it would disrupt meal services for millions of vulnerable seniors who rely on their program.
“The uncertainty is causing confusion among Meals on Wheels providers, who are unsure whether they should continue serving meals today,” the organization told CBS MoneyWatch.”
The stated purpose of the federal aid pause is to allow the Trump Administration to conduct a political review to assess whether federal financial assistance aligns with its priorities, according to the memo. Federal agencies are required to submit a detailed report to the Office of Management and Budget (OMB) by February 10, 2025, outlining all obligations or disbursements of federal financial assistance.The memo specifically mentions reviewing programs related to foreign aid, nongovernmental organizations, DEI initiatives, gender ideology, and the Green New Deal.
But even if federal funding would be paused for a day, programs that Americans rely on could be affected.
Federal dollars go towards:
- Education
- Housing
- Health and Social Services
- Nutrition
- Infrastructure and Transportation
- Research and Science
- Disaster Relief
- Veterans Services
- Environmental Programs
- Foreign Aid
- Law Enforcement
- Small Business
- Seniors
- Safety
The vague language of the memo has led to worries that the federal aid pause will not only affect individuals who rely on food, grant or healthcare help, but also local and state governments that rely heavily on federal funding.
Potential disruptions: The freeze could disrupt a wide range of state and local initiatives, including:
- Law enforcement support
- School funding
- Small business assistance
- Firefighting resources
- Veterans’ services
- Infrastructure projects
Nearly 30% of state revenues come from federal funding.
Previous attempts to cut appropriated spending
Federal aid dollars have already been appropriated by Congress. President Trump’s directive to withhold those dollars may be unconstitutional.
The current federal aid freeze ordered by President Trump echoes a similar controversy from the 1970s involving President Richard Nixon. This historical precedent provides important context for understanding the legal implications of executive attempts to control congressionally appropriated funds:
In the 1970s, President Nixon ordered the Environmental Protection Agency to withhold funding for various programs, including water treatment initiatives. This action led to a significant legal battle that reached the U.S. Supreme Court.
In 1975, the Supreme Court ruled on this issue in the case of Train v. City of New York. The Court’s decision was clear: the president does not have the power to overrule Congress by impounding funding that has been allocated by the legislative branch.
As a direct result of this controversy, Congress passed the Impoundment Control Act in 1974. This legislation was designed to close loopholes and make it more difficult for presidents to unilaterally stop the spending of money that lawmakers had allocated.
The legal history of executive impoundment challenges extends beyond the Nixon era, with several significant cases reinforcing the limits of presidential power over congressionally appropriated funds:
In 1998, the Supreme Court decided Clinton v. City of New York, a landmark case that further restricted executive control over federal spending. This case challenged President Bill Clinton’s use of the line-item veto, which allowed him to selectively cancel specific budget items without vetoing entire bills.
The Supreme Court ruled that the Line Item Veto Act of 1996, which had granted the president this power, was unconstitutional. The Court held that the act violated the Presentment Clause of the Constitution, which outlines the specific process for how bills become law.
