The Trump administration’s Office of Management and Budget released a new memo Wednesday rescinding a controversial memo issued late Monday that froze a wide swath of federal financial assistance, which had paralyzed many federal programs and caused a huge uproar on Capitol Hill.
The decision came amid strong behind-the-scenes pushback from Republican lawmakers on Capitol Hill, according to a GOP senator who was apprised of the decision to reverse Monday’s budget memo.
The reversal was signed by Matthew Vaeth, the acting director of the White House budget office.
One GOP senator expressed relief over the decision.
“Chaos is never good,” the lawmaker said.
GOP senators had been flooded with calls from community leaders who expressed confusion and concern about losing federal grants.
Senate Appropriations Committee Chair Susan Collins (R-Maine) applauded the administration’s sudden change in course.
“I am pleased that OMB is rescinding the memo imposing sweeping pauses in federal programs. While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation,” she said in a statement.
Vaeth ordered a pause of grant, loan and financial assistance programs Monday to ensure compliance with several executive orders issued by President Trump, including a 90-day pause on most foreign development assistance, the termination all federal diversity, equity and inclusion (DEI) programs and a pause on climate programs funded by former President Biden's Inflation Reduction Act.
That memo stated that federal agencies “must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders.”
White House press secretary Karoline Leavitt emphasized that Trump’s executive orders halting foreign assistance, terminating DEI programs and others referenced in the OMB memo from Monday remain “in full force and effect.”
“In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage. The Executive Orders issued by the president on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments,” Leavitt said in a statement.
“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,” she said.
A Trump administration official explained that Wednesday's move was taken to end the confusion over Monday's directive and end the federal injunction against it. The official said it would not halt the intended freezing of funding that conflicts with Trump's executive orders.
Republican and Democratic senators on Capitol Hill saw the rescinding of the memo as a major step toward restoring funding to a number of federal assistance programs that were thrown into chaos Tuesday.
“We just got word that a number of the freezes are off entirely,” Sen. Mike Rounds (R-S.D.) told reporters. “What happens is when you start asking questions, folks go back in and look and say, ‘OK, what’s the best path forward to resolve the issue.’ And that’s what’s going on right now.”
Rounds indicated that White House officials reviewed the funding freeze after getting pressed by GOP lawmakers, who had many questions about how it would affect their constituents.
“From our part, we were simply asking questions and a number of members did,” he said. “I think this is probably just a really good example of advise and consent.
“That means more than just nominees. Once in a while, it’s an advise and consent about a particular action,” he added.
The biggest snafu was the outage of Medicaid’s web portal, which affected many states and caused a loud public outcry.
The internet outage also affected Head Start early education programs and community health. Programs that lost access to the payment management portal run by the Department of Health and Human Services.
Senate Majority Leader Chuck Schumer (D-N.Y.) hailed the Trump administration’s decision to rescind the memo as a victory.
He urged Republican senators to vote against Trump’s nominee to head OMB, Russell Vought, in response to the aborted memo.
Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters that Republican senators should vote against Trump’s nominee to head the Office of Management and Budget, Russ Vought, to make sure the budget office doesn’t advance another funding moratorium.
“As you know Donald Trump just rescinded this horrible OMB freeze. He should now rescind Russell Vought’s nomination for OMB,” Schumer said.
“We don’t believe they’ll stop,” he said. “What they’re basically doing is being lawless to hurt families to help their billionaire friends. So they’re going to keep at it.”
Aris Folley and Al Weaver contributed.
This story was updated at 3:29 p.m. EST
