According to an internal memo released Monday, the White House budget office has ordered a freeze on all federal grants and loans, which could have a significant impact on billions of dollars in government expenditure and disrupt public programs that have a significant influence on millions of Americans.

In the statement, which CNN received, White House Office of Management and Budget acting director Matthew Vaeth stated that federal agencies "must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance." Additionally, the suspension prevents fresh grants from being issued.

The email clarifies that "assistance provided directly to individuals" including Social Security and Medicare benefits will not be impacted by the suspension.

The federal assistance freeze will go into force Tuesday at 5 p.m. It is the most recent attempt by the Trump administration to control public funds, including those that Congress has already allotted.

According to the document, the halt also extends to "other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."

The memo states that on a case-by-case basis, the budget office "may grant exceptions allowing Federal agencies to issue new awards or take other actions."

By February 10, agencies must provide OMB with "detailed information on any programs, projects, or activities subject to this pause," according to the memo.

It was not immediately obvious how much money the pause could save the federal government.

According to Brian Riedl, a senior fellow at the center-right think tank Manhattan Institute, "the memo is too vague to specify which programs are affected and the total cost, but it's certainly well into hundreds of billions of dollars – and in the trillions if grants to state governments are included."

According to a Pew Charitable Trusts estimate, federal grants to state governments exceeded $1 trillion for the first time in 2022.

"This funding would not significantly reduce the $1.8 trillion budget deficits because the White House can legally pause it, but not cancel it," Reidl stated. Furthermore, existing foreign aid and targeted "DEI" spending is insufficient to drastically lower deficits. Although recipients may be severely impacted, this is more of a ploy in terms of reducing the deficit.

 

Nonprofits and Democrats voice concern

When the Trump administration announced the directive Monday night without providing any additional context, nonprofits that accept government grants and loans began to wonder which groups might be impacted.

In a statement released Monday, Diane Yentel, president and CEO of the National Council on organizations, stated, "This order is a potential 5-alarm fire for nonprofits and the people and communities they serve."

Among the initiatives included on the OMB is Meals on Wheels, the most well-known initiative for providing food to elderly individuals in need. Meals on Wheels America spokesman Jenny Young stated, "This would presumably halt service to millions of vulnerable seniors who have no other means of purchasing or preparing meals."

"Seniors will become anxious because they won't know where they'll get their next meals," Young added.

The 71 top research universities in America, including Georgia Tech and Notre Dame, make up the Association of American Universities, which stated on Tuesday that it is "still working to assess" the impact of the pause.

In addition to teaching and training tomorrow's visionary leaders and innovators, member universities "earn the majority of competitively awarded federal funding for research that improves public health, seeks to address national challenges, and contributes significantly to our economic strength," according to the association.

The leading Democratic appropriators in Congress, Senator Patty Murray of Washington state and Representative Rosa DeLauro of Connecticut, sent a letter to the White House on Monday night expressing their "extreme alarm" over the action.

The congressmen wrote, "The extent of what you are ordering is astounding, unprecedented, and will have disastrous repercussions across the nation." "We are writing today to strongly urge you to uphold the Constitution and the law and to make sure that all federal resources are provided in a way that complies with the law."

The halt was swiftly slammed by Senate Minority Leader Chuck Schumer as well.

"These investments were approved by Congress and are mandatory; they are the law," the Democrat from New York said in a statement late Monday. "These grants strengthen communities, support families, assist parents in raising children, and benefit people in both red and blue states."

The measure puts "billions upon billions of community grants and financial support that help millions of people across the country" at risk, Schumer continued.

"It will mean missed rent payments and payrolls and everything in between: chaos for non-profit charities and universities alike," he said