(CNN) — A federal judge on Tuesday afternoon temporarily blocked part of the Trump administration’s plans to freeze all federal grands and loans, a policy that unleashed confusion and worry from charities and educators even as the White House said it was not as sweeping an order as it appeared.
The short-term pause issued by US District Judge Loren L. AliKhan prevents the administration from carrying through with its plans to freeze funding for “open awards” already granted by the federal government through at least 5 p.m. ET Monday.
The White House budget office had ordered the pause on federal grants and loans, according to an internal memorandum sent Monday.
Federal agencies “must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance,” White House Office of Management and Budget acting director Matthew Vaeth said in the memorandum, a copy of which was obtained by CNN, citing administration priorities listed in past executive orders.
The memo specifies the pause will not affect Social Security or Medicare benefits, nor does it include “assistance provided directly to individuals.”
The order sent chills through organizations, both public and private, that rely on federal grants and loans for their operations, but the White House insisted the concern was misplaced.
“This is not a blanket pause on federal assistance and grant programs from the Trump administration,” Press Secretary Karoline Leavitt said in her first White House briefing.
Leavitt said the pause was directed more at Democratic priorities rather than making across-the-board cuts, and she said all agencies could make a case to the administration to keep their funding.
“If they feel that programs are necessary and in line with the president’s agenda, then the Office of Management and Budget will review those policies,” said Leavitt.
Leavitt declined to directly answer questions Tuesday about whether Medicaid funding would be affected by the order.
For several hours on Tuesday, state Medicaid agencies were unable to access federal funds for the health insurance program that covers more than 72 million low-income Americans. However, during the afternoon, states started regaining access to the funding system.
Connecticut’s Department of Social Services, which had told CNN that state Medicaid officials could not log into the system earlier in the day, said in the afternoon that access was restored. Medicaid policy experts also told CNN they were hearing reports of additional states being able to sign in.
Just before 3 p.m., Leavitt posted on X that “The White House is aware of the Medicaid website portal outage. We have confirmed that no payments have been affected – they are still being processed and sent.”
“We expect the portal will be back online shortly,” she posted.
Leavitt’s comments followed the Office of Management and Budget issuing a Q&A on Tuesday afternoon stating “mandatory programs like Medicaid and SNAP (food stamps) will continue without pause.”
The temporary loss of access prompted some Democratic lawmakers to lash out at the Trump administration.
“My staff has confirmed reports that Medicaid portals are down in all 50 states following last night’s federal funding freeze,” Sen. Ron Wyden, a Democrat from Oregon, posted on X on Tuesday afternoon. “This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed.”
At the top of the Department of Health and Human Services page for Payment Management Services (PMS), a notice was posted Tuesday in red, saying: “Due to Executive Orders regarding potentially unallowable grant payments, PMS is taking additional measures to process payments. Reviews of applicable programs and payments will result in delays and/or rejections of payments.”
Less than 24 hours after the pause was announced, several non-profits filed suit in federal court, asking a judge to stop the Trump administration’s decision.
“The Memo fails to explain the source of (the Office of Management and Budget’s) purported legal authority to gut every program in the federal government,” the lawsuit states.
The complaint – whose plaintiffs include the National Council of Nonprofits and the American Public Health Association – requests a temporary restraining order to keep the memo from being implemented.
The memo is slated to take effect at 5 p.m. ET Tuesday. It marks the latest move by the Trump administration to exert control over federal funding, even that which has already been allocated by Congress.
The pause also applies 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,” according to the memo.
The budget office “may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis,” according to the memo.
The memo calls on agencies to submit to OMB “detailed information on any programs, projects or activities subject to this pause” by February 10.
More than 2,000 programs under review
The information that agencies must send to administration leaders is laid out in a spreadsheet obtained by CNN. It lists more than 2,000 programs and requires agencies to document whether each program has any funding related to undocumented immigrants, climate policy, diversity programs or abortion.
Hundreds of government programs are under review, the document shows, including emergency grain storage assistance for farmers, the Head Start program for preschool education, cancer center support grants and even a program covering the cost of caskets for deceased veterans with no next of kin.
The agencies are required to provide their responses to the Office of Management and Budget in less than two weeks.
How much money the federal government could save through the pause was not immediately clear. “It’s certainly well into hundreds of billions of dollars – and in the trillions if grants to state governments are included,” said Brian Riedl, a senior fellow with the Manhattan Institute, a center-right think tank.
Federal grants to state governments topped $1 trillion for the first time in 2022, according to an analysis by the Pew Charitable Trusts.
“Because the White House can legally pause – but not cancel – this funding, it would not notably reduce the $1.8 trillion budget deficits,” Reidl said. “And ultimately, current spending on targeted ‘DEI’ and foreign aid spending is not large enough to significantly reduce deficits. Recipients may be hit hard, but in terms of deficit reduction, this is more of a gimmick.”
Some Head Start programs may close this week
Word of the order came Monday evening without further explanation from the Trump administration, leading charities that receive government grants and loans to question which organizations will be affected.
Some Head Start programs are already unable to access the federal system they use to draw down their federal grant funding, which could force some to close their doors as early as Wednesday, Tommy Sheridan, deputy director of the National Head Start Association, told CNN on Tuesday.
Head Start serves nearly 800,000 low-income children from birth to age 5 and their families.
“Some programs that I just spoke with are having the discussions and trying to figure out, are they going to be able to open their programs tomorrow or not?” Sheridan said, adding that if programs shutter, it could affect parents’ ability to work.
The primary source of federal funding for senior nutrition programs, such as Meals on Wheels, is the Older Americans Act Nutrition Programs, which is a grant. So, if the memo applies to this act, “this would presumably halt service to millions of vulnerable seniors who have no other means of purchasing or preparing meals,” Jenny Young, spokesperson for Meals on Wheels America, told CNN on Tuesday.
“Seniors will panic not knowing where their next meals will come from,” said Young.
The Association of American Universities, which is composed of America’s 71 leading research universities, including Notre Dame and Georgia Tech, said Tuesday it is “still working to assess” the impact of the pause.
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, while educating and training tomorrow’s visionary leaders and innovators,” the association said.
The pause on federal grants and loans could lead to a “complete pausing of the work” done by local health departments and organizations, such as the National Association of County and City Health Officials, CEO Lori Tremmel Freeman said.
“These are not just grants for research or things that can be temporarily put on hold, they’re often grants for real activities that are occurring daily,” Freeman said Tuesday.
Sen. Patty Murray of Washington and Rep. Rosa DeLauro of Connecticut – the top Democratic appropriators in Congress – wrote a letter to the White House on Monday night outlining their “extreme alarm” with the idea of a broad pause in grants.
“The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country,” the lawmakers wrote. “We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law.”
Senate Minority Leader Chuck Schumer also quickly criticized the pause.
“Congress approved these investments and they are not optional; they are the law,” the New York Democrat said in a statement Monday night. “These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities.”
Schumer added that the action jeopardizes “billions upon billions of community grants and financial support that help millions of people across the country.”
“It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities,” he said.
CNN’s Phil Mattingly, Samantha Waldenberg, Jeff Zeleny, Manu Raju and Rebekah Riess contributed to this report.
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