Washington
CNN
—
The Trump administration’s biggest swing at radically reshaping federal spending lasted just under 45 hours.
A sweeping freeze on trillions in federal spending for grants and loans, issued Monday night by the White House budget office to federal agencies without fanfare, sparked outrage and confusion – even among fellow Republicans. The impact touched all corners of the country, with state Medicaid funding portals briefly shuttered and programs like Meals on Wheels and Head Start scrambling to figure out if they were about to lose their funding.
The White House insisted that the confusion was a media-led creation. But on Wednesday the Office of Management and Budget issued a terse two-sentence memo rescinding the directive it had issued just two days prior, and just over 20 hours after a federal judge ordered a halt to the freeze.
The withdrawal of the federal freeze was a stunning about-face for President Donald Trump’s White House, which has so far pushed the envelope to reshape the federal government, sowing chaos and confusion in firing career civil servants, pausing foreign aid programs and offering federal workers a buyout.
The episode underscored the risks of a White House adopting the tech-inspired tactic to “move fast and break things” in its effort to remake the federal government with a flurry of actions in its first 10 days.
Congressional Republicans were privately frustrated they weren’t given a heads up at a decision that stirred a direct deluge of outrage from constituents. The administration received a flood of calls from lawmakers and state officials with questions about its impact on their home states.
“We were in the dark, like everyone else,” a Republican senator told CNN, speaking of the freeze on the condition of anonymity to avoid alienating the West Wing. “That was unfortunate and unnecessary.”
In the hours that followed the initial release of the memo on Monday afternoon, CNN spoke to more than a dozen senior officials across five agencies, lawmakers and senior aides to Republicans and Democrats on Capitol Hill. The confusion was universal and answers were non-existent, the officials said.
The reversal revived questions of competence – even among the president’s admirers – about the administration’s ability to govern or adequately explain its decisions. The fallout from Monday’s OMB memo was reminiscent of the chaos that often plagued Trump’s West Wing in his first term.
After the memo was rescinded Wednesday, Trump insisted the biggest reversal of his new administration was no such reversal at all, even as his government scrambled to walk back the funding freeze that showed the first signs of limits on his executive authority.
“We are merely looking at parts of the big bureaucracy where there has been tremendous waste and fraud and abuse,” Trump said during his first bill-signing ceremony on an unrelated immigration law.
It was a dizzying series of events that offered a telling window into the new Washington order. The White House dismissed any signs of frustration and blamed the media, rather than accept responsibility, for a wave of backlash from Republicans and Democrats alike.
“I can’t help it if left-wing media outlets published a fake news story that caused confusion,” Stephen Miller, deputy chief of staff for policy, told CNN’s Jake Tapper on Tuesday.
‘There is confusion’: Jake Tapper pushes Stephen Miller to explain order to freeze federal aid
But with Wednesday’s reversal, the administration made clear it was not eager to wage a legal fight in this case over the president’s expansive view of executive power in his quest to purge the government of what Trump sees as a “woke” agenda sprinkled throughout it.
“This action should effectively end the court case and allow the government to focus on enforcing the president’s orders on controlling federal spending,” White House press secretary Karoline Leavitt said Wednesday. “In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding.”
Liberal groups had brought the lawsuit against the freeze as part of what they viewed as the best example yet of Trump’s overreach.
Related Post
“While we hope this will enable millions of people in communities across the country to breathe a sigh of relief, we condemn the Trump-Vance administration’s harmful and callous approach of unleashing chaos and harm on the American people,” said Skye Perryman, the chief executive of Democracy Forward, one of the groups that filed the legal action.
The brief saga also created the biggest opening yet for Democrats to try and capitalize on what they saw as a Trump misstep, bringing the opposition party alive in the second week of the administration. Senate Minority Leader Chuck Schumer used the news as a peg to hold his second press conference of the day. “We haven’t won this fight, don’t get me wrong, but see that we can have some real impact,” he said.
Over Trump’s first 10 days in office, the president has issued an all-consuming blitz of executive orders and actions to remake the federal government, which has amounted to an all-out assault on its workforce.
But the OMB memo that landed in agency in-boxes at 5 p.m. Monday was dramatically different – because its sweeping implications were a mystery to Trump allies and critics alike.
Lawyers and federal program managers debated the meaning of paragraphs, sentences and even words in the OMB’s two-page memo.
One sentence referenced federal financial assistance programs making up 30% of federal government spending in the 2024 fiscal year. Some read that as a marker for what the memo would cover, even as multiple officials were flummoxed by the claim of nearly $10 trillion in government outlays.
“Only a couple trillion or so off, I guess?” one official told CNN, referencing the actual number – $6.75 trillion – published by the US government.
Another part of the memo directed federal agencies “to identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.”
That was read by many officials as an unequivocal statement that the memo applied to every single federal assistance program, with two exceptions outlined in two footnotes: assistance “provided directly to individuals” and benefits for Medicare and Social Security.
The footnotes made clear the memo intended to capture specific subsections of the code of federal regulations to include financial assistance for grants, loans, loan guarantees, interest subsidies, insurance, direct appropriations, food commodities and cooperative agreements.
“Those were our reference points to the universe of what was affected by the memo,” one senior career agency management official said. “It’s hard not to read that as covering everything except for the specific exemptions.”
The memo directed “each agency” to conduct a “complete and comprehensive analysis of all of their federal financial assistance programs to identify programs, projects and activities that may be implicated by any of the President’s executive orders.”
As the review took place, the memo stated, federal agencies “must temporarily pause all activities” related to the deployment of “all federal financial assistance” and agency activities that may conflict with Trump’s executive orders.
Three words – “must temporarily pause” – were in bold.
In the absence of clarifying or corrective interpretation from the White House, several officials pointed out, the widely shared view was that the freeze was across the board, outside of the exceptions explicitly noted.
The confusion was exacerbated on Tuesday morning when agencies received a spreadsheet labeled “instructions” that included more than 2,500 programs the administration listed as subject to the review.
It would be another seven hours before the White House would provide any kind of clarification – another OMB memo formatted as a “Q&A” that expanded the exempted programs. Most officials and lawmakers assumed the clarifications were the result of the escalating public pressure and represented a narrowing of the intent after the fact.
The White House insisted that wasn’t the case – and attacked the media for reporting accurately the all-consuming confusion across the agency ranks. But the confusion was real, and it wasn’t occurring in a vacuum.
“It’s understandable given the first week that career officials are going to be cautious about doing something that isn’t aligned with the administration’s intent,” one senior GOP congressional aide who had been in constant conversations with agency officials, told CNN. “It’s not like this White House is taking baby steps – and they certainly aren’t wasting time targeting career folks who aren’t running their plays.”
While signing his first bill into law Wednesday, Trump defended the spending freeze, saying it was done “for us to quickly look at the scams, dishonesty, waste, and abuse that’s taken place in our government for too long.”
Trump cited several payments, including the dubious claim of $50 million going to Gaza for condoms, and “more than $40 million that was on its way out the door to the very corrupt World Health Organization.”
The pause was needed, Trump’s top aides argued Tuesday, because money was still being sent out by career officials in the agencies. Dozens of career officials at the US Agency for International Development were placed on leave Monday over claims they were trying to circumvent Trump’s order freezing almost all foreign assistance.
And Miller said in the interview with CNN’s Tapper Tuesday that career HHS employees were still trying to push money out to NGOs in the migrant resettlement space.
The decision was made to clamp down further to ensure alignment with Trump’s policies. It was directed by Trump’s not-yet-confirmed OMB director, Project 2025 co-author Russell Vought, according to Miller and White House officials – raising questions about Vought’s role given that he’s not yet in the job as White House budget chief.
“OMB, led by Russ Vought, felt it was necessary to protect taxpayer resources to issue clearer guidance establishing for these discretionary grants of funding that are not directed by Congress that they go through a political approval process at the agency.” Miller said.
Shortly after the White House rescinded the memo – roughly 44 hours after its initial release – the senior Republican aide texted an unsolicited observation.
It wasn’t Vought – but rather acting OMB Director Matthew Vaeth – who signed the two memos.
The irony, the aide noted, was that Vaeth – a career OMB staff who has been at the budget office for decades – was simply doing his job and carrying out Trump’s directives: “Kinda runs counter to whole reason Trump’s guys are taking a blow torch to federal workers up and down agency organizational charts, doesn’t it?”
CNN’s Hadas Gold and Kaitlan Collins contributed to this report.