Trump administration rescinds order attempting to freeze federal aid spending

WASHINGTON — President Donald Trump’s administration on Wednesday rescinded an order putting a widespread freeze on most federal grants and loans amid significant criticism, according to a new White House memo a source provided to NBC News.

A senior administration official confirmed the rescission Wednesday, which was ordered by the Office of Management and Budget.

The initial order, which sparked chaos and confusion across Washington, was temporarily halted by a federal district judge Tuesday evening. Democrats, who aggressively pushed back on the White House order, celebrated the rescission of the memo soon after it was reported Wednesday.

“Americans fought back and Donald Trump backed off,” Senate Minority Leader Chuck Schumer, D-N.Y., said in a statement. “Though the Trump Administration failed in this tactic, it’s no secret that they will try to find another, and when they do, it will again be Senate Democrats there to call it out, fight back, and defend American families.”

The first directive from OMB came Monday night, directing federal agencies to “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, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

The memo said the pause would allow the administration to review which programs were “consistent” with Trump’s agenda. Social Security, Medicare and direct payments to individuals were not supposed to be affected, but because the memo was so vaguely worded, it wasn’t clear exactly which aid would be halted.

White House Press Secretary Karoline Leavitt said Wednesday that pulling back the memo was an attempt to “end any confusion.”

“This is NOT a rescission of the federal funding freeze,” she wrote on X. “It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction. The President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”

Throughout Tuesday, the White House attempted to clarify the exceptions — including Medicaid — but by then, there was widespread confusion and reports of people and organizations unable to access systems to receive their federal aid.

Nonprofit groups that worked on health care and homelessness, for example, told NBC News that they were unable to get into websites to withdraw funds, and online portals to access Medicaid payments were temporarily down.

Democracy Forward, a progressive nonprofit group, filed the lawsuit against OMB that resulted in Judge Loren AliKhan issuing the order that temporarily blocked the freeze from going into effect.

“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,” Skye Perryman, the CEO of Democracy Forward, said in a statement. “Our team will continue to bring swift legal actions to protect the American people and will use the legal process to ensure that federal funding is restored.”