Trump orders pause to all federal grants and loans

WASHINGTON - Donald Trump's White House ordered a pause in all federal grants and loans starting on Jan 28, a sweeping decision that could disrupt education and health care programmes, housing assistance, disaster relief and a host of other initiatives that depend on billions of federal dollars.

In a memo on Jan 27, the acting head of the Office of Management and Budget, which oversees the federal budget, said the money would be put on hold while the Trump administration reviews grants and loans to ensure they are aligned with the president's priorities, including executive orders he signed last week ending diversity, equity and inclusion (DEI) programmes.

Mr Matthew Vaeth, the acting director, said the use of federal resources for policies at odds with the president's agenda "is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve."

The memo said the freeze included any money intended "for foreign aid" and for "nongovernmental organisations," among other categories.

The White House said the pause would not impact Social Security or Medicare payments or "assistance provided directly to individuals." That would presumably spare food aid for the poor and disability payments, though it was not clear whether health care programmes for veterans and low-income people would be affected.

The OMB memo asserted that the federal government spent nearly US$10 trillion (S$13 trillion) in fiscal year 2024, with more than US$3 trillion devoted to financial assistance such as grants and loans. But the source of those figures was not clear - the nonpartisan Congressional Budget Office estimated government spending in 2024 at a much lower US$6.75 trillion.

The memo is the latest directive in the Trump administration's campaign to dramatically reshape the federal government, the nation's largest employer.

In a blizzard of executive actions last week, the new US president shuttered all diversity programmes, imposed a hiring freeze, sent national security officials home, ordered a pause in foreign aid and sought to strip away job protections from thousands of civil servants.

The spending freeze ordered by OMB takes effect at 5pm ET on Jan 28 (6am on Jan 29 in Singapore). Agencies have until Feb 10 to submit detailed information on any programmes subject to the suspension.

‘Unlawful’ move

The federal government provides money to a broad swathe of nonprofits, many of which reacted with dismay.

"This order is a potential five-alarm fire for nonprofit organisations and the people and communities they serve," Ms Diane Yentel, president and chief executive officer of the National Council of Nonprofits, said in a statement.

"From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives."

Democrats immediately challenged Mr Trump's action as unlawful and dangerous.

In a letter to Mr Vaeth late on Jan 27, US Senator Patty Murray and US Representative Rose DeLauro, the top Democrats on the congressional appropriation committees, said the order was "breathtaking, unprecedented, and will have devastating consequences across the country."

"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,” the Democrats wrote.

Senate Democratic Leader Chuck Schumer said the administration did not have the authority to halt spending that had been approved by Congress and that the order, if implemented, would harm millions of Americans.

"It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities, state disaster assistance, local law enforcement, aid to the elderly, and food for those in need," Mr Schumer said in a post on X late on Jan 27.

US Representative Tom Emmer, the No. 3 Republican in the House of Representatives, said Mr Trump was simply following through on his campaign promises.

"You need to understand he was elected to shake up the status quo. That is what he's going to do. It's not going to be business as usual," Mr Emmer told reporters at a Republican policy retreat in Miami. REUTERS