White House rescinds federal funding freeze, states lawsuit goes on

The White House Wednesday rescinded a controversial federal funding freeze directive that triggered widespread confusion although the legal wrangling continued as some worried the administration would persist in its effort.

A federal judge in Rhode Island Wednesday sided with 22 Democratic-led states that sued the administration, allowing their proposed injunction to move forward despite the rescinded order.

The states Thursday filed a fresh motion — based on statements from White House officials that seemed to downplay the recission — and asked for a 14-day stay to block the administration from “pausing, freezing, impeding, blocking, canceling, or terminating awards and obligations to provide federal financial assistance.” The Department of Justice has 24 hours to respond and a ruling could come Friday.

A judge in a similar lawsuit brought by a coalition of nonprofits issued a stay on the order until Feb. 3.

Congressional Democrats pounced on the OMB order as evidence of Trump attempting to override Congress and warned that the administration would keep trying. “We know they will come back at this again and again and again,” said New York Democratic Sen. Chuck Schumer Wednesday.

The Office of Budget and Management on Jan. 29 rescinded the Monday night memo that sought to pause the disbursement of federal grants and loans after it triggered widespread pushback and confusion. On Tuesday, the White House issued additional guidance that attempted to clarify that the pause would apply only to policies or programs that conflict with the swath of executive orders signed by President Donald Trump last week. One of the orders blocked a large chunk of the Inflation Reduction Act and electric-vehicle charging station dollars allocated in the Infrastructure Investment and Jobs Act.

Most of the orders pertain to issues like immigration, federal aid, diversity, equity and inclusion and gender policies.

Amid continuing confusion and the federal judge’s stay in the nonprofit lawsuit, the administration fully rescinded the memo on Wednesday.

But the White House said the broader effort to curtail some federal funds will continue, and signaled there may be additional executive orders and OMB memos in the future.

The states, in their argument before the judge, showed the judge a post on X from White House press secretary Karoline Leavitt to support their argument that the issue remains a threat.

“This is NOT a rescission of the federal funding freeze,” Leavitt 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.”