Trump OMB claims unilateral authority to pause federal assistance programs
But OMB memo was rescinded on January 29, 2025, after being temporarily blocked by a federal court
Key Points (updated January 29, 2025 at 10:15 am, L.A. time)
On January 27, 2025, the U.S. Office of Management and Budget (OMB) appeared to be ordering a broad temporary pause on many federal grant and other funding programs, excluding Social Security, Medicare, and some other programs.
While an OMB memo stated the pauses would occur only to the extent permissible by law, reports indicated that a fairly broad funding pause is contemplated, potentially affecting many small and medium-sized programs important to poorer communities, educational institutions, state and local governments, businesses, and others. On January 28, there was considerable confusion about the scope of the OMB directive.
Federal law and past court cases make it clear that Presidents cannot unilaterally delay or cancel funding appropriated by Congress. Therefore, broad court challenges to OMB’s actions were certain unless the pause was rescinded. California’s Attorney General and 22 other state attorneys general filed suit against the OMB directive on January 28. Also, on January 28, a federal judge in the District of Columbia temporarily blocked the OMB directive.
On January 29, OMB rescinded the directive.
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What Is OMB Doing?
In a memo released on January 27, 2025, the U.S. Office of Management and Budget (OMB) directed federal agencies to “identify and review all Federal financial assistance programs and supporting activities consistent with” President Trump’s “policies and requirements.” The memo excludes Medicare and Social Security benefits from this review. The OMB memo directs federal agencies to “complete a 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.”
Federal agencies are directed, “to the extent permissible under applicable law,” to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agencies activities that may be implicated by the executive orders.” These are said to include, but not be limited to, undefined funding of “nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The temporary pause is effective “on January 28, 2025, at 5:00 PM.” Agencies must submit to OMB information on programs subject to the pause no later than February 10, 2025. Each agency is directed to pause issuance of new funding awards, disbursement of federal funds under all open awards, and other relevant agency actions “to the extent permissible by law” until OMB has reviewed and provided guidance with respect to the information submitted.
On January 28, 2025, OMB circulated a 52-page document ordering agencies to review thousands of programs, “including,” as reported by POLITICO, “many that send assistance each month to U.S. households, like food aid to ‘very low-income’ people age 60 and over, the home energy program that helps cover winter heating costs for the poorest households and the WIC program that aids low-income pregnant mothers and babies.”
During the day of January 28, departments scrambled to interpret the OMB directive. The Department of Education, for example, noted that “the temporary pause does not impact ‘assistance received directly by individuals,’” which it interprets to include “Title IV…Pell Grants and Direct Loans,” among others. There were various indications that core Medicaid and SNAP funding are supposed to continue. A FAQ document from OMB, said “mandatory programs like Medicaid and SNAP will continue without pause,” and “funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.” This suggested that the largest federal programs—Medicare, Medicaid, and Social Security—are unaffected by the pause, but the pause potentially could affect many smaller programs. In addition, a coalition of state attorneys general, including California’s attorney general, announced plans to sue the federal government. Late in the day on January 28, a District of Columbia federal judge temporarily blocked the OMB directive.
On January 29, OMB rescinded the directive.
What Are the Constitutional Issues With All This?
“Impoundment,” an action by a government executive to delay or not spend funds appropriated in legislation, has been thoroughly examined by federal courts and the Congress in prior decades. “Attempted impoundments were rare until President Nixon took office,” the Center on Budget and Policy Priorities (CBPP) explains. Intended recipients of funding then, often state or local governments, “regularly sued for release of the withheld funds…and they regularly won.” “In general, the Nixon Administration released the impounded funds after losing, but it appealed one case to the Supreme Court,” which ruled 9-0 against the Nixon Administration.
Congress enacted the Impoundment Control Act (ICA) of 1974, which, following court cases that upheld the congressional power of the purse, provided a specified, fast-track legislative process to allow the President to request and Congress to consider a funding change. The ICA also granted the U.S. Government Accountability Office the authority to trigger the process if the President fails to report an impoundment and to sue for release of funds after the 45 days elapse, as CBPP notes. Presidents, however, have rarely used this ICA mechanism since the mid 1970s. (Impoundment is discussed on pages 30-31 of this 2023 Congressional Research Service document.)
As U.S. Representative Brendan Boyle (D-Pennsylvania) recently explained, recent legal theories that a president may use impoundments by fiat to bypass Congress “are as idiotic as they are dangerous.”
What Happens Next?
Unless funds are released consistent with prior practice and congressional intent, broad legal action by many plaintiffs challenging the OMB pause seemed likely. California’s Attorney General and 22 other state attorneys general filed suit against the OMB directive on January 28.
The California State Assembly is expected to vote on SBX1 1, a bill to allow potential augmentations to the state executive branch’s legal defense budget, if needed to defend the state’s interests against unlawful federal government activity.
On January 29, however, OMB rescinded the directive.
Federal Spending in California
California’s state government is poised to distribute $168 billion of federal grants and other funding in 2024-25, according to recent administration estimates. Of that $168 billion, $108 billion flows through the Department of Health Care Services, principally to support the Medi-Cal program, which currently covers more than one third of the state’s population. As noted above, it appears that state Medicaid programs, such as Medi-Cal, generally are exempt from the OMB spending pause.
Looking beyond the state government, the total amount of federal spending directed to California residents, businesses, nonprofits, state and local government entities, universities, and other entities currently is around $600 billion, far less than the amount of taxes that California sends to the federal government. This spending includes Social Security and disability payments to households, Medicare and Medicaid funding, federal student aid, food and nutrition assistance (such as the Supplemental Nutrition Assistance Program), aid to public schools, federally-funded public assistance programs (such as child and dependent and earned income tax credits), housing assistance, payments to research, defense, and other federal contractors, military and non-military federal employees’ wages and benefits, and federal retirement benefits, among many other categories of spending.
In 2023, California’s gross domestic product was about $3.9 trillion, so gross federal spending equals around 15% of the state’s economy.