financetom
Economy
financetom
/
Economy
/
US judge extends pause on Trump's plan to freeze federal grants, loans
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
US judge extends pause on Trump's plan to freeze federal grants, loans
Feb 3, 2025 3:48 PM

WASHINGTON (Reuters) -A U.S. judge on Monday extended a pause on the Trump administration's plan to freeze federal loans, grants and other financial assistance, saying it appeared to have "run roughshod" over Congress's authority over government spending.

U.S. District Judge Loren AliKhan in Washington wrote that a funding freeze outlined in a memo from the White House budget office last week would be "potentially catastrophic" for organizations that rely on federal funding to carry out their missions and provide services to the public.

Her ruling, issued at the request of several advocacy groups, meant the policy is now subject to two temporary restraining orders. A federal judge in Rhode Island on Friday issued a similar order at the behest of Democratic attorneys general from 22 states and the District of Columbia.

AliKhan had last week ordered a short, administrative pause preventing the Office of Management and Budget (OMB) from moving forward with its policy while she considered whether to issue the longer temporary restraining order.

OMB in its memo had said the funding freeze was necessary to ensure funding complied with President Donald Trump's executive orders on immigration, climate change, diversity and other issues.

After first trying to clarify the funding pause, OMB then fully withdrew its memo on Wednesday. The Republican president's administration had argued the withdrawal should have had the effect of ending the lawsuit before AliKhan by a group of advocacy organizations.

But the judge, an appointee of Trump's Democratic predecessor Joe Biden, said a temporary restraining order was still necessary because funding problems remained and because there was nothing stopping OMB from reissuing the policy.

She said "furthering the president's wishes cannot be a blank check for OMB to do as it pleases." OMB's memo implicated as much as $3 trillion in financial assistance, she said, "a breathtakingly large sum of money to suspend practically overnight."

The policy appeared arbitrary and may have run afoul of Congress' authority over government spending, the judge said.

"It did not indicate when that freeze would end (if it was to end at all)," AliKhan wrote. "And it attempted to wrest the power of the purse away from the only branch of government entitled to wield it."

The White House did not immediately respond to a request for comment.

During a hearing on Monday, a lawyer for the National Council of Nonprofits and the other advocacy organizations said some recipients of federal grants were still struggling to access funding despite the memo's withdrawal and the order issued on Friday by the Rhode Island judge.

"We know the policy remains in place," Kevin Friedl, a lawyer for the advocacy groups at the liberal-leaning group Democracy Forward, told AliKhan at the hearing.

A lawyer with the Trump administration's U.S. Justice Department, Daniel Schwei, argued Trump retained the authority to shape funding priorities under executive orders that were not challenged in the lawsuit.

"The president is allowed to direct subordinate agencies and supervise their activities," Schwei told the judge.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Millions Of Americans Carry More Credit Card Debt Than Emergency Savings
Millions Of Americans Carry More Credit Card Debt Than Emergency Savings
Nov 23, 2025
Federal Reserve officials remain sharply divided on interest rate cuts, casting doubt on the likelihood of a December rate cut. With inflation trying to creep back up and a weakening labor market, the Fed has some big decisions to make. Those economic pressures are showing up in household finances. As families head into the holidays — a time when spending...
Trump faces same reality as Biden: Americans despise higher prices
Trump faces same reality as Biden: Americans despise higher prices
Nov 22, 2025
By Andrea Shalal and Howard Schneider WASHINGTON (Reuters) -President Donald Trump campaigned on a pledge to lower consumer prices that skyrocketed during Joe Biden's term, but he is now facing the same hard reality that dogged his predecessor: Once prices rise, they seldom fall, and Americans hate higher prices. Trump may now be making some of the same mistakes as...
Fed's Collins: Monetary policy currently in right place, hesitant about cutting rates
Fed's Collins: Monetary policy currently in right place, hesitant about cutting rates
Nov 22, 2025
BOSTON (Reuters) -Federal Reserve Bank of Boston President Susan Collins said Saturday that she's still leaning against the U.S. central bank cutting its interest rate target next month as it faces ongoing risks to both its inflation and job mandates.   I do see reasons to be hesitant about lowering the cost of short-term borrowing at the December 9-10 Federal Open...
Legendary Investor Forecasts Another Fed Rate Cut In December Amid Economic Instability
Legendary Investor Forecasts Another Fed Rate Cut In December Amid Economic Instability
Nov 23, 2025
In the midst of the current economic turbulence, Bill Gross, a seasoned bond manager on Wall Street, has made a bold prediction about the Federal Reserve’s upcoming actions. What Happened: Gross has anticipated another rate cut by the Fed in December. Recent reports indicate that the S&P 500 and Nasdaq Composite have experienced a downturn from their October peaks, fueled by increasing worries...
Copyright 2023-2026 - www.financetom.com All Rights Reserved