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Late Monday night, independent journalist Marisa Kabas, who runs the website The Handbasket, posted a leaked two-page memo from the federal Office of Management and Budget purporting to pause all federal financial assistance programs. Later confirmed by the Washington Post, the leaked memo decried “the use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies.”
It also instructed 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” beginning at 5 p.m. on Tuesday.
On Wednesday, after widespread outcry and confusion, the OMB released another memo rescinding the one sent out on Monday, which was also shared by Kabas on social media platform Bluesky.
Before this apparent reversal, a federal judge had already temporarily blocked the directive from going into effect, but for hours after publication of the memo and before the judge’s order, exactly what programs might be affected remained entirely opaque. Trillions of dollars of federal spending can be viewed as falling under the umbrella of federal financial assistance including massive programs like Medicaid and SNAP.
Early Tuesday morning, state Medicaid agencies across the country began reporting they could no longer access the Medicaid payment portal. A representative of Alabama Medicaid informed APR around midday that it was the agency’s “understanding that access to the portal has been halted temporarily, and we are currently awaiting guidance from CMS.”
The Medicaid portal was back online by 4:30 p.m., and White House press secretary Karoline Leavitt claimed on Tuesday that the outage was unrelated to the incipient funding pause.
Leavitt also told reporters that afternoon that “it is a temporary pause and the Office of Management and Budget is reviewing the federal funding that has been going out the door.”
She relayed that Russ Vought, Trump’s nominee to lead the OMB, said “his office is open” to field requests from other federal agencies about funding “in line with the president’s agenda.” A contributor to the Project 2025 handbook, Vought has not been confirmed by the Senate and does not currently occupy any federal office.
Meanwhile, many state agencies in Alabama remain uncertain about which of the programs they oversee will be affected by the pause if or when it goes into effect.
Mike Presley, the unit chief of communications and external affairs for the Alabama Department of Economic and Community Affairs, said the agency is “evaluating what this might mean for ADECA and will await further guidance.” ADECA oversees a host of federally funded programs, including ongoing rural broadband expansion efforts.
Kathryn Shoupe, the director of communications for the Alabama Department of Human Resources, wrote that DHR is “continuing to evaluate any potential impacts of the OMB,” but specified that SNAP benefits were excluded. This was not stated in the original memo but was clarified by a subsequent OMB memo issued on Tuesday according to ABC News. Despite this apparent follow-up memo, SNAP is listed on an OMB spreadsheet meant to collect information on affected programs.
Before the wave of clarifications about programs that would seemingly be exempted from the pause, Alabama Congresswoman Terri Sewell wrote on X, formerly Twitter, that “Trump’s illegal freeze on nearly all federal grants/loans will have immediate and devastating impacts on our district and EVERY community in America.”
She identified food assistance programs like SNAP, student loan programs, and research funding for universities as all likely being at risk. “This chaos and cruelty must stop,” Sewell stated.
Democratic politicians across the country have attacked the memo as an unconstitutional power grab, with twenty-three Democratic attorneys general filing a lawsuit over the decision on Tuesday.
As vice chair of the Senate Committee on Appropriations, Senator Patty Murray, D-Washington, called the decision to “unilaterally withhold or block investments that have been enacted into law” illegal impoundment.
“There is no delicate way of saying this, but the president’s directive to pause federal funding and grants is illegal,” University of Alabama political science professor Nicholas Davis told APR. “The OMB memo to impound these monies flaunts a 1974 act that explicitly bars presidents from delaying Congressionally appropriated funds.”
The Impoundment Control Act of 1974, which Davis was referring to, is part of the long legacy of Watergate. Georgetown law professor Steve Vladeck explains that “the Act creates a procedural framework within which the President can attempt to impound certain appropriated funds.” The Monday memo did not follow the legal process set out by the Impoundment Control Act and is possibly unconstitutional regardless, given the president’s responsibility to “take Care that the Laws be faithfully executed” and the delegation of power over the federal budget to Congress.
Calling the decision “probably unprecedented in post-war American society,” Davis described how the National Science Foundation and National Institutes of Health, both affected by previous Trump administration pauses, help fund research “ranging from studies intended to reduce childhood poverty, to research on cancer therapies, and to work designed to ameliorate racial disparities in maternal mortality.”
“Pausing granting funding for an unknown duration of time literally threatens Americans lives,” he stated. “On top of this, of course, many academics’ careers also hang in the balance. These grants are prestigious, sure, but they fund research positions, interventions, and laboratories — I’m not sure you could design a directive better intended to hamstring a crown jewel of the American economy.”
In December, the University of Alabama boasted about a “record year in external funding for research,” with almost $270 million in “sponsored awards.” Deidre Simmons, the executive director of communications for the university, wrote in an email on Tuesday that the administration is “aware (of the recent executive orders) and closely monitoring developments.”
It currently does not appear like either Pell Grants or student loans will be affected by the potential pause despite early concerns. The spreadsheet sent out by the OMB that lists programs which will be affected does include several programs meant to fight HIV/AIDS, grants for cancer research, and child care subsidies though, amongst hundreds of other programs.
The administrative stay on the OMB directive issued by U.S. District Judge Loren L. AliKhan will expire on February 3 at 5 p.m. Both parties are required to respond and reply to each other’s filings if needed within the next few days. A hearing will be held before the stay expires on the 3rd.
Editor’s Note: This piece was updated to reflect the release Wednesday of a new OMB memo rescinding the original.
