The White House will pause federal grants and loans beginning Tuesday, prompting widespread panic and confusion among organizations that rely on the money.
Administration officials say the decision will ensure that all funding complies with President Donald Trump’s executive orders, which are intended to undo steps on transgender rights; environmental protection; and diversity, equity and inclusion.
Several states plan to sue to block the order, which they say is illegal. Here’s what we know and don’t know.
What funding does the order affect?
Trillions of dollars could be at stake, but it is not immediately clear which programs could be affected. Federal money flows to nonprofits, city governments and state agencies.
Texas would likely feel the effect of a freeze. Federal funds account for roughly 38% of the state’s revenue, according to a 2024 analysis by The Pew Charitable Trusts .
Administration officials say federal assistance to individuals would not be affected, including Social Security, Medicare, SNAP benefits, student loans and scholarships.
In a two-page memo, Matthew Vaeth, the acting director of the Office of Management and Budget, wrote: “The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
The order could disrupt health care research, education programs and other initiatives, at least temporarily.
When will it go into effect?
The pause is scheduled to take effect at 4 p.m. Central, one day after agencies learned of the order.
What do critics say?
Attorneys general in several states, including New York, California and Illinois, plan to sue to block the order, which they say is illegal because Congress already allocated the money.
“My office will be taking imminent legal action against this administration’s unconstitutional pause on federal funding,” the New York attorney general, Letitia James, wrote Tuesday on X. “We won’t sit idly by while this administration harms our families.”
On Tuesday, U.S. Rep. Jasmine Crockett, D-Dallas, denounced the order, which she said could affect funding for programs such as Head Start, Meals on Wheels, and federal food and housing assistance.
“With the flick of a pen, Donald Trump has unleashed a constitutional crisis that could cut off funding for hundreds of government programs that millions of Americans depend on — including funding for schools, hospitals, law enforcement, emergency responders, food assistance, and more,” Crockett said in a statement.
The Associated Press contributed to this report.
