White House Memo Puts Federal Funding On Hold

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I'm Deepa Shivaram. I cover the White House.

Speaker 6 I'm Stephen Fowler. I cover politics.

Speaker 5 And I'm Susan Davis. I also cover politics.

Speaker 4 All right, so big news from yesterday. The White House Budget Office ordered a pause on all federal grants and loans.

Speaker 4 The internal memo states that, quote, 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.

Speaker 4 So this pause has set off alarm bells among Democrats, including Senate Minority Leader Chuck Schumer.

Speaker 7 This decision is lawless,

Speaker 7 dangerous, destructive, cruel.

Speaker 7 It's illegal. It's unconstitutional.

Speaker 4 All right, a lot to get into. So Sue, I'm going to start with you.
Let's start from the top. What exactly does this memo say?

Speaker 5 Well, there's a lot we don't know, so let's start with what we do know. The memo came from Matthew Vayeth.
He's the acting director of the Office of of Management and Budget.

Speaker 5 The pending director, Russ Vogt, has not yet been confirmed by the Senate. And in this two-page memo, he outlines, noting that in fiscal year 2024, of the $10 trillion that the U.S.

Speaker 5 federal government spent, $3 trillion of that was through federal financial assistance programs like grants and loans.

Speaker 5 And they're essentially saying as of 5 o'clock today, they want to freeze those grant and loan programs to make sure that they are in compliance with the other executive orders that Donald Trump has issued since he took office, particularly on things like ending diversity, equity, and inclusion programs across the federal government.

Speaker 5 The impact isn't entirely clear, but I do want to note that our colleague Franco Ordonez did report out that this doesn't affect things like Medicare payments or Social Security payments or direct assistance to Americans, but it does seem to, as far as we can tell, put a pause on grant and loan programs that could basically affect people and programs across the breadth of the federal government.

Speaker 4 And that's not a small thing. Like we're talking about people's jobs, people's livelihoods.
Like this is a large impact that this could potentially have and is already having.

Speaker 5 Sure. And I'll give you just two examples to think about.

Speaker 5 One that one member of Congress noted is that a lot of small child care providers and child care offerings get federal grant money to help underwrite the cost to run their child care programs.

Speaker 5 And if that money stops, they have to shut down. They don't have the money to operate.
They can't pay their staffs.

Speaker 5 Another example, so much of the Agriculture Department's research is done through grant funding, especially through universities in places like California and Texas and Illinois.

Speaker 5 If those grant programs dry up, there's essentially no more ag research in the entire country.

Speaker 5 Now, I should also note that the same source that talked to Franco said that some of these freezes could be just a day.

Speaker 5 Sure, a one-day freeze probably isn't going to have that much of an impact, but days, weeks, months, you'll start to feel a bigger and bigger effect.

Speaker 4 And the bottom line is that there's still a lot of confusion here. I mean, these are things like the very top, you said there's things we know and there's things we don't know.

Speaker 4 A lot of this has just put everyone into a tizzy.

Speaker 5 Aaron Powell, yes. And to Chuck Schumer's point, these are funds that, generally speaking, have gone through the annual appropriations process in Congress.
They have been approved by Congress.

Speaker 5 The spending has been directed by Congress. The constitutional authority to direct that funding lies with Congress.

Speaker 5 Now, there's always room in which the executive branch can help maneuver those funds or have oversight over those funds.

Speaker 5 But to fully pause them or stop them, we don't know what happens if they determine that some grant funding programs are not in compliance with other executive orders.

Speaker 5 Does that end the program funding? So there's just a million questions. I think one of the things we're looking to see is how do Republicans on Capitol Hill respond?

Speaker 5 Generally speaking, historically speaking, conservatives like to believe that the power of the purse relies with Congress. But obviously, we've seen that this is a pretty

Speaker 5 pliant Congress when it comes to the president and going along with what he wants to do. So I don't anticipate there's going to be a big amount of Republican pushback yet.

Speaker 6 And Sue, I do want to point out that this is a little bit of deja vu from Trump's first term, where there is this big sweeping proclamation of a thing, a capital T thing.

Speaker 6 In this case, you know, freeze on grant funding and other things to stop wokeism. Then there is the next step of figuring out, okay, what does that actually mean?

Speaker 6 We've already had some bit of walkback from the White House and and Office of Management and Budget with some clarifications on background about this isn't a freeze.

Speaker 6 This is just a lawfully allowed review. And no, that program won't be cut and this program won't be cut.

Speaker 6 And so we're at the point where it's still the early phases, but we have seen this chapter and book before with Trump's first term, but this is just at a larger scale.

Speaker 6 And I will point out that having spent a lot of time on the campaign trail covering Trump, this is just things that he has said he is going to do as soon as he took office.

Speaker 6 And at a certain level, that is being accomplished and he is delivering on his promise to his constituents and voters.

Speaker 6 Now, the reality of what that looks like and how long it will take to litigate that and figure things out, that's secondary in some regards, I think.

Speaker 5 Yeah, and I do think when things like this happen, part of the reason why we say it causes chaos is like, look, federal workers work within compliance of federal law.

Speaker 5 And if you were working on a program that suddenly it's existing or its mandate is being questioned by the White House, you creates a ton of questions.

Speaker 5 And they're going to want guidance from internal counsels. They're going to make sure they're in compliance.
So it can have a tremendous slowdown effect.

Speaker 5 I would also say I'm curious about if these freezes go for any significant period of time, I would think maybe even a month might be considered significant when you're talking about that kind of money that goes out the door over the course of a fiscal year.

Speaker 5 Does it start to have a broader economic impact? Like the federal government getting money out the door is a critical part of the health of the U.S. economy.

Speaker 5 So I think that that's when you start to see some nervousness among members of Congress and other people about how long is this going to be? What are the broader economic impacts?

Speaker 5 And for a lot of members of Congress, what does this mean for my state? What does this mean for my district?

Speaker 4 Correct for their constituents. All right, we're going to take a quick break and we'll be back in a moment.

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Speaker 4 And we're back. And one thing I just want to underscore from our conversation on this pause/slash freeze, we don't know how long it's going to go for on federal funds.

Speaker 4 You know, this is a massive power grab from Trump, Sue. And can you kind of put that into context a little bit of like how impactful this really is?

Speaker 5 Well, I think you have to look at this executive order in the context of the other other directives towards the federal government. And look, it's only been week one, right?

Speaker 5 Consider this direction on federal loans and grant programs to the freeze on federal aid, stopping programs internationally. I think what Trump is doing is profound.

Speaker 5 The halt on hiring federal workers, putting people on paid leave. I think that he is really trying to, as he campaigned on, remake the entirety of the federal government.

Speaker 5 I think that even some of his supporters are kind of blown back by how prepared they were this time around, especially because so much of this is already happening before his cabinet has even been put into place.

Speaker 5 And I do think that that does tell us something that this power is coming directly from the White House.

Speaker 5 There is no waiting to get your nominee in to feedback up to the White House to say what they think should be done. This is all coming from the top down.

Speaker 4 And Stephen, I mean, one of the things you've been reporting on recently, and I want to have you jump in on this, speaking of, you know, power coming from the top, one of the executive orders that Trump signed on day one was creating this Department of Government Efficiency, commonly known as Doge, helmed by Elon Musk.

Speaker 4 And that department is tasked with cutting federal spending. But how are you learning about how this is working so far? Tell us what your reporting has told you.

Speaker 6 So with Elon Musk and for a time, Vivek Ramaswamy, now that he has left the Department of Government Efficiency effort to potentially run for governor of Ohio, Doge was kind of envisioned as this outside of the government organization that can open things up and look at the government's people and policies and spending and figure out ways to cut, cut, cut.

Speaker 6 That's not the mandate of what is in the executive order.

Speaker 6 The executive order makes this Doge initiative a temporary organization that exists within a currently existing office called the United States Digital Service.

Speaker 6 The United States Digital Service is being renamed as the United States Doge Service, same acronym, different meaning.

Speaker 6 But the Doge Initiative is being tasked with working with federal agencies to find ways to advance the Doge agenda. What is the Doge agenda? We don't know yet.

Speaker 4 Right. And one thing, you know, that's sort of a question that's swirling around here is the timeline, right? Like, how fast can this really get done?

Speaker 6 And clearly, Trump is moving very quickly on some of his plans, things that he talked about in the campaign but when it comes to that cut cut cut trim trim trim realistically how fast can the federal government actually move on that that's where it's interesting to look at the history of the United States doge service formerly known as the digital service and it's this sort of digital strike team that makes government better and more efficient and in turn save money but it's things that have been smaller in scale and have still taken time to do.

Speaker 6 So it's not really clear that even with this Doge mandate more aligning with what President Trump wants to do, that it can get through the glacial pace of government and all of the bureaucratic red tape.

Speaker 5 Aaron Powell, I will say that when I've talked to members of Congress about what role they want to see Doge play, they focus heavily on the government efficiency component of it and less on the spending cut part of it.

Speaker 5 Again, they're like, it's our job to cut spending. But the president and the executive branch does have a tremendous amount of unilateral power to make the executive branches run more efficiently.

Speaker 5 And I do think in that regard, like the Department of Government Efficiency makes a very easy and obvious political sense because it's like, who's against that? Right.

Speaker 5 Like, what is the argument against a more efficient government? I will say that I think that Democrats have been dancing around the Doge effort, trying to get a sense of how serious it is.

Speaker 5 Do they want to play ball with it? And I have talked to Democrats who were saying that, like, look, we want to get a sense of whether this is good faith or not.

Speaker 5 Do they really want to sit down and figure out ways to make the government more efficient, to do smart spending cuts?

Speaker 5 Or is this just a backdoor way to try to enact more of Donald Trump's policy agenda?

Speaker 5 And I would say when you tie together these executive orders and these efforts to shut down loan programs and cut off RNA and reduce federal workers, I think that the political willingness of Democrats to lean in to the Doge effort is going to get less and less by the day because I think increasingly they are not seeing this broader effort as one that they would consider good faith or intended to be bipartisan.

Speaker 4 And there are some elements of this too that are like, you know, efficiency is the brand name of all of it.

Speaker 4 But the thing I'm thinking about, especially as you mentioned, USDS, the digital service, Stephen, I mean, Trump, like day one, reneged on former President Biden's, you know, executive order on AI, right?

Speaker 4 And part of that was, you know, using the digital service, like bringing more experts in to like help the government improve their technology. Like it was supposed to be an efficiency type thing.

Speaker 4 So like as all this is going on, there are like a number of things that are also like highly inefficient that are going on.

Speaker 6 You know, I will say I talked to the former administrator of the U.S.

Speaker 6 Digital Service for my reporting, and they say that there are a lot of things about the way the government operates that are not efficient.

Speaker 6 And there are things that Trump can do and Elon Musk can do to make things better regardless of partisan intent.

Speaker 6 But it revolves around good faith engagement with the federal agencies and the people that are working in those agencies to find the pain points and fix them.

Speaker 6 But in the grander scheme that Trump Trump has put out so far of trying to have ultimate power over the purse and ultimate power over the way the federal government is run, that might not be as high of a priority.

Speaker 5 Yeah, and look, I think that people will know the effectiveness of the Doge effort relatively soon. The president has said this isn't going to be a long-running new government program.

Speaker 5 It's set to expire on the 4th of July, 2026, which will coincide with the 250 anniversary of America, by which point Donald Trump says he will have made America great again.

Speaker 5 But the ultimate work of Doge Doge is going to be conducted in pretty short order compared to how broader federal efforts to rein in spending have gone. Yeah.

Speaker 4 A lot to keep watching for. All right, we're going to leave it there for today.
I'm Deepa Shivaram. I cover the White House.

Speaker 6 I'm Stephen Fowler. I cover politics.

Speaker 5 And I'm Susan Davis. I also cover politics.

Speaker 4 And thank you for listening to the NPR Politics Podcast.

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