White House rescinds memo pausing federal assistance

The White House Office of Management and Budget rescinded its Monday directive pausing federal grants, loans and other assistance, according to a new memo obtained by FedScoop. 

That brief Wednesday memo (M-25-14) from acting OMB Director Matthew J. Vaeth to heads of executive departments and agencies states that OMB’s M-25-13 is rescinded and directs questions about implementing the president’s executive orders to agency general counsels.

In a statement provided to FedScoop, White House press secretary Karoline Leavitt said the decision came in response to a federal court’s decision to halt part of the directive while a legal challenge moved forward.

“In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage,” Leavitt said in an emailed statement. 

Leavitt said the executive orders related to funding reviews are still in effect and will continue to be implemented. The new memo, she said, “should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending. In the coming weeks and months, more executive action will continue to end the egregious waste of federal funding.”

In a post to X on Wednesday, Leavitt said the decision was “NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo.” 

The memo was initially reported by journalists and has not been publicly disclosed in full by the White House. It immediately prompted confusion over its scope and legality. The document asked agencies to pause all financial assistance disbursement and other activities “that may be implicated” by Trump’s initial executive orders. It specifically noted it didn’t apply to Medicare and Social Security benefits or assistance provided directly to individuals.

“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,” read the memo, a copy of which was independently obtained by FedScoop.

That directive was set to go into effect Tuesday at 5 p.m., giving agencies roughly 24 hours to comply. It was halted, however, later that day by U.S. District Judge Loren AliKhan, who issued an administrative stay specifically on the instruction to halt disbursements until 5 p.m. Feb. 3.

After news of the initial M-25-13 memo began to spread, lawmakers posted on X that Medicaid portals were down in multiple states. Leavitt later said that the White House was aware of the outage, payments weren’t affected and that the systems would “be back online shortly.” 

This story has been updated with Leavitt’s Wednesday post to X and more detail about M-25-13.