Trump administration rescinds order attempting to freeze federal aid spending

WASHINGTON — The Trump administration on Wednesday rescinded an order putting a widespread freeze on most federal grants and loans amid significant criticism, according to a new White House memo a source provided to NBC News.

A senior administration official confirmed the rescission Wednesday, which was ordered by the Office of Management and Budget.

A federal district judge on Tuesday evening temporarily halted the initial order, which sparked chaos and confusion across Washington. Democrats, who aggressively pushed back against the order, celebrated the rescission of the memo soon after it was reported Wednesday.

"Americans fought back and Donald Trump backed off," Senate Minority Leader Chuck Schumer, D-N.Y., said in a statement. "Though the Trump Administration failed in this tactic, it’s no secret that they will try to find another, and when they do, it will again be Senate Democrats there to call it out, fight back, and defend American families."

The first directive from OMB came Monday night, directing federal 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, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."

The memo said the pause would allow the administration to review which programs were "consistent" with President Donald Trump's agenda. Social Security, Medicare and direct payments to individuals were not supposed to be affected, but because the memo was so vaguely worded, it was not clear exactly which aid would be halted.

White House press secretary Karoline Leavitt said Wednesday that while the broad OMB memo was being pulled back, the administration's other efforts to halt federal spending would remain.

"This is NOT a rescission of the federal funding freeze," she wrote on X. "It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction. The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented."

According to an NBC News review of Trump’s executive actions since he took office, he never issued an executive order authorizing a blanket freeze of all federal assistance programs.

When OMB rescinded the memo Wednesday, it technically rescinded the blanket freeze on all federal assistance pending review.

Several executive orders Trump signed last week pause or end some federal funding. Those executive orders, which remain in place, include the freezing of foreign aid, all funds to federal grantees who received money for DEI-related purposes and all funds appropriated through the Inflation Reduction Act.

According to the White House, those freezes remain in effect.

Trump’s various executive orders pausing spending under the recent infrastructure law and the Inflation Reduction Act remain in effect, Schumer said Wednesday, calling on Trump to rescind them, as well.

Throughout Tuesday, the White House tried to clarify the exceptions — including Medicaid — but by then, there as widespread confusion, as well as reports of people and organizations unable to access systems to receive their federal aid.

Nonprofit groups that work on health care and homelessness, for example, told NBC News that they were unable to get into websites to withdraw funds, and online portals to access Medicaid payments were temporarily down.

Democracy Forward, a progressive nonprofit group, filed the lawsuit against OMB that resulted in Judge Loren AliKhan’s issuing the order that temporarily blocked the freeze.

“While we hope this will enable millions of people in communities across the country to breathe a sigh of relief, we condemn the Trump-Vance administration’s harmful and callous approach of unleashing chaos and harm on the American people," Skye Perryman, the CEO of Democracy Forward, said in a statement. "Our team will continue to bring swift legal actions to protect the American people and will use the legal process to ensure that federal funding is restored.”

Some Republican senators also said they were pleased that the administration pulled back the OMB memo. Sen. Dave McCormick of Pennsylvania said his constituents who reached out to give their thoughts "made a difference" and led to the rescission," while Sen. Susan Collins of Maine said the original directive was "overreaching and created unnecessary confusion and consternation."

This article was originally published on NBCNews.com