White House puts hold on $18bn for New York rail tunnel and subway expansion

The Trump administration said on Wednesday that it was putting a hold on roughly $18bn to fund a new rail tunnel beneath the Hudson River between New York City and New Jersey and the city’s expanded Second Avenue subway project – because of the government shutdown.

The White House budget director, Russell Vought, said on a post on X that the step was taken due to the Republican administration’s belief that the money was “based on unconstitutional DEI principles”, a reference to diversity, equity and inclusion.

But an administration official, who was not authorized to discuss the matter publicly and insisted on anonymity to discuss the hold, said the government shutdown that started at midnight meant that the transportation department employees responsible for reimbursing workers on the projects had been furloughed, so the money was being withheld.

In a statement, the transportation department confirmed the furloughs, saying: “Without a budget, the department has been forced to furlough the civil rights staff responsible for conducting this review.”

“This is another unfortunate casualty of radical Democrats’ reckless decision to hold the federal government hostage to give illegal immigrants benefits,” the statement reads.

The suspension of funds is likely meant to target Senate Democratic leader Chuck Schumer of New York, whom the White House is blaming for the shutdown.

New York’s governor, Kathy Hochul, a Democrat, told reporters at a news conference, “The bad news just keeps coming,” and “they’re trying to make culture wars be the reason why.”

Hochul said: “That’s what a partnership with Washington looks like as we’re standing here. We’ve done our part. We’re ready to build. It’s under way. And now we realize that they’ve decided to put their own interpretation of ‘proper’ culture ahead of our needs, the needs of a nation.”

The Hudson River rail tunnel is a long-delayed project whose path toward construction has been full of political and funding switchbacks. It’s intended to ease the strain on a 110-year-old tunnel connecting New York and New Jersey. Hundreds of Amtrak and commuter trains carry hundreds of thousands of passengers each day through the tunnel, and delays can ripple up and down the east coast between Boston and Washington, especially.

The Second Avenue subway on the east side of Manhattan was first envisioned in the 1920s but the first section did not open until 2017. The state-controlled Metropolitan Transportation Authority is working toward starting construction on the second phase of the line, which is to extend into East Harlem.

Meanwhile, separately, on Tuesday evening, the New York attorney general, Letitia James, filed a lawsuit and an emergency motion seeking a temporary restraining order against the secretary of homeland security, Kristi Noem, and her department, accusing them of unlawfully withholding nearly $34m in funding requested by the state’s transportation authority, Reuters reported.