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Louis Jacobson
By Louis Jacobson January 29, 2025

Trump administration memo freezing federal funds kicks off legal battle over impoundment power

As he ran to return to the Oval Office, Donald Trump promised, "I will use the president's long-recognized impoundment power to squeeze the bloated federal bureaucracy for massive savings."

Barely a week after Trump was inaugurated, his administration took the first step toward that goal, issuing a late-night memo Jan. 27 ordering a temporary pause on all federal grants, loans and financial assistance, except for direct assistance to individuals, until officials ensure that the programs are consistent with Trump's policies.

The memo said the pause will give the Trump administration time to review the programs and "determine the best uses" of the funding. It gave agencies until Feb. 10 to submit detailed information on any programs, projects or activities subject to the pause. 

By Jan. 29, the administration rescinded the Office of Management and Budget's memo.

"This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo," White House Press Secretary Karoline Leavitt said Jan. 29 on X. "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."

Several nonprofit organizations and several states sued the Trump administration over the pause (before it was lifted). On Jan. 28, U.S. District Judge Loren L. AliKhan temporarily blocked the action until Feb. 3. On Jan. 29, the court was preparing to decide what the memo's rescission meant for the court case. AliKhan's initial ruling didn't address the memo's underlying legality.

Legal observers see the initial funding pause as the opening volley in a legal battle on impoundment, which is an executive refusal to spend funds Congress has appropriated. Trump believes he can exert such authority, but critics say he can't.

Impoundment authority has a long history, going back at least to President Thomas Jefferson. Later presidents who claimed independent power to impound funds include Harry Truman, John F. Kennedy and Richard Nixon

Skeptics say that these presidents' arguments were shut down by the Impoundment Control Act of 1974, which Congress passed "after President Nixon abused it," wrote Zachary Price, a professor at the University of California College of the Law. The law set up a detailed process for what a president could and could not do when there was a disagreement over whether to spend money that had been signed into law.

If the executive branch wants to cancel spending altogether, the 1974 law says, it must propose a "rescission," or a cut. Lawmakers may consider those proposed cuts under an expedited process, but the spending cannot be paused for more than 45 days as this process plays out.

"Regardless of whether the administration is willing to claim that this pause can be justified by some broader presidential impoundment power, it would seem to run afoul of the statutory framework that Congress put in place to manage any spending delays," Yale Law School professor Keith E. Whittington said.  

We'll see whether the administration continues to pursue the idea that the president has unilateral impoundment power, and whether judges challenge it. But the initial memo lays out the Trump administration's intent to advance this promise, so we rate this promise In the Works.

Our Sources

Executive Office of the President, Office of Management and Budget, Memorandum for  heads of executive departments and agenices, Jan. 27, 2025 

Karoline Leavitt, tweet, Jan. 29, 2025

The New York Times, "Live Updates: Freeze on Federal Funds Rescinded, and Trump Signs Law Easing Deportation for Migrants," Jan. 29. 2025

The Washington Post, White House pauses all federal grants, sparking confusion, Jan. 28, 2025 

The New York Times, Live updates: Funding freeze spurs new fight over Trump's vision for his government, Jan. 28, 2025 

C-SPAN, Senate Democratic laders on Jan. 6 pardons and federal grants freeze, Jan. 28, 2025

C-SPAN, White House press secretary on federal freeze on loans and grants, Jan. 28, 2025

USA Today, Federal student loans, Pell Grants not tied up in funding pause, but will be reviewed, Jan. 28, 2025  

NBC News,  Trump's funding freeze creates widespread confusion, Jan. 28, 2025 

Politico, Trump administration targets thousands of programs in funding freeze, Jan. 28, 2025

Congressional Research Service, "Item Veto and Expanded Impoundment Proposals: History and Current Status," updated June 18, 2010

Court Listener, The National Council of Nonprofits and the American Public Health Association lawsuit, Jan. 28, 2025

The Hill, "Trump and his allies are completely wrong about impoundments" (opinion column) July 13, 2024

Vox.com, "This obscure budget procedure could be Trump's biggest weapon: How Trump could attempt to cut Medicaid, school funding, and more — without Congress," Jan 28, 2025

The New York Times, States Will Sue Trump to Stop Federal Grant Freeze, Jan. 28, 2025 

Yahoo, Federal judge temporarily blocks Trump administration freeze on federal grants and loans, Jan. 28, 2025

Email interview with Steven Smith, an Arizona State University political scientist, Jan. 28, 2025

Email interview with Keith E. Whittington, Yale Law School professor, Jan. 28, 2025

Email interview with Zachary Price, professor at the University of California College of the Law, Jan. 28, 2025

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