Donald Trump’s Budget Office orders pause on federal grants and loans. Here’s why

President Donald Trump’s budget office issued an order on Monday directing all federal agencies to temporarily halt the disbursement of grants and loans, except for critical programs like Social Security, Medicare, and other direct assistance to individuals, as per a report.

The memo, marking a significant policy move, instructs agencies to pause all financial aid to review whether the spending aligns with Trump’s executive orders, according to Bloomberg report.

The order is part of a broader push by the Trump administration to scrutinize federal financial assistance programs, including those related to foreign aid, non-governmental organizations, and environmental initiatives. However, essential programs providing direct benefits to individuals are excluded from the pause.

This move comes as the Trump administration challenges the 1974 Budget and Impoundment Control Act, which outlines how federal funds can be withheld by the executive branch. The action is expected to lead to a constitutional debate on the limits of presidential power in controlling federal spending.

The pause will go into effect at 5 p.m. Tuesday, with agencies required to review and halt all activities related to the disbursement of federal funds, except for those specified in the directive.

Pause could impact critical programs, sparking concerns

President Trump’s directive to temporarily halt the disbursement of federal funds has raised concerns among advocates of essential government programs. Programs such as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Section 8 housing choice vouchers, and the Low Income Home Energy Assistance Program (LIHEAP) are expected to be affected, according to Bobby Kogan, senior director of federal budget policy at the liberal Center for American Progress, the news report stated.

“This is as broad and large as folks were worried that Trump might go,” Kogan said, noting the ambiguity in the order and the potential far-reaching consequences.

Kogan also warned, the report said, that the administration’s move could lead to lawsuits from recipients whose funding is delayed.

“This is an illegal pause and they don’t care. They’re breaking the law in pausing these things and going after massive parts of the government,” Kogan was quoted as saying.