Federal judge signals he will block Trump administration from freezing funding despite OMB rescission

(WASHINGTON) — A federal judge signaled he will issue a temporary restraining order barring the Trump administration from freezing federal loans and grants, raising concerns the White House will try to enact the same policy described in the now-rescinded memo from the Office of Management and Budget.

District Judge John McConnell Jr. has not entered the temporary restraining order given the rapidly changing circumstances, but signaled he would sign an order proposed by the 22 state attorneys general who brought the case.

McConnell had harsh words for the Trump administration and justified his future order — despite the OMB’s change of policy — based on a social post by White House press secretary Karoline Leavitt.

“I think the breadth of the relief that plaintiffs are seeking is extraordinary,” argued Department of Justice attorney Daniel Schwei before McConnell cut him off.

“Respectfully, so was the breadth of the OMB directive,” McConnell said.

Earlier Wednesday, Donald Trump’s administration sent a memo rescinding its sweeping directive that sought to pause potentially trillions in loans, grants and financial assistance, according to a memo obtained by ABC News.

“OMB memorandum M-25-13 is rescinded,” the short memo from Matthew Vaeth, the acting director of the Office of Management and Budget, reads. “If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”

The new directive follows a tumultuous 48 hours for the White House, as states and local governments raised concerns that funding for health care, law enforcement, disaster aid and infrastructure spending could be paused or delayed during the expansive rollout of the policy.

Leavitt defended the policy on social media, saying Trump still plans to implement a funding freeze without specifying what mechanism the president plans to use.

“This is NOT a rescission of the federal funding freeze,” Leavitt posted 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.”

Amid the confusion, a federal judge on Tuesday in Washington, D.C., issued a stay of the policy through Monday as lawyers for the Department of Justice struggled to confirm the extent of the directive. The policy had been set to go into effect at 5 p.m. on Tuesday.

“Without this funding, Plaintiff States will be unable to provide certain essential benefits for residents, pay public employees, satisfy obligations, and carry on the important business of government,” 22 state attorneys general had said in the lawsuit challenging the policy Tuesday.

On Monday, the Office of Management and Budget ordered federal agencies to freeze any federal funding to activities that might be implicated by Trump’s executive orders, causing states, local governments and nonprofits to scramble to determine if their funding would be cut off. Less than 24 hours after the policy was revealed, the White House attempted to clarify the policy in a memo, saying programs that provide direct benefits to Americans — such as Social Security, Medicare and SNAP benefits — would be excluded from the freeze.

During the hearing Tuesday, the lawyer for the Department of Justice struggled to clarify exactly what would be affected.

“It seems like the federal government currently doesn’t actually know the full scope of the programs that are going to be subject to the pause. Is that correct?” U.S. District Judge Loren L. AliKhan asked.

“I can only speak for myself, which is just based on the limited time frame here, that I do not have a comprehensive list,” DOJ lawyer Daniel Schwei said, adding, “it just depends” on the type of program and funding source.

This is a developing story. Please check back for updates.

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