Trump spending freeze temporarily blocked by federal judge

Erik Larson and Zoe Tillman, Bloomberg News on Jan 31, 2025

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WASHINGTON — The Trump administration likely violated federal law with a controversial directive that aimed to pause spending on potentially trillions of dollars of grants and loans to a vast array of recipients across the country, a judge said in putting the plan on hold.

A temporary restraining order against the spending pause was issued Friday by Chief U.S. District Judge John McConnell of Rhode Island, who said a group of nearly two dozen Democratic-led states are likely to succeed in their lawsuit challenging the White House plan.

“Congress has not given the Executive limitless power to broadly and indefinitely pause all funds that it has expressly directed to specific recipients and purposes and therefore the Executive’s actions violate the separation of powers,” McConnell wrote.

The TRO will remain in effect “until further order of this court,” the judge said, adding that he’ll set a hearing soon on the states’ planned request for a longer lasting injunction against the spending pause. The TRO is far broader than a court order earlier this week that temporarily blocked the spending freeze in a different case brought by a group of nonprofits.

The White House didn’t immediately respond to a request for comment on the ruling.

The states, led by New York Attorney General Letitia James, sued Jan. 28, a day after the White House Office of Management and Budget issued a surprise memo telling agencies to pause all federal financial assistance to ensure it’s aligned with Trump’s recent slew of executive orders targeting liberal policies. Trump rescinded the memo just days later, in what appeared to be a major reversal amid confusion and concern about the effect of the spending freeze nationwide.

But McConnell held that Trump’s apparent withdrawal of the memo may have been an attempt to prevent the court from issuing a TRO while still allowing the spending pause to take effect. The spending freeze appeared to still be intact via Trump’s executive orders even without the memo, he said.

“Messaging from the White House and agencies proves the point,” McConnell said.

The judge cited a statement by White House press secretary Karoline Leavitt after Trump withdrew the memo, where she insisted that the rescission was “NOT a rescission of the federal funding freeze” but simply of the OMB memo. She added that Trump’s executive orders, which have banned the use of federal funds for diversity programs, abortion and other policy priorities opposed by the new administration, “remain in full force.”

“The evidence shows that the alleged rescission of the OMB directive was in name-only and may have been issued simply to defeat the jurisdiction of the courts,” the judge said. “The substantive effect of the directive carries on.”

The OMB had said a pause was needed for agencies to review spending on “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” But the states allege the plan violates federal law and needlessly put children, seniors and nonprofits at risk.

“The court must act in these early stages of the litigation under the ‘worst case scenario’ because the breadth and ambiguity of the executive’s action makes it impossible to do otherwise,” McConnell said in his decision.

McConnell said the temporary order would remain in effect until a later hearing, where the states would have to produce more evidence in support of a longer lasting injunction that would block Trump’s funding freeze during the entire case.

Trump defended the move during a bill-signing event at the White House on Wednesday, casting the brief freeze as one that allowed his administration to review discretionary spending programs and “quickly look at the scams, dishonesty, waste, abuse that’s taking place in our government for too long.”

The fight over Trump’s funding freeze is part of a flurry of suits challenging his policies, from restrictions on birthright citizenship to a ban on transgender Americans serving in the armed forces. A Seattle federal judge issued a TRO against Trump’s executive order restricting who can automatically get U.S. citizenship when their born on U.S. soil.