US President Donald Trump Orders Halt to Virtually All Domestic and Foreign Aid
WASHINGTON: President Donald Trump’s White House ordered a pause in all federal grants and loans starting today, a sweeping decision that could disrupt education and healthcare programmes, housing assistance, disaster relief, and a host of other initiatives that depend on billions of federal dollars.
Background
In a memo yesterday, the acting head of the Office of Management and Budget (OMB), which oversees the federal budget, said the money would be put on hold while the Trump administration reviews grants and loans to ensure they are aligned with the Republican president’s priorities, including executive orders he signed last week ending diversity, equity, and inclusion programmes.
Impact
The OMB memo said today’s freeze included any money intended "for foreign aid" and for "non-governmental organisations", among other categories. The White House said the pause would not impact social security or Medicare payments or "assistance provided directly to individuals". That would presumably spare disability payments and the SNAP food programme for the poor, though it was not clear whether healthcare programmes for veterans and low-income people would be affected.
Foreign Aid Suspension
As part of the foreign aid suspension, the administration began moving today to stop the supply of lifesaving drugs for HIV, malaria, and tuberculosis, as well as medical supplies for newborn babies, in countries supported by the United States Agency for International Development.
OMB Memo
The OMB memo is the latest directive in the Trump administration’s campaign to dramatically reshape the federal government, the nation’s largest employer. In a blizzard of executive actions, the new president has shuttered all diversity programmes, imposed a hiring freeze, sent national security officials home, and sought to strip away job protections from thousands of civil servants.
Reactions
The federal government provides money to a broad swath of non-profits, many of which reacted with dismay. "From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives," Diane Yentel, president & CEO of the National Council of Nonprofits, said in a statement.
Democrats Challenge "Unlawful" Move
The memo asserted the federal government spent nearly US$10 trillion in fiscal year 2024, with more than US$3 trillion devoted to financial assistance such as grants and loans. But those figures appeared to include money authorised by Congress but not actually spent – the nonpartisan congressional budget office estimated government spending in 2024 at a much lower US$6.75 trillion.
Conclusion
The spending freeze ordered by OMB takes effect at 5pm today. Agencies have until February 10 to submit detailed information on any programmes subject to the suspension. The federal government’s decision to halt virtually all domestic and foreign aid has sparked widespread concern and criticism, with many non-profits and state and local governments warning of devastating consequences.
FAQs
Q: What is the impact of the spending freeze on social security and Medicare payments?
A: The White House has said that social security and Medicare payments will not be affected by the spending freeze.
Q: Will healthcare programmes for veterans and low-income people be affected?
A: It is unclear whether healthcare programmes for veterans and low-income people will be affected by the spending freeze.
Q: What is the significance of the foreign aid suspension?
A: The foreign aid suspension will stop the supply of lifesaving drugs and medical supplies to countries supported by the United States Agency for International Development.
Q: What is the reaction of Democrats to the spending freeze?
A: Democrats have challenged the spending freeze as unlawful and dangerous, warning of devastating consequences for millions of Americans.