By: The Editorial Board – wsj.com – January 29,2025

Trump’s pause on federal grants wasn’t illegal and didn’t even affect most spending.

It’s well within Mr. Trump’s executive authority to pause disbursement of discretionary funds to ensure they comply with the law and his priorities. But the White House didn’t help itself with a lack of clarity on the details, which let Democrats predict the apocalypse. “The blast radius of this terrible decision is virtually limitless,” Senate Minority Leader Chuck Schumer said, citing “disaster assistance, local law enforcement, rural hospitals, aid to the elderly, food for people in need.”

Mr. Trump wants to disrupt Washington, and voters will thank him if he does. But governing by chaos doesn’t work. To succeed, his executive actions need to be nailed down and carefully explained, or they’ll be torn apart by the courts and the agents of the status quo.

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The original memo, issued Monday by the Office of Management and Budget (OMB), directed agencies by Tuesday to put a hold on grants that hadn’t yet been disbursed, so that Trump appointees could review them. By Feb. 10, agencies were supposed to submit “detailed information on any programs, projects or activities” that don’t comply with Mr. Trump’s executive orders, such as funding for DEI and the “green new deal.”

On Tuesday the White House clarified in a follow-up memo that the pause would not affect financial assistance to individuals, such as food stamps, small business grants, aid to farmers, and sundry entitlement programs, including Medicaid and children’s nutrition. OMB also added that agencies “may grant exceptions” on “a case-by-case basis.”

There’s nothing wrong with an incoming Administration that doesn’t want to keep shoveling money out the door without first reviewing where it’s going. Take the National Institutes of Health’s First program, which requires grant recipients to use “diversity statements” for government-funded faculty. The program and others like it may violate the Supreme Court’s Students for Fair Admissions (2023) ruling that barred racial preferences in education.

The Biden Administration also conditioned Inflation Reduction Act (IRA) awards on at least 40% of a project’s “benefits” going to “disadvantaged communities.” Federally funded transportation projects were required to give a certain amount of subcontracts to “disadvantaged business enterprises.” These are de facto diversity quotas that may be illegal.

Last summer we highlighted how the Environmental Protection Agency doled out $100 million for “climate justice” to leftist groups that called for the abolition of Israel and Immigration and Customs Enforcement.

Federal Judge Loren AliKhan temporarily blocked the pause on Tuesday after liberal groups sued. Some 20 Democratic Attorneys General followed. “OMB’s policy unconstitutionally overrides Congress’s power to decide how federal funds are spent,” New York AG Letitia James argued. But the OMB memo expressly stated that agencies must comply with federal law, and the pause affected only spending over which Congress granted the President some discretion—for instance, IRA loan guarantees, NIH grants, chip-maker grants and some transportation funds.

Mr. Schumer said that “virtually any organization, school, state, police office, county, town or community depends on federal grant money to run its day to day operations, and they’re all now in danger.” Federal dollars in 2022 made up 36% of state and 6.2% of local government budgets. But most is mandatory spending that wouldn’t have been affected by the pause. Federal public-safety grants, by the way, represent only about 1% of New York’s budget.

The press also suggested the memo violated the Impoundment Control Act that Mr. Trump’s OMB nominee, Russ Vought, thinks may be unconstitutional. But that law is only implicated if Mr. Trump refuses to spend the money at all. Funds don’t have to be spent in the next two weeks, and Mr. Biden in his final months rushed to finalize grants that deserve legal review. Congress didn’t demand that NIH give Harvard a $5 million grant by Feb. 10.

Mr. Trump was elected in part to stop the willy-nilly spending blowout of the last four years. Nondefense discretionary spending has increased 45% since 2019, twice the rate of inflation. Democrats want to keep the party going, but Mr. Trump has the authority—pause or no pause—to scrutinize discretionary funds that still haven’t gone out the door. Let’s hope he does it more competently next time.

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Source: The Spending Freeze Panic – WSJ