White House pauses federal grants and loans

US President Donald Trump has paused grants, loans and other federal assistance, according to a leaked government memo verified by the BBC’s US partner, CBS News.

In the memo, the acting head of the Office of Management and Budget (OMB) calls on government agencies to ensure spending is consistent with Trump’s priorities – and nods to a number of executive orders that the returning president has made.

The full impact of the pause is not yet clear, although the memo specifies that Medicaid and Social Security benefits are not affected. It comes days after the US halted nearly all foreign aid.

The move has been criticised by members of the rival Democratic Party, and could face legal challenges.

The memo, signed by acting OMB chief Matthew Vaeth, calls on government agencies to temporarily pause their financial assistance programmes, so they can review spending that could be impacted by the various orders Trump has signed .

It says this encompasses “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal”.

A deadline of 17:00 EST (22:00 GMT) has been set. Each agency is told to pause the issuing of new awards as well as the disbursement of funds under existing awards.

The memo further demands that all agencies report which programmes have been paused by 10 February.

The White House has not yet commented officially on the leaked document.

Democrats in Washington DC were quick to sound an alarm of concern about the plan.

The top Democratic appropriators in Congress – Washington Senator Patty Murray and Connecticut Congresswoman Rosa DeLauro – sent a letter to the White House Monday evening expressing their “extreme alarm” with the memo.

“The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country,” the congresswomen wrote. “We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law.”

The Democratic minority leader of the US Senate, Chuck Schumer, was also critical of the pause: “Congress approved these investments and they are not optional; they are the law.”

He added: “It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to non-profit charities.”

The move follows last week’s news that the Department of State had issued a halt to nearly all existing foreign assistance and paused new aid, according to an internal memo sent to officials and US embassies abroad.

It appeared to affect everything from development assistance to military aid, making exceptions only for emergency food aid and for military funding for Israel and Egypt.

Trump had earlier issued an executive order for a 90-day pause in foreign development assistance pending a review of efficiencies and consistency with his foreign policy.

The US is the world’s biggest international aid donor, having spent $68bn (£66bn) in 2023 according to government figures. The State Department notice appears to affect everything from development assistance to military aid.