On Monday, January 27, the White House Office of Management and Budget (OMB) issued a memo to temporarily pause all federal aid, grants, and loans beginning January 28 at 5:00 p.m. The memo directed all federal agencies to pause all activities to allow time for review and compliance with the released executive orders focused on “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The memo also instructed federal agencies to provide OMB with detailed information on any programs, projects, or activities affected by the pause by February 10. While the memo stated that its orders should not be construed to affect “assistance provided directly to individuals” such as Social Security or Medicare, its vague language created mass confusion and concern as to its broad effects.
Further causing concern was a 52-page document circulated by the OMB ordering agencies to answer 14 questions by the end of next week for each program that has funding activities planned through March 15. The spreadsheet covers various federal agencies and included a wide array of programs and questions for agencies to answer.
As a result, a group of nonprofit and public health organizations filed a lawsuit to halt the implementation of the federal funding freeze.
In addition to this group of nonprofits, several states’ Attorneys General also filed a suit against the Trump administration, requesting a temporary restraining order, calling the administration’s actions “unconstitutional.”
Several lawmakers also expressed concern, including House Appropriations Ranking Member Rosa DeLauro (D-CT) and Senate Appropriations Ranking Member Patty Murray (D-WA) who wrote a letter to OMB Acting Director Matthew Vaeth raising their alarm.
In response to the legal and public pushback the White House received as a result, OMB published an additional memo on January 28 that sought to clarify the issue. However, stakeholders, and the public remained confused as to the programs impacted by the original guidance and concerned about abrupt pauses to federal funding.
On the evening of January 28, U.S District Judge Loren AliKhan granted an administrative stay to block OMB from freezing federal funding. The stay order paused the administration’s plans for a week and set a hearing for further arguments next Monday, February 3.
Following continued calls from the public to clarify the OMB guidance, OMB moved to rescind the original memo on January 29, and stated that any questions regarding implementing the President’s Executive Orders (EOs) should be directed to the agency’s General Counsel. While most generally interpreted this move as the Trump administration abandoning its plans to implement its federal funding freeze, White House Press Secretary Karoline Leavitt then tweeted out that this was not a recission of the federal funding freeze, rather a recission of the OMB memo, and that the President’s EOs on federal funding would remain in “full force and effect” and would still be implemented.
On January 29, a second federal judge, U.S. District Judge Jack McConnell, said he intends to issue a new block on the President’s efforts to freeze federal funds, citing the White House’s contradictory signals on the policy.
Meanwhile in the Senate, Republicans advanced Russ Vought’s nomination for the OMB director despite a Democratic boycott of the vote due to their concerns with the emerging OMB policies. With concerns about the funding freeze still looming, Republican senators signaled they had no further questions for Vought as new OMB directives continue to roll out.
Also on Capitol Hill, negotiations on spending levels for FY25 are ongoing as the March 14 government funding deadline approaches. While Republican and Democratic appropriators initiated bipartisan talks in a “four corners” meeting last week, major disagreements remain, such as the establishment of topline numbers, addressing budget reconciliation, and potentially including disaster and border security funding (Politico Pro, subscription required). Notably, the recent White House funding freeze described above has complicated negotiations and put topline numbers in jeopardy (Politico Pro, subscription required).
In the House, Republicans finished their policy retreat in Miami, FL with a high-level blueprint for a one-bill approach to reconciliation plans, although Speaker Johnson’s plan to pass a budget resolution by next week and finish reconciliation by Easter may be stalled due to lack of consensus between House GOP and their slim majority. Meanwhile, Senate Majority Leader John Thune (R-SD) announced that Senate Republicans are ready with a back-up budget blueprint for a two-bill approach, in case the House negotiations stall. Their two-bill approach would first tackle border security, defense, and energy, followed by a broader tax package.
On the appropriations side, Senate Appropriations Chair Susan Collins (R-ME) and Vice Chair Patty Murray (D-WA) announced the Senate Appropriations subcommittee chairs, ranking members, and full rosters for the 119th Congress.
With a month and a half left until government funding expires on March 14, lawmakers face significant challenges in balancing reconciliation plans, bipartisan funding talks, and complications from administrative actions dominating their agenda.
Hill Updates
- Speaker Mike Johnson (R-LA) formally invited President Donald Trump to address a joint session of Congress on March 4 to provide policy proposals for the upcoming legislative year. The speech is not technically considered a “State of the Union” address, however since 1981, newly inaugurated presidents have delivered similar addresses to Congress with the same pomp and circumstance. The White House has yet to formally accept the invitation, but President Trump is expected to confirm.
- On January 28, Representatives Earl L. “Buddy” Carter (R-GA) and Ron Esters (R-KS) reintroduced the HEALTH Panel Act, a bill seeking to strengthen congressional oversight and statutory authority for the Congressional Budget Office’s (CBO) Panel of Health Advisers. Specifically, the legislation aims to enhance the accuracy of CBO’s health care bill assessments by formalizing the Panel of Health Advisers, granting congressional appointment power, and mandating an annual report to the Budget Committees.
- On January 29, Robert F. Kennedy Jr. appeared for his nomination hearing before the Senate Finance Committee (SFC) to be considered for Secretary of the Department of Health and Human Serves (HHS). During the SFC hearing, Kennedy faced questioning on his past remarks criticizing vaccines, his past support for abortion, as well as his approach for managing the agency’s largest health programs, Medicare and Medicaid. On January 30, the Senate Health, Education, Labor and Pensions Committee held a courtesy confirmation hearing for Kennedy, where Kennedy cited the Make America Healthy Again (MAHA) movement as he spoke about his plan to focus on chronic diseases, the safety of the food supply, and bring America up to the “gold standard” for scientific research. Notably, Senate HELP Chair Bill Cassidy (R-LA) and others voiced their serious concerns and doubts about Kennedy’s long-held opposition to vaccinations. Importantly, Senator Cassidy also sits on the SFC, and an opposition vote from him could jeopardize Kennedy’s nomination. The SFC will decide, in a vote expected next week whether to recommend his confirmation to the Senate.
Administration Updates
- On January 27, Dr. Matthew Memoli, Acting Director of the NIH, clarified that essential clinical trials, critical research purchases, and necessary hiring for safety and security may continue despite the Trump administration's restrictions on HHS travel, communications, and hiring. Importantly, many uncertainties remain, including the fate of halted grant review meetings and the potential impact of restrictions on diversity, equity, and inclusion (DEI) efforts in research. While scientific journal submissions may proceed, preprint articles are paused, and concerns persist over how these policies will affect long-term medical research funding and direction.
- On January 28, President Trump issued an executive order directing federal agencies to restrict gender-affirming care for minors, including limiting insurance coverage, defunding related medical research, and rescinding prior guidance supporting such care. The order also calls for regulatory changes to exclude gender-affirming treatments from federal health programs like TRICARE, Medicare, and Medicaid, while instructing the Justice Department to enforce restrictions against sanctuary states protecting youth access to care.
- On January 29, CMS released a statement on lowering the cost of prescription drugs that noted a commitment to transparency and providing opportunities for stakeholders to provide input on specific ideas to improve the Medicare Drug Price Negotiation Program.
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