White House suspends federal funding and loans: implications for key programs

The administration of U.S. President Donald Trump has ordered the suspension of all federal grants and loans starting Tuesday evening, January 28. Federal agencies have until February 10 to submit reports on the programs that have been affected by the restrictions. This was reported by Reuters, according to UNN.

According to a memo signed by the acting head of the Administrative and Budgetary Department, the suspension of payments is related to verifying that the funded programs are in line with the president's priorities. In particular, it refers to the decrees signed last week aimed at suspending funding for programs related to diversity, equality and inclusion (DEI).

Purpose and consequences of the decision

Matthew White, acting head of the Office of Management and Budget, emphasized that spending federal funds on programs that do not meet the president's political priorities is a misuse of tax dollars that does not improve the lives of citizens.

The suspension affects foreign aid, funding for non-governmental organizations, and a number of other programs. However, the White House has assured that the suspension will not affect social benefits, Medicare, and other types of assistance provided directly to citizens.

At the same time, it remains unclear whether this measure will affect health care programs for veterans and low-income people. The memo also states that in fiscal year 2024, the federal government spent about $10 trillion, of which $3 trillion was spent on grants and loans. However, Congress cites different data, estimating spending at $6.75 trillion.

Reaction of Democrats and NGOs 

The White House's decision drew sharp criticism from Democrats and non-governmental organizations. Diane Yentel, president of the National Council of Nonprofits, called the order “catastrophic” and warned that even a short-term suspension could lead to the halt of vital programs, including research into treating childhood cancer and helping victims of domestic violence.

Senate Democratic Leader Chuck Schumer noted that the administration has no right to cancel spending approved by Congress and warned that this decision would harm millions of Americans.

Position of the Republicans

The president's supporters believe that these measures are in line with his campaign promises. House Representative Tom Emmer said that “Trump was elected to change the way things are. That's exactly what he's doing.

As a reminder, the United States introduced a 90-day pause on foreign aid and will audit its use. Scandals at the NBU and corruption cases may affect the trust of international partners and the amount of future assistance.