President Trump leaving the White House last week. An order by his administration that froze trillions of dollars of federal grants and loans this week was published without being shown to key White House officials.
Credit...Eric Lee/The New York Times

Trump’s Federal Funding Freeze: Who Was Behind It and How Did It Unfold?

The order that froze trillions of dollars of federal grants and loans was published without vetting by key officials in the White House.

by · NY Times

Trump Administration 

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The explosive Trump administration order that froze trillions of dollars of federal grants and loans this week was published without vetting by key officials in the White House, according to three people with knowledge of what happened.

The order was drafted inside the Office of Management and Budget by the agency’s general counsel, Mark Paoletta, two of the people said. And it was released without being shown to the White House staff secretary, Will Scharf, or to Mr. Trump’s top policy adviser, Stephen Miller.

The people spoke on the condition of anonymity to describe sensitive discussions.

The White House rescinded the directive on Wednesday after legal challenges and widespread condemnation and confusion, including the interruption of the Medicaid system, which provides health care to millions of low-income Americans. President Trump was angered by the media coverage of the order and its aftershocks, according to a person who spoke to him.

During a bill signing at the White House on Wednesday, Mr. Trump cast blame on the media for the confusion. “We are merely looking at parts of the big bureaucracy where there has been tremendous waste and fraud and abuse,” he said.

White House officials and a spokeswoman for the Office of Management and Budget did not immediately respond to requests for comment on Wednesday.

The episode, which amounted to the first significant reversal of the new administration, echoed Mr. Trump’s early-2017 effort to ban people from mostly Muslim-majority countries from entering the United States. That order caused mass confusion at airports, sparked damaging headlines and was temporarily blocked in court and pared back.

But while that first travel ban was emblematic of a new administration stocked with governmental novices, the chaos this week stood out because the second term Trump administration has so far shown far more discipline and skill at execution.

Behind the scenes, senior White House officials were caught off guard on Monday when the Office of Management and Budget released the memo, which ordered a pause in grants, loans and other federal financial assistance to ensure that federal programs aligned with Mr. Trump’s policy priorities.

But the memo did not provide detail on the scope and scale of the pause or a list of the services that would be affected. White House officials rushed to understand what had happened and what could be done to reassure people that essential services would not be affected.

As confusion mounted on Tuesday, the White House issued a Q&A on the freeze, saying it did not “apply across the board” to all federal assistance and was not supposed to affect programs like food stamps, Social Security and Medicaid. Though it was not intended to do so, the directive did interrupt the Medicaid system as states across the country found themselves locked out of systems that pay out federal grants.

In private, senior Trump advisers were furious that they were not read into the process. Some felt that the resulting mess gave Democrats their best opening since Mr. Trump’s election victory to rally public opposition against the administration.

Democrats assailed Mr. Trump’s order as an unlawful encroachment on Congress’s authority to control spending.

“Today, we saw what happens when Americans fight back against disastrous policies,” Senator Chuck Schumer, Democrat of New York and the minority leader, told reporters. “Americans made their voices heard.”

On Tuesday afternoon, a federal judge in the District of Columbia temporarily blocked Mr. Trump’s order in response to a lawsuit filed by Democracy Forward, a liberal organization that argued that the directive violated the First Amendment and a law governing how executive orders are to be rolled out.

On Wednesday afternoon, Matthew J. Vaeth, the acting director of the Office of Management and Budget, told federal agencies that the memo freezing aid had been “rescinded.” But the White House press secretary, Karoline Leavitt, said on social media that Mr. Trump’s initial executive orders on federal funding “remain in full force.”

She was referring to executive orders that directed the government agencies to review and eliminate spending on so-called woke ideologies. The Trump administration had already identified hundreds of federal programs that would receive additional scrutiny.

But the memo that would carry out those executive orders by freezing all federal spending was, at least for now, no longer in force.

The reversal from the Trump administration was surprising given how vociferously top officials had initially defended it, including Mr. Miller, the deputy White House chief of staff for policy.

Appearing on CNN on Tuesday, Mr. Miller accused federal civil servants of trying to push out “billions of dollars for wicked and pernicious purposes.”

“The choice here is simple,” Mr. Miller said. “It is very simple, and I want to state it clearly: Either Donald Trump gets political control over this government and ends the waste, abuse and fraud on the American people, or we let bureaucrats autopilot federal spending.”

Nicholas Nehamas contributed reporting.

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