White House Memo Puts Federal Funding On Hold

Summary

The NPR Politics Podcast: "White House Memo Puts Federal Funding On Hold" Release Date: January 28, 2025

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Introduction

In the January 28, 2025 episode of The NPR Politics Podcast, NPR's political reporters delve into a significant development from the White House: an internal memo mandating a pause on all federal grants and loans. Hosted by Deepa Shivaram, the episode features in-depth discussions with co-hosts Susan Davis and Stephen Fowler, exploring the implications, reactions, and broader context of this unprecedented move.

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The White House Memo: Details and Implications

The episode begins with Deepa Shivaram outlining the crux of the memo issued by the White House budget office. The memo declares a halt on federal grants and loans, citing the misuse of taxpayer dollars on initiatives like "Marxist equity, transgenderism, and green new deals social engineering policies."

Key Points:

• Origin of the Memo: Susan Davis explains that the memo originated from Matthew Veith, the acting director of the Office of Management and Budget. The official Budget Director, Russ Vought, remains unconfirmed by the Senate.

• Financial Breakdown: Out of the $10 trillion federal expenditure in fiscal year 2024, $3 trillion was allocated to federal financial assistance programs, including grants and loans.

• Scope of the Freeze: The memo aims to freeze these programs effective at 5:00 PM on the day of issuance to ensure compliance with previous executive orders aimed at ending diversity, equity, and inclusion initiatives across federal agencies.

Notable Quotes:

• Susan Davis (01:49):

  "In this two-page memo, he outlines that..." (Susan Davis, 01:49)

• Deepa Shivaram (01:08):

  "All right, so big news from yesterday. The White House budget office ordered a pause on all federal grants and loans..." (Deepa Shivaram, 01:08)

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Political Reactions and Concerns

The memo has elicited strong reactions, particularly from Democratic leaders who view this as a significant overreach of executive power.

Key Points:

• Democratic Alarm: Senate Minority Leader Chuck Schumer has expressed deep concerns, labeling the decision as "lawless, dangerous, destructive, cruel," and potentially unconstitutional.

• Impact on Constituents: Susan Davis highlights the direct effects on various sectors:

  • Childcare Providers: Many rely on federal grants to operate. A halt could force closures and layoffs.
  • Agricultural Research: Federal funds support research in universities across states like California, Texas, and Illinois. A freeze could stagnate critical agricultural advancements.

• Duration and Economic Impact: While a temporary freeze might have minimal effects, extended periods could significantly disrupt federal operations and the broader economy.

Notable Quotes:

• Susan Davis (03:07):

  "One member of Congress noted... if that money stops, they have to shut down." (Susan Davis, 03:07)

• Deepa Shivaram (02:58):

  "And that's not a small thing. Like we're talking about people's jobs, people's livelihoods." (Deepa Shivaram, 02:58)

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Parallels to Trump's First Term

Stephen Fowler draws comparisons between the current administration's actions and those of former President Donald Trump's first term, where similar sweeping executive actions were taken.

Key Points:

• Historical Context: The administration's move resembles Trump's approach to halting grant funding and addressing "Wokeism," indicating a continuation of similar policies on a larger scale.

• Implementation Challenges: Fowler notes that while promises are being fulfilled, the actual execution involves navigating complex bureaucratic processes, which could delay tangible outcomes.

Notable Quotes:

• Stephen Fowler (04:58):

  "This is still the early phases, but we have seen this chapter and book before with Trump's first term." (Stephen Fowler, 04:58)

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The Department of Government Efficiency (DOGE)

A significant portion of the discussion centers around the newly established Department of Government Efficiency (DOGE), spearheaded by Elon Musk, and its role in overseeing federal spending cuts.

Key Points:

• Formation and Mission: Created by executive order, DOGE is tasked with identifying inefficiencies within federal agencies and proposing cost-cutting measures.

• Operational Challenges: Stephen Fowler expresses skepticism about DOGE's ability to enact rapid changes due to inherent government bureaucracies.

• Political Reception: While some members of Congress are open to DOGE's efficiency objectives, there is hesitancy regarding its true intent—whether it's a genuine effort to streamline government or a vehicle for advancing specific political agendas.

Notable Quotes:

• Deepa Shivaram (08:55):

  "And speaking of power coming from the top, one of the executive orders that Trump signed on day one was creating this Department of Government Efficiency, commonly known as DOGE..." (Deepa Shivaram, 08:55)

• Stephen Fowler (09:21):

  "DOGE was kind of envisioned as this outside of the Government organization that can open things up and look at the government's people and policies and spending and figure out ways to cut, cut, cut." (Stephen Fowler, 09:21)

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Questions and Uncertainties

The episode underscores several unresolved issues surrounding the memo and DOGE's initiatives:

• Duration of the Freeze: Uncertainty looms over how long the grant and loan programs will remain paused, raising concerns about prolonged economic disruptions.

• DOGE's Effectiveness: The success of DOGE in achieving its efficiency goals remains to be seen, especially given the complexity of government operations.

• Bipartisan Cooperation: There is skepticism about whether DOGe will maintain bipartisan support or become a point of contention between Democrats and Republicans.

Notable Quotes:

• Susan Davis (12:31):

  "Do they really want to sit down and figure out ways to make the government more efficient... or is this just a backdoor to try to enact more of Donald Trump's policy agenda." (Susan Davis, 12:31)

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Conclusion

The NPR Politics Podcast episode provides a comprehensive analysis of the White House's decision to pause federal funding through grants and loans. With input from experts like Susan Davis and Stephen Fowler, listeners gain a nuanced understanding of the immediate impacts, historical parallels, and the uncertain future of federal funding and government efficiency initiatives. As the situation unfolds, the administration's actions continue to generate significant debate and concern among policymakers and the public alike.

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For more detailed insights and ongoing coverage, subscribe to The NPR Politics Podcast through your preferred podcast platform.

Transcript

[Carvana]

This message comes from Carvana. Finance your next car the convenient way with customizable transparent terms. All online. Make your budget work for you and swap hassle for convenience with Carvana.

[Joe Walk]

Hi, my name is Joe Walk. I am at Echo Lake Elementary School in Shoreline, Washington and I just got finished putting the finishing touches on the first edition of our monthly newspaper, the Talon. This podcast was recorded at 1:06pm on.

[Deepa Shivaram]

Tuesday, January 28, 2025.

[Joe Walk]

Things may have changed by the time you hear this, but our students will be better informed, which is so important in today's world. Okay, here's the show.

[Deepa Shivaram]

I worked on my elementary school Something something. I don't know if it was a newspaper or maybe it was the yearbook, but that's life changing stuff.

[Susan Davis]

I'm curious to know if they have a print edition or if it's all online and if so, how they're reading it, if they're elementary school kids.

[Deepa Shivaram]

Are. Yeah. Is it a newsletter like are they on TikTok? I want to know. Hey there. It's the NPR Politics podcast. I'm Deepa Shivaram. I cover the White House.

[Stephen Fowler]

I'm Stephen Fowler. I cover politics.

[Susan Davis]

And I'm Susan Davis. I also cover politics.

[Deepa Shivaram]

All right, so big news from yesterday. The White House budget office ordered a pause on all federal grants and loans. The internal memo states that, quote, the use of federal resources to advance Marxist equity, transgenderism and green new deals social engineering policies is a waste of taxpayer dollars. The that does not improve the day to day lives of those we serve. So this pause has set off alarm bells among Democrats, including Senate Minority Leader Chuck Schumer.

[Carvana]

This decision is lawless, dangerous, destructive, cruel. It's illegal, it's unconstitutional.

[Deepa Shivaram]

All right, a lot to get into. So Sue, I'm gonna start with you. Let's start from the top. What exactly does this memo say?

[Susan Davis]

Well, there's a lot we don't know, so let's start with what we do know. The memo came from Matthew Veith. He's the acting director of the Office of Management and Bud pending Director Russ Vote has not yet been confirmed by the Senate. And in this two page memo he outlines noting that in fiscal year 2024 of the $10 trillion that the US federal government spent, 3 trillion of that was through federal financial assistance programs like grants and loans. And they're essentially saying as of 5:00 today they want to freeze those grant and loan programs to make sure that they are in compliance with the other executive orders that Donald Trump has issued since he took office. Particularly like Ending diversity, equity and inclusion programs across the federal government. The impact isn't entirely clear, but I do want to note that our colleague Franco Ordonez did report out that this doesn't affect things like Medicare payments or Social Security payments or direct assistance to Americans. But it does seem to, as far as we can tell, put a pause on grant and loan programs that could basically affect people and programs across the breadth of the federal government.

[Deepa Shivaram]

And that's not a small thing. Like we're talking about people's jobs, people's livelihoods. Like this is a large impact that this could potentially have and is already having.

[Susan Davis]

Sure. And I'll give you just two examples to think about. One that one member of Congress noted is that a lot of small childcare providers and childcare offerings get federal grant money to help underwrite the cost to run their childcare programs. And if that money stops, they have to shut down. They don't have the money to operate, they can't pay their staffs. Another example, so much of the Agriculture Department's research is done through grant funding, especially through universities in places like California and Texas and Illinois. If those grant programs dry up, there's essentially no more ag research in the entire country. Now, I should also note that the same source that talked to Franco said that some of these freezes could be just a day. Sure, a one day freeze probably isn't gonna have that much of an impact, but days, weeks, months, you'll start to feel a bigger and bigger effect.

[Deepa Shivaram]

And the bottom line is that there's still a lot of confusion here. I mean, these are things like the very top. You said there's things we know and there's things we don't know. A lot of this is just put everyone into a tizzy.

[Susan Davis]

Yes. And just Chuck Schumer's point, these are funds that, generally speaking, have gone through the annual appropriations process in Congress. They have been approved by Congress. The spending has been directed by Congress. The constitutional authority to direct that funding lies with Congress. Now, there's always room in which the executive branch can help maneuver those funds or have oversight over those funds. But to fully pause them or stop them, we don't know what happens if they determine that some grant funding programs are not in compliance with other executive orders. Does that. And the program funding. So there's just a million questions. I think one of the things we're looking to see is how do Republicans on Capitol Hill respond? Generally speaking, historically speaking, conservatives like to believe that the power of the purse relies with Congress. But obviously we've seen that this is a pretty pliant Congress when it comes to the president and going along with what he wants to do. So I don't anticipate there's going to be a big amount of Republican pushback yet.

[Stephen Fowler]

And Sue, I do want to point out that this is a little bit of deja vu from Trump's first term where there is this big sweeping proclamation of a thing, a capital T thing, in this case, you know, freeze on grant funding and other things to stop Wokeism. Then there is the next step of figuring out, okay, what does that actually mean? We've already had some bit of walk back from the White House and Office of Management and Budget with some clarifications on background about this isn't a freeze. This is just a lawfully allowed review. And no, that program won't be cut and this program won't be cut. And so we're at the point where it's still the early phases, but we have seen this chapter and book before with Trump's first term. But this is just at a larger scale. And I will point out that having spent a lot of time on the campaign trail covering Trump, this is just things that he has said he is going to do as soon as he took office. And at a certain level, that is being accomplished and he is delivering on his promise to his constituents and voters. Now, the reality of what that looks like and how long it will take to litigate that and figure things out, that's secondary in some regards, I think.

[Susan Davis]

Yeah. And I do think when things like this happen, part of the reason why we say it causes chaos is like, look, federal workers work within compliance of federal law. And if you were working on a program that suddenly it's exist or its mandate is being questioned by the White House, you creates a ton of questions. And they're gonna want guidance from internal counsels. They're gonna make sure they're in compliance. So it can have a tremendous slowdown effect. I would also say I'm curious about if these freezes go for any significant period of time. I would think maybe even a month might be considered significant. When you're talking about that kind of money that goes out the door over the course of a fiscal year, does it start to have an, a broader economic impact like the federal government? Getting money out the door is a critical part of the health of the U.S. economy. I think that that's when you start to see some nervousness among members of Congress and other people about how long is this gonna be? What are the broader economic impacts and for a lot of members of Congress. What does this mean for my state? What does this mean for my district?

[Deepa Shivaram]

Correct. For their constituents? All right. We're gonna take a quick break and we'll be back in a moment.

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[Deepa Shivaram]

And one thing I just want to underscore from our conversation on this pause freeze, we don't know how long it's going to go for on federal funds. You know, this is a massive power grab from Trump, Sue. And can you kind of put that into context, a little bit of like how impactful this really is?

[Susan Davis]

Well, I think you have to look at this executive order in the context of the other directives towards the federal government. And look, it's only been week one, right? Consider this direction on federal loans and grant programs to the freeze on federal aid, stopping programs internationally. I think what Trump is doing is profound. The halt on hiring federal workers, putting people on paid leave. I think that he is really trying to, as he campaigned on, remake the entirety of the federal government. I think that even some of his supporters are kind of blown back by how prepared they were this time around, especially because so much of this is already happening before his cabinet has even been put into place. And I do think that that does tell us something, that this power is coming directly from the White House. There is no waiting to get your nominee in to feed back up to the White House to say what they think should be done. This is all coming from the top down.

[Deepa Shivaram]

And, Steven, I mean, one of the things you've been reporting on recently and I want have you jump in on this. Speaking of, you know, power coming from the top, one of the executive orders that Trump signed on day one was creating this Department of Government Efficiency, commonly known as doge, helmed by Elon Musk. And you know, that department is tasked with cutting federal spending. But how are you learning about how this is working so far? Tell us what your reporting has told you.

[Stephen Fowler]

So with Elon Musk and for a time, Vivek Ramaswamy, now that he has left the Department of Government Efficiency effort to potentially run for governor of Ohio, Doge was kind of envisioned as this outside of the Government organization that can open things up and look at the government's people and policies and spending and figure out ways to cut, cut, cut. That's not the mandate of what is in the Executive Order. The Executive Order makes this DOGE Initiative a temporary organization that exists within a currently existing office called the United States Digital Service. The United States Digital Service is being renamed as the United States DOGE Service. Same acronym, different meaning. But the DOGE Initiative is being tasked with working with federal agencies to find ways to advance the DOGE Agenda. What is the DOGE Agenda? We don't know yet.

[Deepa Shivaram]

Right. And one thing you know, that's sort of a question that's swirling around here is the timeline, right? Like, how fast can this really get done? And clearly, Trump is moving very quickly on some of his plans, things that he talked about in the campaign. But when it comes to that cut, cut, cut, trim, trim, trim, realistically, how fast can the federal government actually move on that?

[Stephen Fowler]

That's where it's interesting to look at the history of the United States DOGE Service, formerly known as the Digital service. And it's this sort of digital strike team that makes government better and more efficient and in turn, save money. But it's things that have been smaller in scale and have still taken time to do so. It's not really clear that even with this DOGE mandate more aligning with what President Trump wants to do, that it can get through the glacial pace of government and all of the bureaucratic red tape.

[Susan Davis]

I will say that when I've talked to members of Congress about what role they want to see DOGE play, they focus heavily on the government efficiency component of it and less on the spending cut part of it. Again, they're like, it's our job to cut spending. But the president and the executive branch does have a tremendous amount of unilateral power to make the executive branches run more efficiently. And I do think in that regard, like, the Department of Government Efficiency makes a very easy and obvious political sense, because it's like, who's against that, right? Like, what is the argument against a more efficient government? I will say that I think that Democrats have been dancing around the DOGE effort, trying to get a sense of how serious it is. Do they want to play ball with it? And I have talked to Democrats who were saying that, like, look, we want to get a sense of whether this is good faith or not. Do they really want to sit down and figure out ways to make the government more efficient to do smart spending cuts, or is this just a backdoor to try to enact more of Donald Trump's policy agenda. And I would say when you tie together these executive orders and these efforts to shut down loan programs and cut off foreign aid and reduce federal workers, I think that the political willingness of Democrats to lean in to the DOGE effort is going to get less and less by the day because I think increasingly they are not seeing this broader effort as one that they would consider good faith or intended to be bipartisan.

[Deepa Shivaram]

And there are some elements of this, too, that are like, you know, efficiency is is the brand name of all of it. But the thing I'm thinking about, especially as you mentioned, usds, the digital service, Stephen, I mean, Trump, like day one, reneged on former President Biden's executive order on AI, Right. And part of that was using the digital service, like bringing more experts in to help the government improve their technology. It was supposed to be an efficiency type thing. So as all this is going on, there are a number of things that are also highly inefficient that are going on.

[Stephen Fowler]

I will say I talked to the former administrator of the U.S. digital Service for my reporting, and they say that there are a lot of things about the way the government operates that are not efficient. And there are things that Trump can do and Elon Musk can do to make things better, regardless of partisan intent. But it revolves around good faith engagement with the federal agencies and the people that are working in those agencies to find the pain points and fix them. But in the grander scheme that Trump has put out so far of trying to have ultimate power over the purse and ultimate power over the way the federal government is run, that might not be as high of a priority.

[Susan Davis]

Yeah. And look, I think that people will know the effectiveness of the DOGE effort relatively soon. The president has said this isn't going to be a long running new government program. It's set to expire on the 4th of July, 2026, which will coincide with the 250th anniversary of America, by which point Donald Trump says he will have made America great again. But the ultimate work of DOGE is going to be conducted in pretty short order compared to how broader federal efforts to reign in spending have gone.

[Deepa Shivaram]

So a lot to keep watching for. All right. We're going to leave it there for today. I'm Deepa Shivaram. I cover the White House.

[Stephen Fowler]

I'm Stephen Fowler. I cover politics.

[Susan Davis]

And I'm Susan Davis. I also cover politics.

[Deepa Shivaram]

And thank you for listening to the NPR Politics podcast. Listen to this podcast sponsor, free on Amazon Music with a Prime membership or any podcast app by subscribing to NPR [e-mail] that's plus.NPR.org.