The White House has officially rescinded a controversial memorandum that ordered a freeze on federal grants and loans, which was initially issued by the Office of Management and Budget (OMB) under the direction of Acting Director Matthew Vaeth. The memo, originally intended to pause funding late Tuesday afternoon, faced immediate legal challenges. A federal judge intervened, temporarily halting the freeze to consider the legality of the directive. This decision followed growing concerns from nonprofit groups who argued the freeze was unlawful.
On Wednesday, the White House formally withdrew the initial memorandum, known as OMB Memo M-25-13, with new guidance expected from the administration soon. The original memo was part of President Donald Trump's agenda to allow agencies time to ensure compliance with his policy directives. However, the unexpected ramifications, such as the suspected shutdown of Medicaid reimbursement portals across all 50 states on Tuesday, led to increased scrutiny and swift legal action.
Acting OMB Director Matthew Vaeth issued a new memo on Wednesday, effectively canceling the previous order.
"OMB Memorandum M-25-13 is rescinded. If you have any questions about implementing the President's Executive Orders, please contact your agency General Counsel." – Acting OMB Director Matthew Vaeth
This statement confirmed the retraction of the freeze order. A senior administration official also verified that the original OMB memo had indeed been rescinded, marking a quick turnaround in response to both legal and operational concerns.
The freeze initially aimed to provide agencies sufficient time to review their programs and ensure alignment with the President's priorities. However, its implementation without adequate consideration of potential impacts led to significant disruptions, particularly in federal aid distribution mechanisms. Nonprofit organizations swiftly challenged the legality of this approach, prompting judicial intervention and a temporary pause by a federal judge.
NBC News obtained the newly issued memo through an inside source, but efforts by CNBC to solicit comments from the OMB went unanswered. The lack of communication from the OMB has left some stakeholders seeking further clarification on how future directives will be managed without causing similar disruptions.
Despite the rapid rescission, questions remain about how the administration plans to proceed with its broader policy goals without resorting to abrupt measures that could lead to unintended consequences. The situation highlights the challenges of balancing policy implementation with operational realities and legal constraints.
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