- Donald Trump has repeatedly promised to test the limits of presidential power to cut spending.
- The OMB’s order to pause all federal grants is effective at 5 pm Tuesday.
- Nonprofits are unclear about the scope of the order.
President Donald Trump has long promised to test the extent of presidential power to cut federal funding unilaterally. Monday night’s Office of Management and Budget order pausing all federal grants, which congressional Democrats have called a constitutional crisis, fulfills that pledge.
“When I return to the White House, I will do everything I can to challenge the Impoundment Control Act in court, and if necessary, get Congress to overturn it,” Trump said in a 2023 policy announcement video. “We will overturn it.”
Legally, Congress has constrained the president’s powers to ignore their wishes and not appropriate funds. The issue, known as impoundment, reached a boiling point during the Nixon administration, leading to the passage of the Impoundment Control Act of 1974. The act allows a president to withhold funds temporarily, but only if a president goes through a formal process that eventually allows lawmakers to disapprove of the action.
House Democrats impeached Trump in 2019 in part due to his temporary hold on Ukraine aid. He was later acquitted in the Senate.
Before DOGE was formalized, Elon Musk and Vivek Ramaswamy wrote that impoundment was central to the Department of Government Efficiency’s efforts to slash federal spending. (Ramaswamy recently left DOGE.)
Trump and his allies have criticized the impoundment act. Russel Vought, Trump’s nominee to lead the OMB, recently testified to lawmakers that he agreed with Trump that the Nixon-era law was unconstitutional — a view not shared by most legal scholars.
A Reagan-era Office of Legal Counsel opinion found that there was “no textual authority” within the constitution for presidential impoundment power.
“Moreover, if accepted, arguments in favor of an inherent impoundment power, carried to their logical conclusion, would render congressional directions to spend merely advisory,” the OLC opinion read.
Legal scholars view the OMB order as a vehicle through which Trump can try to put the act’s constitutionality before the Supreme Court.
The extent of the OMB order remains unclear. A senior administration official said it was not simply an across-the-board funding freeze.
In the memo, acting OMB director Matthew Vaeth wrote that to the extent permitted under law, federal agencies must “temporarily pause all activities.” The order has an exception for Social Security and Medicare and “assistance provided directly to individuals.”
“Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal,” Vaeth wrote.
Nonprofits immediately expressed fear that their funding could be affected. On Tuesday, a Meals on Wheels spokesperson told Business Insider they were unclear if the order affected their service of providing free meals to low-income seniors. Federal grants are behind numerous services, including SNAP benefits, rental assistance, and educational programs. Colleges and universities could also be affected if the pause applies to federal research grants.
