Why Should Delaware Care?
A memo by the White House sought to freeze all federal grants and loans Monday caused widespread confusion Tuesday and a disruption of some federal services. On Wednesday, President Donald Trump backtracked while continuing to scrutinize spending that could impact services to the public.
The 48 hours of worry over a nationwide pause on federal loans and grants seems to have come to an abrupt halt Wednesday afternoon when the Trump administration formally rescinded a memo at the heart of the controversy.
Matthew Vaeth, acting director of the White House Office of Management and Budget, wrote in a memo sent late Monday that all federal grants and loans would be halted Tuesday evening so that the administration could review agency programs and ensure funding is consistent with the law and Trump’s priorities.
“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” Vaeth wrote.
By Tuesday morning, however, worried nonprofits began seeking answers and finding uncertainty in exactly what funding was impacted by the broad order. Congressional Democrats began to criticize the order and withhold votes on Cabinet confirmations in protest.
And although the OMB memo stated that the pause would not affect Social Security or Medicaid benefits, the national Medicaid payment portal was unavailable most of the day Tuesday, including in Delaware.
On Tuesday evening, a federal judge in Washington, D.C., blocked the pause from going into effect after a group of nonprofits sued the federal government. The order was also the subject of a lawsuit by 22 Democratic attorneys general, including Delaware Attorney General Kathy Jennings, that was to be heard Wednesday afternoon.
But about noon Wednesday, Veath issued a memo rescinding that order, writing succinctly, “OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”
Is it over?
While Vaeth rescinded the memo that caused the confusion Wednesday, the White House pushed back on the idea that a funding freeze was off the table.
“This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction. The President’s EOs on federal funding remain in full force and effect, and will be rigorously implemented,” wrote Karoline Leavitt, the White House press secretary, on X.
A federal court hearing in Rhode Island on the attorneys general lawsuit also proceeded toward the imposition of an additional temporary restraining order. A lawyer from the U.S. Department of Justice unsuccessfully argued that the issue was now moot due to the memo’s rescission, in part because plaintiffs relied upon Leavitt’s post.
Meanwhile, major federal funding sources had reportedly returned to normal function in Delaware on Wednesday, including the funding portals for Medicaid, the subsidized health insurance for low-income individuals; Head Start, the childcare service for the low-income; and for the U.S. Department of Housing and Urban Development, which provides housing assistance vouchers and aid for the homeless.
Sheila Bravo, the president and CEO of the Delaware Association for Nonprofit Advancement, which represents the interests of hundreds of nonprofits statewide, said the episode Tuesday became a blur of panic and concern for her members.
She was relieved to hear of the memo’s rescission, but said the uncertainty by Leavitt’s comments has not been reassuring. Bravo credited Delaware’s Congressional delegation, Gov. Matt Meyer and the state’s philanthropic community for assisting nonprofits in any way they could Tuesday.
“We still need to act as if on Feb. 4 everything is frozen,” Bravo said, referring the day after the first court ruling would be made.
And even if the Trump administration narrows its focus to spending on targeted programs, there’s potential risk for Delaware nonprofits that serve immigrant or LGBTQ+ communities, or research or advance clean energy projects, to lose funding, she said.
“There is confusion when you talk about ideology, as to what degree the administration will look at the entire organization’s portfolio of services versus just what the funding of that one particular grant does,” she said, explaining that some grants provide for overlapping services.
Bravo said that she was also preparing her members to be on alert beyond the grant and loan freeze, noting that Congress will soon be forced to re-engage with budget reconciliations and then later this year will begin Fiscal Year 2026 budget deliberations. Both could present opportunities to pare back federal spending.
“So no matter what, there’s still going to be a lot of uncertainty around what’s going to be funded and what’s not going to be funded,” she said. “And we’d rather collect the data so we can see where the risks are to help inform philanthropy and our government partners on what needs might need to be figured out.”
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