The Spending Freeze Panic

Trump’s pause on federal grants wasn’t illegal and didn’t even affect most spending

WSJ editorial. Excerpts:

"It’s well within Mr. Trump’s executive authority to pause disbursement of discretionary funds to ensure they comply with the law and his priorities."

"The original memo, issued Monday by the Office of Management and Budget (OMB), directed agencies by Tuesday to put a hold on grants that hadn’t yet been disbursed, so that Trump appointees could review them. By Feb. 10, agencies were supposed to submit “detailed information on any programs, projects or activities” that don’t comply with Mr. Trump’s executive orders, such as funding for DEI and the “green new deal.”"

"the pause would not affect financial assistance to individuals, such as food stamps, small business grants, aid to farmers, and sundry entitlement programs, including Medicaid and children’s nutrition. OMB also added that agencies “may grant exceptions” on “a case-by-case basis.”

There’s nothing wrong with an incoming Administration that doesn’t want to keep shoveling money out the door without first reviewing where it’s going. Take the National Institutes of Health’s First program, which requires grant recipients to use “diversity statements” for government-funded faculty. The program and others like it may violate the Supreme Court’s Students for Fair Admissions (2023) ruling that barred racial preferences in education."

The Biden Administration also conditioned Inflation Reduction Act (IRA) awards on at least 40% of a project’s “benefits” going to “disadvantaged communities.” Federally funded transportation projects were required to give a certain amount of subcontracts to “disadvantaged business enterprises.” These are de facto diversity quotas that may be illegal.

Last summer we highlighted how the Environmental Protection Agency doled out $100 million for “climate justice” to leftist groups that called for the abolition of Israel and Immigration and Customs Enforcement."

"the OMB memo expressly stated that agencies must comply with federal law, and the pause affected only spending over which Congress granted the President some discretion"

"Federal dollars in 2022 made up 36% of state and 6.2% of local government budgets. But most is mandatory spending that wouldn’t have been affected by the pause. Federal public-safety grants, by the way, represent only about 1% of New York’s budget." 

"Funds don’t have to be spent in the next two weeks, and Mr. Biden in his final months rushed to finalize grants that deserve legal review. Congress didn’t demand that NIH give Harvard a $5 million grant by Feb. 10."

"Nondefense discretionary spending has increased 45% since 2019, twice the rate of inflation."