Government to cut trillions in program disbursements?

Investment Analysis Clubs Macro Economic Trends and Risks
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White House Budget Office Orders Pause in All Federal Loans and Grants

The full extent of the order was not immediately clear, but the directive sent to government agencies on Monday threatened to paralyze a vast swath of federal programs.

By Chris Cameron, The New York Times, Updated Jan. 28, 2025

The White House budget office has ordered a pause in grants, loans and other federal financial assistance, according to a memo sent to government agencies on Monday, potentially paralyzing a vast swath of programs and sowing confusion and alarm among the array of groups that depend on them.

The directive threatened to upend funds that course throughout the American economy: Hundreds of billions of dollars in grants to state, local and tribal governments. Disaster relief aid. Education and transportation funding. Loans to small businesses. The White House budget office has ordered a pause in grants, loans and other federal financial assistance, according to a memo sent to government agencies on Monday, potentially paralyzing a vast swath of programs and sowing confusion and alarm among the array of groups that depend on them.

The memo cited “more than $3 trillion” in federal financial assistance that could be affected by the directive, but the source of that number was unclear, and another figure the memo cited for total federal spending was significantly inflated.

The directive threatened to upend funds that course throughout the American economy: Hundreds of billions of dollars in grants to state, local and tribal governments. Disaster relief aid. Education and transportation funding. Loans to small businesses…

Among the uncertainties was whether President Trump has the authority to unilaterally halt funds allocated by Congress. Senator Chuck Schumer of New York, the Democratic leader in the Senate, said in a statement that the memo “blatantly disobeys the law.”

“Congress approved these investments and they are not optional, they are the law,” Mr. Schumer said…

The budget office memo carved out an exception for “assistance received directly by individuals,” as well as Medicare and Social Security benefits. … [end quote]

I put a question mark after the subject line because it isn’t clear what programs will be affected, how much will be cut or even whether the executive branch has the ability to restrict spending that Congress has mandated since the Constitution gives only Congress the right to allocate money.

There’s no question that this announcement will cause chaos and mass confusion from many recipients of federal aid. If all the cuts go through they would be large enough to cause a Macroeconomic impact, slowing the economy.
Wendy

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Trump can drag his heels. Damage will be done.

He makes everyone a loser.

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The footnote in the memo says nothing will be cut that puts money directly into recipient’s hands, ie Social Security or assistance programs for the needy.

As for Congress having all the spending authority, what constraint is there on Presidential action? He can’t be charged criminally, for an “official act” of impounding funds. Only remedy is impeachment, and, as we saw in 21, that is a bar too high, even in the most extreme circumstances.

I remember when Nixon impounded appropriated funds. Congress enacted a law specifically withdrawing Presidential authority to impound funds. But, the power was historically regarded as an “inherent” power of the office. One could embrace John Yoo, and say that an act of Congress cannot override an “inherent” Constitutional power.

Steve

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The president’s ability to do this is unquestionable, he/she can’t. As you mentioned, Congress has the power of the purse.

The real question is whether or not Congress will stand up and do something about it.

Just kidding, that question has already been answered, they won’t.

Colorado is reeling -

https://www.axios.com/local/denver/2025/01/28/trump-spending-pause-denver-colorado

I wonder how red states are faring.

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Give them what they voted for – good and hard.

intercst

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Yep. They won’t dare touch Social Security of Medicare. Medicaid payments to nursing homes would likely also be exempt – old people (and their families who don’t want to pay their cost of care) vote.

intercst

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Texas and Florida are #3 and #4 on the list of states getting the most in Federal aid.

Montana gets over 31%, the highest in the country, of all their state spending in the form of Federal aid.

This needs to simmer and percolate a few weeks and then it will be sure to boil over. Lets some of those corporate farms go without some payments and see how quickly House members start to cry bloody murder.

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Maybe on Medicaid, although he’s non compos mentis enough to not include it. Hopefully, you’re correct as I also see the same problems in not including Medicaid.

The interesting thing will be to see what the other carve outs are when the dust settles. I’m paying attention to those although I already have an idea of what they are…

Pete

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Medicaid portal shut down in all 50 states.

About 72 million Americans receive Medicaid. That’s 1 out of 5 people in the country. This also affects me personally. My disabled son relies on Medicaid for his health care. Fortunately, he does not have critical ongoing needs. I’d hazard a guess that virtually every reader of this board knows at least one person who is on Medicaid.

For full disclosure, the White House Press Secretary has said this is going to be addressed quickly. But I’m in the position that I won’t believe it until I see it. Even if this one part is reversed, most or all of the other freezes will remain in place until the current administration frees up the payments or a court orders the freeze be halted. Either way, as Wendy said at the top, this is going to have severe negative effects on the macro economy.

–Peter

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Federal “aid”, or Federal money? A state full of retirees drawing Social Security, or a lot of military bases and defense contractors, has a lot of Federal money coming in to the local economy, but it isn’t “aid”.

Steve

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DOGE clock has appeared and is now in action. It has hit $31B so far.

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image1920Ă—902 325 KB

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Already happened.

intercst

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Pretty sweet for a Go Daddy website. If you dig deep, there’s a counter for dumb-dumbs, looks like it started at 77,284,118, now down below 70,000,000 and declining fast.

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Aid.

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Too bad.
Let them have what they voted for. (Or something like that.)

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A judged has stayed the order.

If the admin wins Medicare and SS will be next. The president would have the power to stop payments. That is a court win if he gets it.

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Thanks. Just the sort of info I was looking for. The bulk of it appears to be Medicaid. I would assume the “all other programs” includes things like the “blight clearance” grants the local news is always talking about. I count about $450B that would be questionable, as in “if the state wants that, it should pay for it”.

Screenshot 2025-01-28 at 21-51-01 Which states rely the most on federal aid USAFacts
Screenshot 2025-01-28 at 21-51-01 Which states rely the most on federal aid USAFacts810Ă—734 10.7 KB

Steve

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He’s mostly just trying to figure out a way to loot the treasury

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