CNN
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Federal agencies across Washington are finding innovative ways to keep funding frozen, despite a recent court order that temporarily halted the White House’s attempt to pause trillions of dollars in federal assistance.
FEMA has clawed back $80 million intended to assist New York City in housing migrants. The EPA has paused more than 30 grant programs, some of which provide money for schools to purchase electric buses. USAID contractors report hundreds of millions of dollars in contracts have not been paid.
Trump officials justify the suspensions as lawful and in compliance with President Donald Trump’s executive orders, arguing he has broad authority over federal spending. However, multiple lawsuits allege the administration is violating Congress’ powers over government spending and defying a judge’s order to resume funding.
Chaos in Contractors and Workers
Interviews with over two dozen administration officials, government contractors, and activists, along with court filings, reveal the extent of federal spending chaos as the Trump administration rapidly cuts funds, despite judicial orders.
This has left US contractors in upheaval, leading to furloughs and layoffs in organizations dependent on government funding.
“People are just flipping out, and most of them are being careful about what they say,” said Jason Walsh, executive director of the BlueGreen Alliance, a climate and labor group.
“Contracts are going to get broken if this doesn’t stop, and workers are going to get laid off,” Walsh added. “I didn’t anticipate how fully brazen they’d be in ignoring the courts.”
White House Defense of Funding Cuts
The White House argues the cuts aim to eliminate illegal spending, targeting waste, fraud, and abuse in the federal bureaucracy.
“Any court that would say that the president or his representatives – like secretary of the treasury, secretary of state, whatever – doesn’t have the right to go over their books and make sure everything’s honest… I mean, how can you have a country? You can’t have anything that way. You can’t have a business that way. You can’t have a country that way,” Trump said in the Oval Office alongside Elon Musk.
White House Freeze Rescinded, Partially
Last month, the White House budget office implemented a broad freeze of federal assistance with several exemptions. After protests, the White House rescinded the memo, but maintained the funding freezes mandated by Trump’s executive orders, targeting most foreign aid, diversity, equity, and inclusion programs, and Biden’s Inflation Reduction Act funds.
Judicial Orders Temporarily Blocking Freezes
Two federal judges have imposed temporary injunctions blocking the Trump administration’s attempts to freeze funding through the budget office, with other judges seeking to maintain funding flow to prevent extensive damage. However, courts’ restraining orders have not completely halted the administration’s ability to pause funding while lawsuits proceed.
On Monday, FEMA suspended $59 million in payments to New York City, allocated for housing migrants after years of surges. In total, the Trump administration revoked more than $80 million from the city’s bank accounts, sparking a “highway robbery” by Comptroller Brad Lander, who accused the administration of violating the court injunction.
Inside FEMA, four officials were fired over the payments, prompting fears of further layoffs for those performing their duties.
“It doesn’t take a genius to figure out that Trump wants us to not process grant payments, and the way to do it is to terrify us all into thinking that we will get fired if we do our basic job functions,” said one FEMA employee. “We’re all just kind of frozen.”
Justice Department Actions
USAID was the first target of DOGE. Musk cheered its dissolution, folding the agency into the State Department and placing most of its 10,000+ staff on leave. Musk’s team also sought to block USAID payments by gaining access to a sensitive payment system within the Treasury Department.
A young software engineer from DOGE, no longer working with the federal government, was granted access to the source code and data of the Treasury Department’s accounting systems, which dispense billions annually in federal payments.
Treasury once held an international payment request from the Millennium Challenge Corporation, a foreign aid agency, sending a copy to the State Department for review.
State Department officials did not officially respond, but later, the official in charge of payments requested the Fiscal Service rescind the request.
In a lawsuit this week, aid groups alleged millions in outstanding invoices have not been paid, including over $103 million to Chemonics for 2024 work and $120 million from DAI.
Without government funding, organizations have furloughed large staffs. Democracy International furloughed its entire US staff, while Chemonics furloughed 750 people, nearly two-thirds of its US workforce.
