WASHINGTON — 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 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 U.S. 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.

But the two-page memo from Matthew J. Vaeth, the acting director of the Office of Management and Budget, left the scope of the pause, and much else, unclear.

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Uncertainties That Trump Has Power to Halt Funds Allocated by Congress

Among the uncertainties was whether President Donald Trump has the authority to unilaterally halt funds allocated by Congress. Sen. 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,” Schumer said, adding that “Donald Trump must direct his administration to reverse course immediately and the taxpayers’ money should be distributed to the people.”

In his memo, Vaeth directed federal agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance,” and any other programs that included “D.E.I., woke gender ideology and the Green New Deal.”

Vaeth signaled that the pause, which is set to go into effect Tuesday, would continue until at least mid-February, saying that agencies should provide a detailed report on the programs that have been affected by Feb. 10. He added that the pause was needed to ensure federal programs aligned with Trump’s policy 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 said.

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Not Clear Which Programs Are Hit

It was not immediately clear what programs would fall under those categories. The Green New Deal, for example, was a policy proposal that never became law.

The memo, which was reported earlier by journalist Marisa Kabas, specifies that programs that support nongovernmental organizations would also be affected. Nonprofit groups reacted with alarm.

“This order is a potential five-alarm fire for nonprofit organizations and the people and communities they serve,” Diane Yentel, the CEO of the National Council of Nonprofits, said in a statement.

“From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives,” she added. “This order could decimate thousands of organizations and leave neighbors without the services they need.”

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. Government analysts estimated the budget for fiscal year 2024 at $6.75 trillion, while Vaeth’s memo asserted the government spent “nearly $10 trillion” in that fiscal year.

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The Memo Has an Exception

The budget office memo carved out an exception for “assistance received directly by individuals,” as well as Medicare and Social Security benefits. The memo also seemingly acknowledged the legal limits of executive power to interfere in legally mandated programs, saying that agencies should carry out the pause “to the extent permissible under applicable law.”

It was also unclear what fell under the definition of individual assistance, and the memo did not provide examples of what programs would or would not qualify. Many farmers and small-business owners take out loans and receive grants from the federal government, but it is unclear if those would count as individual assistance or assistance to a business.

Congress, for example, established a program decades ago that provides farm loans for women, racial minorities and Native Americans — a program that the first Trump administration had participated in. That program could theoretically be put under scrutiny for its perceived similarities to “woke,” “DEI” or “Marxist equity.”

Karl Scholz, the president of the University of Oregon, said Monday’s directive was “generating plenty of questions.” But he, like many others in academia and government, was still trying to interpret the memo and its consequences, saying researchers were experiencing “considerable unease along with a deep interest in getting greater visibility about what is actually happening.”

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This article originally appeared in The New York Times.

By Chris Cameron/Eric Lee
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