WASHINGTON  — President Donald Trump’s budget office on Wednesday rescinded an order freezing spending on federal grants, less than two days after it sparked widespread confusion and legal challenges across the country, according to two people familiar with the matter.

The Monday evening order from the White House Office of Management and Budget sparked uncertainty over a crucial financial lifeline for states, schools, and organizations that rely on trillions of dollars from Washington and left the White House scrambling to explain what would and wouldn’t be subject to a pause in funding.

The people, speaking on the condition of anonymity to discuss internal guidance, confirmed that the OMB pulled the order Wednesday in a two-sentence notice to agencies and departments.

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Democrats Celebrate

Democratic critics of the order moved swiftly to celebrate the action.

“This is an important victory for the American people whose voices were heard after massive pressure from every corner of this country—real people made a difference by speaking out,” said Sen. Patty Murray, D-Wash.

“Still, the Trump administration—through a combination of sheer incompetence, cruel intentions, and a willful disregard of the law—caused real harm and chaos for millions over the span of the last 48 hours which is still ongoing.”

The push set off panic and confusion across the country and raised the possibility of a constitutional crisis over control of taxpayer money and expansion of executive power.

Here’s a look at the legal issues at play:

Power of the Purse

The Constitution gives Congress control over federal spending, a setup key to the framers’ vision of separating major powers between branches of government.

Once appropriations are approved, the White House has the job of doling out money to states, agencies and nonprofits through the Office of Management and Budget.

Typically, the White House sends out money according to the priorities laid out in Congress, though there have been times when presidents have refused to spend all the cash they get. Thomas Jefferson, for example, declined to use money set aside for gunboats in the early 1800s.

When the president won’t spend money that Congress has set aside, it’s called impoundment.

Trump’s Republican administration had framed the proposed halt to federal grants and loans as a brief pause that would allow for an across-the-board review to align spending with his ideological agenda, rather than an impoundment.

What Does the Law Say?

A showdown between Congress and President Richard Nixon in the 1970s led to a law laying out specific rules around impoundment.

Nixon had tried to halt billions of dollars in federal funding for things ranging from social programs to water treatment. The administration faced a wave of lawsuits that it overwhelmingly lost, said William Ford, a policy analyst at the nonpartisan group Protect Democracy.

Congress also passed the Impoundment Control Act in response. The act says that if there’s a delay in sending out federal money, the White House is supposed to tell Congress about the pause and how much money is involved. There are some exceptions for logistical issues related to specific programs.

The law also says any longer-term freeze has to get congressional approval. While duels over spending have continued since then, the law has rarely been invoked, Ford said.

Any Legal Battle Could Reach the Supreme Court

Trump allies have said that the Impoundment Control Act is unconstitutional, arguing the White House should have more control over spending. Trump also promised to challenge the law in a 2023 campaign video as a way to fight against waste.

If an impoundment fight comes back in the future, the weighty constitutional issues at play could mean it ends up before the Supreme Court.

The court weighed in on the Nixon funding fight in a case known as Train v. New York. The justices unanimously found that the president couldn’t block sewage treatment funding that had already been approved by Congress.

What’s at Stake?

The White House said that the funding freeze wouldn’t affect programs that send money to individual people, including Social Security, Medicare, food stamps, student loans, and scholarships.

If implemented, it was still expected to affect trillions of dollars and cause widespread disruption in a wide range of programs, from the National Science Foundation to Meals on Wheels.

It also sparked at least two lawsuits, one helmed by Democracy Forward representing nonprofits that get federal funding and another from nearly two dozen Democratic states.

They said the pause would clearly be unconstitutional and break federal contracting law. The nonprofits said the ideological bent of the proposed review also violates their freedom of speech.