‘Catastrophic’ Trump Spending Freeze Blocked by Second Judge (1)

President Donald Trump’s freeze on trillions of dollars in loans, grants and other payments has been blocked indefinitely by a judge for a second time, the latest setback for the administration in its broad attempt to claw back spending already approved by Congress.

The January pause by the White House Office of Management and Budget, while technically short lived, had “catastrophic consequences” for states that depend on such funding for everything from Medicaid and child-care programs to infrastructure projects, Chief US District Judge John McConnell of Rhode Island ruled Thursday. The freeze is still rippling through the country, he said.

McConnell, an Obama appointee, granted an injunction sought by Democratic state attorneys general who had sued the administration. Last week, a judge in Washington cited the “chaos” of the nationwide funding freeze when she issued a similar order in a separate lawsuit filed by a group of nonprofits.

The Rhode Island judge, who previously issued a temporary restraining order against the freeze, said the states presented extensive evidence that some federal funds continue to be held up. He rejected the government’s assertion that the effort to freeze spending “will end eventually.”

“The states are not reassured by this vague promise, and neither is the court,” McConnell said in his written opinion.

Read More: Trump Freeze Spurs Fight Over $3.6 Billion for Homelessness

The judge also expressed doubt that the funds would continue flowing without a court order in place, particularly from online portals that are used by states to draw down billions of dollars earmarked by Congress.

“Some funding has been restored in federal funding portals, but others appear to have been removed,” McConnell said. “And nothing in the defendants’ briefing or oral presentation reassures the states that federal agencies, under the Executive’s directives, will fulfill their funding obligations in the future.”

The White House didn’t immediately respond to a message seeking comment.

The Trump administration is likely to appeal the new ruling, which may ultimately make its way to the US Supreme Court.

The ruling is the latest setback for Trump in his unprecedented effort to reshape the government and cut federal spending. Judges in different cases have barred the administration from withholding foreign assistance programs under the US Agency for International Development, and restricted access to Treasury Department data by Elon Musk’s government efficiency team.

“Today we secured another court order to block the administration’s funding freeze while our lawsuit progresses,” New York Attorney General Letitia James, who led the group of states that sued, said in a statement. “The power of the purse belongs to Congress – not the President.”

Balance of Power

McConnell spent several pages of his ruling laying out a history of the Constitution and explaining the balance of power established by the Founding Fathers for the executive, legislative and judicial branches.

The interaction of the three branches is an “intricate, delicate, and sophisticated balance” that is “crucial” to the functioning of the government, the judge said, adding that the executive branch had “put itself above Congress” by imposing the funding freeze.

“Federal agencies and departments can spend, award, or suspend money based only on the power Congress has given to them — they have no other spending power,” the judge wrote.

OMB quickly rescinded the spending-freeze memo just days after it was issued, but the states sued anyway. McConnell held in his earlier temporary order that Trump’s apparent withdrawal of the memo may have been an attempt to prevent the court from issuing a TRO while still allowing the spending pause to take effect. The freeze appeared to still be intact, the judge said.

Trump has repeatedly defended the move, including during a bill-signing event, casting the freeze as one that allowed his administration to review discretionary spending programs and “quickly look at the scams, dishonesty, waste, abuse that’s taking place in our government for too long.”

The case is New York v. Trump, 25-cv-39, US District Court, District of Rhode Island (Providence).

(Updates with detail from the ruling.)

To contact the reporter on this story:
Erik Larson in New York at elarson4@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net;
Sara Forden at sforden@bloomberg.net

Steve Stroth, Elizabeth Wasserman

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