By Nate Raymond
(Reuters) – Four groups representing non-profits, public health professionals and small businesses filed a lawsuit on Tuesday challenging U.S. President Donald Trump administration’s sweeping directive to temporarily freeze federal loans, grants and other financial assistance.
The lawsuit filed in federal court in Washington, D.C., took aim at a directive the acting head of the U.S. Office of Management and Budget issued on Monday that could disrupt education and health care programs, housing assistance, disaster relief and other initiatives that depend on billions of federal dollars.
Matthew Vaeth, OMB’s acting director, said the money would be put on hold while the Trump administration reviews grants and loans to ensure they are aligned with the president’s priorities, including executive orders he signed ending diversity, equity and inclusion (DEI) programs.
The spending freeze ordered by OMB takes effect at 5 p.m. ET (2200 GMT) on Tuesday. Agencies have until Feb. 10 to submit detailed information on any programs subject to the suspension.
The U.S. Constitution gives Congress control over spending matters, but Trump said during his campaign that he believes the president has the power to withhold money if he disagrees.
A 1974 law called the Impoundment Control Act established procedures designed to restrict a president from not spending money appropriated by Congress.
His nominee for White House budget director, Russell Vought, who has not yet been confirmed by the Senate, headed a think tank that has argued that Congress can authorize a president to spend money but can’t require him to do so.
The freeze marked the latest in a flurry of actions by the Trump administration since the Republican’s return to office on Jan. 20 to dramatically reshape the federal government.
Trump’s order not only impacts a broad swath of nonprofits but could lead to turmoil in state and local governments that depend on federal aid for everything from highway construction to school lunches to foster care.
“The blast radius of this terrible decision is virtually limitless, and its impact will be felt over and over again,” U.S. Senator Chuck Schumer, the top Democrat in the U.S. Senate, said on Tuesday.
(Reporting by Nate Raymond in Boston)
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