Trump freeze on federal funds sparks confusion, chaos among local, state agencies

A Trump administration order halting the spending of already-approved federal funds stirred more accusations that the new president is usurping powers in his first days in office.

The action sparked another political firestorm and fast litigation as a federal judge put a temporary hold on the order Tuesday afternoon in response to state attorneys general filing a lawsuit contending that it was unconstitutional.

“Jan. 20 was an inauguration, not a coronation,” Illinois Attorney General Kwame Raoul said in a news conference held before the lawsuit was filed. “Congress is given the power to appropriate funding.”

Raoul and other Democratic attorneys general contended that Trump was illegally interfering with Congress’s constitutional authority to determine how tax dollars are spent.

“Donald Trump is stealing money from our community,” U.S. Rep. Lauren Underwood, D-Naperville, said after a check presentation for $950,000 to Lewis University in Romeoville for a semiconductor program.

The Trump freeze on grants and loans did not come up during the Lewis University ceremony. But Underwood said afterward that remaining funds yet to be delivered to Lewis are threatened.

“Donald Trump has no right to do this,” Underwood said. “Donald Trump is not the king. He may think he is, but he is not.”

The order put a temporary freeze on grants and loans, creating uncertainty in city and village halls on what effect the new administration will have on local projects already in the works.

U.S. District Judge Loren L. AliKhan blocked the action Tuesday afternoon, minutes before it was set to go into effect. The administrative stay pauses the freeze until Monday, according to The Associated Press.

The White House had planned to start the pause as it begin an across-the-board ideological review of federal spending, The AP reported.

The funding freeze by the Republican administration could affect trillions of dollars and cause widespread disruption in health care research, education programs and other initiatives. Even grants that have been awarded but not spent are supposed to be halted.

“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,” according to a memo from Matthew Vaeth, the acting director of the Office of Management and Budget.

Democrats and independent organizations swiftly criticized the administration, describing its actions as capricious and illegal because Congress already had authorized the funding.

U.S. Rep. Eric Sorensen, D-Moline, issued a statement saying that the administration’s decision to freeze funds on “essential services to families, businesses and communities is incredibly irresponsible and hurtful to hardworking families in our country.”

“Our job as members of Congress – parties aside – is to find solutions for people. My sole focus is to work for the people in my district so they can live a good life, get their kids a good education and make our communities more sustainable," Sorensen said. “Please be assured that our entire team is working to get answers. I will always fight to make sure the executive branch of the government does not overstep its bounds, impeding our neighbors’ ability to live a good life.”

Republican U.S. Rep. Darin LaHood, whose district includes McHenry, Ogle, La Salle, Bureau, Putnam, Lee and Grundy counties, did not return a request for comment Tuesday.

Trump administration officials have said federal assistance to individuals would not be affected, including Social Security, Medicare, food stamps, student loans and scholarships.

But what was at least a glitch in Medicaid funding triggered Tuesday night fueled suspicions that the Trump administration was interrupting scheduled funding for that program as well.

The pause in grants and loans was supposed to take place starting at 4 p.m. Tuesday, but Illinois officials confirmed to Shaw Local News Network hours before the deadline that they were locked out of Medicaid.

“State agencies have reported to the governor’s office issues with accessing federal funding sites and disbursement systems, including Medicaid systems‚” a spokesman for the governor’s office said via email.

On Tuesday afternoon, White House press secretary Karoline Leavitt posted on the social media site X that the White House was aware of the Medicaid website not working.

“The White House is aware of the Medicaid website portal outage,” she wrote. “We have confirmed no payments have been affected – they are still being processed and sent. We expect the portal will be back online shortly.”

At a news conference in Chicago, Gov. JB Pritzker said: “What Donald Trump tried to do in the last 24 hours is illegal. They are either lying to us, or they are critically incompetent. This is what happens when you staff the federal government full of Project 2025 contributors that don’t have any experience governing and don’t think that the laws apply to them.”