After one full week in office, President Donald Trump sent a signal that his transformation of Washington was soon to take full force: The White House released an order Monday night to pause as much as $3 trillion in federal grants and loans. The earth-shattering disruption, officials said, was so the administration could conduct an across-the-board review of federal funding to tear out progressive initiatives and ensure government spending complied with Trump’s barrage of executive orders.
It was exactly the kind of thing Trump promised on the campaign trail. But it blew up before it even got started. After a chaotic day marked by uncertainty over which programs were covered under the vaguely worded memo, U.S. District Judge Loren AliKhan blocked federal agencies from implementing the freeze minutes before it was supposed to take effect. She scheduled oral arguments for the case next week.
That may set up the first major test of Trump 2.0. If it succeeds, it could restore a presidential power last wielded by Richard Nixon and expedite the radical reshaping of government Trump outlined as a candidate. If it fails, Trump could still win by losing. Some in his inner circle see the dramatic action as a strategic move to flood the zone and move the Overton window, paving the way for more of the President’s boundary-pushing policymaking in the months and years to come.
However it unfolds will affect the lives of millions of Americans who rely on myriad forms of federal assistance, as well as U.S. aid recipients overseas such as Ukraine and nations fighting crises ranging from famine to an HIV/AIDS epidemic. The stakes are also high for the Trump Administration, which risks appearing impotent shortly after taking power.
The White House’s Office of Management and Budget sent a memo Monday requiring federal agencies to “identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.” It specifically targeted “DEI, woke gender ideology and the Green New Deal,” referring to diversity, equity, and inclusion programs intended to ensure increased opportunities for marginalized groups, and a sweeping climate proposal that has never passed Congress. “They’re taking inventory,” a White House official tells TIME. The Administration is evaluating funding allocations and asking: “Is it working? Is it following the President’s mission? Yes or no? If not, then boom—it goes.”
The seemingly slapdash document to overhaul the nation’s spending priorities created confusion throughout the federal government. Many civil servants were unsure what it meant for the fate of thousands of programs that Americans rely on, such as Medicaid and the Head Start preschool program.
Democrats derided the move as destructive and unconstitutional. Sen. Chuck Schumer, the top Senate Democrat, argued that it violates the Impoundment Control Act of 1974, which prohibits the President from withholding congressionally-authorized funds. “It’s a dagger at the heart of the average American family in red states and blue states, in cities, in suburbs, in rural areas,” Schumer said. “It is just outrageous.”
Throughout the campaign, Trump promised to restore the power of impoundment as part of his professed “War on Washington.” The maneuver was one of Nixon’s favorites; he used his authority to block funding for subsidized housing and the Environmental Protection Agency. Shortly after Nixon left office in disgrace, Congress passed a law to ban its practice.
The President and some of his closest advisors, including his nominee to lead OMB Russel Vought, have been planning to challenge the 1974 statute’s constitutionality during Trump’s second term. “There’s a couple of different approaches that you could take,” Vought told TIME last year. “One is to test the view in the courts by making some of these decisions to hold back money or one is to go and try to get the law overturned.”
With the courts soon to rule on Trump’s order, that test is now coming to a head. Some of the nation’s preeminent conservative legal scholars also consider a President unilaterally impounding congressionally-appropriated funds a bridge too far. “Much of what he is doing either exceeds the Supreme Court’s current conceptions of the limits of presidential power or at least are very aggressive and contested assertions of presidential power,” wrote Jack Goldsmith, a Harvard law professor who served in the George W. Bush Administration, in a Substack column.
Ultimately, the courts will adjudicate whether Trump’s far-reaching memo passes legal muster—or whether he will face the first major impediment to him delivering on a revolutionary campaign promise.
