A coalition of state attorneys general has filed a lawsuit against the Trump administration, challenging what they call an unconstitutional pause on federal grants and loans. The legal action comes after a federal judge temporarily blocked the administration’s plan to review what taxpayer dollars are being used for.

Legal challenge to federal funding freeze

The lawsuit, filed by 23 states and Washington, D.C., claims the Trump administration’s actions to freeze federal funding violate the Constitution.

On Tuesday, Jan. 28, numerous government agencies and individuals were uncertain about their financial future as a nationwide freeze on federal funding was set to take effect by 5 p.m. EST. The Office of Management and Budget (OMB) issued a memo directing agencies to identify all federal financial assistance programs, without specifying which would be affected.

A federal judge issued a temporary stay, pausing the funding freeze until early next week. The judge’s stay order, which effectively reopened the flow of federal funding, requires agencies to document and report which programs would be impacted by the pause.

In describing the freeze, OMB said in part, “The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars,” and called for the end of policies it described as “woke” or politically motivated.

The lawsuit, filed by attorneys general from 23 states, including Arizona, New York and Rhode Island, argues that the funding freeze is both “dangerous” and “illegal.” The plaintiffs contend that the Trump administration could undermine critical services and programs that rely on federal funds.

The legal action specifically targets the administration’s proposed review of federal spending, which is set to examine trillions of dollars.

White House explains the pause

The White House said the pause on federal grants and loans is necessary to align government spending with President Donald Trump’s policy goals. The administration has explained the review would ensure federal funds are being used effectively to further recent executive orders. They include the expansion of fossil fuels, changes to immigration policies, and the elimination of diversity, equity and inclusion programs.

In a social media post, White House Press Secretary Karoline Leavitt emphasized that the freeze would not affect assistance programs, including Medicare, Social Security payments and food benefits.

While there were reports of Medicaid portals experiencing outages on Tuesday, Jan. 28, Leavitt said the issues were unrelated to the funding freeze and that no payments were delayed.

The judge’s stay order only impacts programs currently receiving federal funding. New grants and loans will be subject to further review by the White House.