Trump’s grant gambit threatens to wreck the goldilocks economy he inherited

Trump’s grant gambit threatens to wreck the goldilocks economy he inherited

A two-page memo, totaling less than a thousand words and packed with right-wing rhetoric, threw the fate of the US economy into uncertain territory late Monday as the Trump administration ordered the suspension of hundreds of billions of dollars in federal grants and loans. The document from the acting director of the Office of Management and Budget states explicitly that federal funds should align with Trump administration priorities and focus on “ending ‘wokeness.’” It rails against using federal money to “advance Marxist equity, transgenderism, and green new deal social engineering policies” and directs all government agencies to suspend disbursements while the administration reviews them. It’s difficult to overstate the chaos that the directive, with its ambiguous wording, unleashed within organizations across broad swaths of the economy that rely on federal funds — including programs that provide essential medical services, emergency aid for farmers, cancer center support and even a program covering the cost of caskets for deceased veterans with no next of kin, my CNN colleagues Jennifer Hansler, Andy Rose and Tami Luhby reported. By Tuesday evening, a federal judge had temporarily blocked part of the freeze on federal aid. And while there were still countless questions left unanswered — a White House spokesperson initially couldn’t say whether Medicaid funding would be paused, for instance — what was clear is that any disruption to the flow of federal funds would have undeniable ripple effects throughout the US economy. The gambit is part of Trump’s stated desire to wrest control over spending from Congress, and is, according to legal experts, almost certainly illegal. Samuel Bagenstos, a law professor at the University of Michigan and former general counsel for the OMB, told me that it comes down to “a basic constitutional principle … that the executive branch can only delay spending appropriated funds for certain reasons,” and none of those reasons include the president disagreeing with the policy underlying the appropriation.