The Assault on Federal Grants

This article is part of a preview to the spring 2025 issue of Academe. The full issue will be published in May.

This article is part of a series, "Trump Is Revealing Our Higher Ed Crisis."

During the first several weeks of his second administration, Donald Trump has focused many key executive actions on stopping the flow of federal grants. Although courts have intervened to rein in the Trump administration’s attacks on federal grants in some respects, the administration has frequently evaded those judicial orders. Trump’s actions threaten to devastate the budgets of universities, hospitals, and other research institutions—and many have already halted projects that are crucially important to people across the United States and the world.

One of the key tools Trump has used against federal grants is the executive order. Trump’s “Unleashing American Energy” executive order, issued on the first day of the new administration, required all agencies to “immediately pause the disbursement of funds appropriated through” the Inflation Reduction Act and the Infrastructure Investment and Jobs Act—two signature Biden administration achievements—pending a review to ensure that spending the money was consistent with the policies of the new administration. That pause halted grants for a variety of green-energy and infrastructure programs funded by Congress.

And Trump’s “Ending Radical and Wasteful Government DEI Programs and Preferencing” executive order, also issued on his first day in office, required agencies to “terminate, to the maximum extent allowed by law,” all “‘equity action plans,’ ‘equity’ actions, initiatives, or programs, [and] ‘equity-related’ grants or contracts.” Because it is so unclear just what is encompassed within the broad phrase “‘equity-related’ grants or contracts,” that order provided the pretext for many agencies to stop or pause a wide array of grants.

A week later, on January 27, the Office of Management and Budget (OMB) sought to implement these and other directives by issuing a broadly worded memorandum directing that federal agencies “must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be issued by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The memorandum stated that the pause was necessary to “provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities.”

A day after the OMB announced this broad funding freeze, two lawsuits were filed—one by twenty-two states and the District of Columbia, the other by four nonprofit organizations that receive, or whose members receive, federal grants. The very next day, January 29, in a transparent effort to render the lawsuits moot, the OMB rescinded the funding memorandum in its entirety. But later that same day, White House Press Secretary Karoline Leavitt tweeted that “this is NOT a rescission of the federal funding freeze” and that “the President's EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”

Unsurprisingly, the two courts determined that the Trump administration had withdrawn the freeze in name only. Each court promptly issued a temporary restraining order directing the administration to end the funding freeze. The administration purported to comply with those orders, but it continued to withhold funds from grantees across the government. So the courts issued additional orders emphasizing that the Trump administration was required to cease its freeze and could not erect new barriers to doing so. As of this writing, however, many agencies are still sitting on grant funds, though the purported reasons shape-shift. (For example, the National Institutes of Health [NIH] has refused to schedule—or has been told by the White House that it cannot schedule—the study sections and advisory committee meetings that are required before it may award new grants.)

The funding freeze is already having significant effects on higher education—effects that threaten to be devastating. Some universities are pausing graduate student admissions; others are freezing hiring and cutting staff; many are unable to start or continue major research projects. The adverse effects of the freeze would be compounded if the NIH were to implement its hastily announced 15 percent cap on indirect cost reimbursements, which could cut some $4 billion from the budgets of research institutions across the country in one fell swoop. A judge quickly enjoined that cap, which violates a specific congressional instruction, but the litigation continues.

In all of these cases, Congress passed laws appropriating money to agencies for grant programs. But the administration is not spending the money, because it wants to ensure that the grants are consistent with Trump policies. That is a violation of basic constitutional principles.

Article I of the Constitution vests in Congress the power of the purse, the power to decide how federal money is spent. Taxing and spending for the general welfare is the very first congressional power listed in the Constitution. As the Supreme Court recently recognized, the framers of the Constitution relied in this respect on the English practice—in which Parliament had successfully struggled, up to and through the Glorious Revolution, to seize the power of the purse from the king.

Congress appropriates money by passing bills, which the president has the power to veto like any other bill. But once those bills are signed into law, Article II of the Constitution gives the president the duty to “take Care” that they are “faithfully executed.” A new president may not come along and disregard an appropriations law out of disagreement with the policy it reflects; under our constitutional system, the president must go back to Congress and convince legislators to pass a new law.

It follows that President Trump may not “pause” or “freeze” congressionally created grant programs to review whether they accord with his own policy views. Once again, his obligation is to follow the policy set forth in the law. If he disagrees with the policy, he must convince Congress to change it in a way that incorporates his views.

Congress itself made this point clear in the Impoundment Control Act. Enacted in the wake of Watergate in an effort to respond to Nixon’s abuses—abuses that included the refusal to spend appropriated money—the Impoundment Control Act gives the president a procedure for proposing to Congress that funding “should be rescinded for fiscal policy or other reasons.” If the president makes such a proposal, providing detail of just what funding Congress should rescind, why, and what the effects will be, the president may pause spending the money for forty-five days to give Congress a chance to enact the proposal into law. But in the absence of such a proposal, the statute makes clear, the president may not “withhold or delay” the spending of appropriated money because of policy concerns.

President Trump has not sent a rescission proposal to Congress under the Impoundment Control Act. Instead, he has simply refused to spend money Congress has appropriated—a clear violation of the Constitution and the statute, and a violation of multiple court orders. He and his administration seem eager to invite a constitutional challenge to the Impoundment Control Act, with the hope of overturning the long understanding of Congress’s power of the purse. It seems likely that the Supreme Court will ultimately decide this question, and probably quite soon.

In the meantime, colleges and universities will continue to face efforts to cut their funding—part of what I have elsewhere called “a systematic effort by the second Trump Administration to attack the independent institutions that could provide some check on Trump’s illegal and disastrous behavior,” and to intimidate those institutions into abandoning speech and programming that the administration disfavors. Instead of trying to lay low in the vain hope of escaping the administration’s wrath, institutions of higher education need to fight back in the courts, and to make an aggressive public case for the value of our research and teaching.

Samuel Bagenstos served as general counsel at the US Department of Health and Human Services in the Biden administration. He is professor of law at the University of Michigan Law School and professor of social policy at the Gerald R. Ford School of Public Policy.