President Donald Trump has dramatically rescinded his order freezing federal grants, according to a new memo from the budget office.

The stunning U-turn came after the original direction caused chaos as government agencies were unsure which of their programs were affected.

Temporary shutdowns of Medicaid portals and warnings from aid groups about lives at risk due to frozen critical funding for vaccines and other health issues led to confusion at the White House as officials grappled with explaining the implications of the order.

The White House Office of Management and Budget, through acting director Matthew Vaeth, issued a new order rescinding the previous directive (OMB memorandum M-25-13) a day after its initial release to government officials.

The original order instructed federal agencies to halt all activities related to the obligation or distribution of federal financial assistance temporarily.

It paused federal grants, loans and other financial assistance which could have totaled trillions in funding. 

Twenty-two states and Washington, D.C., sued, immediately challenging the order in court and a district judge put a freeze on it late Tuesday night. 

Adding to the general confusion, moments after the OMB rescinded its original order on Wednesday, White House press secretary Karoline Leavitt declared the funding freeze was not being dropped, and grants were still under review.

President Donald Trump rescinded his order freezing federal funds

She said: ‘This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction.

‘The President’s executive orders on federal funding remain in full force and effect, and will be rigorously implemented.’

The administration has argued funding should be put on hold while officials ensure no government programs are ‘woke,’ and that all are in line with executive orders Trump signed last week abolishing the Biden administration’s DEI agenda. 

On Tuesday, Leavitt had attempted to clear up questions about how the funding freeze would work, and who was affected. 

‘This is not a blanket pause on federal assistance and grant programs from the Trump administration,’ she said. 

Trump officials argued critical funding pipelines like Medicare, Social Security and veterans’ care would not be affected.

They also said it was a temporary measure as funding streams were reviewed.

But after several states reported the Medicaid portal was down, the OMB on Tuesday afternoon stated that ‘mandatory programs like Medicaid and SNAP (food stamps) will continue without pause.’ 

The original order wanted officials to review more than 2,000 programs and required federal agencies to document whether each program has any funding related to undocumented immigrants, climate policy, diversity programs or abortion. 

The agencies were required to provide their responses to the OMB in less than two weeks. 

Democrats blasted the spending freeze on Capitol Hill on Tuesday before a judge temporarily halted it

Democrats and even some Republicans criticized the move. Republicans said the White House needed to better explain what was affected.

Sen. Patty Murray of Washington and Rep. Rosa DeLauro of Connecticut – the top Democratic appropriators in Congress – wrote to the White House,  outlining their ‘extreme alarm’ with the idea of a broad pause in grants.

‘The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country,’ the lawmakers wrote. ‘We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law.’