White House Rescinds Funding Freeze Memo, but Executive Orders Remain

The White House Office of Management and Budget (OMB) rescinded a controversial memo on January 29, 2025, which had directed federal agencies to temporarily pause federal grants, loans, and other financial assistance programs. The memo, issued on January 27, was rescinded just two days later, following widespread confusion and a temporary halt by a federal judge.

White House Press Secretary Karoline Leavitt clarified that the rescission was not a reversal of the federal funding freeze, stating, "This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo... the President’s EOs on federal funding remain in full force and effect and will be rigorously implemented."

The rescinded memo had directed federal agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated 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 pause was not intended to affect Social Security, Medicare benefits, Medicaid, or "assistance provided directly to individuals."

A federal judge in Washington, D.C., had temporarily halted the pause shortly before it was set to take effect on January 28 at 5 p.m. ET. In a separate court case brought by some Democratic attorneys general, U.S. District Judge Jack McConnell considered blocking the freeze, stating, "I fear... that the administration is acting with a distinction without a difference."

The rescission of the OMB memo has left many wondering about the future of the funding freeze and the administration's efforts to review federal spending. While the memo has been rescinded, the White House has maintained that the executive orders on federal funding remain in full force and effect. This has raised concerns about the potential overreach of executive power and the impact on federal programs and recipients of federal assistance.

As the situation continues to unfold, investors and stakeholders should closely monitor the developments and assess the potential implications for their portfolios and investments. The ongoing legal challenges and political pressure may influence the administration's ability to enforce the funding freeze, even after the OMB memo's rescission.

In conclusion, the rescission of the OMB memo has not put an end to the funding freeze and the administration's review of federal spending. Investors and stakeholders should remain vigilant and adapt their strategies as needed to navigate the uncertainty and potential impacts on their investments.