The White House announced a temporary suspension of federal grants and loans to review spending alignment with President Trump's executive orders. This move, targeting policies on transgender rights, environmental justice, and DEI, has sparked concerns among opponents about potential disruptions to vital programs. Economists and public affairs experts are evaluating the freeze's impact on economic growth and public services.
Starting Tuesday, January 28, 2025, at 5 p.m. Eastern Time, the White House will temporarily pause federal grants and loans. This measure is being implemented by the Trump administration to review spending and ensure it aligns with President Donald Trump 's executive orders. These orders target changes to policies related to transgender rights, environmental justice, and diversity, equity, and inclusion ( DEI ).
Federal agencies have been instructed to assess their financial aid programs to identify those potentially impacted. It's crucial to emphasize that Medicare and Social Security benefits will remain unaffected. The administration asserts that this pause is temporary and aims to guarantee that federal funds are allocated in a manner consistent with the President's policy objectives. \However, opponents, including Senator Patty Murray and Representative Rosa DeLauro, have voiced strong concerns in a letter addressed to Matthew J. Vaeth, the acting director of the Office of Management and Budget. They warn that these actions could disrupt vital federal programs. Newsweek has consulted economists and public affairs experts to evaluate the potential impact of this freeze on overall economic growth and public services. \Dr. Josh Bivens, Chief Economist and Research Director of the Economic Policy Institute (EPI), states that pausing federal grants is reckless and could trigger a steep recession. He highlights the potential consequences for essential services like rural hospitals, nursing homes, and schools. Dr. Bivens argues that long-term repercussions would be catastrophic, leading to a significant economic shock and jeopardizing valuable government work. He questions the potential defunding of crucial research initiatives like those aimed at combating pandemics and curing cancer, as well as the disruption of economic data collection vital for private sector investment. \Dr. James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, suggests that while the direct economic effects might be limited due to grants primarily being allocated by law, the psychological impact of this power grab could be more profound. He expresses concern about the underlying mentality revealed, a belief that 'Marxist equity' has been driving federal policy, which he finds absurd. \Dr. Stephanie Kelton, Professor of Economics and Public Policy at Stony Brook University, believes the goal is to test the waters and potentially push further depending on the courts' response to legal challenges. She emphasizes that Congress has the constitutional power of the purse, and the current situation represents a blatant and unconstitutional attempt to undermine the rule of law. She warns of potential major cuts to programs like Section 8 housing, WIC, and LIHEAP, urging vigilance against such actions. \Dr. David Mednicoff, Associate Professor of Middle Eastern Studies and Public Policy, states that the federal grant freeze will negatively impact universities and research institutes, both public and private, leading to job losses in middle-class communities across the country. He argues that this move will reduce Americans' buying power, hindering economic growth and setting back scientific research compared to global rivals. He questions whether this initiative genuinely aims to benefit the economy
FEDERAL GRANTS FEDERAL LOANS DONALD TRUMP EXECUTIVE ORDERS TRANGENDER RIGHTS ENVIRONMENTAL JUSTICE DEI ECONOMIC IMPACT PUBLIC SERVICES
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