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January 28, 2025 02:35 PM UTC

Chaos as Federal Spending Freeze Cripples Medicaid and Other Key Services

  • 4 Comments
  • by: Colorado Pols

UPDATE #2: As hoped, AP reports that a federal judge has halted President Donald Trump’s unprecedented federal funding freeze until next week at the earliest:

A federal judge has temporarily blocked a Trump administration freeze on federal grants and loans that could total trillions of dollars.

U.S. District Judge Loren L. AliKhan blocked the action Tuesday afternoon, minutes before it was set to go into effect. The administrative stay pauses the freeze until Monday.

The White House had planned to start the pause as they begin an across-the-board ideological review of federal spending.

—–

UPDATE: Statement from Gov. Jared Polis:

“Governing is about delivering real results for the people we serve, not sowing chaos. This indefinite pause in Congressionally appropriated federal funding hurts children and hardworking families, jeopardizes American jobs and businesses, harms hospitals and safety net health providers, threatens road and bridge repairs, and impacts countless other programs. These federal investments help people and support good-paying jobs and our economy, and this sloppy action creates confusion that distracts from Americans’ real challenges…

…chaotic actions like this do not make our country better off. We hope that this senseless action is reversed urgently before too much damage is done to people and businesses.”

—–

Going great!

The federal spending freeze initiated through a surprise announcement this morning via the Office of Management and Budget (OMB) has become a certified clusterfuck before the order becomes official at 3:00 MST. The vague and confusing OMB order has even forced Republicans to speak out against President Trump in just his second week in office.

After initially expressing surprise at reports that the website used for Medicaid funding had gone down in all 50 states, the White House is now sheepishly acknowledging the truth about the chaos caused by the Trump administration’s surprise OMB order.

As The New York Times reports:

The online portal through which state Medicaid departments receive federal funding stopped working Tuesday, according to state officials who rely on that system to funnel payments to millions of patients nationwide. The outage at least temporarily jeopardized payments the federal government legally owes Medicaid programs, which serve tens of millions of low-income Americans and cover the cost of treating those patients in hospitals and clinics…

…the freezing of the payment system created confusion in state Medicaid offices across the country over whether the program, which more than 70 million Americans rely on for health insurance, would be affected by President Trump’s freeze on federal grants.

The portal used for federal reimbursements, Payment Management Services, had a red banner on it Tuesday afternoon warning that the system was taking “additional measures” that could cause delays because of “executive orders regarding potentially unallowable grant payments.”

Colorado Attorney General Phil Weiser has joined other states in suing the White House for freezing federal funds, which appears to be a clear violation of the separation of powers by preventing Congressionally-approved programs from being funded:

“The Trump White House freeze on congressionally mandated federal aid is reckless and unprecedented. This action takes the power of the purse away from Congress, violates the separation of powers, and is already causing massive harm in Colorado, undermining delivery of healthcare, education, and public safety. As attorney general, I will continue to defend Coloradans and the Constitution. This government funding shutdown is illegal and must be stopped by the courts. That is why I will join other state attorneys general in filing a lawsuit to do just that.”

Republican leaders across the country are asking the White House to get its shit together. From a separate story in the New York Times:

By Tuesday afternoon, a wide array of states and officials was reporting concerns related to the government’s funding freeze. Gov. Jeff Landry of Louisiana, a hard-line conservative and prominent Trump ally, just issued a joint statement with top state officials asking the administration “to develop a responsible runway to untangle us from any unnecessary and egregious policies without jeopardizing the financial stability of the state.”

Louisiana is among the states most dependent on federal funding. An analysis published in September by Pew found that in the fiscal year ending in September 2022, Louisiana had the highest percentage of revenue from the federal government, at 50.5 percent.

Of course, the states that receive the largest percentage of federal funding are generally solid red states that backed Trump for President in 2024, so this isn’t a case of Trump punishing blue states.

Colorado Rep. Gabe Evans (R-Adams County) is trying (and failing) to explain what his Dear Leader is doing:

Among the many, many problems with today’s OMB order is that it came as a total surprise to most government officials. As The Washington Post reports:

Few in Washington appeared to understand the scope and intention of a White House memo that directed agencies to “temporarily pause” the disbursement of key funds, leaving thousands of government services — totaling billions of dollars and dedicated primarily to Americans’ health, safety and well-being — at risk of shutting down, at least temporarily.

The uncertainty forced the White House to clarify its approach by midday: In a new directive, the Office of Management and Budget said it sought only to bring spending in line with the president’s recent executive orders, including those that clamp down on foreign aid and funding for diversity, equity and inclusion, or DEI, which Trump has called “radical and wasteful.”…

…Many states reported issues accessing funds under Medicaid, which provides health insurance to millions of low-income families, even though it was never supposed to be affected by the White House spending halt. Preschool centers struggled to obtain reimbursements from the federal program known as Head Start, putting some child-care services at financial risk.

A web portal that housing providers use to draw down money for government voucher and rental assistance funds stopped working Tuesday, though the cause was not immediately clear. And federal health and education officials similarly said they had to halt work in response to the mixed messages from the White House. That delayed money for some after-school programs, charter schools and the Special Olympics, a spokesperson for the Education Department confirmed.

This was all part of the plan from “Project 2025,” the guidebook for a new Trump administration drawn up by former staffers. But after putting so much time and effort into figuring out what they wanted to cut, it apparently never occurred to anyone to figure out HOW to do it without disrupting everything.

Ultimately, it may be that Trump and his most dedicated acolytes are pushing for the U.S. Supreme Court to decide whether or not the President can run the Constitution through the shredder and claim the “power of the purse” from Congress.

The darker view is that we might be in the first stages of a government “coup,” where Trump attempts to seize (more) power from the inside and raid the government coffers for his own purposes.

Whatever the truth may be, one thing is clear: It’s not good. For anybody.

[Coincidentally, this week’s episode of the Get More Smarter Podcast is all about oligarchies and kleptocracies, featuring Cornell Professor Tom Pepinsky]

Comments

4 thoughts on “Chaos as Federal Spending Freeze Cripples Medicaid and Other Key Services

  1. Beggers can't be choosers, but I wish the stay had not been issued by a "Biden judge." The narrative in all of these matters quickly becomes – Biden thwarted by "Trump judges," and Trump stopped by "Obama/Biden" judges. This is a very bad look for the judiciary. Many actions, like this blatantly unconstitutional action by Trump and his executive order denying birthright citizenship, should be stopped by any competent federal judge. Other cases are close calls, and that is why they end up in court. Recall that the Supreme Court ruling throwing out obstruction charges against J6 defendants was 6 – 3, but Justice Jackson joined the majority and Justice Barrett was with the dissent. The charges were thrown out either way, but when it is not a hardline partisan split, the insititution retains some credibility. 

    1. The blame for the current view of the federal courts falls squarely on the SCOTUS justices who have taken a blowtorch to stare decisis and elevated originalism–a/k/a judges playing bad amateur historians–in its place.  It is gobsmacking how the court in the last 20 years has turned its back on constitutional law and embraced this silly notion that the constitution is frozen in time and therefore should be "interpreted" based on 18th century America, not 21st century.  I would resign my Supreme Court bar membership but for the fact that I have clients who need me to maintain it for them.   

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