Retirees can breathe a sigh of relief, at least for now. While the White House budget office ordered a pause on all federal grants and loans effective as of 5:00 pm on Tuesday January 28, the short-lived action was rescinded Wednesday after it caused chaos and confusion. While Social Security and Medicare were excluded from the list, other programs that provide support to older adults could have lost temporary funding.
“OMB Memorandum M-25-13 is rescinded. If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel,” a memo obtained by CNN read.
It's not surprising that the White House backtracked. In addition to a federal judge Tuesday temporarily blocking the funding freeze, according to the Associated Press (AP) , the move faced fierce criticism.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Even after the OMB Memorandum was rescinded, questions remained about the federal funding pause after comments made by White House Press Secretary Karoline Leavitt on X who wrote: "This is NOT a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 EO's on federal funding remain in full force and effect, and will be rigorously implemented."
Her comments added to the confusion, as it was the rescinded memo and not the executive orders that described a temporary pause in funding. It's not clear what the White House will do next.
When announcing the funding freeze, Matthew J. Vaeth, acting director of the Office of Management and Budget (OMB) wrote in a memorandum that of the close to $10 trillion spent by the federal government, over 30%, or $3 trillion, went to federal financial assistance, such as grants and loans.
“Financial assistance should be dedicated to advancing administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending ‘wokeness’ and the weaponization of government, promoting efficiency in government, and Making America Healthy Again,” wrote Vaeth.
Vaeth said that taxpayer dollars should not be used for programs that do not "improve the day-to-day lives of those we serve" or are ideological in nature.
Vaeth said the pause would give the Administration time to review agency programs and determine the best use of the funding in line with the laws and President Donald Trump’s priorities. In a footnote, Vaeth said, “Nothing in this memo should be construed to impact Medicare or Social Security benefits.”
Social Security and Medicare safe for now
It’s unclear what impact a spending pause would have had on many federal financial assistance programs. Still, Democrats said it could impact disaster relief, aid to the nation’s seniors and school lunch programs, among many other programs.
Originally all agencies had until February 10 to submit detailed information to the OMB on any of the programs, projects and activities subject to the pause. Any funding not aligned with President Trump’s executive orders and agenda could be on the chopping block. The memo did make clear that in addition to Social Security and Medicare, the pause would not have included assistance provided directly to individuals.
In a letter to Vaeth, Senate Appropriations Committee Vice Chair Patty Murray and House Appropriations Committee Ranking Member Rosa DeLauro raised the alarm on what they called President Trump’s unlawful executive orders and the new memoranda issued by OMB directing agencies to withhold vast swaths of approved federal funding.
“As leaders of the House and Senate Committees on Appropriations, we write with extreme alarm about the Administration’s efforts to undermine Congress’s power of the purse, threaten our national security, and deny resources for states, localities, American families, and businesses,” wrote the legislators. “The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country. 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.”
Bottom line
Since President Trump began his second term he has signed a flurry of executive orders to better align the government with his vision for America. So far Social Security and Medicare has been untouchable, which is good news for retirees relying on these important benefits.
Related content
-
Dow Climbs 559 Points to Hit a New High: Stock Market TodayThe rotation out of tech stocks resumed Tuesday, with buying seen in more defensive corners of the market.
-
Are You Saving Too Much for Retirement? Know These Surprising DownsidesYour money may be better served outside of a retirement account.
-
Are You Saving Too Much for Retirement? Know These Surprising Downsides
Your money may be better served outside of a retirement account.
-
The 'Pay Yourself' Rule of Retirement SpendingGet peace of mind in retirement with the 'Pay Yourself' rule.
-
Dental Cost Advice for New Retirees, From a New RetireeWhat I faced in my first dental bill after retiring.
-
Outsmarting the AI Job Algorithm: Why Older Women Need a StrategyWhen you're job hunting, AI may undermine your best efforts. Here's how older women can throw a wrench in the algorithm.
-
I'm Embarrassed to Ask: What Is a Life Insurance Trust?Life insurance trusts, particularly irrevocable life insurance trusts (ILITs), can minimize estate taxes and protect your heir's inheritance.
-
I'm 61 and need $50,000 for home repairs. Should I borrow, given today's rates, or take a withdrawal from my $950,000 401(k)?We asked financial experts for advice.
-
Headed for the Retirement Red Zone? This Eight-Step Game Plan Helps to Avoid FumblesThese strategies help safeguard your nest egg and ensure long-term financial success during the five years before retirement and the five years after.
-
I'm a Financial Planner: This Is How You Can Get Started With RMDsThe IRS will come knocking for its share of your tax-deferred retirement savings when you hit 73, but planning ahead for RMDs will ensure you're ready.
