Federal judge hears arguments to decide the future of Trump's federal funding freeze

A federal judge in Rhode Island heard arguments on Friday about whether to further block the Trump administration from freezing trillions of dollars in federal grants and other spending.

It's the latest development in a lawsuit brought by Democratic attorneys general in 22 states, including California, and the District of Columbia, who argue that the freeze is unlawful and would have devastating consequences nationwide. The White House, in turn, has said the pause is necessary to review federal funding and ensure spending aligns with President Trump's priorities.

The funding freeze had already been blocked by U.S. District Judge John McConnell Jr. last month through a temporary restraining order. Two weeks later, McConnell ruled that the Trump administration was not in compliance with the court order after plaintiffs presented examples of federal funds that were still being delayed or inaccessible.

On Friday, McConnell said he would leave the temporary restraining order in place, but that he hoped to have a final ruling on the case in about a week.

The case represents a pivotal test for the administration, as it pursues a dramatic restructuring of the federal workforce and government spending. The White House has faced legal challenges on multiple fronts in response to that effort, several of which have resulted in orders to restore funding — at least temporarily. Yet the administration has sought to maneuver around orders, as in the Rhode Island case and a case dealing with funding of the U.S. Agency for International Development.

The arguments

At stake in Friday's arguments was the fate of countless programs and projects touching on everything from healthcare and child care, to food assistance, education and other areas that rely on federal money. A similar suit filed by a group of nonprofits is also playing out in Washington, D.C.

The plaintiffs began their argument by describing what they said was the harm and chaos triggered by the spending freeze as it was first spelled out last month in a memo by the Office of Management and Budget. The White House rescinded the memo after an initial uproar and wave of confusion, but later said its efforts to review spending would continue.

During arguments, Sarah Rice, deputy chief with the Rhode Island Attorney General's office, pointed to the example of California, which she said was expecting about $200 million for Medicaid on the night of Jan. 27 when the memo came out.

"They did not get it," Rice claimed. "They would not have been able to operate beyond January 28th if that funding [had] not been turned back on."

Rice later argued that many states are unable to afford to make up for lost federal funds, meaning programs that heavily rely on them would simply shut down if the pause were to become permanent.

The plaintiffs also sought to push back against the sweeping nature of the spending freeze, arguing that such a move was done without discretion and is unconstitutional.

Rabia Muqaddam with the New York State Attorney General's office said that refusing to disperse congressionally appropriated funds is a violation of the separation of powers.

Daniel Schwei, an attorney with the Department of Justice representing the Trump administration, argued that the freeze is within the president's authority and that the Office of Management and Budget has emphasized in guidance that agencies cannot pause money that's legally required.

At times, Schwei faced skeptical questions from the judge. Early into his arguments, McConnell asked Schwei outright, "Where does the president's power to issue that kind of categorical freeze come from?"

Schwei answered, "We're not claiming that power. We're saying that the agency actions here tell agencies to follow the law, but if the law gives you the discretion to pause, then you should pause these types of funding."

McConnell pushed back that the Trump administration did not initially frame it that way, to which Schwei disagreed.

Schwei went on to say that both sides in the case agree there are lawful ways to pause funding. "So the question is just how big is that universe versus how big is the universe of mandatory programs where a pause would not be lawful?" he added.

He argued the plaintiffs should have focused on identifying specific funding streams where a pause would have been unlawful, instead of making a broad accusation of illegality.
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