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The White House on Wednesday rescinded former President Donald Trump's spending freeze, a move aimed at ending litigation and clarifying federal policy, though it maintains a review of government spending to ensure compliance with executive orders issued by the president.

The decision follows a temporary stay issued by a federal judge in response to a lawsuit from a progressive advocacy group and four nonprofit organizations. Additionally, a second legal challenge from 22 states and the District of Columbia was set to be heard later in the day.

"In light of the injunction, [the Office of Management and Budget] has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage," White House press secretary Karoline Leavitt stated.

She added that despite the rescission, the executive orders on federal spending remain in full force and that the administration will continue efforts to eliminate wasteful government funding.

Controversial Directive and Legal Fallout

The now-rescinded directive ordered federal agencies to pause all funding, particularly in areas related to:

• Foreign aid and nongovernmental organizations
• Diversity, equity, and inclusion (DEI) programs
• Climate change initiatives tied to the Green New Deal
• Gender-related policies

The sweeping directive triggered multiple lawsuits, and its withdrawal does not necessarily end the ongoing litigation. The Trump administration filed a motion Wednesday afternoon arguing that the case was now moot, given the policy reversal.

However, critics remain skeptical, asserting that the policy created substantial confusion and inflicted immediate harm, particularly in healthcare, education, and state funding programs.

State-Led Lawsuits and Court Battles

The first legal challenge came from Democracy Forward, which filed suit on behalf of:

• National Council of Nonprofits
• American Public Health Association
• Main Street Alliance
• SAGE

This was followed by a broader lawsuit led by New York Attorney General Letitia James and attorneys general from 21 other states and D.C.

Both lawsuits contend that the spending freeze violated the Administrative Procedure Act and the constitutional separation of powers, which grants Congress—not the president—the authority over federal spending.

Additionally, the advocacy groups asserted First Amendment violations, arguing that the directive unfairly targeted programs related to DEI, gender policies, and climate change initiatives.

Immediate Impact on Federal Programs

Despite the White House's attempts to clarify the directive on Tuesday, the lawsuit from the states noted ongoing disruptions, including:

• Medicaid reimbursement portals malfunctioning
• Limited access to Head Start and child care development block grants

The states argued that withholding federal funds would cause "immediate and devastating harm", reinforcing the need for judicial intervention.

Legal Teams and Representation

The 22 states and the District of Columbia pursuing the lawsuit include New York, California, Massachusetts, Illinois, Rhode Island, New Jersey, Wisconsin, Washington, Vermont, Oregon, New Mexico, Nevada, North Carolina, Maine, Minnesota, Michigan, Maryland, Hawaii, Delaware, Connecticut, Colorado, and Arizona.