New York leads multi-state challenge to Trump's ‘reckless’ federal funding freeze

MANHATTAN (CN) — New York Attorney General Letitia James announced Tuesday that she’s suing President Donald Trump over his administration’s sweeping freeze of federal aid, an order that’s caused widespread panic among organizations and households around the nation that require that aid to survive.

James, who called the pause “reckless and dangerous,” is one of the leaders of a multi-state coalition challenging Trump’s order in federal court. She announced the lawsuit on Tuesday in a joint press conference with other state attorneys general.

“We will not stand for any illegal policy that puts essential services for millions of Americans,” James told reporters. “Our lawsuit will seek a court order to immediately stop the enforcement.”

The attorneys general of California, Illinois, Massachusetts, New Jersey and Rhode Island are leading the lawsuit alongside James. Joining the lawsuit is Arizona, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Vermont, Washington, Wisconsin and the District of Columbia.

“The OMB Directive would permit the federal government to rescind already allocated dollars that have been included in recipient budget — monies that are otherwise necessary for the Plaintiffs to ensure that their residents have quality healthcare, the protections of law enforcement, the benefit of safe roads, and assistance in the aftermath of natural disasters, among many other key services,” the states wrote in their 44-page complaint, filed Tuesday in federal court in Rhode Island. “Without this funding, Plaintiff States will be unable to provide certain essential benefits for residents, pay public employees, satisfy obligations, and carry on the important business of government.”

The freeze became public Monday night in a leaked memo in which the White House’s budget office ordered federal agencies to “temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the Green New Deal.”

“The use of federal resources to advance Marxist equity, transgenderism, and Green New Deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” the memo said.

Set to take effect at 5 p.m. Eastern Time on Tuesday, the freeze is expected to disrupt health research, education programs and other initiatives to the tune of trillions of dollars — at least temporarily.

Financial assistance to individuals, including Social Security, Medicare, food stamps and student loans, will not be affected, according to the memo. White House press secretary Karoline Leavitt downplayed the effects of the pause when speaking to reporters on Tuesday, claiming that “this is not a blanket pause on federal assistance.”

However, James said at Tuesday’s press conference that more than 20 states — including New York — have already been “frozen out of their Medicaid systems,” potentially leaving millions of Americans uninsured. In New York alone, more than 6.9 million people were enrolled in Medicaid as of November 2024.

“What a ham-handed way to run a government. It is astonishing that President Trump, through an agency most Americans have never heard of, would take an action so unlawful,” Rhode Island Attorney General Peter Neronha told reporters during the joint presser with James. “If you drive on a road, you’re impacted. If you get healthcare, you’re impacted.”

California Attorney General Rob Bonta added that his state’s ongoing efforts to combat raging wildfires in Los Angeles County will likely be affected.

“I do believe the FEMA funding is at risk,” Bonta said.

In addition to James’ complaint in New York, a batch of nonprofits filed their own suit against Trump’s pause on Tuesday in federal court in Washington, D.C. They panned the White House for blindsiding them with the memo — which only saw the light of day thanks to the journalists who shared it — leaving them with “few hours that remain before federal grantees are thrown into disarray.”

The freeze has also drawn the ire of some national lawmakers who see the memo as a flagrant scheme for Trump to bypass Congress-approved allocations of federal resources. They have also criticized the vagueness of the order as causing unnecessary panic and confusion from federal grantees.

“Senators’ phones have been ringing off the hook with nonstop calls from hospitals, police departments, volunteer firefighters, food pantries, drug treatment centers, on and on and on,” Sen. Chuck Schumer, a Democrat from New York, said in a statement Tuesday. “Americans are in panic mode trying to figure out how Trump’s lawless, destructive, cruel order to halt virtually all federal assistance affects them.”

The funding pause is the latest controversial step by the Trump White House to undo progressive steps taken by past administrations on environmental justice and civil rights efforts.

On the day of his inauguration, Trump signed an executive order that redefined the longstanding constitutional interpretation of birthright citizenship in the U.S., limiting the right only to people born to at least one parent who is already a citizen. After more than 20 states sued Trump for the “flagrantly unlawful attempt to strip hundreds of thousands [of] American-born children of their citizenship,” a federal judge in Seattle temporarily blocked the move in a bench ruling last week, calling it “blatantly unconstitutional.”

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