Trump Funding Freeze

The Trump administration last week ordered federal agencies to stop disbursing funds under the Biden-era Inflation Reduction Act and Infrastructure laws. The order requires agencies to halt distributions so that the Trump administration can “review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law.” Federal agencies have 90 days to report to the Office of Management and Budget and the National Economic Council and provide information on how the spending freeze comports with the new administration’s energy policies.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about Trump’s decision to halt Inflation Reduction Act and Infrastructure Act funding.

Below is a summary of the debate that ensued between the two professors.

Their Votes:





Their Reasons:

Byrnes: This pause is a legitimate way for the new administration to examine current funding and determine whether initiatives are in line with the new administration's priorities and policies. This type of spending freeze is not at all uncommon when we have a new administration take office. The freeze gives the administration time to assess and review to determine whether continued funding remains in line with the goals of the administration that the American people overwhelmingly voted into office.

Bloink: Many of the green energy-related initiatives that were encouraged by the Biden-era law are now in full swing. Halting funding for these initiatives is extremely confusing to the companies that have been awarded contracts in these areas. While the funding freeze isn't permanent, it makes it incredibly difficult for companies and individuals to plan to maximize the value of these beneficial tax credits and incentives going forward under an act that was lawfully enacted by Congress.

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Byrnes: We knew to expect significant policy changes from this new administration that vastly disagrees with our previous administration. The Inflation Reduction Act includes hundreds of billions of dollars in tax credits and other incentives for green energy initiatives. This level of government spending on green energy initiatives cannot be a priority when ordinary Americans are struggling to pay for gas and groceries.

Bloink: Trump’s decision to freeze funding puts tens of billions of dollars’ worth of funding into limbo—and remember that we're talking about lawfully allocated funds. Putting these types of climate-related initiatives on the back burner is incredibly irresponsible and ignores the needs of future generations. It also ignores the current realities and is an incredible setback with respect to this country’s energy and climate policies.

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Byrnes: The new administration’s priority must be focusing on extending the 2017 tax cuts and creating initiatives that really help the American people today. The prior administration’s actions did significant damage to this country’s economy. We first have to fix the most pressing problems that ordinary Americans are struggling with today before we look toward funding Biden’s green energy initiatives. That’s what the American people voted for and that’s what the Trump administration is working to deliver.

Bloink: We can’t pretend that this wide-reaching spending freeze is business as usual for a new administration. While an administration will often impose a spending freeze and review with respect to agency decisions ordered by a prior administration, this is a freeze on funding pursuant to a law enacted by Congress—not a unilateral order from the executive branch. We’re talking about a wide-reaching freeze on disbursements that have already been approved. While many on Trump’s team claim this freeze is going to allow the administration to reprioritize and ensure that their policies are reflected, in reality this spending freeze is going to have a chilling effect on the new and lucrative jobs created by these clean-energy laws—hurting hardworking Americans in the process.