White House puts $26 billion in Democratic state projects in deep freeze as shutdown intensifies

The federal shutdown went into its second day with a high-drama new turn: the White House has stopped $26 billion in funds allocated for projects in Democratic-led states, ratcheting up the crisis in an already nasty confrontation with Congress.
The freeze includes large infrastructure, transit, and clean-energy programs, hitting New York and California most but reaching well over a dozen states, according to administration officials. Critics brand the action political payback; the White House maintains it is a fiscal protection designed to trim what it defines as wasteful or ideologically motivated spending.


Shutdowns are never graceful, but this one is being particularly bruising. Rather than letting federal spending idle in neutral, President Donald Trump's administration seems to be driving it towards blue states, with idle programs of great economic and political importance.
The Office of Management and Budget instructed agencies late Wednesday to freeze billions of already approved projects. They include the Gateway Tunnel expansion connecting New York and New Jersey and the Second Avenue Subway extension in Manhattan—age-old priorities of Senate Democratic Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries.

"This is not fiscal prudence. This is political punishment," Schumer stated during a Manhattan press conference.


Outside of transit, the Department of Energy said it was canceling or freezing $7.5 billion in grants for renewable energy and climate initiatives. Over 200 projects, including hydrogen hubs in the Midwest and wind and solar projects in California, were abruptly put on hold.

For Democratic governors, the message was blunt. "This isn't about budgets, it's about retribution," California Gov. Gavin Newsom stated. "Our clean-energy future shouldn't be collateral damage in Washington's shutdown games."

Administration officials rebut that the targeted money was tied to programs with agendas prioritizing diversity, equity, and climate requirements at the expense of efficiency. OMB Director Russell Vought stated that the suspension was needed "to ensure taxpayer money isn't hijacked for radical agendas."


The freeze is particularly stinging in New York, where the officials warned that tens of thousands of construction jobs might be lost or postponed if the infrastructure projects are kept on ice. Gov. Kathy Hochul criticized the move as "a direct strike at working families and the future of our state's economy."

Transit leaders caution that stopping construction of the Gateway Tunnel a project designed to replace deteriorating Hudson River rail bridges, would ripple far from New York, slowing trade along the Northeast Corridor.

"This isn't just a New York issue," said Regional Plan Association President Tom Wright. "This is about the economic spine of the East Coast."


Democrats plan to sue the freeze in federal court, invoking the Impoundment Control Act of 1974, which prohibits presidents from withholding Congress-approved funds unilaterally. A federal judge halted a previous effort earlier this year, when the administration sought to freeze 22 states' spending.

Legal experts contend the courts are likely to act again, but the litigation would take months—putting projects on hold and forcing states to pay current bills.


The spending freeze reframes the shutdown from a budget standoff to outright power struggle. For Trump, it highlights his willingness to use federal spending as leverage, showing strength to his base while casting Democrats as advocates of "bloated" government initiatives.

For Democrats, too, the stakes are high. Several of the cancelled programs underlie their climate and economic agendas, and the reductions give them new ammunition to talk about abuse of power in Washington.

Pundits caution that the risk may rebound against either party. If the freeze holds, Democrats will come under pressure to make concessions hastily to reinstate funding. But if judges invalidate the ploy, Trump may be portrayed as reckless and discredit his shutdown tactic.


Shutdowns have been disruptive for years, but few times has the federal government so freely targeted projects aligned with one political party. That change is stoking fears that Washington's budget battles will increasingly become state-by-state struggles, with local economies suffering the consequences.

For now, New York's construction cranes are still, renewable energy projects have uncertain destinies, and state officials prepare for a protracted battle.

"This isn't a shutdown, it's a shot across the bow," said one Democratic strategist. "And whether it fires or not, the White House message is clear: political allegiance precedes national progress."

1. Which states are most affected by the funding freeze?
   New York and California face the biggest cuts, with projects in over a dozen other Democratic-led states also impacted.
2. Can the president legally withhold already approved funds?
   Under the Impoundment Control Act, presidents cannot permanently block funds without congressional approval.
3. How long could the shutdown last?
   It depends on negotiations in Congress; shutdowns can last days, weeks, or even months.
4. What happens to federal employees during this shutdown?
   Non-essential federal employees are furloughed, while essential workers continue without pay until funding is restored.
5. Are Republican-led states affected by the freeze?
   No, the freeze primarily targets projects in Democratic states, sparking accusations of political retaliation.