WASHINGTON (AP) — President Donald Trump's budget office on Wednesday rescinded a memo freezing spending on federal loans and grants, less than two days after it sparked widespread confusion and legal challenges across the country.

President Donald Trump speaks to reporters aboard Air Force One en route from Miami to Joint Base Andrews, Md., Monday, Jan. 27, 2025. (AP Photo/Mark Schiefelbein)

The memo, which was issued Monday by the Office of Management and Budget, had frightened states, schools and organizations that rely on trillions of dollars from Washington.

Administration officials said the pause was necessary to review whether spending aligned with Trump's executive orders on issues like climate change and diversity, equity and inclusion programs.

But on Wednesday, they sent out a two-sentence notice rescinding the original memo. The reversal was the latest sign that even with unified control of Washington, Trump’s plans to dramatically and rapidly reshape the government has limits.

Administration officials insisted that despite the confusion, their actions still had the intended effect by underscoring to federal agencies their obligations to abide by Trump’s executive orders.

“The Executive Orders issued by the President on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments,” White House press secretary Karoline Leavitt said, blaming the confusion on the courts and news outlets, not the administration. “This action should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending.”

The White House's change in direction caught Congress off guard, particularly Trump’s Republicans allies who had defended him throughout the brief saga.

“This is Donald Trump. He throws hand grenades in the middle of the room, and then cleans it up afterwards,” said Sen. Kevin Cramer of North Dakota. “I just think the guy’s a genius.”

Cramer acknowledged the initial memo may have generated too much political heat, with red and blue states raising alarms over the funding freeze. But the senator suggested Trump “maybe didn’t understand the breadth” of what had been proposed.

But Democrats said the White House had overreached beyond what Americans want.

“Most people voted for cheaper eggs,” said Sen. Martin Heinrich of New Mexico. “They did not vote for this chaos.”

The funding pause was scheduled to go into effect at 5 p.m. Tuesday. It was stayed by a federal judge until at least Monday after an emergency hearing requested by nonprofit groups that receive federal grants. An additional lawsuit by Democratic state attorneys general was also pending.

After the initial memo was distributed, federal agencies were directed to answer a series of yes or no questions about each program by Feb. 7. The questions included “does this program promote gender ideology?” and “does this program promote or support in any way abortion?”

Although Trump had promised to turn Washington upside down if elected to a second term, the effects of his effort to pause funding were being felt far from the nation’s capital. Organizations like Meals on Wheels, which receives federal money to deliver food to the elderly, were worried about getting cut off. Even temporary interruptions in funding could cause layoffs or delays in public services.

On Tuesday, Trump administration officials said programs that provide direct assistance to Americans, including Medicare, Social Security, student loans and food stamps, would not be affected.

However, they sometimes struggled to provide a clear picture. Leavitt initially would not say whether Medicaid was exempted from the freeze, but the administration later clarified that it was.

Democratic critics of the order moved swiftly to celebrate the memo's rescinding.

“This is an important victory for the American people whose voices were heard after massive pressure from every corner of this country," said Sen. Patty Murray of Washington. She said Trump had “caused real harm and chaos for millions.”

Senate Democratic leader Chuck Schumer of New York said that “Americans fought back and Donald Trump backed off."