Withhold and Comply

In January, Donald Trump explained the model himself.

They can sue us and maybe they’ll win, but we’re not giving money to sanctuary cities anymore. — Donald Trump

The Office of Management and Budget simultaneously launched a review targeting 14 Democratic-led states and the District of Columbia. ^[1] The admission was the architecture: withhold the money, let them sue, and extract compliance during the months it takes courts to rule. By March, CMS Administrator Mehmet Oz had translated the architecture into operational language.

We will give them the money, but we’re going to hold it and only release it after they propose and act on a comprehensive corrective action plan to solve the problem. — Mehmet Oz

The pressure was not aimed at federal agencies but at state officials.

If providers and beneficiaries are worried about getting their money and services, please call your governor. — Mehmet Oz

The model had found its mechanics. **Medicaid.** In June, 25 states sued over work requirements that narrow the definition of medical frailty so severely that people with cancer or heart disease must prove their illness "significantly impairs" their ability to work. Rhode Island Attorney General Peter Neronha described the dynamic in plain terms.

This rule helps Americans build skills and independence through work, education, job training or community service, creating new opportunities for themselves and their families. — Mehmet Oz

^[2] **Nutrition.** USDA demanded six years of SNAP recipient personal data — Social Security numbers, income — to be shared with ICE, threatening Washington state with the loss of $129.5 million in annual administrative funding. A federal court blocked the demand in January. ^[3] By June, USDA had attached new conditions to $74 billion in nutrition funding across SNAP, school lunches, and WIC, requiring states to certify compliance with immigration and gender policies. Judge Joun blocked those too. ^[4] **Housing.** HUD threatened to strip $10.7 million from 16 states unless they weakened fair housing protections for LGBTQ+ individuals, veterans, and seniors. Sixteen states sued in March. ^[5] **Social services.** HHS attempted to freeze $10 billion in child care, TANF, and Social Services Block Grant funding for five Democratic-led states, initially claiming benefits went to undocumented immigrants, then shifting the justification to fraud. Judge Broderick blocked it in February. ^[6] **Education.** The Education Department waged a year-long campaign threatening school DEI funding. Schools began scrubbing DEI terminology from their websites before any court ruled. When Judge Gallagher blocked the policy in January, the administration dropped its appeal — the compliance had already been extracted. ^[7] **Broadband.** The administration threatened to pull federal BEAD funding from Louisiana to kill state-level AI regulation bills. At least a third of nearly 20 proposed AI bills were withdrawn by legislators who cited fear of losing rural broadband.

This approach will protect children, prevent censorship, respect intellectual property, and safeguard communities while ensuring America remains the undisputed leader in AI and technological innovation. — Federal government of the United States

^[8] **Clean energy.** Judge Mehta ruled the administration illegally canceled $7.6 billion in clean energy grants because DOE decisions were based on whether awardee states voted for Trump. The court found the government "freely admitted" that grant terminations were "primarily — if not exclusively" based on political affiliation. ^[9] **Disaster aid.** On July 6, Trump approved $846 million for nine Republican-leaning states while denying Rhode Island's blizzard disaster request the same day. When announcing Wisconsin's $22.6 million, he praised Republican Representative Tom Tiffany and omitted Governor Evers, who noted the administration had previously "declined tens of millions of dollars in Wisconsin disaster relief requests." ^[10] **Election security.** DHS linked $1.1 billion in preparedness and antiterrorism grants to election security mandates — paper ballots, 5% manual audits, citizenship verification through the SAVE database — with 20% of funding withholdable for noncompliance. More than two dozen states sued in Rhode Island federal court this week. ^[11][12] **Federal contractors.** Executive Order 14398 requires contractors to certify they do not engage in DEI activities, with noncompliance risking contract cancellation, suspension, or debarment — and uses the False Claims Act to empower DOJ enforcement and whistleblower actions, extending the compliance lever to private companies. ^[13] The courts have blocked nearly every attempt. The First Circuit upheld a block on the blanket funding freeze in March, calling it "arbitrary and capricious." ^[14] Judge Talwani ruled in July that the administration's use of a "Termination Clause" to revoke $5 billion in already-awarded grants violated the Spending Clause. ^[15] The legal defeats span equal protection, the Administrative Procedure Act, and the Spending Clause — a near-total judicial rejection of the model's legality. Yet the compliance happened anyway. Schools scrubbed their websites before Judge Gallagher ruled. Louisiana legislators withdrew their AI bills before any court heard the broadband case. Contractors began self-policing under threat of False Claims Act liability. The model does not need to win in court to change policy on the ground — it only needs the months litigation takes. The quantitative picture confirms what the pattern suggests. Trump signed 225 executive orders in 2025, the most since 1933. He signed 38 bills into law. ^[16] Funding leverage has displaced legislation as the administration's primary domestic policy instrument — not because Congress stopped mattering, but because conditioning money is faster than passing bills and works even when it loses. The model is not purely punitive. Trump reversed a FEMA denial to provide additional disaster funding to Michigan after meeting with Governor Whitmer, showing the lever can reward cooperation as well as punish resistance. ^[17] Georgia's Republican-controlled Senate passed hand-marked paper ballot requirements in March — the same reforms the administration would later push through DHS grant conditions — suggesting aligned states may adopt the desired policies without direct pressure. ^[18] But the mechanism's defining feature is its self-sustaining logic. Each judicial defeat produces a new mechanism on a different funding stream: the blanket freeze blocked, so the administration moved to grant-by-grant terminations; those blocked, so it moved to program-specific conditions on Medicaid, SNAP, and election grants; those blocked, and this week it tied antiterrorism funding to election mandates. Courts chase a moving target while policy changes on the ground during the chase. The strategy does not require a single victory — only that the next mechanism is ready before the last one falls.