Trump Freezes $28 Billion in Funds During Government Shutdown

The Donald Trump administration froze or canceled approximately $28 billion in federal grants for infrastructure and energy projects across Democratic-led states and cities during a government shutdown that began October 1, 2025. The cuts include $18 billion for New York City projects—specifically the Hudson River Tunnel and the Second Avenue Subway—and $2.1 billion for Chicago transit upgrades, including the Red Line Extension. Additionally, the administration terminated roughly $7.6 billion in clean energy grants across 16 states that voted for Kamala Harris in 2024.

White House Budget Director Russell Vought and the U.S. Department of Transportation justified the freezes as necessary to ensure funds are not distributed based on "unconstitutional DEI principles" or "race-based contracting." Democratic leaders, including Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, condemned the moves as "blackmail" and political retribution. New York Governor Kathy Hochul characterized the actions as a "culture war" tactic and refused to use state funds to keep the Statue of Liberty open, arguing the public must see the consequences of the federal stalemate.

As the shutdown entered its third week, the administration used the impasse as an "unprecedented opportunity" to implement permanent spending cuts and identify "Democrat Agencies" for elimination. While the White House reallocated tariff revenue to maintain military pay and nutrition programs, it warned of mass federal layoffs. Legal challenges followed, with Judge Loren AliKhan halting one attempt to freeze grants, ruling the administration tried to illegally seize the "power of the purse" from Congress.