WASHINGTON — The Trump administration rescinded an order that would have frozen large swaths of federal grant and loan funding on Wednesday after the initial order triggered panic and confusion across the country Tuesday and was halted by a federal judge minutes before it was intended to go into effect.

A two-line memo sent out to all federal departments and agencies by Matthew Vaeth, the acting director of the Office of Management and Budget, and obtained by Spectrum News merely rescinded the previous order and did not clarify further whether the administration planned to return to the policy. 

The Monday evening order from the White House Office of Management and Budget sparked uncertainty over a crucial financial lifeline for states, schools and organizations that rely on trillions of dollars from Washington and left the White House scrambling to explain what would and wouldn't be subject to a pause in funding.

Speaking on Wednesday afternoon, President Donald Trump said the intention was to look for "the scams, dishonesty, waste and abuse that's taken place in our government for too long" and that the freeze in no way affected "Social Security, Medicare, Medicaid, or other entitlements that Americans depend on." State offices across the country experienced disruptions in their access to Medicaid payment systems on Tuesday that the administration chalked up to an "outage" and argued was unrelated to the freeze.

Trump went on to boast that as part of this effort his administration "stopped $50 million being sent to Gaza to buy condoms for Hamas" and claimed the Palestinian militant group at war with Israel were using the condoms to make bombs. There is no evidence to support the claim, and the administration has offered no explaination to back it up after it was made by officials earlier this week. While U.S. aid programs spend around $8 million a year on condoms, they are mostly designated for Africa in a bid to fight the HIV/AIDS epidemic and other sexually transmitted infections. No money was spent on condoms in the Middle East in the 2021, 2022 or 2023 fiscal years, according to CNN.

Adding to the confusion, White House press secretary Karoline Leavitt said in a statement on Wednesday that Vaeth's latest memo was "NOT a rescission of the federal funding freeze" and was intended to "end any confusion created by the court's injunction."

"It is simply a rescission of the OMB memo," Leavitt said. "The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented."

It was not immediately clear what Leavitt said about the freeze continuing to be implemented means for thousands of federal programs. She blamed the confusion on the courts and news outlets, not the administration.

"Chaos, chaos, and more chaos... these people don't have a clue how to govern," New York Rep. Yvette Clarke, a Democrat, said in response to Leavitt.

The administration intends to continue weeding out programs viewed as promoting "Marxist equity, transgenderism, and green new deal social engineering policies," as Vaeth put it in the initial memo. Agencies had been directed to answer a series of yes or no questions on each federal program by Feb. 7. The questions included, “does this program promote gender ideology?” and “does this program promote or support in any way abortion?”

The vaguely worded memo, combined with incomplete answers from the White House throughout the day, left lawmakers, public officials and average Americans struggling to figure out which programs would be affected by the pause. Even temporary interruptions in funding could cause layoffs or delays in public services.

Nourishing Hope, which runs foods pantries, home meal delivery and an online food market in Chicago, gets roughly 20% of its food budget comes from the federal government. CEO Kellie O’Connell said the biggest issue when the memo surfaced was getting clear and accurate information so they could figure out how to plan for the coming months.

If their federal funds were frozen, O'Connell said, they could make it a few weeks. But the wider concern was the possible end of assistance, like food stamps, which would increase demand on her organization.

“If that were to significantly diminish or get eliminated, it will be nearly impossible for the charity food system to step up,” she said of food stamps. “It would be potentially catastrophic for our communities.”

Leavitt initially would not say whether Medicaid was exempted from the freeze, but the administration later clarified that it was.

Trump administration officials said programs that provide direct assistance to Americans, including Medicare, Social Security, student loans and food stamps, would not be affected. But they sometimes struggled to provide a clear picture.

U.S. District Judge Loren L. AliKhan blocked the funding freeze Tuesday.

The administrative stay, prompted by a lawsuit brought by nonprofit groups that receive federal money, was set to last until Monday afternoon. Seperately, state attorneys general from nearly two dozen states filed a lawsuit of their own. 

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 such as Meals on Wheels, which receives federal money to deliver food to the elderly, and Head Start, which provides early child care in lower income communities, were worried about getting cut off.

Democratic critics of the order moved swiftly to celebrate the action.

“This is an important victory for the American people whose voices were heard after massive pressure from every corner of this country—real people made a difference by speaking out," said Sen. Patty Murray, D-Wash. "Still, the Trump administration—through a combination of sheer incompetence, cruel intentions, and a willful disregard of the law—caused real harm and chaos for millions over the span of the last 48 hours which is still ongoing."

"Americans fought back, and Donald Trump backed off," Senate Democratic leader Chuck Schumer said. He urged Trump to rescind his noination of Russ Vought, a Project 2025 architect who Trump has tapped to lead the influential Office of Management and Budget.

“We believe they’ll come back and try to do this in other ways,” Schumer told reporters at the Capitol, without elaborating on other measures the administration may take. “Russell Vought sat in my office and said he was going to do it.”

This is a developing story. Check back for updates.