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The New Trump OMB Rule: How People, Organizations Are Pushing Back

The new White House Office of Management and Budget rule would give Trump and his administration significantly more power to select, award, cut and terminate grants,

Bruce Y. Lee, Senior Contributor Forbes 05 Jul 2026, 11:35 2 min read 7/10 Washington, D.C.

The New Trump OMB Rule: How People, Organizations Are Pushing Back

Key Takeaways

The OMB rule, published July 1, 2026, asserts unilateral authority to terminate any grant for 'efficiency or policy reasons,' a standard critics say is vague and ripe for abuse.
Over 40 organizations including the American Civil Liberties Union, National Governors Association, and the Association of Public and Land-grant Universities have filed formal comments opposing the rule.
A bipartisan group of 12 state attorneys general—led by California and New York—is preparing a federal lawsuit arguing the rule violates the Impoundment Control Act of 1974.
Congressional Democrats introduced the Grant Integrity Act on July 5, 2026, to nullify the rule and require OMB to obtain congressional approval before altering grant terms.
Federal grants total approximately $1.2 trillion annually, spanning health, education, infrastructure, and scientific research—making the stakes of this rule enormous for local economies and public services.

A new rule from the White House Office of Management and Budget would hand President Trump unprecedented power to select, award, cut, and terminate federal grants—sparking immediate backlash from lawmakers, state officials, and advocacy groups. The rule, quietly advanced in mid-2026, reinterprets the Budget and Accounting Act of 1921 to give OMB direct authority over individual grant decisions, bypassing Congress and traditional agency discretion. Critics call it a power grab that threatens the separation of powers and could redirect billions in federal funds based on political loyalty. The pushback is broad: Democratic senators have introduced legislation to block the rule, attorneys general from a dozen states are preparing lawsuits, and non-profit coalitions warn it will destabilize research, education, and infrastructure projects. Supporters argue the rule restores accountability and cuts waste, but opponents see it as a fundamental threat to the integrity of federal grant-making. The OMB is currently accepting public comments, with a final rule expected before the 2026 midterm elections. If implemented, it would fundamentally alter how the federal government allocates tens of billions of dollars annually—and set a major precedent for executive control over spending. This is not a minor administrative tweak; it is a landmark battle over the reach of presidential power.

Frequently Asked Questions

The rule, issued by the White House Office of Management and Budget in July 2026, gives OMB the authority to select, award, cut, and terminate federal grants without prior approval from Congress or the granting agency. It expands executive power over grant-making beyond traditional limits.

Critics argue it violates the Impoundment Control Act of 1974 and the separation of powers by allowing the president to unilaterally halt funding for programs Congress has authorized. Opponents fear it could be used to punish political opponents or redirect funds to favored projects.

Democratic lawmakers introduced the Grant Integrity Act to block it. A bipartisan coalition of 12 state attorneys general is preparing a lawsuit. Groups like the ACLU, National Governors Association, and Association of Public and Land-grant Universities have filed formal objections.

Federal grants total roughly $1.2 trillion each year, covering health, education, infrastructure, science, and disaster relief. The rule could impact any of these programs, depending on OMB's discretion.

The public comment period runs through August 2026. After that, OMB may finalize the rule before the midterm elections. Legal challenges are expected immediately, and Congress may attempt to overturn it using the Congressional Review Act.

Yes, it echoes President Trump's previous attempts to impound funds and the broader tension between the executive and legislative branches over spending power. However, this rule formalizes a level of discretion not seen since the Nixon era.

Original source

www.forbes.com

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