Vast carelessness

The bungled grants freeze shows how little this administration bothers to think things through

Today’s post is from a friend and colleague, Robert Gordon, who has long experience in government, including at the White House and as the assistant secretary responsible for grants policy at the Department of Health and Human Services.

I have spent years railing against long government memos with languorous timelines. How about a two-pager? Where’s the urgency?

Careful what you wish for. OMB’s two-pager on grants, with its 24-hour deadline, dropped like a bomb on a trillion-dollar grantmaking enterprise (and that’s just at HHS). It risks wreckage across the country.

The memo required agencies to pause all spending, with a footnote exempting “assistance received directly by individuals.” HHS suspended states from drawing down Medicaid funds and tribal facilities from drawing down Indian Health Service Funds. Also suspended were grants that provide funds for Head Start, child care, LIHEAP, and more. By midday yesterday, OMB issued a corrective note explaining that the footnote excluded Medicaid and Head Start, as well as other programs like SNAP and Pell grants. That was good, if incoherent, since Medicaid makes payments through intermediaries (states, which may in turn pay managed care organizations which pay providers) as much as any federal program. And the order leaves in the crosshairs, just at HHS, programs offering drug treatment and mental health services, funding foster care, serving the homeless, engaging in medical research, and on and on.

Smart lawyers have focused on the question whether the delay violates the Impoundment Control Act (sure seems to), but there’s another problem. The actions now unfolding may well violate the terms of any number of grant agreements. Grant agreements bind two parties—not only the grantee, but also the government. Here’s a snippet from the key text, the Uniform Grants Guidance:

Payments for allowable costs must not be withheld at any time during the period of performance unless required by Federal statute, regulations, or in one of the following instances: (i) The recipient or subrecipient has failed to comply with the terms and conditions of the Federal award; or (ii) The recipient or subrecipient is delinquent in a debt….

OMB says it is seeking to “cancel awards already awarded that are in conflict with Administration priorities,” but there are rules for that too. The first Trump Administration instructed agencies to make it easier to terminate grants, while the Biden Administration made it harder. Depending on the timing and the agency, these directions will be captured differently in actual agreements. Even under the old Trump guidance, the grant agreement had to include the terms allowing for the termination, and the government’s actions had to be consistent with those terms. In some circumstances, HHS grantees can appeal to the Department Appeals Board. And they can go to the courts, under the Administrative Procedure Act, as several just did, winning a temporary reprieve.

Many of us desperately want to simplify the government’s rules and procedures, but that does not mean we want no rules at all. When a state or grantee receives a grant from the federal government, the receipt of the grant does not turn that state or grantee into a vassal or a subject who can only appeal for the king’s mercy. (Justice Kennedy must have written something ponderous about this.) And the main requirement at issue here is modest: If the government committed to do something, it should follow through.

What is remarkable is how easily the Administration could have pursued the same ideological goals in a more orderly way. They could have changed the requirements only in pending grants announcements and agreements not yet signed. They could have tackled agreements that renew annually as those renewals arise. For multiyear grants, they could have worked with the Republican-controlled Congress to change grant terms at the end of the fiscal year. Federal grantees all understand, or reasonably should, that their money is subject to appropriations law. Law and edict are different things.

Even for a team in a hurry, they could have thought it through. They could have excluded Medicaid from the get-go so that HHS did not turn off their payment systems only to need to turn them back on. (How much money did this waste? Calling DOGE.) And they could have said in advance what exactly they are demanding that agencies and grantees do if they want to comply with these orders. Is it enough to get rid of self-proclaimed DEI programs, or do all mentions of “diversity” need to be scrubbed? How about LGBTQ? All of these questions are unanswered, left for the next two-pager.

Six years ago, arriving at the Michigan Department of Health and Human Services, I discovered through Civilla the beauty of human-centered design. HCD teaches people in government to care about small things—the choice of a word on a form, the placement of a button on a website, the location of a desk in a SNAP office. Coming to federal HHS in 2022, with lessons from Michigan, I was able to build on fine work by staff in the last Trump Administration to simplify grant applications. Saving people even a little time on their grants treats them with respect.

What we are seeing now is the opposite of the human-centered ethos. This government cannot trouble itself to plan for the biggest things, the funds that thousands of organizations use to serve millions of people. It has swept up civil servants in a vortex of confusion and fear. Even if courts block the grants action, the churn is degrading the delivery of health care, child protection, and medical research. The experience of government that human centered design teaches us to see, this government chooses to ignore.

The Constitution requires that the President take care that the laws be faithfully executed. To paraphrase Fitzgerald, these are careless people who smash up things and creatures, secure in their vast carelessness.