Trump’s Grip on Billions of Taxpayer Funds Loosened in Court (1)

President Donald Trump’s expansive efforts to use federal funding as a cudgel against political opponents and programs he considers “woke” remain mired in court more a year since his return to the White House.

By the start of 2026, US judges had halted his funding cuts and limits, or the government took steps to resolve issues after being sued, in more than half of 167 spending fights reviewed by Bloomberg News as of Jan. 16. The Justice Department is pressing dozens of appeals, including over a judge’s order unfreezing funds for the $16 billion Gateway rail tunnel between Democrat-led New York and New Jersey.

The rulings against the government underscore how the legal system has persisted as a road block — or at the very least a speed bump — to Trump’s second-term agenda. The administration has faced more than 700 lawsuits so far, according to Bloomberg’s review. The grind of court process has at times slowed officials’ pace and pried loose information. Some judicial blocks have been temporary or narrow, while others are sweeping in scope.

In January alone, judges lifted a freeze on $10 billion for child care and aid for low-income families, restored roughly $12 million to the American Academy of Pediatrics, and struck down a cap on National Institutes of Health reimbursements to research institutions for facilities, security and other “indirect” costs, a move the administration said was worth at least $4 billion.

New legal fronts are on the horizon: Trump recently said he would pull federal dollars from Democrat-led states and cities that won’t cooperate with his immigration crackdown, a move that would be sure to face court challenges.

The rail project fight in New York unfolded at a rapid clip over the last week. A Manhattan federal judge on Monday agreed to temporarily pause her ruling requiring the Trump administration to release funds -- up to $200 million to start, the government says -- while the Justice Department urges an appeals court to keep it on hold long-term as the litigation plays out.

“Litigation seems to be the only language that’s understood right now,” said Sara Churgin, executive director of the Eastern Rhode Island Conservation District.

The nonprofit got an injunction from a Rhode Island judge last year ordering the government to restore a multiyear grant worth about $200,000 to work with farmers on best management practices, but Churgin said they’re still figuring out how to operate amid other federal cuts and more grant competition.

The administration’s funding cuts and threats of future disruptions have left state and city governments that rely on federal dollars in limbo. Even when judges rule against the administration, local officials say it’s challenging to budget if there are appeals pending or unresolved legal questions.

“Cities and towns do a good job at planning ahead for capital projects, but that planning ahead requires assurances,” said Fidel Maltez, city manager of Chelsea, Massachusetts. Chelsea stands to potentially benefit from a court ruling restoring a cancelled disaster mitigation program, but Maltez said it’s still not clear they’ll get the money they’ve been counting on.

The Republican majority in Congress – which controls federal spending under the Constitution – hasn’t stood in the way of the administration’s cuts, which have spanned scientific research, clean energy measures, foreign aid and diversity inclusion and equality initiatives, among other programs. The Department of Government Efficiency said it saved $215 billion during the last fiscal year, although overall spending by the federal government rose.

Protestors in Boston during the ‘Hands Off’ demonstration to oppose federal cuts to social programs in April, 2025.

Photographer: Craig F. Walker/Getty Images

The sums clawed back in court by states or other entities represent a fraction of that. Some Democratic state attorneys general have calculated amounts they’ve shielded from cuts or returned to constituents, including $866 million in New Mexico, $3 billion in Massachusetts and $15 billion in Washington state.

The Illinois attorney general’s office estimated they had “protected” about $6.6 billion for state residents through legal fights over the past year, but Governor JB Pritzker‘s budget office also recently warned that the Trump administration’s policy changes had created “unprecedented” pressures.

The administration has touted key wins at the US Supreme Court last year that narrowed legal options for local officials, nonprofits and businesses that get government money.

But those rulings were at early stages on an emergency basis, instead of final opinions after a fulsome review. Lower court judges in some instances have explained as they ruled against the administration that they don’t see those Supreme Court orders as directly on-point to the cases before them.

The White House and Justice Department did not respond to requests for comment.

The administration has chipped away at district court losses before appeals courts, mirroring its progress against hundreds of other lawsuits challenging Trump’s policies ramping up deportations, slashing the federal workforce, shuttering US agencies and more. It’s a process that can take months. Justice Department lawyers haven’t asked appellate judges to intervene on an emergency basis in all of these cases, including those that involve broader challenges to grant conditions, as opposed to specific cuts.

But the US has also dropped a few appeals, including recently in a fight brought by Democratic state officials over an effort to condition billions of dollars in federal transportation grants to immigration enforcement cooperation.

The Justice Department is appealing a judge’s ruling in San Francisco last year blocking the administration’s effort to strip funding from more than four dozen so-called “sanctuary” cities and counties that have policies against aiding US immigration authorities.

Trump said in mid-January that the administration would stop “making any payments” to sanctuary jurisdictions, but US officials haven’t announced details. A White House official told Bloomberg that the Office of Management and Budget is coordinating with agencies on a report on how federal funds are being spent, with a focus on investigating potential fraud.

“If there are threats to critical funding for our city, litigation is on the table,” Seattle City Attorney Erika Evans said in a statement to Bloomberg. Seattle is a plaintiff in the San Francisco sanctuary jurisdictions fight, and is defending a separate funding win on appeal.

“We are always looking for every opportunity to advocate until we can’t,” Evans said.

The Supreme Court’s conservative majority changed the landscape for spending fights in three cases. In April, the justices let the Education Department withhold teacher training grants over DEI-related concerns. In August, the court greenlit potentially hundreds of millions of dollars in National Institute of Health cuts. In September, the justices let the administration withhold $4 billion in expiring foreign aid.

Commuters near the Environmental Protection Agency (EPA) headquarters, which has endured massive budget cuts and lay offs, in Washington, DC.

Photographer: Kent Nishimura/Bloomberg

Although the justices issued those orders on an emergency basis, they made it clear that lawsuits resembling breach-of-contract claims seeking unpaid federal funds belong in a specialized tribunal – the US Court of Federal Claims – considered favorable to the government, according to legal experts following the litigation.

Unlike in district courts, Federal Claims judges can’t order early relief to challengers while a case is pending.

“That may give the executive branch more de facto latitude to make changes, even if it has to pay some cost down the road,” said Zachary Price, a professor at University of California College of the Law San Francisco.

Disputes over grant conditions, how agencies vet funding applications and alleged constitutional violations appear to remain fair game, experts say. Judges are realizing “that’s the way to thread the needle,” said Gregory Sisk, a law professor at the University of St. Thomas School of Law.

In one recent opinion ordering Education Department officials to reconsider at least $3 million in denied grants, a judge in Washington wrote that the claims fell within a “gray area” of the justices’ guidance so far.

The Justice Department appealed at least 61 district court losses in funding fights by mid-January, while the administration’s challengers appealed 10 rulings for the government.

The administration has prevailed on appeal more than half of the time so far, including preliminary orders pausing a district judge’s injunction or preserving a lower court win. Several of those cases boosted the government’s efforts to link funding to compliance with Trump’s hard-line stance against DEI and services for transgender individuals.

Even when judges agreed with the administration’s legal stance, they’ve sometimes expressed concern about its broader approach. In a Feb. 6 ruling for the government in a fight over DEI-related cuts, a member of the US Court of Appeals for the 4th Circuit wrote that the evidence “suggests a more sinister story” of “valuable grants gutted in the dark” and “worthy efforts to uplift and empower denigrated.”

In more than a dozen cases, appeals courts ruled against the government.

Most court orders against the administration have been temporary while lawsuits go forward. Many restored funding access only to challengers who sued, an offshoot of the administration’s success last year arguing for the Supreme Court to rein in nationwide, or universal, injunctions.

“Courts have been able to fashion remedies when necessary to protect people,” said Skye Perryman, president of Democracy Forward, a liberal-leaning organization that has been active in suing the administration, including over funding cuts.

States that sue sometimes benefit more than those on the sidelines. When the administration last year froze a $5 billion Federal Highway Administration program to build electric vehicle charging infrastructure, a group of Democrat-led states sued.

In June, a Seattle judge said the US couldn’t withhold access to more than $856 million from 14 states, while more than $1.8 billion remained inaccessible in the rest of the country. That allowed Francis Energy to resume a “significant number” of the 125 projects it had paused, Chief Executive Officer David Jankowsky said.

Francis Energy, based in Oklahoma, is on track to finish earlier projects and start new ones, but the delays have made them more expensive, Jankowsky said. The administration has since largely unfrozen the program but the judge recently ruled again for the states, citing uncertainty about how US officials would administer funding in the future.

“While we’re still working out of it, we’re optimistic on the ultimate success of the program,” Jankowsky said.

The AIDS Foundation of Chicago is part of a funding lawsuit related to Trump’s anti-DEI and “gender ideology” executive actions, and lost a request for a preliminary injunction last year.

The organization’s president John Peller said they’ve been able to hold onto major federal funding, but have had to stop collecting information on whether clients are transgender, making it harder to tailor services. They’re still pursuing the lawsuit.

“The court process is a long one and we knew that,” he said. “We’re going to continue with that case as long as we possibly can.”

Methodology: Bloomberg News counted lawsuits filed in US district courts that principally challenge funding terminations, suspensions or conditions, exclusive of cases about the dismantling of entire federal agencies. Each lawsuit was counted even if it was later consolidated with similar cases. For appeals, Bloomberg counted a consolidated set of appeals covering the same district court order as one case.

(Updates with details on the fight over Gateway funding.)

--With assistance from Skylar Woodhouse, Christopher Cannon and Steve Stroth.

To contact the author of this story:
Zoe Tillman in Washington at ztillman2@bloomberg.net

To contact the editor responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Sara Forden

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