Billions of dollars that Congress already approved are no longer sitting safely under President Donald Trump’s thumb. After months of legal challenges, judges and state attorneys general have begun to pry open what had looked like a locked vault of frozen grants, education aid, and infrastructure money. The emerging pattern is not just a series of isolated wins, but a coordinated legal and political effort to reassert Congress’s power of the purse.
What is taking shape is a stress test of how far any president can go in using funding delays and freezes as a policy weapon. The early rulings and settlements suggest courts are increasingly skeptical of aggressive impoundment tactics, and that skepticism is already reshaping the balance of power over everything from child care in Minnesota to tunnel construction under the Hudson River.
States push back on frozen billions
By the start of this year, federal judges and agency lawyers had already forced the administration to retreat on a wide range of funding holds, with cases touching everything from transportation to social services. Reporting indicates that, by early 2026, courts or negotiated resolutions had affected at least 40 funding disputes, some narrow and others sweeping in scope. That volume alone shows how central withholding tactics have become to President Trump’s governing style, and how determined states and advocacy groups are to challenge them.
One of the most visible fights centers on New York’s long planned tunnel project under the Hudson River, a linchpin for rail travel along the Northeast Corridor. A federal judge recently issued an administrative stay that gives the administration more time to unfreeze billions in infrastructure money, while also signaling that the government may not be able to withhold the funds indefinitely. The order, detailed in coverage by Piper HudspethBlackburn, underscores how even temporary delays now face close judicial scrutiny.
Education, child care, and the constitutional fight over impoundment
The legal pushback is not limited to concrete and steel. In the education arena, New York Attorney General Letitia James has taken a leading role, filing suit on behalf of students and school districts that rely on federal support. In a sweeping complaint, New York Attorney 22 other attorneys general, along with the governors of Pennsylvania and Ke, accuse the administration of illegally freezing billions of dollars in critical education funding. Their argument is straightforward: once Congress has appropriated money, the executive branch cannot simply sit on it because it dislikes how lawmakers chose to spend it.
That claim rests on a firm statutory and constitutional foundation. A fact sheet from the Senate Appropriations Committee stresses that The Constitution grants the President no unilateral authority to withhold funds from obligation, and that The Impoundment Control Act lays out specific procedures a president can and must follow to propose any delay or cancellation. When the administration bypasses those guardrails, it is not just playing hardball politics, it is inviting courts to police a separation of powers violation that Congress has already anticipated.
The stakes are just as concrete for families as they are for school districts. In Minnesota, Attorney General Keith Ellison recently announced that his office had won a second court victory blocking a federal funding freeze that threatened support for child care and other services. In a statement from SAINT PAUL, Attorney General Keith Ellison framed the win as a lifeline for vulnerable families who depend on federal dollars for childcare and support for vulnerable families. For parents juggling work and care responsibilities, these legal abstractions translate into whether a local center can keep its doors open next month.
Congress redraws the battlefield while new fights loom
Even as courts weigh individual freezes, Congress has started to box in the administration on future attempts to squeeze the budget. Lawmakers used the 2026 Commerce Justice and Science Appropriations Bill to reject proposed cuts to major science and research programs, effectively locking in funding that the White House had hoped to pare back. A detailed breakdown of the Commerce Justice and shows how Congress not only restored threatened lines, but also signaled that it expects agencies to move the money quickly rather than slow walk grants through bureaucratic delay.
That same dynamic is playing out in the fight over Biden’s green bank, a financing tool designed to steer private capital into clean energy projects. Congressional Democrats have urged the DC Circuit to revive the program, arguing that the EPA under President Donald Trump has usurped congressional authority by sidelining funds that were meant to support projects in low income communities. If the court agrees, it would reinforce the message that agencies cannot quietly bury programs that lawmakers have explicitly funded.
Yet the administration is not backing away from the strategy of using grant delays as leverage. In the West, officials in Colorado are bracing for a new confrontation after learning that the federal government plans to hold back grant money from their state and three others. Reporting from Colorado notes that the decision came before some local agencies had even received official notice about the decision, a sign of how abruptly these financial shocks can land. It is hard to imagine attorneys general in those states watching Minnesota and New York win in court and deciding to sit this one out.
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*This article was researched with the help of AI, with human editors creating the final content.
Julian Harrow specializes in taxation, IRS rules, and compliance strategy. His work helps readers navigate complex tax codes, deadlines, and reporting requirements while identifying opportunities for efficiency and risk reduction. At The Daily Overview, Julian breaks down tax-related topics with precision and clarity, making a traditionally dense subject easier to understand.
