Trump Administration’s Proposed Changes to Federal Grants Highlight Problems of Big Government

David Ditch

Federal regulations can cause significant changes for governance or sectors of the economy. Yet it is quite striking for a proposed rule to overhaul more than $1 trillion of annual spending.

On May 29, 2026, the Office of Management and Budget (OMB) put forward a proposed rule that would overhaul grantmaking across the federal government. The Federal Register received roughly 100,000 comments on the rule through the July 13 comment deadline, demonstrating substantial interest. The OMB will now review the comments before issuing a final rule, which would then be subject to congressional review for 60 in-session days under the Congressional Review Act.

Understanding the rule’s stated purpose and potential effects is important for anyone interested in public policy. More importantly, the rule emphasizes the amount of control that the federal government has accumulated. This centralization is unhealthy for governance and contrary to American ideals of freedom and autonomy.

One of the Trump administration’s consistent policy themes has been changing federal policies related to identity characteristics such as race, gender, and sexual orientation, with a particular focus on ending so-called “woke” policies generally associated with the political left.

The OMB proposal strongly criticizes the Biden administration’s tendency to use federal resources to advance an ideological agenda. This was frequently the case in federal grants, as agencies approved funding for projects with inappropriate goals such as supporting or encouraging political activists and promoting censorship under the guise of fighting “misinformation.” (The proposed rule cites research I published on Biden administration grantmaking, but I did not advocate the policy changes contained in the Trump Administration proposal.)

The rule would give political appointees greater formal authority over approving and terminating federal grants. Since the more than $1 trillion in annual federal grants affect activities such as scientific research, infrastructure projects, foreign aid, and social programs, this would amount to a substantial increase in power for the office of the president.

Concerns about an excessive concentration of power in the Oval Office are reasonable. However, the status quo of unelected agency employees holding substantial grantmaking power is not necessarily a healthy arrangement either.

In turn, those who support the rule on the grounds of preventing “woke” grants should consider the potential ramifications for the future. If political appointees have more control over grants, a subsequent administration that supports left-leaning social values would more easily approve left-leaning ideological grants, since that would be in line with the “priorities” of such an administration. Bending grant programs to fit an administration’s political or ideological agenda could become the default if the rule is finalized and remains in place.

The OMB’s proposed rule fails to address the central problem of federal grantmaking: that funneling more than $1 trillion in taxpayer resources through thousands of federal programs every year is destructive to many aspects of American life.

• The vast majority of federal grant programs fall outside of the federal government’s core responsibilities and are instead designed to address concerns that are often local in scope. This falls prey to the collective action problem of concentrated benefits and diffused costs, as it can be easy for a locality to notice the effect of a grant, but the grant’s cost is invisible when spread across the entire nation. The US, with a population of 342 million people spread over a large area, is more vulnerable to this problem than smaller nations.
• Programs such as the Community Development Block Grant (CDBG) have few meaningful guardrails, making them little more than slush funds that both Congress and the executive branch can use for political purposes.
• State and local governments increasingly rely on federal grants to fund infrastructure, education, and social welfare programs. This not only causes substantial waste and inefficiency as projects are managed by multiple sets of bureaucrats, but it also undermines the quality of governance at all levels. State and local officials lose autonomy as they are forced to comply with federal grant requirements. Accountability and transparency suffer when it is unclear where responsibility lies.
• Federal grants both crowd out and control civil society and private initiative. From addressing local social problems to funding research to financing infrastructure, federal grants often take the place of charities, businesses, and other organizations. Worse, many of these groups have become dependent on federal support, which creates unhealthy political incentives as recipients and elected officials curry favor with one another rather than focusing on the public good.
• Federal grants consume $1 trillion every year, imposing a burden on the economy through taxation and the effects of federal borrowing.

Reducing the number of grant programs or the amount of money they control would address problems cited by both supporters and critics of the Trump administration’s grantmaking proposal. It would limit Washington’s ability to promote a social agenda that runs counter to most of the public’s values, while also reducing the power vested in the Oval Office.

The United States recently celebrated the 250th anniversary of its Declaration of Independence against centralized control of the public by a distant and unaccountable government. Today, the sprawling and labyrinthine nature of the federal government has recreated the problems that the Declaration sought to overturn. Reining in federal grantmaking would be a worthwhile step toward restoring America’s hard-earned liberty.