In a week that underscored the deepening legal and political battles over federal funding and immigration policy, the U.S. Supreme Court and a federal district court issued a pair of rulings that will have far-reaching consequences for how billions of dollars in aid are distributed across the country and around the world. At the heart of these cases is the Trump administration’s aggressive use of executive power to condition or withhold funds—moves that have sparked fierce debate over the separation of powers, states’ rights, and America’s role abroad.
On Friday, September 26, 2025, the Supreme Court handed President Donald Trump a significant victory, granting his administration’s emergency request to keep nearly $5 billion in foreign aid on hold. According to NBC News, this 6-3 decision by the court’s conservative majority overruled lower courts that had found Trump’s maneuver likely unlawful. The order blocks the release of the funds indefinitely, even though Congress had already approved them.
Trump’s decision, announced in August, relied on a rarely used budgetary tactic known as a pocket rescission. As Reuters explains, this mechanism allows a president to submit a late request to Congress not to spend allocated funds. The catch? If the budget year ends before lawmakers’ 45-day approval window closes, the White House argues that congressional inaction effectively cancels the spending altogether. The last time a president tried this approach was about 50 years ago.
Justice Department lawyers turned to the high court after U.S. District Judge Amir Ali ruled that only Congress had the authority to halt the aid. A federal appeals court declined to suspend Ali’s order, but Chief Justice John Roberts issued a temporary block on September 9. Now, the full court has allowed that block to remain, leaving the aid frozen for the foreseeable future.
In its unsigned order, the majority acknowledged that the president’s powers in foreign affairs carry significant weight but emphasized that this was not a final judgment on the merits. Still, the three liberal justices dissented in sharp terms. Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, warned, “The effect is to prevent the funds from reaching their intended recipients — not just now but (because of their impending expiration) for all time.”
This ruling is just the latest in a string of emergency appeals where Trump has prevailed at the Supreme Court, including cases involving migrant protections, federal employee dismissals, transgender service members, and the removal of leaders from independent agencies. Critics argue that such appeals—fast-tracking disputes to the Supreme Court, often with little explanation—were seldom used by past presidents and risk eroding the checks and balances fundamental to the U.S. system.
Advocates for humanitarian aid warn that keeping the funds locked up will have dire consequences. Nick Sansone of Public Citizen Litigation Group, who represented the AIDS Vaccine Advocacy Coalition, told Politico, “The high court’s decision further erodes separation of powers principles that are fundamental to our constitutional order. It will also have a grave humanitarian impact on vulnerable communities throughout the world.”
Despite the administration’s claims that the financial savings are minimal compared to the federal deficit, critics argue that the cuts damage U.S. credibility overseas by disrupting food programs and development initiatives. Judge Ali, whose ruling was overruled for now, acknowledged the stakes: “This case raises questions of immense legal and practical importance, including whether there is any avenue to test the executive branch’s decision not to spend congressionally appropriated funds.” For now, the Supreme Court’s order ensures that billions in aid will remain locked up, with global consequences for those who depended on it.
While the Supreme Court’s decision played out on the international stage, a separate legal drama was unfolding at home. On Wednesday, September 24, U.S. District Judge William Smith issued a permanent injunction blocking the Trump administration from conditioning disaster and emergency grants to states on their immigration policies. The Department of Homeland Security (DHS) had issued terms requiring grant recipients to cooperate with immigration officials to receive federal grants—a move that prompted lawsuits from a coalition of 20 Democrat-led states.
According to Nexstar Media, Judge Smith, a former President George W. Bush appointee, ruled that the conditions were both “arbitrary and capricious” as well as “unconstitutional.” In his decision, Smith wrote, “The conditions not only jeopardize states’ fiscal planning but also threaten their capacity to protect public safety in the areas where federal and state cooperation is most critical.” He further noted, “Plaintiff States are entitled to injunctive relief. First, Plaintiff states have succeeded on the merits of their claims: the contested conditions are both arbitrary and capricious and unconstitutional. Second, Plaintiff States stand to suffer irreparable harm; the effect of the loss of emergency and disaster funds cannot be recovered later, and the downstream effect on disaster response and public safety are real and not compensable.”
The ruling follows months of legal wrangling. In May, a coalition of Democratic attorneys general filed lawsuits against both the DHS and Department of Transportation, arguing that new federal conditions requiring states to assist with immigration enforcement or lose billions in funding were an overreach. Plaintiff states included California, Illinois, Rhode Island, New Jersey, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Vermont, Washington, Wisconsin, and the District of Columbia, as court documents show.
Homeland Security Secretary Kristi Noem had previously directed her department’s sub-agencies, including FEMA, to cease federal funding to sanctuary cities. Transportation Secretary Sean Duffy issued a letter in May stating, “Federal grants come with a clear obligation to adhere to federal laws. It shouldn’t be controversial – enforce our immigration rules, end anti-American DEI policies, and protect free speech. These values reflect the priorities of the American people, and I will take action to ensure compliance.”
The Trump administration’s pressure campaign on so-called sanctuary jurisdictions has been relentless throughout 2025. The White House has sued cities and states including Chicago, Los Angeles, Boston, and New York for policies that limit cooperation with Immigration and Customs Enforcement (ICE). Some of these efforts have borne fruit; for example, the mayor of Louisville announced in July that his city would begin cooperating with ICE. Federal immigration operations have been deployed in Los Angeles, Washington, D.C., and Chicago as part of this campaign.
Despite the court’s rebuke, the Trump administration has shown no signs of backing down. DHS spokesperson Tricia McLaughlin responded to the ruling by stating, “Cities and states who break the law and prevent us from arresting criminal illegal aliens should not receive federal funding. Radical sanctuary politicians need to put the safety of the American people first—not criminal illegal aliens. The Trump Administration is committed to restoring the rule of law. No lawsuit, not this one or any other, is going to stop us from doing that.”
As these legal battles play out, the broader implications are unmistakable. On one hand, the Supreme Court’s willingness to let the executive branch withhold congressionally appropriated funds signals a potential shift in the balance of power between the branches of government. On the other, Judge Smith’s injunction reaffirms the principle that the federal government cannot coerce states into enforcing its immigration agenda by threatening to pull essential aid.
For now, billions of dollars remain in limbo—both for vulnerable people abroad and for states grappling with natural disasters at home. The litigation is ongoing, and the stakes, both legal and humanitarian, could hardly be higher.
