On October 1, 2025, the Trump administration set off a political firestorm by freezing roughly $18 billion in federal funding for New York City’s most ambitious infrastructure projects—the Hudson Tunnel (part of the Gateway Program) and the Second Avenue Subway. The decision, announced mere hours after a government shutdown began, has not only thrown the future of these massive undertakings into question, but also ignited fierce debate over the role of diversity, equity, and inclusion (DEI) policies in federal contracting, as well as the use of federal power in political disputes.
Russell Vought, Director of the Office of Management and Budget (OMB), delivered the news via a post on X (formerly Twitter), stating that the funding was being “put on hold to ensure funding is not flowing based on unconstitutional DEI principles.” According to POLITICO, Vought specifically cited concerns that New York’s infrastructure projects were subsidizing contracts with taxpayer money based on discriminatory principles. The Department of Transportation (DOT), led by Secretary Sean Duffy, clarified that the projects are under administrative review to determine whether any unconstitutional practices—particularly those related to race- and sex-based contracting requirements—are occurring.
The projects at the heart of the dispute are not minor undertakings. The Hudson Tunnel Project, a decade-long effort, aims to construct a new two-tube rail tunnel under the Hudson River and rehabilitate the existing North River Tunnels, critical for Amtrak and NJ Transit on the Northeast Corridor, the busiest passenger rail line in the country. The Second Avenue Subway, now in its second phase, seeks to extend the Q subway line into East Harlem and Harlem, adding new stations and promising to transform commutes for thousands of New Yorkers. As the New York Times has previously reported, these projects are considered among the largest infrastructure initiatives in the Western Hemisphere.
Yet, the timing and rationale for the funding freeze have drawn sharp criticism from New York’s political leaders. Both Senate Minority Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries, whose home state is New York, were quick to respond. In a joint statement cited by CBS News, they declared, “These projects aren’t political trophies—they are lifelines. They mean tens of thousands of good-paying union jobs. They mean shorter commutes, safer travel and a stronger economy not just for New York, but for the entire nation. Choking off these projects out of spite will damage America’s competitiveness and cost working families dearly.”
Schumer, taking to X, didn’t mince words: “That royally screws commuters. Obstructing these projects is stupid and counterproductive because they create tens of thousands of great jobs and are essential for a strong regional and national economy.” Jeffries, meanwhile, dismissed the administration’s move as “baseless,” writing, “Russ, you are the poster child for privilege and mediocrity. Get lost.” Their frustration was echoed by New York Governor Kathy Hochul, who warned, “They’re trying to make culture wars be the reason why, culture wars over the tens of thousands of jobs that we’ve created with these infrastructure projects that were literally talked about for decades.” Hochul further asserted, “I will not sit idly by while Donald Trump defunds public safety and lets our infrastructure crumble. We will use every tool available to us to restore this funding and ensure that these critical infrastructure projects get built and keep every New Yorker safe.”
The Department of Transportation, for its part, emphasized that the administrative review could take longer than anticipated due to staff furloughs caused by the government shutdown. “Thanks to the Chuck Schumer and Hakeem Jeffries shutdown, however, USDOT’s review of New York’s unconstitutional practices will take more time. Without a budget, the department has been forced to furlough the civil rights staff responsible for conducting this review,” the DOT said in a statement obtained by POLITICO. Until the review is completed, project reimbursements—including a $300 million disbursement for the Second Avenue Subway—cannot be processed.
Vice President JD Vance weighed in at a White House press briefing, framing the freeze as an unfortunate but necessary consequence of the shutdown. “We want to do everything that we can to help the American people, but when the Democrats shut down the government, we have to actually do a little triage to make sure the most critical and most essential services are provided,” Vance remarked, according to POLITICO. The administration has maintained that the freeze is not about political retribution, but rather about upholding constitutional principles and ensuring taxpayer dollars are not used to further what they see as discriminatory contracting practices.
However, critics—especially Democratic lawmakers—see the move as a blatant act of political revenge. Rep. George Latimer (D-N.Y.), who represents commuter-heavy Westchester County, called it “Political revenge. Clearly outlined by Trump, time and again. He sees the U.S. as Blue and Red, and Blue states are enemies. As he has said many times, he hates his enemies; he is the retribution. Has he announced any rescission of any projects in Florida or Texas?” Rep. Rob Menendez (D-N.J.) added, “They will go after any community for any reason, and I think they’re using the shutdown as a reason to settle political score.”
The freeze comes as New York is already embroiled in a separate legal dispute with the federal government. On September 30, 2025, the state filed a lawsuit over a nearly $34 million federal grant for transit security that was cut off, alleging the freeze was due to New York’s refusal to devote law enforcement resources to immigration enforcement. The mounting legal battles underscore the high stakes for New York’s infrastructure ambitions—and for the commuters, workers, and families who depend on these projects.
Despite the pause in reimbursements, the Gateway Development Commission, which oversees the tunnel project, has stated that work will continue as planned, at least for now. According to a statement provided to POLITICO, “The project continues on scope, schedule, and budget,” with the agency spending money upfront and then seeking federal reimbursement. Yet, the uncertainty looms large: If the freeze drags on, the financial strain could eventually force delays or even halt progress.
The dispute also highlights a broader conflict over the future of DEI policies in federal contracting. The Transportation Department recently issued an interim final rule removing “race and sex-based presumptions of social and economic disadvantage that violate the U.S. Constitution.” This move is part of a wider push by the Trump administration to roll back DEI initiatives, which President Trump has long criticized as divisive and unconstitutional.
Meanwhile, the political rhetoric has only intensified. President Trump has even threatened that New York City may not receive federal funding if Zohran Mamdani, a self-described democratic socialist, wins the upcoming mayoral election. Such threats have only deepened concerns among New York officials that the administration is using federal funding as a cudgel in partisan battles.
As the standoff continues, the fate of New York’s infrastructure—and the livelihoods tied to it—hangs in the balance. With lawsuits pending, administrative reviews underway, and a government shutdown complicating matters, the coming weeks will reveal whether compromise, court intervention, or continued confrontation will decide the future of these critical projects.
For now, commuters, workers, and city leaders are left in limbo, watching as political and legal battles shape the fate of projects that have been decades in the making.
