Democrats Attack Proposed Grantmaking Changes at House Hearing

Democratic lawmakers grilled White House Office of Management and Budget Director Russell Vought on his office’s proposed rule on federal grantmaking at a Tuesday budget hearing in the House. Vought defended the rule and said OMB is also interested in reducing indirect cost rates as much as possible.

OMB’s proposed rule, issued May 29, would deliver on President Donald Trump’s August executive order giving political appointees the final say over grant decisions across the federal government, including the power to terminate grants that do not meet agency priorities. It also includes wide-ranging provisions disallowing funds for publishing costs, restricting international collaboration, and more. OMB is accepting comments on the proposed rule until July 13.

At Tuesday’s hearing, Democrats, including House Appropriations Committee Ranking Member Rosa DeLauro (D-CT) and Rep. Marie Gluesenkamp Perez (D-WA), primarily criticized the breadth of the power that the rule would give political appointees.

“There is no telling on any given day what the president’s priorities may be,” DeLauro said in her opening statement. “He routinely announces a policy in the morning, only to reverse it in the afternoon. His habit is to govern by whim and fiat. This proposal seeks to establish yourself as the chief interpreter and final arbiter of what does or does not conform to this ill-fated, ill-defined standard.”

Vought said agency heads should have full authority to align grantmaking decisions with the current president’s policy objectives because “he got elected on behalf of the entirety of the American people.” He said this principle would hold true beyond the Trump administration.

DeLauro also accused OMB of already implementing political reviews of grants, leading to “massive delays” at agencies including the National Science Foundation, the National Institutes of Health, the Interior Department, and the Department of Homeland Security.

Vought said DeLauro was “misconstruing the proposal to make it seem as if it is OMB-centric” and said OMB does not have or intend to implement a formal review for every funding opportunity.

Republicans on the committee generally focused their questioning on other topics, though Rep. Michael Cloud (R-TX) expressed support for the proposed rule, saying it would provide “more safeguards on the taxpayers’ dollar.”

Vought told DeLauro he would not commit to extending the comment period on the proposed rule by 45 days, as hundreds of scientific and other organizations have requested. He said that the proposal has seen a “probably record number of comments” and that the office will assess each one and make necessary changes. More than 70,000 comments have been submitted so far.

Vought also said that the proposed rule suggests no changes to indirect cost rates because Congress barred such changes. However, he added that “indirect costs are the kind of things that we’re trying to restrict as much as we possibly can.”

“Bill Gates only pays 10% for indirect costs,” Vought said. “We pay up to 50 to 60% for indirect costs, for things like parking, buildings, and administrative costs, and while there may be examples where something might be useful or important, we think the trend in that direction is not something that we want the grant programs to be funding. We want them to be funding actual research and investment,” he added.

Gluesenkamp Perez asked Vought if OMB has directed any agencies to follow the regulation before it is finalized. Vought answered no, saying that agencies are trying to align themselves with the August executive order. NSF and NASA have already issued proposed updates to their grant policies that would bring them into alignment with the OMB proposed rule.

Vought told Gluesenkamp Perez that the proposed rule would not allow OMB to unilaterally cancel congressionally directed spending, also known as earmarks. He also said he believes the proposal provides appropriate recourse and due process for states, cities, or Congress in cases where OMB decided that a grant was inconsistent with presidential priorities.

Gluesenkamp Perez also asked Vought if OMB is building an AI tool to flag grants that are misaligned with the administration’s agenda.

Vought responded that OMB is “definitely working on technology, including AI, to be able to have a wider-angle lens about what is going on with the federal government.” But, he added, “It would be something that agencies would use in conjunction with us, and it’s certainly not to take the place of agency officials who would be making this determination.” Vought suggested that a tool that contains comprehensive information on reports from the Government Accountability Office or on government spending data from the USAspending website would be useful for OMB examiners.