Why Business Should Oppose OMB’s Plan To Politicize Grantmaking

Background

The driving force behind this effort is Russell Vought, President Trump’s director of OMB. A noted advocate of the “Unitary Executive theory,” Vought believes that Article II of the Constitution vests all executive power directly in the president, giving him absolute control over the work of federal agencies, civil servants and the federal budget. In addition, Vought was a key architect of Project 2025. He authored a section of its summary report and created a “transition playbook” to guide its quick implementation. The playbook remains confidential.

The preamble to OMB’s proposed rule signals its intent. Elizabeth Ginexi, an NIH program officer for 24 years, notes that it “relies heavily on Heritage Foundation reports, partisan Senate committee documents, and White House fact sheets, rather than independent scientific or administrative assessments. It characterizes decades of peer-reviewed research on climate, public health, equity, and international collaboration as “woke,” “neo-Marxist,” “anti-American,” or “divisive ideology.” It treats the scientific community’s professional infrastructure, including conferences, journals, international partnerships, and open access publishing, as wasteful overhead to be controlled or eliminated.”

Key Issues Of Concern

Among the rule’s many troubling sections, five stand out as particularly harmful:

§200.205 – Gives political appointees total control over grant awards

For decades, Congress appropriated funds to federal science agencies based on the expectation that grantmaking would utilize a merit-based, expert-review process to ensure that it is “open, fair, reliable, and free of political influence, favoritism, or retaliation,” according to the nonpartisan Center on Budget and Policy Priorities.

OMB’s proposed rule shifts decisionmaking authority from federal experts, grant review committees and career administrative staff to political appointees with little expertise. To emphasize the point, political appointees will be forbidden to defer to peer reviewers or routinely ratify their recommendations. Instead, grants must “demonstrably advance the President’s policy priorities.” Any proposal deemed to “promote anti-American values,” however loosely that is defined, can be dismissed out of hand.

Science doesn’t change depending on who is in office. If merit is replaced by political ideology, junk science will prevail. America’s post-WWII leadership in science and technology will be lost, we will struggle to compete in the global marketplace and our economy, quality of life and national security will decline.

§200.206 – Grant applicants can be denied funding based on organizational “affiliations”

Under this section, grant applicants affiliated with one or more organizations that “advocate for the overthrow of the United States Government” or “undermine public safety or national security” may be barred from consideration. Given OMB’s expansive framing of topics that constitute “anti-American activity,” this provision could be invoked to exclude applicants who support mainstream environmental, public health or civil rights organizations.

§200.220 – Broadly prohibits international scientific collaboration

This section would severely disrupt international partnerships that have been foundational to U.S. leadership in multiple fields.

§200.340 – Allows active grants to be terminated at any time, for any reason

This rule expands agency authority to terminate active grants mid-award, simply because a political appointee deems them “inconsistent with program goals or agency priorities.” No finding of noncompliance or fraud is required. Agencies need only provide a brief written rationale that is not subject to appeal.

If this provision is adopted, it will retroactively threaten successful multi-year research programs and training grants. It will also allow administration officials to shut down methodologically sound research that is generating findings the President wants suppressed. This is inimical to a free society.

But Wait…There’s More

The proposed changes to CFR Part 200 govern every federal grant to every recipient, including state and local government agencies and community nonprofits across the United States, its territories, and the District of Columbia.

Living in Richmond, Virginia, I got a sense of what this could entail when, on Jan 6, 2025, my city’s 101-year-old water plant failed in an ice storm. Water pressure fell to zero for two days, and safe tap water was unavailable for five. Residents and businesses throughout the city and a neighboring county were severely affected, as were hospitals, schools, and other facilities. Virginia’s General Assembly had to delay its opening session.

Notwithstanding the magnitude and costs of the disruption, shortly after Trump returned to the White House, his administration abruptly canceled a $12 million FEMA grant intended to fund badly needed upgrades to Richmond’s water treatment plant. The grant had been awarded in 2023 and was due to be paid within days. Instead of honoring that commitment, FEMA canceled it and nearly a billion dollars in other “Building Resilient Infrastructure and Communities” (BRIC) grants, severely affecting water treatment infrastructure projects nationwide.

In 2024, the federal government sent $1.1 trillion in grants to state and local governments to support a wide range of programs, including Medicaid, transportation, nutrition for needy families, and Section 8 housing vouchers, according to the Congressional Research Service. On average, federal grants account for 36 cents of every dollar states spend, according to Elizabeth Ginexi.

If OMB’s proposed rule is adopted, it will upend the partnership between taxpayers, the federal government, states and municipalities. By administratively bypassing Congress, Vought seeks to circumvent Constitutional checks and balances to amplify President Trump’s power to reward jurisdictions and organizations that do his bidding and punish those that do not. This is more typical of autocratic regimes than constitutional republics such as the United States.

In Conclusion:

To date, OMB’s plan has elicited more than 70,000 public comments. Although America’s scientific, academic, and non-profit communities strongly oppose its provisions, non-research, commercial, and financial businesses have largely remained silent. That could be a costly mistake. CEOs who are indifferent to the benefits of research and innovation might consider the negative effects that a loss of water supply, the collapse of an aging bridge or floodwall, or an epidemic can have on communities and their bottom line.

The stakes are high, and time is running short. The window for submitting comments to OMB closes next Monday, July 13, 2026, at 11:59 PM EDT. If the rule is finalized and Congress fails to intervene, it will take effect on October 1, 2026.