The Trump Administration’s Plan To Politicize Federal Grants Would Harm American Health and Innovation

On May 29, 2026, the Office of Management and Budget (OMB) proposed sweeping changes to the rule governing how federal grant money is spent.¹ These rules—Title 2 of the Code of Federal Regulations (2 CFR), Part 200—would apply to the more than $1 trillion in federal funding from grants, cooperative agreements, and financial assistance each year, including science and research grants.² If implemented, the proposed changes would open up grantmaking decisions to political influence. This would undercut the rigor and independence of science and further damage grantmaking intended to create conditions that support community health and well-being, resulting in slowed innovation and weakened economic growth.

The proposed rule violates the laws governing agency rulemaking as well as the constitutional rights of Americans. According to Governing for Impact, the OMB director does not have the authority to establish financial management policies and requirements, as proposed in the rule,³ and the rule violates First Amendment and equal protection rights⁴ and infringes upon Congress’ authority over federal spending by unilaterally adding conditions to congressional appropriations. While future litigation is likely, the proposed rule can still do enormous harm before a court decides its legality as potential grant recipients preemptively comply with it to stay in the administration’s favor.⁵

Scientists, patient advocates, professional associations, universities, lawmakers, and members of the public submitted almost 500,000 comments within the 45-day public comment period.⁶ Among the rule’s harmful provisions is a proposal to remove a statement noting that 2 CFR Subtitle A is merely “guidance” and instead claim that it has a binding regulatory effect across 42 agencies.⁷ Forty-seven senators responded with a letter detailing how the proposal exceeds the OMB’s legal authority to issue such binding regulations, as well as attempts to override Congress’ authorization and appropriation of funding for federal grants.⁸ Analysis of more than 50,000 publicly submitted comments found that about 94 percent opposed the proposed changes.⁹

In comments submitted to the OMB, the Center for American Progress strongly urged the agency to rescind the proposed rule, allow agencies to exercise their statutorily defined powers independently to set grant conditions and funding rules for federal programs, and work to strengthen the independence, rigor, and dissemination of American scientific research and grantmaking.

In July, following a call from all Senate Democrats for the OMB to withdraw the proposed rule, Senate leadership added language to the bipartisan continuing resolution (CR) stopgap funding bill that would prevent the Trump administration from implementing the proposed rule until after December 11, when the CR expires.¹⁰ The Senate passed the CR with such language in August, and the House passed it with the Senate amendments in September.¹¹ However, this stopgap measure will not protect the integrity of the grantmaking process after December 11.

This report details how the proposed rule would entrench the Trump administration’s attacks on science, research, and federal grantmaking, including by:

• Entrenching attacks on science and research
• Undermining peer review and scientific expertise
• Degrading scientific independence and objectivity
• Hampering scientific discovery by limiting professional collaboration and the dissemination of research findings
• Gutting research that supports opportunities to improve health for all Americans

The proposed rule would make permanent, through federal regulation, continued actions by the Trump administration to insert its biases and political agendas into federally funded research. These actions cut funding for urgent issues that require more, not less, investment. For example, the Trump administration terminated $40 million in National Institutes of Health (NIH) grants for more than 50 autism-related research projects that explore the association between exposure to pollution or chemicals in the environment and increased risk of autism—a contributing factor that does not align with Health and Human Services (HHS) Secretary Robert F. Kennedy Jr.’s false belief that autism is linked to vaccines.¹² HHS also canceled millions of dollars in teen pregnancy prevention grants, stating that they did not align with the department’s priorities.¹³

More broadly, the proposed rule stands to undermine the United States’ science and technology advantage, reducing the future prosperity on which American leadership rests. The United States’ unparalleled innovation ecosystem was developed with federally funded research and development (R&D) grants at its core.¹⁴ For decades, the system has spurred the development of new scientific ideas and new technologies that now define the world.¹⁵ This was not accidental; it was the product of nonpartisan R&D investments that enjoyed the support of policymakers from both political parties.

Public funding for R&D is a major driver of economic activity, supporting private sector productivity and prosperity for communities across the country—not to mention an influence over global affairs that simply would not be possible without U.S. companies’ commercialization of new technologies.¹⁶ By one estimate, federal R&D funding after World War II provided returns of 140 to 210 percent, helping American firms bring countless technologies to market—from the internet and smartphones to advanced batteries and lifesaving medicines.¹⁷ The development of these world-altering technologies was not a partisan affair, but rather the result of nonpartisan, scientific excellence—often conducted by researchers who were immigrants.¹⁸

At a moment when China is increasing its investment in areas such as artificial intelligence (AI) and robotics that will define the future, the Trump administration is seeking to inject politics into the science and innovation system that the United States needs to compete effectively.¹⁹ Indeed, the administration’s actions will only continue to push leading researchers away, allowing other countries to capture the talent and progress associated with leading scientific research.²⁰

As CAP has previously noted, the American innovation ecosystem evolved as a partnership among private industry, early-stage investors, and nonpolitical, federally funded research. Politicizing the federal funding component of this three-legged stool will not create a more stable innovation environment; it will constrict the pipeline of new ideas and technologies that enable the rest of the system to flourish. As such, it will not only be the researchers who feel the impact of the proposed guidance but also the private sector and the entire country.²¹

Provision §200.205 of the OMB proposed rule, “Federal agency review of merit of proposals,” would, among other things, require senior administration appointees to review proposals to ensure that awards advance the president’s policy priorities. The provision also clarifies that peer review is “advisory”—meaning peer review would merely provide recommendations—and refers to “Gold Standard Science” without defining the term.²² In short, it would replace the scientifically rigorous, fair, independent, and unbiased peer review process, which has been used to determine federal research funding since World War II, with the biases and agendas of political appointees, undermining agency expertise and diminishing the capacity to advance science and improve health. Subjecting all federal grants to review by political appointees and replacing decisions based on scientific expertise will weaken the quality of scientific research and undermine the American public’s confidence in scientific innovation.

These provisions also run counter to the administration’s stated goal of “restoring trust.”²³ Australia, which rolled back federal peer review processes purportedly to increase efficiency and decrease costs, has faced criticism from the scientific community about the reliability, credibility, fairness, and accountability of its new system. Its experience can thus serve as an example of the dangers of curtailing review processes that rely on the knowledge of scientific experts.²⁴ Systematic and rigorous peer review panels have not been restored in Australia since their cancellation in 2020 due to the COVID-19 pandemic. Instead, with the stated goal of reducing administrative costs and increasing flexibility, panels of eight to 12 experienced and qualified reviewers have been replaced by panels of four to five anonymous inexperienced reviewers with unknown qualifications. Procedures for addressing potential bias and conflict of interest, along with feedback to applicants, have been laid aside.

The OMB’s proposed rule also runs counter to the Trump administration’s Executive Order 14303: Restoring Gold Standard Science, which calls for federally funded research that is “transparent, rigorous, and impactful” and federal decisions that are “informed by the most credible, reliable, and impartial scientific evidence available.”²⁵ The executive order states that “reproducibility, rigor, and unbiased peer review must be maintained” and defines Gold Standard Science, among other ways, as “science conducted in a manner that is … subject to unbiased peer review.”

Beyond scientific research, the proposed rule would apply to federal grants that support essential public services, such as public safety, education, economic development, access to health and social services, environmental protection, transportation, housing, and child welfare programs. This includes areas that the administration has claimed to prioritize, such as chronic disease, healthy pregnancies, children’s health, and autism.²⁶ Ultimately, the provisions would harm community-based organizations, health care providers, schools, and private sector productivity and growth throughout the nation.

As discussed above, the proposed rule would undercut the independence of scientists conducting groundbreaking and lifesaving research by removing the objective standards by which the validity of science is judged and making it a subjective political question. The rule would also allow political appointees to cancel scientific grants, at any time, for discretionary reasons rather than objective or scientifically based determinations, disrupting the entire scientific arena and leading to immeasurable missed opportunities that would benefit all Americans. If the rule takes effect, researchers may self-censor and avoid critical scientific exploration simply because it may not conform with the worldviews of the political appointees determining whether to approve a grant. And scientists working in fields disfavored by political appointees would likely experience a significant chilling effect—exactly what the objective standards currently in place prohibit. Finally, political appointees would have the ability, under the rule, to summarily end promising scientific research in areas that benefit humanity simply because they do not like what the science may show. The proposed rule’s validity, therefore, should not withstand legal scrutiny.

Cutting grants for health, environmental, biotechnology, and basic science research—including training programs for scientists and entrepreneurs—would stall innovation that drives new products, therapies, and medications; delay treatments for diseases such as cancer; shrink the economy; and threaten jobs for young scientists who may choose to work in other countries, leading to poorer health, more hospitalizations and emergency department visits, preventable deaths, and higher health care costs.²⁷ According to one estimate, cuts to NIH funding would result in future worsened health outcomes worth $8 trillion.²⁸ Another estimate found that in fiscal year 2023, NIH funding supported more than 410,000 jobs throughout the country and fueled nearly $93 billion in economic spending.²⁹ Cutting federal science and health research grants would harm the economy of every state.³⁰ The United States would lose its status as a leader of scientific innovation, damaging the nation’s health, economy, and competitiveness.

Several provisions in the proposed rule are highly subjective in nature, threatening to undermine scientific independence, give grantmaking the appearance of corruption, and make fraud more likely to occur by taking final decisions out of the hands of career officials and putting them in the hands of political appointees. In addition, the overly broad language and subjective approval or denial of grants by nonexpert political appointees would give rise to the appearance of arbitrary and capricious application. Section 200.205 requires agencies to design and execute an objective merit review process yet includes the requirement that political appointees conduct a review to determine whether the applicant will demonstrably “advance the President’s policy priorities.”³¹ Requiring this subjective political review of scientific grants immediately eliminates the independence of agencies’ nonpolitical officials that Congress has designated through statute to advance the agencies’ missions.

Moreover, the requirement that agencies’ merit review processes comply with a presidential administration’s ideological goals renders any claims that the review process is objective effectively meaningless. Section 200.300, for example, prohibits grant awards from flowing to or through entities that “promote, encourage, subsidize, or facilitate,” “diversity, equity, inclusion, and accessibility [DEIA],” gender ideology, or the transition of a minor.³² There is no statutory or judicial definition identifying or delineating what actions or speech constitutes what the rule refers to as “unlawful identity-based ‘Diversity, Equity, and Inclusion’,” and executive orders do not carry the weight of statutes in delineating what is and is not defined in the law. The rule implies that grant funding could be denied or terminated due to the statements or actions of institutions or colleagues where recipients work. Yet while the federal government can impose restrictions on direct funding recipients, it does not have the power to restrict activity and speech of individuals or institutions who do not receive federal funding.

If implemented, the proposed rule would fundamentally impinge on Americans’ and American entities’ constitutional rights, especially under the First Amendment. Under this rulemaking, the definitions of prohibited conduct and speech are inherently vague. The U.S. Supreme Court has long held that government actions may be void for vagueness if prohibitions are not clearly defined under due process rights, as laws must “give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.”³³ In Grayned v. City of Rockford, the court noted that where a vague law “‘abut[s] upon sensitive areas of basic First Amendment freedoms,’ it ‘operates to inhibit the exercise of [those] freedoms.’” Indeed, federal courts have already blocked the administration’s efforts to defund educational entities under a sweeping prohibition against “unlawful DEI” as a violation of due process due to vagueness.³⁴ In addition, the proposed rule limits what scientists and researchers can say about their work, where they can say it, and with whom they can associate.

The rulemaking purports to disclaim that the spending clause provisions inherent to §200.300 do not apply to Section 200.340. Those spending clause provisions assert that funding may be prohibited to entities that participate in or promote “unlawful DEI” or disparate impact-related activities, which purportedly would not apply to §200.340. However, the unduly vague nature of the basis for discretionary termination of grants raises significant concerns about how fairly the proposed rule would be applied and whether it could result in grant terminations across an entire university if some portion of that entity promoted or engaged in so-called unlawful DEI or other disfavored activities. Furthermore, Section 200.340 allows political appointees to terminate grants at any time based on shifting discretionary standards that may change over time and are not exhaustively spelled out in the rule. These discretionary terminations may occur based on the vague determinations that the grants no longer comport with the national or public interest and that providing such a disclaimer at the outset of the grantmaking process means that grant recipients would not have reliance interests in the funding stream—meaning they would not be able to rely on the grant being ongoing or subject to termination in their long-term budgeting or planning. In short, the rule would allow the government to change the rules of the game after it has begun.

The argument that the disclaimer obviates the reliance interests of a grant recipient falls on its face at the outset. A political appointee’s determination of what constitutes the national or public interest may change at any time, let alone when there is a change of administration. Science is intended to build knowledge and solve problems through an independent and rigorous process that is not dependent on the whims of politics. This amendment to §200.340 runs counter to that purpose and furthers the due process and First Amendment concerns highlighted above.

The rulemaking that would create discretionary grant funding through noncompetitive processes under §200.204 would also undermine independence in science and create an appearance of corruption in the process. It could eliminate the objective competitive grantmaking process to provide funds to politically favored recipients in ways undetectable by the public, resulting in unchecked wasteful spending of public tax dollars. Grants could then be provided to politically favored, but ineffectual, grant applicants on the basis of little more than the preference of the individual or entity approving the grant, again giving rise to the appearance of corruption and claims that the government itself is the agent perpetrating fraud against the American people by rigging the playing field in such an opaque manner.

Several provisions in the proposed rule would create barriers to scientific collaboration and communication, both domestically and abroad. Research shows that collaborative research has a greater impact, as papers with authors from multiple institutions receive significantly more citations and teams with researchers from multiple disciplines outperform those with researchers from a single field.³⁵ Similarly, international scientific collaboration leads to stronger research outcomes, as diverse teams of researchers are better equipped to foster innovation and advance solutions to global problems.³⁶

One section that limits the use of federal funds for collaborations with international researchers would go beyond reasonable national security limits to prohibit engagement with countries deemed “of particular concern” or those “subject to sanctions or restrictions relating to national security, defense, or intelligence activities.”³⁷ Researchers and research institutions are already required by law to comply with relevant restrictions on any transaction involving activities in a country subject to comprehensive or targeted sanctions—or any entity or individual on the Office of Foreign Assets Control Specially Designated Nationals List, Consolidated Sanctions List, or other restricted party lists.³⁸ These new designations risk being overly broad and limiting scientific collaboration in ways that hinder research, innovation, and economic growth.

In addition, the “domestic-first framework,” detailed in Section 200.202(e), would unnecessarily restrict international collaboration by requiring that any “international elements” of a research grant be affirmatively allowed by agency grantmakers, with the strict stipulation that the international collaborator has unique expertise or other resources not available in the United States.³⁹ These additional bureaucratic barriers would reduce the number of international research partnerships and thus hamper innovation.

Finally, the proposed regulations would further limit scientific collaboration both domestically and internationally by requiring express agency approval for researchers to attend conferences and participate in scientific membership organizations. Conferences and membership organizations are fundamental ways researchers exchange ideas, share knowledge and tools, think across disciplines, and build new partnerships.⁴⁰ Restricting the flow of ideas by requiring agencies to affirmatively approve every conference and organization in which a researcher participates is an extraordinary amount of new red tape that would unnecessarily micromanage research, restrict researchers’ ability to adapt as projects evolve, and ultimately slow progress toward knowledge and innovation.

In addition, the regulations would create new barriers that would prevent communication of scientific findings with other researchers and the public by preventing researchers from using federal funding for publication costs, unless required by law or given special agency approval. An inherent part of the prepublication process is validating research findings through peer review; publication then makes findings available to other scholars who can build on them.⁴¹ A 2021 study found that publication costs for scientific articles averaged about $400, with fees for prestigious journals reaching $1,000. These fees are higher for open-access publishing, where the authors pay article processing charges (APCs) to compensate the publisher for revenue lost when making the article available to the public for free.⁴² One publisher charges a range of $500–5,000 for APCs depending on the journal.⁴³ Supporting open-access publishing for federally funded research helps ensure the public has the greatest possible access to research findings that were made possible by taxpayer dollars.

Similarly, the proposed rule would prohibit the use of grant funding for advertisement or public relations costs, with limited exceptions. Such a policy change would create barriers to communicating research findings with the public. In areas such as public health, for example, this restriction could lead to measurable impacts on health outcomes. For instance, researchers have identified poor communication as one factor that limited uptake of measures to reduce spread of infection during the onset of the COVID-19 pandemic.⁴⁴

In conditioning research grants on political ideology, the federal government risks limiting research on important issues that urgently need further study. “DEI” is not a discrete category of activity that can be excised from federal research without collateral damage; it is embedded in the basic practice of asking whether a treatment, policy, or disease behaves differently across populations. Diversity of intellectual thought and research is paramount to advancing science and protecting the well-being of all Americans.

Three examples illustrate why a blanket prohibition would suppress research that is critical for identifying and responding to underlying social and health problems that exist in society.

In addition to the examples above, disaggregated data by race show that white people in the United States—particularly those of low income—die at higher rates than the country’s Asian or Hispanic populations.⁵⁰ Yet studies that disaggregate outcomes by race to understand these trends are now prohibited under anti-DEI restrictions.

Finally, §200.477 would expand the Hyde Amendment, which prohibits the use of certain federal funding to pay for abortion, subject to limited exceptions. Rather than being a permanent law, the Hyde Amendment has been attached annually as a temporary “rider” to the congressional appropriations bill for HHS.⁵¹ Section 200.477 purports to apply Hyde-like restrictions to all federal grantmaking, including for agencies that previously have not been subject to Hyde; to make the amendment permanent; and to expand the prohibition to include funding for “costs associated with abortion,” on which it does not elaborate. This change risks further limiting access to reproductive health care.

The proposed rule relies on several executive orders as justification to condition funding on compliance with anti-DEI and anti-LGBTQI+ provisions.⁵² Many of these executive orders have been successfully challenged in courts.⁵³ While presidents hold the authority to direct agency action, they cannot force agencies to break the law; and as written, the proposed rule could put many agencies and programs in that position (see Robert F. Kennedy Center for Justice and Human Rights v. U.S. Department of Education).⁵⁴ The U.S. Supreme Court has rejected previous attempts by governments to curtail free speech in educational settings (see Keyishian v. Board of Regents)⁵⁵ and has also rejected attempts to require government-directed speech as a condition of federal funding (see Agency for International Development v. Alliance for Open Society International).⁵⁶ Following the logic of these decisions, there are strong grounds to challenge the proposed anti-DEIA and anti-LGBTQI+ funding conditions on First Amendment grounds.⁵⁷ More to the point, it is unclear if researchers at one institution would face grant funding prohibitions if separate parties at the same institution engaged in research that is deemed prohibited under the edicts of §200.300. Because §200.300 prohibits use of funding to “promote, encourage, subsidize, or facilitate DEI or DEIA policies or practices” without defining “DEI” with precision and extends liability to “facilitation,” it risks chilling important research.⁵⁸

If finalized, the OMB proposed rule would have far-reaching negative impacts on the American scientific enterprise. The proposed changes would undermine the foundations of scientific research, including reliance on peer review, a commitment to address understudied problems, and collaboration to maximize impact. They would inject ideological biases into all federal grantmaking across sectors, infringe on Americans’ constitutional rights, restrict speech and diversity of thought of individuals and institutions, and harm productivity, growth, and well-being throughout the nation. Accordingly, CAP has strongly urged the agency to rescind the proposed rule.

The authors would like to thank Viviann Anguiano, Adam Conner, Emily Gee, William Roberts, and Topher Spiro for their review and feedback and Olivia O’Connell for her fact-check.