The memo was rescinded by the Trump White House to “end the confusion” and “end the injunction,” a source familiar told the Washington Examiner. However, the source said that reviews are ongoing and that money will be halted if it’s found to run contrary to Trump’s priorities.

But a statement posted to X by Leavitt suggested the freeze itself could still be in place, even if the memo was walked back.

“This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction,” Leavitt wrote. “The President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”

That statement led to further confusion about what the rescission of the memo did and did not do, and a group of states who were suing over the policy cited it to argue that their lawsuit should continue during a hearing later on Wednesday.

U.S. District Judge Jack McConnell, an Obama appointee, heard arguments in that case in a Rhode Island courthouse after the OMB’s memo was rescinded.

Department of Justice attorney Daniel Schwei argued that because the states’ lawsuit targeted the memo, the lawsuit was moot.

“I think the breadth of relief that plaintiffs are seeking are extraordinary,” Schwei said.

But McConnell took a more skeptical view of that argument, countering, “so is the breadth of the OMB directive.”

“I fear, Mr. Schwei, that the administration is acting with a distinction without a difference,” he said. “While the piece of paper may not exist, there is sufficient evidence that the defendants collectively are acting consistent with that directive and therefore their arguments about needing a temporary restraining order for their various legal rights exist.”

McConnell has yet to rule, but told the states to indicate how they would like a restraining order to be structured.

A separate federal judge has already placed the spending freeze on hold. That judge, Biden-appointee Loren AliKhan, issued an order Tuesday preserving the status quo for six days in response to a separate lawsuit from nonprofit groups challenging the funding freeze.

Earlier on Wednesday, Leavitt said the action to rescind the memo was intended to end court cases against it and allow the government to focus on enforcing Trump’s executive orders, though it appears that won’t be the case.

“In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage,” White House press secretary Karoline Leavitt said in a statement after the OMB’s rescintion of the memo. “The executive orders issued by the president on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments.”

While the Trump administration insisted the freeze would not affect aid to people or programs such as Social Security and Medicare, it nonetheless set off panic throughout Washington and beyond.

“This policy is a callous disregard for the rule of law and a drastic abuse of power that will harm millions of Americans across the country,” said Skye Perryman, president of Democracy Forward, which represented plaintiffs in a lawsuit challenging the order.

Democrats elected to go forward with an emergency meeting on Wednesday afternoon to discuss the order, warning that the saga is not over.

“We heard Trump rescinded his horrible OMB freeze. He should now rescind Russell Vought’s nomination for [the Office of Management and Budget],” Senate Minority Leader Chuck Schumer (D-NY) said. “We believe they’ll come back and try to do this in other ways. Vought sat in my office and said he was going to do it. The next step to make sure this doesn’t happen is rescind Vought’s nomination for OMB director.”

Schumer said on X that it’s “no secret” Trump will try the tactic again, “and when they do, it will again be Senate Democrats there to call it out, fight back, and defend American families.”

Rep. Alexandria Ocasio-Cortez (D-NY) posted on X, “FAFO,” an acronym for “f*** around and find out.”

Before it was halted, Vaeth defended the freeze by saying that federal money would be put on hold to ensure alignment with Trump’s executive orders, including those targeting diversity, equity, and inclusion programs.

Leavitt also defended the move on Tuesday, pushing back against claims that the order came on short notice.

“There was notice. It was the executive order the president signed,” she said. “This administration is taking into consideration how hard Americans work and give their tax dollars. DOGE and OMB found $37 million that was about to go to the World Health Organization. They also found $50 million about to go to fund condoms in Gaza. That is a preposterous waste of money,” Leavitt told reporters.

Rachel Schilke, Kaelan Deese, and Samantha-Jo Roth contributed to this report.