The Trump administration’s budget office told FOX Business Wednesday that it is canceling $1.5 billion in blue-state grants, citing concerns about how funds are being managed in California, Colorado, Illinois and Minnesota.

The Office of Management and Budget (OMB) said it will target projects at the Department of Transportation (DOT) and the Centers for Disease Control and Prevention (CDC), cutting $943 million and $602 million, respectively.

An OMB spokesperson told the New York Post that the states were being targeted due to “waste and mismanagement” of taxpayer funds.

The announcement follows OMB launching a sweeping review of federal funding for several Democratic-led states in January, which required states to submit detailed receipts proving no funds were being mishandled, CBS News reported.

TRUMP’S ENERGY DEPARTMENT AXES BIDEN-ERA PROJECTS, SAVING TAXPAYERS $7.56B

The Office of Management and Budget is planning to cancel over $1 billion in grants from the Department of Transportation (DOT) and the Centers for Disease Control and Prevention (CDC). (Stephen Goin / Fox News)

The initiative reflects a shift in fiscal policy toward “America First” priorities by withholding funds from states that maintain sanctuary policies or projects the administration deems wasteful. 

Concerns cited include tax support for illegal immigrants, green initiatives and alleged fraud in certain states, such as the $250 million COVID-era scam in Minnesota uncovered in the “Feeding Our Future” case.

Several DOT and CDC programs in blue states could be affected by the funding cuts, including equity-focused infrastructure projects and public health initiatives the OMB previously criticized as “social engineering” rather than legitimate public health efforts. 

“The use of Federal resources to advance Marxist equity, transgenderism, and Green New Deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” the OMB previously said in 2025. 

TREASURY SECRETARY ANNOUNCES CASH REWARDS FOR MINNESOTA FRAUD WHISTLEBLOWERS

The Trump administration’s budget office is canceling $1.5 billion in funding for DOT and CDC projects in four blue states over funding misuse concerns. (Al Drago/Bloomberg via Getty Images / Getty Images)

In January, Trump halted more than $10 billion in federal childcare and social services funding to four states, as well as New York, over concerns that some benefits had been fraudulently funneled to noncitizens, the Post reported. 

In California, San Francisco was slated to receive $15 million to expand its electric vehicle charging network, with a focus on “disadvantaged communities that are marginalized by underinvestment and overburdened by pollution,” city officials said in 2025. 

Similarly, the California Reducing Disparities Project, an equity-focused public health program serving marginalized communities, including racial minorities and LGBTQ+ populations, was awarded $60 million over six years.

Chicago has drawn scrutiny for its initiatives focused on diversity, equity and inclusion. 

The Biden-era Red Line Extension and the Red and Purple Modernization Programs, which together total approximately $2.1 billion, were paused in 2025 pending a review of “race-based contracting” practices.

DEMS’ DHS SHUTDOWN THREAT WOULD HIT FEMA, TSA WHILE IMMIGRATION FUNDING REMAINS INTACT

CDC research may be subject to potential cuts. (Nathan Posner/Anadolu Agency via Getty Images / Getty Images)

Additionally, funding for CDC research on sexually transmitted diseases affecting “adolescents and young adults, gay, bisexual, and other men who have sex with men” may be subject to potential cuts. The project, which listed Chicago as a recipient, was in line to receive $7 million, The Post reported.

In October 2025, the Trump administration labeled federal funding for various climate and renewable energy initiatives as a “Green New Scam” and subsequently terminated or paused $7 billion in grants, with Colorado among the primarily affected states, according to local media CPR News. 

CLICK HERE TO DOWNLOAD THE FOX NEWS APP

The Trump administration may expand grant cancellations in the future amid concerns about systemic failures in sanctuary city leadership, which surfaced prominently following Minnesota’s fraud schemes.

The governors of California, Colorado, Illinois and Minnesota did not immediately respond to FOX Business’ request for comment.

Fox News Digital’s Greg Norman contributed to this report. 

The Nifty IT index fell 5.9% on Wednesday, in its worst performance since the peak of the Covid selloff in March 2020, leading to a market cap erosion of ₹1.9 lakh crore in the Indian IT pack.

ET Bureau

“The sell-off has been triggered by market concerns that Anthropic’s new automation tools could replace currently outsourced IT services, leading to margin pressure for Indian IT companies,” said Vinod Nair, head of Research, Geojit Investments.

The San Francisco-based AI company’s new tool — Claude Cowork, an open-source plugin, is designed to automate tasks across legal, sales, marketing and data analysis.

Live Events

Nair said automation tools from companies like Anthropic are viewed as a challenge to traditional IT service models.
After the launch announcement, US-based stocks Accenture, Microsoft, Cognizant and Salesforce fell 310% while American Depository Receipts (ADRs) of Infosys and Wipro fell 5.6% and 4.8%, respectively, in the US on Tuesday.
At home, Infosys fell the most, down 7.4%, followed by TCS, which declined 7%. The rest of all stocks on the Nifty IT index were down 3.8-6%.
The benchmark Nifty ended 0.2% higher at 25,776.

Sagar Shetty, research analyst at StoxBox said Wednesday’s sell-off was largely a knee-jerk reaction.

“At this stage, unless we see a clear and material impact on revenues, we don’t see any immediate reason to worry about large-scale disruption to the industry,” he said.

Nifty IT index advanced 1.4% in Tuesday’s trading after the finalisation of the India-US trade deal. Though Indian IT companies were not directly impacted by the tariffs, caution over business demand in the US had weighed on sentiment.

SHORT-TERM WORRIES, LONG-TERM STABILITY
Nair said Indian IT stocks are experiencing sentiment-driven volatility amid concerns about AI disruption, though underlying fundamentals remain stable.

“At this stage, long-term investors may selectively accumulate high-quality IT names with strong client stickiness and solid balance sheets. It is important, however, to monitor deal win trends over the next few quarters to assess any impact from AI adoption,” he said.
Shetty also said while near-term volatility may persist, deal momentum remains healthy, and the longer-term outlook for software
services remains constructive.

“We remain positive on the adaptation capabilities of Indian IT players, as the revenue model shifts from headcount-led, timeand-material billing to an AI-driven, outcome-based model,” he said.

Shetty remains bullish on Infosys, HCL Tech, Coforge and Persistent, and sees dips as good buying opportunities.