The USAID Shutdown: Where Next?

Some members of the administration are floating foreign assistance reorganization proposals. While there is surely a lot that could be done to make US foreign assistance more effective, I hope Congress focuses on the far more urgent task of ensuring the foreign assistance funding it has already appropriated can be legally and responsibly spent. At the moment, the system to accomplish that is collapsing, still functioning at all thanks only to court-ordered remedies.

On January 20th, the White House issued an executive order for a 90-day pause and assessment of US foreign aid awards. Secretary of State Marco Rubio stopped all US foreign assistance outlays on January 24^th and then four days later issued a waiver to the pause for life-saving assistance. Assurances were given to the public and to Congress that assistance waivers would cover lifesaving programs including PEPFAR and allow them to resume. Members including Reps Mast (chairman of House Foreign Affairs) and McCaul (chairman emeritus) repeated these assurances.

It is a sign of the systemic dysfunction created in the last two months that the waivers simply never worked. This can be seen from government spending data, shown in the chart below: The black line is cumulative, actual USAID spending in 2024. The blue line is cumulative, actual spending in 2025 to date. The yellow line shows what would happen if all spending stopped after the freeze except for an estimate of USAID daily expenditures on its own operations (including staff salaries) based on the 2024 budget numbers—i.e., there were no payments made to any contract and grant awardees. As you can see, that “hypothetical” scenario matches the actual spending line extremely closely.

On March 6^th, USAID announced it had finished reviewing awards under the assessment. Actual cumulative USAID spending on that date was $1.45 billion. The “yellow line” scenario where all spending except USAID operations had ceased since January 27^th predicts expenditure of $1.47 billion—almost a precise match.

This suggests that the waiver process had zero impact on releasing USAID funds to awardees between the announcement of the spending freeze and the announcement that the contract review had been completed.

Figure. USAID Spending for 2024 and 2025 YTD, Cumulative in USD billions

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Source for spending data; source for admin costs.

There was contradictory and shifting guidance regarding waiver approval and an ever-changing definition of “lifesaving” that meant disbursements were rarely authorized. But when they were, payout portals were disabled, staff necessary to implement activities were locked out of buildings and systems and there was a mass termination of contracts that supported program delivery.

This is the ongoing challenge: we know people have died as a result of the chaotic shutdown of foreign assistance. To the extent that more people haven't died so far, it isn’t because of waivers, but because contractors and grantees found ways to continue providing services by covering costs that USAID and State should have paid. And we know a lot more will die if USAID isn’t urgently resuscitated.

In turn, the question is how to ensure USAID can deliver an aid program that still involves awards with obligations worth nearly $70 billion, and which is under court order to spend or lawfully rescind USAID-appropriated funds before September 30, 2025, and which is now operating under a continuing resolution with sectoral budget lines the same as last year’s which has been signed by the president.

It will be simply impossible when the agency’s financial system is still reported to be largely non-operational, numerous suppliers providing lifesaving services under USAID awards have already shut down, bankrupted by the funding pause, and when Stand Up for Aid estimates that only 800 of 4500 USAID direct hires were at work in mid-March (to say nothing of the thousands of contractors who once supported them). Court documents suggest 90 percent of USAID’s workforce are on leave or terminated.

There is some sign of hope: USAID did manage to outlay about $1.5 billion between March 6^th and 18^th, likely related to court-ordered back payments (although in those court filings, the administration also suggests that it is only capable of making hundreds of payments today, down from being able to make thousands of foreign assistance payments before the freeze). Another court order on March 18^th reinstated access to email, payments, security, and other systems for all current USAID employees. It also ordered a temporary stop to additional terminations of staff or awards. Perhaps this will help further stabilize the situation, alongside a revised set of rules reducing the level of approvals to make payments and defining the process for new obligations going forward.

But it is worth noting what is preventing the further dismantling of capacity, and further collapse in the ability of USAID to follow legal mandates on spending levels, reporting, and oversight: it is the judicial system, not administration leadership. The payments that have been made are because of a judge, not because of a waiver. Looking forward, the number of active USAID solicitations for contracts and grants rounds to zero. And the administration wants to reduce staffing to 300 or fewer employees.

It is ridiculous to talk about a reform agenda when on the current trajectory there will be nothing left to reform. I hope members of Congress who were misled by the waiver process refuse to entertain discussion of a new aid architecture until the foundations of that architecture are clearly secured: a staffed and operational aid delivery system that can meet legal commitments including the responsible expenditure of appropriated funds.