The Trump administration has announced sweeping plans to cut back on clean energy initiatives and block billions of dollars earmarked for major projects in New York, escalating its standoff with Democrats over the ongoing government shutdown.
The decisions, rolled out by the Department of Energy and the Department of Transportation, were described as part of a broader push by the administration to pressure Democrats into striking a deal that would end the impasse in Congress.
President Donald Trump had already set a combative tone in the days leading to the shutdown, threatening mass layoffs, drastic cuts to federal agencies, and pinning the blame on Democrats for the failure to resolve the funding stalemate.
On Thursday, the Department of Energy revealed it was terminating 321 financial awards that supported 223 projects, claiming the move would save American taxpayers about $7.56 billion. According to the agency, the projects—previously managed under the Office of Clean Energy Demonstrations, the Office of Energy Efficiency and Renewable Energy, and other federal programs—were not aligned with the country’s energy priorities and were unlikely to deliver meaningful returns.
The department added that recipients of the affected funds have 30 days to appeal, with several already beginning the process. Specific projects targeted for cancellation were not publicly listed.
Russell Vought, head of the Office of Management and Budget, defended the cuts on social media, dismissing the programs as part of what he described as “the Left’s climate agenda.” He singled out several Democratic-led states, including California and New York, as among the hardest hit.
California Governor Gavin Newsom sharply criticized the decision, saying it would wipe out as much as $1.2 billion dedicated to a major hydrogen energy initiative and jeopardize tens of thousands of jobs. “In Trump’s America, energy policy is sold to the highest bidder. Economics and common sense do not matter,” Newsom said, pledging to continue his state’s clean energy strategy regardless of Washington’s stance.
In New York, where Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries hail from, the Department of Transportation announced it was halting nearly $18 billion in federal funding for the Hudson Tunnel project and the Second Avenue subway expansion.
The department justified the freeze by citing diversity, equity, and inclusion requirements tied to the projects. It argued that contracting practices based on race and gender were unconstitutional, a violation of civil rights law, and an improper use of taxpayer money. The agency said funding would remain suspended pending an administrative review, but noted the process would be delayed due to furloughs of the civil rights staff overseeing it.
New York Governor Kathy Hochul condemned the move, describing it as “political payback and an attack on New York.” She accused the administration of deliberately weaponizing the shutdown. “Donald Trump has made it clear he is determined to use this reckless shutdown to punish the American people,” she said.
