The Biden administration handed $20 billion in EPA grants alone to left-wing activist groups in its final weeks.
A White House budget official watched courts block every attempt to stop it – and kept working.
And he just proposed the rule that shuts the whole machine down.
The Billions Biden Funneled to DEI Groups – and How the Machine Worked
The Biden administration ran a political money loop for four years.
Federal agencies handed billions in grants to left-wing nonprofits.
Those nonprofits funneled money back into Democrat campaigns, activist operations, and ideological causes.
Then those same causes helped elect more Democrats who kept the grants flowing.
EPA Administrator Lee Zeldin later said, "The days of irresponsibly shoveling boatloads of cash to far-left activist groups in the name of environmental justice and climate equity are over."
A Senate Commerce Committee investigation under Chairman Ted Cruz found the National Science Foundation alone funneled $2.05 billion into research projects promoting DEI or what the report called "neo-Marxist class warfare propaganda."
By 2024, more than a quarter of all new NSF grants were funding left-wing ideological causes disguised as academic research – up from less than one percent when Biden took office.
The Heritage Foundation documented the same pattern across every major federal agency – billion-dollar slush funds rubber-stamped with almost no oversight, coercing state and local governments to follow the same ideological path.
Biden's team called it equity.
It was a money machine.
What the OMB Federal Grants Rule Actually Bans
In May, the White House Office of Management and Budget published a proposed rule that would permanently codify what executive orders started – and dismantle the operation at the regulatory level.
It hits four targets.
First, it bans federal grants from funding, promoting, or subsidizing any DEI or DEIA policies that violate federal anti-discrimination law – including any program where race serves as a selection criterion for employment or participation.
Second, it bans funding for what the rule calls "gender ideology" – any program that denies the biological reality of sex – and explicitly prohibits taxpayer money from funding so-called gender transitions for anyone under 19.
Third, it eliminates disparate-impact liability from the grant framework entirely – and that one hits harder than anything else in the rule.
Under disparate-impact theory, any neutral policy that produced statistically unequal outcomes between racial groups was presumptively illegal – no discriminatory intent required, no proof of bias needed.
Bureaucrats used it to demand race-conscious outcomes across every program they controlled.
The rule quotes the standard directly: "Disparate-impact liability effectively mandates consideration of federally protected characteristics, such as race or sex, and incentivizes racial balancing, contrary to principles of equal treatment and merit-based opportunity."
Fourth, the rule blocks federal money from flowing to collaborations with China or Chinese-owned entities – codifying into regulation restrictions that already exist in federal statute but were routinely ignored.
Why the Pre-Issuance Review Requirement Changes Everything
The pre-issuance review requirement is what's keeping the Left up at night.
Under OMB Director Russ Vought's rule, senior political appointees – not career bureaucrats – must review and approve discretionary grants before they are issued.
That one change would have stopped the Biden machine cold.
Career bureaucrats embedded by previous administrations were the ones rubber-stamping grants to Black Lives Matter-connected groups, climate activist nonprofits, and gender ideology programs.
Political appointees accountable to the president would not have approved a single one.
OMB’s rule states explicitly that the pre-issuance review must ensure "discretionary awards advance the president's policy priorities" – meaning Trump's priorities, not those of the permanent administrative state.
The rule also gives the administration cleaner authority to terminate grants that violate the new standards.
It converts the previously advisory Uniform Guidance into binding OMB regulation.
That conversion matters.
When it was guidance, agencies could ignore it.
When it becomes regulation, they cannot.
The Comment Period Closes July 13 – Then It Becomes Law
The comment period runs through July 13, 2026, with the rule set to take effect October 1 for all new grants.
Critics are already calling it "political interference in science."
Scientists who built careers on taxpayer-funded ideological projects are about to lose their funding – and Vought is restoring the accountability Biden spent four years dismantling.
Trump already proved this works.
Since Trump shut down USAID's international funding pipeline, conservative candidates have won presidential elections in Ecuador, Bolivia, Honduras, Chile, Costa Rica, and Peru.
The Left's political machine runs on other people's money.
Vought just found the switch.
Sources:
- Mike Gonzalez, "The Rule Change That Could Gut the Left's Federal Funding Machine," Washington Examiner, June 2026.
- "Cruz-Led Investigation Uncovers $2 Billion in Woke DEI Grants at NSF, Releases Full Database," Senate Commerce Committee, February 2025.
- "ICYMI: Administrator Lee Zeldin Announces EPA Found Billions of Dollars Parked at an Outside Financial Institution by Biden Administration," EPA.gov, February 2025.
- "OMB Proposes Major Overhaul of Federal Grant Rules," Jenner & Block LLP, June 2026.
- "Funding Leftism, Making Power Grabs: The Biden Administration's Bureaucratic Radicalism," Heritage Foundation.
- "OMB Unveils Proposed Rule to Restructure Federal Financial Assistance Oversight," Brownstein, June 2026.
