The Trump administration announced Wednesday it would withhold $18 billion in federal funding from two major New York City transportation projects. Democrats say it’s meant as punishment.
“It’s horrible. He’s selectively thinking he’s using it to target New York or Democrats, but this is something that’s important not just to the city and state of New York but to surrounding states, to our economy,” Rep. Grace Meng, a Democrat who represents part of Queens, told NOTUS. “I imagine he will hear from even his friends and allies in New York.”
The Trump administration paused funding for the Hudson Tunnel and the Second Avenue Subway projects over accusations that contractors could have used “unconstitutional practices” on diversity, equity and inclusion, the Department of Transportation said. The agency did not offer any specifics.
Office of Management and Budget’s director, Russell Vought, said the administration would conduct a review of whether the state and city are using “DEI principles” in the contracting process. But that review can’t happen until Congress funds the government. DOT’s civil rights staff is currently furloughed, the OMB statement said.
DOT issued an interim final rule this week implementing a series of January executive orders prohibiting federal contractors from hiring based on “DEI.”
The White House, which has repeatedly threatened retaliating against blue states like New York, is billing the move as one made necessary by the shutdown.
“I’m sure that Russ is heartbroken by the fact that he’s unable to give certain things to certain constituencies,” Vice President JD Vance told reporters at Wednesday’s White House press briefing. “We have to save money in some places so essential services don’t get turned off in other places.”
New York City leaders say the two projects are essential for the city.
The Hudson Tunnel project, which would construct infrastructure for passenger trains to pass under the Hudson River between New York and New Jersey, was set to receive $12 billion in federal grant funding. The Second Avenue Subway — a project that has been in the works for more than a century — was set to receive about $3.4 billion in federal grant funding for its ongoing second phase, which would extend train service to East Harlem.
Neither are managed by the city, William Fowler, deputy press secretary for New York City Mayor Eric Adams, said.
“The Hudson Tunnel and Second Avenue Subway extension provide good-paying union jobs to New Yorkers who are building infrastructure to transport working-class New Yorkers to their jobs — that is ultimately who will pay for this unnecessary action by the federal administration,” Fowler said in a statement to NOTUS. “We are reviewing our options in response.”
New York City Council Majority Whip Selvena N. Brooks-Powers, who chairs the council’s Committee on Transportation and Infrastructure, described the administration’s decision as “dangerous, reckless, and a direct attack on the future of our region,” in a statement to NOTUS.
A spokesperson for the New York City Department of Transportation told NOTUS that the agency was not aware of any other city-specific grants from the federal Department of Transportation that have been impacted.
Democrats in Congress said the freeze was political retaliation.
Senate Minority Leader Chuck Schumer said the administration’s decisions on the projects was “because Democrats refused to rubber-stamp a plan that does nothing to stop Americans’ health insurance premiums from doubling.”
New York Sen. Kirsten Gillibrand said in a post that Transportation Secretary Sean Duffy “promised” her earlier this year that he would not pull funding for the two projects, and that the “Trump administration is using New Yorkers … as political pawns.”
And Democratic Rep. Dan Goldman said the administration was using the shutdown as an excuse to punish blue states.
“Trump and his congressional Republicans are shutting the government down to … slash funding to states that did not vote for Trump,” Goldman said in a post on social media. “This is an escalation of what they have been doing for nine months.”
House Minority Leader Hakeem Jeffries did not directly answer a reporter’s question Wednesday about whether he thought he was being personally targeted by the funding decision. But he said the funding freeze was “consistent with the Trump administration’s track record of failing on the economy.”
Vought also announced on Wednesday that the administration was cancelling $8 billion in climate-related grant funding across 16 states, including New York. All of the states went for Kamala Harris in the 2024 election.
The administration cut more than $100 million in counterterrorism funding to the city this week, and Trump also threatened to strip all federal funds to the city if state assembly member Zohran Mamdani, a democratic socialist and the Democratic nominee for mayor, wins November’s mayoral election.
It’s not clear whether the administration would have frozen these funds had the government not shut down. The White House has targeted funding around what it claims are “illegal” DEI practices nationwide.
Republican Sen. Chuck Grassley implied that Democrats could undo the White House’s actions if they voted for Republicans’ funding proposal. If Schumer “gets the votes to get the government up and running, then Vought wouldn’t have any excuse to do what he’s doing,” he said.
For now, though, that money is in limbo — a reality New York Democrats are decrying.
“Millions of New Yorkers rely on this infrastructure to go about their daily lives,” Rep. Nydia Velázquez, whose district includes parts of Brooklyn and Queens, said in a statement. The Hudson Tunnel and Second Avenue Subway are “not pet projects,” she said.