The Trump administration has halted $2.1 billion in federal funding for major infrastructure projects in Chicago, citing opposition to “race-based contracting.” Budget director Russ Vought announced the decision on Friday, marking another blow to a Democratic-led city as the U.S. government shutdown drags into its third day. The move follows a similar freeze of $18 billion for New York’s transit system earlier this week.
Funding Freeze Hits Chicago
Russ Vought, director of the Office of Management and Budget, said on Friday that billions in funding for Chicago’s mass transit upgrades have been put on hold. The suspended projects include expansions and modernization of the city’s iconic Red Line subway route. “Funding has been put on hold to ensure funding is not flowing via race-based contracting,” Vought said. The decision comes amid rising tensions between the Trump administration and Democratic leaders during the ongoing federal shutdown.
New York Projects Also Targeted
Earlier this week, Vought confirmed that $18 billion in funding for major New York transit projects was also frozen. The blocked initiatives include the Hudson River tunnel between New York and New Jersey and the extension of the Second Avenue subway line. The administration cited the same justification for the move, claiming to review whether contractors were engaged in “improper diversity initiatives.” These actions have been widely viewed as part of Trump’s escalating pressure campaign on Democratic-led states.
Chicago’s Red Line Extension at Risk
The Biden administration had approved nearly $2 billion in funding to extend Chicago’s Red Line by 5.5 miles, linking the city’s far South Side communities to the main “L” rail system. The project was hailed as a major step toward improving transportation access and economic equity. Now, with the funds frozen, local officials fear that the long-awaited expansion could face significant delays. The Red Line project had been one of Chicago’s largest infrastructure undertakings in decades.
New Rule on Diversity Reviews
According to Vought, the freeze is tied to a new U.S. Transportation Department rule that took effect Wednesday. The rule requires the review of small-business contractors to ensure they are not engaging in diversity programs deemed “improper” by the administration. Critics argue the move represents a broader rollback of inclusion efforts in federal contracting. The timing, amid a federal shutdown and partisan clashes, has fueled speculation that the rule is being weaponized for political leverage.
Legal Challenges Expected
Analysts and lawmakers predict swift legal challenges to the funding freezes. Federal funding for infrastructure is typically protected from partisan interference, and several Democratic officials have called the administration’s justification unconstitutional. Any prolonged delays could further strain transportation systems and stall job creation in affected states. Experts warn that the political standoff could endanger billions in economic activity tied to ongoing public works.
Hudson River Tunnel in Jeopardy
In New York, the $17.2 billion Hudson River tunnel project, which includes more than $11 billion in federal grants, faces an uncertain future. The project, designed to repair an aging tunnel and construct a new one for Amtrak and commuter trains, is vital to a region that generates 10% of the U.S. economy. The existing tunnel was severely damaged by Hurricane Sandy in 2012, and transportation officials warn that its failure could cripple daily commuting across the metropolitan area.
Partial Reversal for New York Security Funds
In a separate development on Friday, New York Governor Kathy Hochul announced that the Trump administration reversed its earlier decision to cut $187 million in federal security funds for the state. The reversal, however, does not affect the halted infrastructure money, leaving billions in transit funding still frozen. The administration’s actions underscore its selective approach to federal spending amid the ongoing budget standoff.