White House yanks $18B for NYC projects, cites DEI — and ramps up shutdown pressure

Hours into the federal shutdown, the White House froze roughly $18 billion in federal money for two of New York City’s biggest infrastructure jobs, taking aim at the home base of Democrats Chuck Schumer and Hakeem Jeffries. Budget director Russell Vought announced the move on X, saying the administration was putting funds “on hold to ensure funding is not flowing based on unconstitutional DEI principles,” and then named names: the Gateway Hudson Tunnel and the Second Avenue Subway.

The timing was no accident. With key Transportation Department staff furloughed by the shutdown, the administration said it can’t process reimbursements while it conducts an “administrative review” of New York’s contracting practices. Officials say they’re scrutinizing whether awards under the Biden years violated civil-rights and constitutional standards by favoring “disadvantaged” firms. In practical terms, that means money that had been teed up — including a $300 million Second Avenue disbursement — isn’t moving.

Politically, the message was loud. Trump had telegraphed a shutdown-as-leverage strategy, warning he could “get rid of a lot of things” Democrats like. Vought’s freeze hit the marquee projects Democrats championed as proof Washington could still build big. The $16 billion Gateway rail tunnel under the Hudson, revived with an $11 billion infusion in 2024 after delays in Trump’s first term, is the Northeast Corridor’s linchpin. The Second Avenue Subway extension into East Harlem, backed by $3.4 billion in federal money in 2023, is one of the country’s largest urban transit builds.

New York officials blasted the move as culture-war retaliation that jeopardizes tens of thousands of jobs and snarls projects already under construction. Gov. Kathy Hochul said the freeze shows “things keep getting worse,” while Democrats from New York and New Jersey labeled it political revenge. The administration countered that the pause is about the law, not geography, and pointed to a new DOT rule rolling back race- and sex-based presumptions in federal contracting.

Legal fights are likely. The MTA is already in court with the administration over an attempt to torpedo congestion pricing revenues; Gateway’s backers are weighing their options. Even before the freeze, shutdown chaos was bleeding into the transportation world, with civil-rights staff furloughed and contract reviews stalled.

Beyond the posturing, the stakes are concrete. Gateway is essential to replacing a century-old Hudson crossing that carries 200,000 daily Amtrak and NJ Transit riders; delays balloon costs and risk service meltdowns. The Second Avenue build is supposed to deliver long-promised relief to transit-dependent neighborhoods. With billions now in limbo and a shutdown with no clear off-ramp, the region’s biggest bets on mobility are suddenly a hostage to Washington’s budget and ideological brawls.

With input from NBC News, the Hill, Politico, the New York Times.