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Democrat-Led States Sue Trump Admin for 'Unlawful' Federal Childcare Funding Freeze
"It is especially pathetic that, once again, his administration's actions are inflicting harm on the most vulnerable among us," said California Attorney General Rob Bonta.
Jan 09, 2026
The Democratic attorneys general of California, Colorado, Illinois, Minnesota, and New York on Thursday sued President Donald Trump's administration over its "extraordinary and cruel action to immediately freeze $10 billion in federal funds that plaintiff states use to help provide services and cash assistance that allow families to access food, safe housing, and childcare."
Amid a childcare funding fraud scandal in Minnesota, the US Department of Health and Human Services (HHS) on Tuesday announced the halt on a total of around $7.35 billion for Temporary Assistance for Needy Families, $2.4 billion for the Child Care and Development Fund, and $870 million for social services grants for those five Democrat-led states.
The states' complaint, filed in the Southern District of New York, says that the department and HHS Secretary Robert F. Kennedy Jr., along with the Administration for Children and Families and its leader, Alex Adams, "have no statutory or constitutional authority to do this. Nor do they have any justification for this action beyond a desire to punish plaintiff states for their political leadership. The action is thus clearly unlawful many times over."
Minnesota Attorney General Keith Ellison argued that "withholding all funding for these vital programs will not help fight fraud as purported, and will instead shred the finances of Minnesotans already struggling to get by. Without childcare assistance, poor families will be forced to choose between parents going to work and paying their bills or staying home to provide childcare during their working hours. And it's not just families who benefit from these programs that will suffer."
"Minnesota's entire childcare system will be put under immense strain if childcare centers lose the funding provided by these programs, which could force centers to lay off staff or close their doors entirely," Ellison warned. "This extreme outcome is not just cruel, it's also another example of the Trump administration going off the rails and deciding not to follow the processes and mechanisms Congress put in place to manage federal grants in a responsible way."
"Federal laws and regulations give a roadmap for reasonable, legal ways to audit funding programs and address areas of potential noncompliance, but this 'funding freeze' takes a chainsaw to the entire system without regard to who it hurts," the former congressman stressed. "I will not allow that to happen, so today I am filing a lawsuit to halt these cuts and protect families across Minnesota from Trump's heartless attack on low-income families."
BREAKING--We have filed our 50th lawsuit against the Trump Administration, challenging its illegal and harmful actions. It addresses the withholding of funds for the neediest among us, including access to child care. I will always fight for Colorado. www.axios.com/local/denver...
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— Phil Weiser (@philweiser.bsky.social) January 9, 2026 at 11:18 AM
White House Press Secretary Karoline Leavitt confirmed Wednesday that at least one other targeted state is being investigated. She said that "the president has directed all agencies across the board to look at federal spending programs in not just Minnesota, but also in the state of California to identify fraud and to prosecute to the fullest extent of the law all those who have committed it."
After the federal suit was filed, HHS General Counsel Mike Stuart said that the department "stands by its decision to take this action to defend American taxpayers" and "it's unfortunate that these attorney generals from these Democrat-led states are less focused on reducing fraud and more focused on partisan political stunts."
Meanwhile, California Attorney General Rob Bonta—who has now taken the Trump administration to court over 50 times—declared that "the American people are sick and tired of President Trump's lawlessness, lies, and misinformation campaigns."
"It is especially pathetic that, once again, his administration's actions are inflicting harm on the most vulnerable among us," he said. "As a society, we are rightly judged by how we treat our neighbors in need, and this is a shameful way to treat them."
Illinois Attorney General Kwame Raoul similarly ripped the funding freeze as not only "unlawful" but "particularly callous," while New York's Letitia James also highlighted that "once again, the most vulnerable families in our communities are bearing the brunt of this administration’s campaign of chaos and retribution."
"After jeopardizing food assistance and healthcare, this administration is now threatening to cut off childcare and other critical programs that parents depend on to provide for their children," James continued. "As New Yorkers struggle with the rising cost of living, I will not allow this administration to play political games with the resources families need to help make ends meet.”
Colorado Attorney General Phil Weiser emphasized that "the US Constitution does not permit the president to single out states for punishment based on their exercise of core sovereign powers," and vowed that "the administration cannot punish Colorado into submission."
In addition to being blasted by leaders from the five targeted states, the funding freeze has been condemned by a growing number of elected officials across the country. US Senate Health, Education, Labor, and Pensions Committee Ranking Member Bernie Sanders (I-Vt.) noted Friday that the move could impact nearly 340,000 children.
"At a time when our childcare system is already struggling, this will be a disaster for working parents and their kids," Sanders said. "This illegal order must be rescinded."
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Jensen Huang, World's 8th Richest Man, 'Perfectly Fine' With California Billionaire Tax
If the proposed tax is enacted, Huang would face a roughly $8 billion tax bill—a tiny fraction of his $165 billion net worth.
Jan 07, 2026
Jensen Huang, CEO of the tech behemoth Nvidia and the eighth-richest man in the world, said Tuesday that he is "perfectly fine" with a grassroots push in California to impose a one-time wealth tax on the state's billionaire residents.
In an interview with Bloomberg, Huang said that "we chose to live in Silicon Valley, and whatever taxes, I guess, they would like to apply, so be it"—a nonchalant response that diverges from the hysteria expressed by other members of his class in response to the proposed ballot initiative.
"It never crossed my mind once," Huang said of the tax proposal.
If the proposed 5% levy on billionaire wealth makes it onto the November ballot and California voters approve it, Huang would face an estimated $8 billion tax bill—a tiny slice of his $165 billion net worth. Those subject to the tax would have the option of paying the full amount owed all at once or over a period of five years.
"'Who cares' is absolutely the appropriate reaction," said Matt Bruenig, founder of the People's Policy Project, a left-wing think tank. "It means nothing to him. David Sacks types look like the biggest babies in the world."
Bruenig was referring to the White House cryptocurrency czar who left California for Texas at the end of 2025 in an apparent effort to avoid the possible billionaire tax, which would apply to anyone living in California as of January 1, 2026.
“As a response to socialism, Miami will replace NYC as the finance capital and Austin will replace SF as the tech capital,” Sacks declared in a social media post last week.
"Frontline caregivers are glad to hear that, much like the overwhelming majority of billionaires, Mr. Huang will not be uprooting his life or business to make an ideological point over a 1% per year fix to a problem that Congress created."
The proposed one-time tax on California's roughly 200 billionaires would raise an estimated $100 billion in revenue, funds that would be set aside for the state's healthcare system, food assistance, and education.
Organizers are pursuing the tax in direct response to unprecedented Medicaid cuts enacted by US President Donald Trump and the Republican-controlled Congress over the summer.
Suzanne Jimenez, chief of staff of Service Employees International Union-United Healthcare Workers West and the lead sponsor of the ballot initiative, welcomed Huang's response to the proposed tax in a statement late Tuesday.
"We agree with Jensen Huang that California has a tremendous talent pool of workers uniquely qualified to continue moving many industries forward, including within the tech sector and beyond," said Jimenez. "This initiative will ensure the $100 billion healthcare funding crisis created by [the Trump-GOP legislation] in July is fixed, so that all of those workers can access emergency rooms and vital healthcare in California."
"Frontline caregivers are glad to hear that, much like the overwhelming majority of billionaires, Mr. Huang will not be uprooting his life or business to make an ideological point over a 1% per year fix to a problem that Congress created last July—and that California will unite to solve this November," Jimenez added.
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As Billionaires Seethe, Organizers Say Proposed Wealth Tax in California Is 'Not Radical'
"Asking the handful of wealthiest Californians to contribute less than the annual appreciation on their fortunes to mitigate these crises is a small, reasonable, and administrable request," argued a group of experts.
Jan 02, 2026
Billionaire outrage against a proposed one-time wealth tax on the richest Californians reached a fever pitch in recent days as organizers began the process of gathering the hundreds of thousands of signatures needed to get the initiative on the November ballot.
Without providing specifics, billionaire Bay Area investor Chamath Palihapitiya claimed in a social media post that he knows people "with a collective net worth of $500 billion" who "scrambled and left California for good yesterday" to avoid the potential 5% wealth tax, which would apply to billionaires living in California as of January 1, 2026. (The evidence for significant billionaire tax avoidance via physical relocation is virtually nonexistent.)
Palihapitiya characterized the proposed ballot initiative, which is aimed at raising revenue to avert a healthcare crisis spurred by federal Medicaid cuts, as an "asset seizure tax."
Bill Ackman, a billionaire hedge fund manager who lives in New York, similarly described the proposed tax as "an expropriation of private property."
The Jeff Bezos-owned Washington Post, meanwhile, published a hostile editorial on Thursday denouncing the proposed tax and mocking its supporters, including Service Employees International Union-United Healthcare Workers West (SEIU-UHW).
"Many progressives think of taxation the way teenage boys think about cologne: If some is good, more must be great," the editorial reads. "California, already reeks of overtaxation, but it’s thinking about trying out its most potent scent yet: a wealth tax. Just a whiff has some of the state’s wealthiest residents fleeing."
The Wall Street Journal reported that "the firms of two high-profile California investors issued announcements on New Year’s Eve about establishing new offices out of state, without saying anything about the proposed Golden State tax."
"Tech investor Peter Thiel’s investment firm, Thiel Capital, said it signed a lease in December for office space in Miami," the newspaper added. "The office will 'complement Thiel Capital’s existing operations in Los Angeles,' the company said."
Supporters say the response from billionaires and other opponents of the proposed tax—including California Gov. Gavin Newsom, who is helping raise money to fight the initiative—badly misses the mark. According to organizers, most billionaires see larger capital gains increases in months than the amount they would pay if California voters approved the tax.
“Asking those who have benefited most from the economy to contribute more—particularly to stabilize healthcare systems under direct threat—is not radical. It is reasonable,” Suzanne Jimenez, the chief of staff of SEIU-UHW, told the Journal.
Earlier this week, as Common Dreams reported, US Sen. Bernie Sanders (I-Vt.) endorsed the proposed wealth tax, which proponents say would raise roughly $100 billion in revenue from around 200 California billionaires. Under the proposal, most of the resulting revenue would be allocated to a Billionaire Tax Health Account, while the rest would go toward an account to fund food assistance and education.
A new expert analysis of the proposal, authored by some of those involved in drafting the initiative, argues that the one-time tax is urgent because "decisions at the federal level have put—and will put—California's healthcare system, education system, and broader economy under severe stress."
"Asking the handful of wealthiest Californians to contribute less than the annual appreciation on their fortunes to mitigate these crises is a small, reasonable, and administrable request," the experts write. "And that is all that this ballot measure does."
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