Trump Administration Retracts $80M in Federal Funds From New York City

The unprecedented move followed false claims by Elon Musk about the use of FEMA funds for migrant housing.

President Donald Trump's administration clawed back $80 million in congressionally approved FEMA funds from New York City, causing a $79.5 million overdraft in a city bank account.
The funds were originally allocated under a federal grant program to support migrant services, not disaster relief, as falsely claimed by Elon Musk on social media.
Elon Musk alleged that $59 million of the funds were spent on 'luxury hotels for illegal migrants,' a claim refuted by city officials who clarified the funds were used for temporary shelter and migrant processing within federal cost limits.
The Trump administration fired FEMA officials involved in disbursing the funds and used the ACH system to reverse the payment, an action city officials described as 'unprecedented' and akin to 'highway robbery.'
New York City Comptroller Brad Lander confirmed the city is pursuing legal action to recover the funds and criticized the administration's actions as a violation of constitutional governance.