California is suing the Trump administration over its “baseless and cruel” decision to freeze $10 billion in federal funding for child care and family assistance allocated to California and four other Democratic-led states, Atty. Gen. Rob Bonta announced Thursday.

The lawsuit was filed jointly by the five states targeted by the freeze — California, New York, Minnesota, Illinois and Colorado — over the Trump administration’s allegations of widespread fraud within their welfare systems. California alone is facing a loss of about $5 billion in funding, including $1.4 billion for child-care programs.

The lawsuit alleges that the freeze is based on unfounded claims of fraud and infringes on Congress’ spending power as enshrined in the U.S. Constitution. The White House did not immediately respond to a request for comment.

“This is just the latest example of Trump’s willingness to throw vulnerable children, vulnerable families and seniors under the bus if he thinks it will advance his vendetta against California and Democratic-led states,” Bonta said at a Thursday evening news conference.

The $10-billion funding freeze follows the administration’s decision to freeze $185 million in child-care funds to Minnesota, where federal officials allege that as much as half of the roughly $18 billion paid to 14 state-run programs since 2018 may have been fraudulent. Amid the fallout, Gov. Tim Walz has ordered a third-party audit and announced that he will not seek a third term.

Bonta said that letters sent by the U.S. Department of Health and Human Services announcing the freeze Tuesday provided no evidence to back up claims of widespread fraud and misuse of taxpayer dollars in California. The freeze applies to the Temporary Assistance for Needy Families program, the Social Services Block Grant program and the Child Care and Development Fund.

“This is funding that California parents count on to get the safe and reliable child care they need so that they can go to work and provide for their families,” he said. “It’s funding that helps families on the brink of homelessness keep roofs over their heads.”

Bonta also raised concerns regarding Health and Human Services’ request that California turn over all documents associated with the state’s implementation of the three programs. This requires the state to share personally identifiable information about program participants, a move Bonta called “deeply concerning and also deeply questionable.”

“The administration doesn’t have the authority to override the established, lawful process our states have already gone through to submit plans and receive approval for these funds,” Bonta said. “It doesn’t have the authority to override the U.S. Constitution and trample Congress’ power of the purse.”

The lawsuit was filed in federal court in Manhattan and marked the 53rd suit California had filed against the Trump administration since the president’s inauguration last January. It asks the court to block the funding freeze and the administration’s sweeping demands for documents and data.

President Donald Trump called for defense spending to be raised to $1.5 trillion, a 50% increase over this year’s budget. 

“After long and difficult negotiations with Senators, Congressmen, Secretaries, and other Political Representatives, I have determined that, for the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars,” Trump wrote on Truth Social on Thursday evening. 

“This will allow us to build the “Dream Military” that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe.” 

The president said he came up with the number after tariff revenues created a surplus of cash. He claimed the levies were bringing in enough money to pay for both a major boost to the defense budget “easily,” pay down the national debt, which is over $38 trillion, and offer “a substantial dividend to moderate income patriots.”

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The boost likely reflects efforts to fund Trump’s ambitious military plans, from the Golden Dome homeland missile defense shield to a new ‘Trump class’ of battleships.

The Committee for a Responsible Federal Budget found that the increased budget would cost about $5 trillion from 2027 to 2035, or $5.7 trillion with interest. Tariff revenues, the group found, would cover about half the cost – $2.5 trillion or $3 trillion with interest. 

The Supreme Court is expected to rule in a major case Friday that will determine the legality of Trump’s sweeping tariff strategy.

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This year the defense budget is expected to breach $1 trillion for the first time thanks to a $150 billion reconciliation bill Congress passed to boost the expected $900 billion defense spending legislation for fiscal year 2026. Congress has yet to pass a full-year defense budget for 2026.

Some Republicans have long called for a major increase to defense spending to bring the topline total to 5% of GDP, as the $1.5 trillion budget would do, up from the current 3.5%.

Trump has ramped up pressure on Europe to increase its national security spending to 5% of GDP – 3.5% on core military requirements and 1.5% on defense-related areas like cybersecurity and critical infrastructure.

Trump’s budget announcement came hours after defense stocks took a dip when he condemned the performance rates of major defense contractors. In a separate Truth Social post he announced he would not allow defense firms to buy back their own stocks, offer large salaries to executives or issue dividends to shareholders. 

“Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military, and our Allies,” he said. 

“​Defense Companies are not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly.”

He said that executives would not be allowed to make above $5 million until they build new production plants.

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Stock buybacks, dividends and executive compensation are generally governed by securities law, state corporate law and private contracts, and cannot be broadly restricted without congressional action.

An executive order the White House released Wednesday frames the restrictions as conditions on future defense contracts, rather than a blanket prohibition. The order directs the secretary of war to ensure that new contracts include provisions barring stock buybacks and corporate distributions during periods of underperformance, non-compliance or inadequate production, as determined by the Pentagon.