The United States Agency for International Development, known as USAID, is the latest political flashpoint in Washington.

The Trump administration and Republicans are targeting the agency, which is funded by American tax dollars, while Democrats are accusing them of going too far.

"For decades, the United States Agency for International Development (USAID) has been unaccountable to taxpayers as it funnels massive sums of money to the ridiculous — and, in many cases, malicious — pet projects of entrenched bureaucrats, with next-to-no oversight," said a statement posted on the White House website on Monday.

Among the USAID spending that the White House singled out was "$2 million for sex changes and 'LGBT activism' in Guatemala" and "$6 million to fund tourism in Egypt".

Billionaire Elon Musk, owner of X.com and CEO of Tesla, whom US President Donald Trump has picked to head the new Department of Government Efficiency (DOGE), has called USAID a "criminal organization".

USAID was created by executive order by former president John F. Kennedy in 1961 during the Cold War era, after Congress passed the Foreign Assistance Act. It was seen as an avenue for countering the influence of the former Soviet Union.

After declaring a 90-day freeze on almost all foreign aid, Trump on Monday named US Secretary of State Marco Rubio the acting administrator of USAID, which has a $50 billion annual budget. The USAID website also has been shut down.

"There are a lot of functions of USAID that are going to continue, that are going to be part of American foreign policy, but it has to be aligned with American foreign policy," Rubio said on Monday during a visit to El Salvador. "Every dollar we spend and every program we fund will be aligned with the national interest of the United States, and USAID has a history of ignoring this and deciding that they're a global charity and ignoring that."

Trump has said the agency was "run by radical lunatics".

All USAID overseas missions have been ordered to shut down and all staff will be recalled by Friday, CBS News reported on Tuesday evening, citing multiple sources.

Peter Marocco, the newly appointed deputy administrator for the agency, met with State Department officials and asked that all USAID employees be recalled from their respective foreign countries, CBS reported. Marocco said that the staff would be evacuated by the US military if necessary, the sources said.

USAID has missions in more than 100 countries and distributes more than half of all US foreign assistance, according to usaspending.gov, the official source of spending data for the US government.

"We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity," is how USAID has described its mission.

Dozens of senior USAID officials have been placed on leave, thousands of contractors laid off, and employees were told Monday not to enter the agency's Washington DC headquarters.

More than 100 USAID employees protested the shutdown outside the headquarters at the Ronald Reagan Building on Monday, joined by some Democratic lawmakers.

"We don't have a fourth branch of government called Elon Musk," Representative Jamie Raskin, a Maryland Democrat told the crowd. "You (Musk) don't control the money of the American people. The United States Congress does."

"Unilaterally closing USAID is illegal," Senator Chuck Schumer, a New York Democrat and the Senate minority leader, said on the Senate floor on Monday. "Donald Trump does not have the authority to erase an independent agency created by Congress. Nor can the Department of State absorb USAID, especially because now there is basically nothing left to absorb."

Musk responded to Schumer on X on Tuesday: "He's mad that @DOGE is dismantling the radical-left shadow government in full view of the public. This is our ONE CHANCE to return POWER to the PEOPLE from an unelected BUREAUcracy back to DEMOcracy!!"

Schumer then wrote on X that USAID isn't a "tech startup".

About 6 in 10 Americans said the government was spending "too much" overall on foreign aid, according to a March 2023 Associated Press-NORC poll.

Some 7 in 10 said the government was allocating too much assistance to other countries. About 9 in 10 Republicans and 55 percent of Democrats agreed that the country was overspending on foreign aid.

At the same time, about 6 in 10 said the government was spending "too little" on domestic issues such as education, healthcare, infrastructure, Social Security and Medicare.

Next up for DOGE is another politically contentious issue, the Department of Education (DOE), which the Trump administration is looking to dismantle.

"Reagan campaigned on ending the federal Dept of Education, which was created by Carter in 1979, but it was bigger when Reagan left office than when he started!" Musk posted on X on Tuesday. "Not this time. President @realDonaldTrump will succeed."

Abolishing the DOE would require congressional approval.

"I want the states to run schools, and I want Linda to put herself out of a job," Trump told reporters at the White House on Tuesday, referring to his pick for education secretary, Linda McMahon.

Asked whether he plans to resort to an executive order or collaborate with Congress, Trump said: "I think I'd work with Congress."

He said that he also would have to work with teachers' unions "because the teachers union is the only one that's opposed to it".

The National Education Association, the largest labor union in the country, described Trump's plans as "a direct attack on our students, educators and public schools".

Agencies contributed to this story.