Presidential Impoundments & the Rescission Process

Republicans in Congress want to use a special budget process to codify spending cuts identified by President Trump's Department of Government Efficiency. Since taking office, Trump has implemented many of DOGE's recommendations via executive action by impounding federal funding for agencies like the United States Agency for International Development (USAID). And lawmakers supportive of Trump's cost-cutting efforts hope to persuade their colleagues to approve a rescissions package locking in those cuts if the president decides to send one to the House and Senate.

Congress created the rescission process in a bid to streamline and limit the president’s impoundment power. Whatever the merits of the argument advanced by Trump and some top administration officials that the law creating that process is unconstitutional, it nevertheless established a process that the president's allies in the House and Senate can now use to codify many of the executive actions he has already taken. Lawmakers doing so could reduce the controversy surrounding many of the president's DOGE cuts and make it harder for a future president – or a future Congress – to reverse them. But they can't use that process to make approving Trump's spending cuts easier until the president takes the first step.

Congress's Power of the Purse

Congress is the primary actor in the federal budget process because it has the power of the purse. The Constitution's Appropriations clause (Article I, section 9, clause 7) stipulates that "no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Lawmakers use the power of the purse to pay for the government programs and projects they authorize in law.

Lawmakers initiate the federal budget process in a fiscal year when they appropriate money by giving executive branch officials legal power - "budget authority" - to allocate federal dollars for specific purposes. Those officials use that power to make promises - "to incur financial obligations" - to pay for the programs they administer. The Treasury Department then fulfills those obligations by releasing federal dollars - "outlays" or "expenditures" - to honor the government's promises. The president "impounds" budget authority/appropriated dollars when he directs executive branch officials to ignore congressional directives and not incur financial obligations or orders officials in the Treasury Department not to approve the outlays/expenditures needed to honor those obligations.

The President's Impoundment Power

Trump is not the first president to impound budget authority/appropriated dollars. Presidents have ordered executive branch officials not to obligate or expend money appropriated by Congress throughout American history. Presidents often justified their actions in the past by claiming that impoundments were needed to manage federal program spending more effectively. Congress mostly went along with the impoundments because they involved small sums of money, and presidents usually consulted with lawmakers before ordering impoundments and gave them information afterward detailing why they withheld the money in the first place.

Presidents have cited the Constitution's Take Care clause (Article II, section 3, clause 3) and specific congressional grants of power like the Antideficiency Act as giving them the power to impound money appropriated by Congress. The Take Care clause directs the president to "take Care that the Laws be faithfully executed." Presidents have maintained that this directive authorizes them to impound budget authority for a specific program or project because the congressional appropriation providing that authority merely establishes a ceiling that limits how much money executive branch officials can spend to implement the program or project. Presidents have reasoned that they are, therefore, permitted to direct those officials to spend below that ceiling if they can accomplish the same objectives using less money. The Antideficiency Act similarly empowered executive branch officials – albeit explicitly - to withhold budget authority/appropriated dollars when necessary to ensure that the government did not deplete all available funding for a program or project prematurely.

President Nixon altered the collegial dynamic between the White House and Congress regarding impoundments when he began impounding more significant amounts of money appropriated by the House and Senate in an open bid to limit spending on government programs that he opposed instead of managing that spending more effectively. Unlike his predecessors, Nixon asserted an independent and seemingly unqualified impoundment power. And Nixon often exercised that power without consulting Congress beforehand. Nor did lawmakers feel that he provided them with sufficient information detailing the reasons for his impoundments afterward.

Nixon's actions prompted concerned lawmakers in the House and Senate to call for reforming the impoundment process. In response, Congress passed the Federal Impoundment and Information Act (Public Law 92-599), requiring the president to give lawmakers detailed information about the reasons for impounding budget authority/appropriated dollars and the agencies and programs affected. In 1974, Congress passed the Congressional Budget and Impoundment Control Act (Public Law 93-344), placing explicit limits on the president's impoundment power.

The Budget and Impoundment Control Act

Congress addressed Nixon's actions in the "impoundment" part of the Congressional Budget and Impoundment Control Act (Title X). Title X of the Budget Act limits the president's ability to impound budget authority/appropriated dollars and requires that lawmakers be notified of proposed impoundments. It also establishes a special process in the House and Senate to expedite the consideration of proposed impoundments.

While the Budget Act curtails the president's impoundment power, it also streamlines the impoundment process. It gives the president a qualified power to impound budget authority/appropriated dollars for a limited period. In doing so, the law divides presidential impoundments into two categories: rescissions - which withhold budget authority permanently - and deferrals - which withhold budget authority temporarily.

The Budget Act requires the president to notify Congress whenever he rescinds federal funds. If lawmakers do not take action to approve the president's rescission proposal by passing a rescission bill - or otherwise fails to act on it - within "45 calendar days of continuous session" after being notified, executive branch officials must obligate the money as initially directed (or release cash from the Treasury to pay for those obligations).

Section 1012(a) of the Budget Act limits when the president can propose to rescind budget authority/appropriated dollars. Specifically, the president may propose a rescission of money appropriated by Congress if "all or part of any budget authority will not be required to carry out the full objectives or scope of programs for which it is provided or that such budget authority should be rescinded for fiscal policy or other reasons." It also requires the president to include specific information about the proposed rescissions when he notifies Congress. That information includes:

• the total amount of budget authority rescinded;

• the "account, department, or establishment of the Government" that received the appropriation and the program or project affected;

• the reasons for the rescission;

• estimates of the rescission's "fiscal, economic, and budgetary effects;"

• all other "facts, circumstances, and considerations" related to the rescission and the decision to order it.

In contrast, the Budget Act gives the president more leeway to defer budget authority/appropriated dollars on a temporary basis. Unlike rescission orders, which expire after 45 days unless approved by Congress, the president can defer budget authority for up to one fiscal year unless Congress passes an impoundment resolution disapproving the deferral.

The Budget Act limits when the president’s deferral power is operative. Specifically, Section 1013(b) limits the president's power to defer budget authority/appropriated dollars to circumstances when the law (i.e., Congress) explicitly allows it or when deferral is needed to "provide for contingencies" or "achieve savings made possible by or through changes in requirements or greater efficiency of operations." The president does not have the power to defer appropriated dollars in all other circumstances. This is because section 1013(b) stipulates explicitly that "no officer or employee of the United States may defer any budget authority for any other purpose."

As with rescissions, the Budget Act requires the president to notify the House and Senate about deferrals and provide lawmakers with information about the specific legal power on which the decision is based, as well as on the program or project impacted and the fiscal effects.

The Takeaway

Presidents have impounded money appropriated by Congress throughout American history, usually in a bid to manage federal expenditures more effectively. Nixon altered this mostly collegial relationship between the White House and lawmakers on Capitol Hill regarding impoundments when he asserted an independent power to withhold federal funds from specific programs and projects. In response, Congress placed explicit limits on the president's impoundment power. At the same time, Congress streamlined the impoundment process by requiring the president to submit detailed information about the funds proposed to be withheld (permanently or temporarily) and creating a fast-track procedure in the House and Senate to make it easier for lawmakers to act on proposed rescissions. But the president must act first before lawmakers can use that process to codify his executive actions in this area.