Is that a rescission in your pocket?
I-C-A looming problem for congressional spending supremacy.
Dear friends,
They’re baaa-aaack.
Congress returns today from their traditional summer recess, and there’s a laundry list of things on (or potentially on) the congressional plate.
The Epstein files.
A crime bill and/or action on the administration’s DC crime policy.
A ban on stock-trading by Members.
Potential Russia sanctions.
A possible second majority-vote reconciliation bill with Republican priorities.
A pile of pending executive nominations.
Expiring health care subsidies.
And lots more! You can read some curtain-openers here and here and here.
Further Cracks in the Dysfunctional Approps Process
Of course, the single most-important item on the agenda this month is the Fiscal Year 2026 appropriations, the 12 annual spending bills that will fund the government from October 1 until September 30, 2026. Absent the passage of these bills (separately or in one big omnibus) or a continuing resolution providing temporary funding, the government will shut down. There are 14 scheduled days of session in the House before October 1. The clock is ticking.
In one sense, this is all very normal. Congress has not passed all of the spending bills by October 1st since the mid 90s. And in the past 15 years, the combination of partisan brinksmanship, austerity budgeting, and internal House GOP spending disagreements have destroyed the traditional process, as creaky as it already was. The new normal is constant shutdown showdowns, continual CRs with temporary funding, and huge omnibus bills passed in the spring. No one even pretends the process will end in September anymore. It’s bad for executive agencies trying to govern, it’s bad for congressional oversight, and it’s bad for the country.
But this year, there’s a new problem. The administration has aggressively sought to avoid spending FY25 and other money previously approved by Congress. They have (mostly legally) cancelled hundreds of contracts from the Biden admin and foot-dragged on re-obligating the money. They have held up grants and other funding to agencies, states, universities, and other lawful recipients. They have fired thousands of government employees. And the head of OMB, Russ Vought, backs a radical theory that all of this is no-big-deal because impoundment—the simple refusal of the president to spend congressionally-approved appropriations, period—is not only constitutional, but wise.
That’s nonsense, pure and simple. The very word appropriation exists because parliament rejected the theory of impoundment in 16th century England when they wrestled open-ended supply away from the monarchy. Our Founders didn’t believe in impoundment. 19th and 20th century Republicans and Democrats didn’t believe in it. No one did. And when Nixon sought to revive it, Congress smacked him down and passed the Impoundment Control Act. Congress controls spending. To argue to the contrary is to nitpick. To upend it would be to seriously undermine the existing constitutional order. I’ve discussed all this before (see points #14-#18 here).
The Trump administration’s aggressive moves on spending have included actions that are completely within the law. Under the Impoundment Control Act, Congress actually provides a mechanism for the president to make temporary impoundments, by making a formal request to Congress that it rescind previously-appropriated money. But unless Congress approves a new law rescinding the funding within 45 days, the president must release the money. This process is rarely used; presidents have only made formal proposals a handful of times since the 70s. And that’s because (a) Congress typically likes the spending choices it made less than a year ago; and (b) when Congress and/or the president want to rescind funds, they often just build those rescissions into the negotiated annual appropriations bills. Tons of rescissions—proposed by Congress or by the administrations—occur every year. It’s a normal part of budget execution.1
There’s a loophole in the Impoundment Control Act, however. The law provides expedited consideration of any formal presidential rescission request, which means it only needs 50 votes to pass in the Senate. Which, in turn, means that deals struck in the annual appropriations bills—which require 60 votes and are always bipartisan products—can be undone unilaterally on a party-line basis. The Trump administration tried and failed to do this in 2018. But earlier this year, they were successful, rescinding $9 billion of FY25 foreign aid and public broadcasting money on a party-line vote. It wasn’t much money and it was altered by Congress—cutting spending is really hard, even if you only need 50 votes—but it didn’t sit well with anyone. Appropriators in both parties view it as an impediment to forward going negotiations for FY26 and beyond. As minority leader Schumer put it, how can you cut bipartisan deals if one party can turn around and undo them immediately afterwards?
But that’s not all. The latest salvo from the administration is the concept of the pocket rescission. The idea here is that the administration simply makes the formal rescission proposal less than 45 days before the end of the fiscal year, when the FY25 appropriations expire. The money is frozen for 45 days and—poof!—it expires before the law requires it to be spent, regardless of congressional action. No congressional majority of any size is needed, because there’s no congressional vote needed. You just run out the clock until the money vanishes on its own.
The Trump administration has just proposed a $5 billion rescission of exactly this nature. And they are proudly touting it as such. This is not a lot of money. As a substantive matter, it’s not that big of a deal. But this is a serious showdown. If pocket rescissions are allowed to go forward, it will blow a serious hole in congressional spending authority, upend the equilibrium in annual appropriations negotiations, and further consolidate the ever-increasing power of the presidency.
I highly recommend this Lawfare podcast by the fabulous Molly Reynolds of Brookings, Philip Wallach of AEI, and Zach Price of UC San Francisco Law.2 The podcast preempted a lot of what I was going to say today, so please do listen.
Pocket rescissions are obviously absurd
The craziest part of the whole pocket rescission debate is that this is all complete nonsense. No one outside the administration seriously thinks they are legitimate. Of course the democrats hate them. But GAO has consistently held—for decades—they are illegal. The current Senate Republican appropriation chair also thinks they are unconstitutional. And so do a lot of GOP House appropriators. If someone proposed this at the PTA meeting—and I’m a big fan of thinking of the federal government and its politics as no different than the PTA—you’d laugh at them.
Seriously. Imagine if every year we approved some money at the first bi-monthly PTA meeting in September for three school-wide parties that would be held throughout the year that the PTA would sponsor. Halloween, Christmas, and Last Day of School. $500 each. Then, a few years ago, the PTA president and the handful of saints who help her actually run stuff at the school decided they didn’t really like the Halloween party, so they just didn’t buy the stuff or plan it or do any of the 200 things you need to actually do to make this stuff successful. So it didn’t really happen. The party was totally lame.
At the next PTA meeting, everyone flipped out that there was no real Halloween party, and made it clear that you have to spend the money on the parties. And if you really don’t want to spend the money or run the party the way we decided, you can hold off on spending the money until you bring it up at the next bi-monthly meeting so we can discuss it and maybe make some changes.
And this is totally normal and how sane people run organizations that are based on separate legislative and executive decision-making. The group votes on what to do, and the people executing it have a lot of discretion but ultimately implement something that conforms to the vision of the group. It’s banal.
Now imagine the new PTA president this year deciding she doesn’t like Last Day of School parties. She makes that known throughout the year, but at each of the meetings everyone rebuffs her and tells her we still want to have the party. Then, in June she sends out an email saying she doesn’t want to run the party, and since there’s no more meetings left to discuss it because the meetings are over for the year, she’s allowed to just put the money on hold and it’s too bad but the school year is about to end so there’s nothing that can be done.
You’d obviously reject this, and if she persisted, you’d either take control of the party planning yourself and spend the money, or (perhaps more likely) just remove her as president of the PTA, on the grounds she’s being completely absurd. You didn’t make the rule allowing her to hold off on the spending until you discussed it to give her the option of holding off on any spending that occurs after the last meeting of the year. You made the rule in order to ensure that the money got spent as desired by the PTA membership. The loophole she found is the opposite of the intent of the policy. And instead of thinking “you know, she’s clever, that’s too bad,” everyone would more likely just decide she’s insane, and proceed accordingly.
And so it goes with the Impoundment Control Act. There’s simply no reading of the actions Congress took in 1974 that can sum to “we wanted to make sure the president didn’t impound funds, so we set up a process by which we have to approve the rescissions, but we also did want to allow him to impound funds by fiat in the last 45 days they are available, so we built in that possibility.”
That’s ridiculous—and everyone knows it.
Technical legal debates favor the presidency
The typical response to this line of common-sense reasoning is some variation of legal textualism. That is, people will argue that the intent of Congress is irrelevant, and the only thing that matters is what the actual text of the law says. So the president (of the PTA or the United States) says “well, if you look at the law, it says I can propose rescissions at any time and during the 45 day period of congressional consideration they do not have to be spent and there’s no clause in there that prevents me from doing it in the last 45 days they are available and so putting in that sort of restriction would be extra-legal.”
And then they argue that it’s dangerous to try to understand congressional intent beyond the text of the law because it’s a collective and judging intent from things that weren’t voted on gets you into the game of prioritizing the intent of people who spoke up, or of committee chairs or other leaders, or even worse of the judges who are dealing with this in the courts. And of course that’s true to some extent and it does become a mess when you try to judge intent beyond the text, and yes it makes the job of judges harder in some sense.
But it’s also a completely asymmetric standard. The nature of legislation is that it cannot consider every possibility and has to be written in broad and often vague language. And executives need discretion in implementing law. And so how every legislative-executive relationship works is that the legislature sets up the basic policy goals and the executive works out the details of implementing the goals. And that’s hard! It’s why good governance depends on skillful executives, and it’s why Hamilton was so keen on “energy” in the executive. Congress (or the PTA) can write all the good law it wants, but without smart executive decision-making in execution, the end product will be garbage.
It also depends on good faith in the executive.
The very discretion that we need to give to executives in order to govern well under the law creates the conditions where bad-faith on the part of the executive can create latitude for action far beyond the intent of the legislature. And that’s because it is very difficult—and maybe impossible—to write a law that will 100% constrain an executive operating in bad-faith. You just can’t consider every possible loophole or radical interpretation that someone could come up with.
I always think about TARP in this respect. There was definitely some surprise on the Hill when Obama started using that money to bail out GM. Oops. And then there was really some surprise on the Hill when the administration decided that money paid back by the various companies could be used again for further bailouts. Neither of those things were intended, but boy, a technical reading of the law certainly didn’t bar them. And everyone just had to shrug and deal with it and hope the executive knew what they were doing.
And that’s the other problem. The product of congressional negotiations is just that—a negotiated product. And often the best way to amass the votes for something is to water down the language, so that everyone can sort of see what they want to see in the law. Precision has a way of losing votes. And so the very nature of building the coalition in Congress to approve a new piece of legislation is often the seeds of executive discretion going beyond the intent of the legislature. It’s just baked into the cake.
And look, defenders of Congress can make technical legal arguments on their side of the case as well. But getting bogged down in these legalistic technical debates further obscures the entire big-picture issue. There’s a strong argument, made by GAO and others, that even at the technical level, OMB is wrong about pocket rescissions.
But to engage on that level is to accept that the legalistic interpretation of the ICA is what these issue hinge on, instead of just saying “Congress passed a statute to limit impoundment that does indeed limit impoundment; it’s absurd to read the same statute as creating a mechanism for unlimited and unilateral impoundment in the last month of the fiscal year.”
Congress should fight back, but they won’t
None of this, in theory, is damning to Congress. It’s not like pocket rescissions are being defended as some sort of Article II constitutional right of the executive (though that claim about impoundment may come down the road). This is just the executive claiming authority under the law.
And Congress can always change the law. They could rewrite the ICA to be clear that pocket rescissions are not allowed. They could fix the immediate problem by passing a law further appropriating the money in question, with language that unambiguously demands it be spent. Congress could tighten up the language in the annual appropriations bills, and make it clear in the text that the intent of Congress is that every penny be spent.
In fact, Congress could take a game theory approach to all of this and start punishing the executive branch whenever they propose things that weaken the congressional spending power. Tit for tat. Reduce next year’s appropriation for the White House staff, or for OMB, every time there is a pocket rescission proposal. The president is not constitutionally entitled to the two thousand people who support him in the EOP, nor is he entitled to a mansion or a chef or Air Force One or anything else. Congress could make clear that those perks of the job are dependent on good faith execution of spending.
None of this is going to happen. Members of Congress are cross-pressured in their defense of institutional prerogatives by both partisan political goals and short-term substantive ones. And this isn’t lost on them, sometimes they will happily articulate it. When the choice becomes one between “should I support the short-term policies my constituents want and that my co-partisan president wants at the expense of long-term congressional power” the answer is an easy yes for the vast majority of members in both parties. And for those who say no, they often find themselves out of job. Meaning natural selection takes care of things. Multiply this by 500 members and thousands of issues over 240 years, and it’s not hard to see why power has drained from the legislature and toward the executive.
You can see this right now pocket rescissions. Even as GOP appropriations leaders kick and scream about their dubious constitutionality, many congressional republicans are falling in line with the president, or even helping to clear the decks. As Daniel Schuman points out in a helpful post today, the House version of the Legislative Branch Appropriations bill this year would limit GAO’s authority to file lawsuits against executive impoundments, despite having opened 40 investigations and having found six violations already.
It also completes the circuit on legalistic interpretation. Because the members who do scream and shout about these things tend to be the opposition party, for natural reasons. But because they don’t have the majority or the presidency, their most obvious outlet for dealing with this is the courts. And in the courts, for better or worse, the technical legal arguments are the grounds you need to fight on, most of the time. And so they do. And they lose. Rinse and repeat.
Trump turns the dials to 11 on Congress
I had lunch with a friend the other day, and his basic theory of the administration is that it just doesn’t believe it is constrained by statutory law. That the only real constraints are political—what will co-partisans and/or the public accept as legitimate3—and that the technical legal arguments are themselves being made in bad faith. The fact that there is a kernel of legalistic argument to each and every move made by the administration—and there certainly is an ultra-legalistic argument in favor of pocket rescissions—and also often a flimsy precedent for each and every move obscures the bigger picture of an all-out executive assault on the spending power.
I’m sympathetic to this argument. Not because I believe Trump invented presidential encroachment on spending—I’m long on the record that Trump is the natural consequence of a runaway contemporary partisan presidential spending power grab that includes Obama and Biden in its timeline. But because the sheer volume of activity from the Trump administration in this front dwarfs what we’ve seen in the past. Obama and Biden might get the benefit of the doubt from a neutral observer about whether Medicaid expansion or student loans were good-faith efforts rather than obvious spending power grabs. Not so with Trump; there’s just no way to read the administration’s record this year as anything but a complete disdain for congressional control over spending authority.
But the rub is that they won’t just come out and say it. As much as Vought seems to believe in constitutional executive impoundment, the actual rhetoric—and certainly the actual filings in court by DOJ attorneys—always remain in the technical, legalistic world, where each case is a separate small issue and there’s no need to ever see the big picture. And they will win some and lose some and it’s all just a fight over statutory authority, which was, mind you, granted to them by Congress.
Congress should call the administration’s bluff and have the big fight. Because Congress can’t win in the long run if the question is only about technical legal provisions of laws. They can only win if the question is big and simple: does the president have the power to unilaterally ignore spending decisions made in law by Congress?
That is a winnable fight, and one worth having.
Cheers,
Matt
Appropriators are also keen to put the rescissions in to the annual bill for a very technical procedural reason: if the rescission is in the bill, it makes the bill score lower by CBO, which means you can use the rescissions to find extra money to be spent this year while staying under the budget act caps.
Also check out Philip’s latest writing on pocket rescissions and Zach’s primer on the Impoundment Control Act.
Which, in some sense, has to be true and has always had to be true.