The stage is set for a constitutional battle between President Donald Trump and a federal watchdog over the extent of presidential authority on spending, as Trump seeks to make sweeping federal spending and personnel cuts.
Trump and administration officials want to reduce existing restrictions on the president’s impoundment power, which allows a president to decline to spend money appropriated by Congress.
According to Trump, the Impoundment Control Act of 1974—which requires the president to seek permission to rescind, or officially end, funding—violates the Constitution and the separation of powers.
Specifically, Trump argues that the chief executive has broad authority to interpret and make decisions about congressionally mandated spending—including the decision not to disburse funding.
His critics, meanwhile, say that the White House is transgressing Congress’s power of the purse.
Since taking office, Trump and the Department of Government Efficiency have sought to identify and implement budget cuts, through actions such as shuttering or reorganizing federal agencies, reducing staff, and blocking funds.
In response, the Government Accountability Office (GAO)—the watchdog that oversees the Impoundment Control Act—has opened dozens of investigations into the executive branch.
A series of lawsuits related to the issue is also pending in federal courts, meaning that the issue could make its way to the Supreme Court.
Impoundment Use
In legal terms, impoundment refers to a situation in which the president declines to spend money appropriated by Congress.It has been used often by presidents throughout history, beginning with President Thomas Jefferson.
In that instance, Congress called for the construction of 15 new gunboats at a cost of $50,000. Jefferson decided against it. In October 1803, in his third annual address, he informed Congress that the boats remained unconstructed and the money unspent.
The legislation had “authorized and empowered” Jefferson to build “a number not exceeding fifteen gunboats.”
Supporters of presidential impoundment point to the unilateral decision as the basis for the practice in U.S. law.
However, in Kendall v. U.S. ex Rel. Stokes, the Supreme Court ruled that there were limits to the doctrine. The president could not unilaterally refuse to delegate funding when Congress’s intention was clear, the court found.
The issue has been barely litigated since then—meaning that many of the questions involved still have not been defined by the courts. Those questions primarily have to do with the separation of powers.
The Impoundment Control Act
Impoundment gained more attention during President Richard Nixon’s tenure in office.The Clean Water Act of 1972 authorized federal funding to municipalities, including New York City, to combat water pollution.
Nixon initially vetoed the legislation. Congress overrode his veto by a two-thirds vote.
After the law was enacted, Nixon sought to block funding to New York City, prompting the city to sue.
In Train v. City of New York, the Supreme Court ruled 8–0 that Nixon had superseded his authority in refusing to disburse the funding.
Congress said Nixon’s actions had crossed from the executive function into the policymaking function—a prerogative of Congress.
In response, it passed the Impoundment Control Act. It was the first legislative effort to define the limits between Congress and the president on the impoundment issue.
“[Impoundment] wasn’t an issue until Nixon made it an issue,” Neama Rahmani, former federal prosecutor, told The Epoch Times.
Watkins said the perception of policymaking through impoundment was the main driver behind the 1974 law, in which Congress imposed new limits on the president’s power.
The law requires the president to send a rescission request to Congress if he wishes to reduce or alter spending previously required by Congress. Congress then has 45 days of continuous session to respond to the request.
GAO Investigations and Lawsuits
The GAO said it is investigating various moves made by Trump that may violate the legislation.If any of those investigations yield evidence of violations of the Impoundment Control Act, the GAO could bring a suit against the administration.
In the past, Watkins said, Impoundment Control Act disputes have often arisen between the GAO and the Office of Management and Budget (OMB).
“A lot of times, what you see is this jousting between OMB and the GAO,” he said.
Russ Vought, Trump’s director of the OMB, has been an outspoken critic of the Impoundment Control Act, vowing to work to strengthen the president’s impoundment power in Trump’s second term.
However, it is rare for an impoundment issue to make it all the way to trial.
In the 1970s, the GAO brought a suit against President Gerald Ford for his use of impoundment in Staats v. Ford. However, the case was resolved before being litigated.
That act was referenced during the first impeachment proceedings against Trump, although the GAO did not file a lawsuit.
The GAO’s May 22 report marks the first escalation of the dispute.
That report centers on a Feb. 6 DOT announcement of a freeze on new electric vehicle infrastructure grants under the Infrastructure Investment and Jobs Act of 2021. That legislation appropriated $5 billion for constructing new charging stations and other electric vehicle infrastructure as part of President Joe Biden’s push to phase out gas-powered vehicles.
The GAO said the move to cancel funding appropriated by Congress is in violation of the 1974 law. It said the 2021 infrastructure law included a “mandate to spend,” so the department “is not authorized to withhold these funds from expenditure and DOT must continue to carry out the statutory requirements of the program.”
The report said the administration needs to resume funding to comply with the law, but proposed that the department could also send a rescission request to Congress.
Most of these have failed to result in court action.
One exception is State of Rhode Island v. Trump, an ongoing case involving a suit from 21 attorneys general who argue that Trump’s sweeping executive moves to shrink the federal bureaucracy violate the Impoundment Control Act and other separation of powers laws.
A judge granted a preliminary injunction in the case.
Purse Strings and Executive Authority
Trump has made the case for broad presidential impoundment authority, saying it is simply a means for the president to exercise oversight on taxpayer funding.
However, Democrats and other critics say that Trump’s use of impoundment transgresses congressional authority.
“From day one, President Trump has unilaterally frozen or contravened critical funding provided in our bipartisan laws,” Sen. Patty Murray (D-Wash.) said during the April Senate hearing at which Dodaro testified.
“That is really not what the Constitution envisioned. Congress has the power of the purse period, our presidents cannot pick and choose which parts of a law that they can follow.”
Rahmani echoed Murray’s perspective, saying he disagrees with the argument that the Impoundment Control Act unfairly intercedes on executive authority.
“The bottom line is ... Congress passes a law,“ he said. ”The president can’t choose to ignore the law, especially when it comes to the appropriation of funds. So this is a pretty clear issue.”
Rahmani suggested that Republicans would not be as open to a Democrat’s exercising such power over funding.
In contrast, Watkins argued for a more expansive interpretation, noting that presidents throughout U.S. history have refused to spend appropriated money for a variety of reasons.
The 1974 legislation could be interpreted as making changes to the balance of power between the legislative and executive branches, he said—which could render some components of the bill unconstitutional.
Watkins argued that the 1974 law was a legislative overcorrection “with significant interpretive challenges,” and proposed that the criteria for impoundment be based on whether Congress has explicitly set terms around the use of funding.
Often, when Congress appropriates funds, it does not “specify either the amount of money or who that money should be going to, or when that money should be spent,” he said.
In less clear cases, he said, the presumption should be in favor of presidential authority.
However, that faces long odds in the Senate, where at least seven Democrats would need to sign on for the legislation to pass.
