In July 1974, then-President Richard Nixon, weakened by the Watergate scandal and only weeks away from becoming the first president to resign, signed the innocuously titled “Congressional Budget and Impoundment Control Act.”
He didn’t have much of a choice: The bipartisan bill passed the Senate 80 to 0 and 386 to 23 in the House.
More than 50 years later, though, that decision is still reverberating through Washington after President Donald Trump’s Office of Management and Budget issued a memo late Monday night asking agencies to identify all forms of “federal financial assistance” through grants and loans and pause them while the administration reviews them.
That was exactly what the 1974 law, which also created the Congressional Budget Office, was supposed to prevent, critics of the Trump administration say.
The law was meant to keep the White House from picking and choosing what programs it wanted to fund over what programs Congress had funded, with its “power of the purse” appropriations authority in the U.S. Constitution.
Broadly, the law forbids impoundment — withholding approved funds from being used — in all but a few minor circumstances.
The administration can ask Congress to take back its approval of the spending, rescinding the authority, and withhold the money for up to 45 days. But unless Congress approves the rescission, the funding has to be released after the 45-day period.
The administration can also defer spending the money, but only if they send a message to Congress outlining why they want to defer it, the legal authority for doing so and the things that went into the decision-making process.
Monday’s memo did not appear to invoke either of those circumstances, raising the likelihood of a successful legal challenge. A prolonged court fight, though, or one that makes it to the U.S. Supreme Court, may be exactly what the administration wants, however.
Russ Vought, Trump’s former OMB director who has been nominated to again lead the budget office, told senators in two confirmation hearings that he would follow the law but added that he and Trump thought the 1974 law was unconstitutional.
“The president and his team is going to go through a review with our lawyers, if confirmed, including the Department of Justice, to explore the parameters of the law with regard to the Impoundment Control Act,” Vought said at his Senate Budget Committee hearing.
Vought also said delays in funding authorized by the Inflation Reduction Act and the bipartisan infrastructure law passed under former President Joe Biden were not impoundments but “programmatic delays,” an exception not found in the anti-impoundment law.
“Those [executive orders] were, again, pauses to ensure that the funding that is in place is consistent and moves in a direction along the lines of what the president ran on, unleashing American energy, away from the Green New Deal,” Vought said.
Vought grounded his opposition to the 1974 law in history.
“The reason the president ran on this is that 200 years of presidents had this authority to manage taxpayer resources,” Vought told Sen. Patty Murray (D-Wash.), who is the top-ranking Democrat on the Senate committee that determines annual funding for federal agencies and programs.
While the 1974 law has not been subject to much litigation, the underlying idea that impoundment is illegal is rooted in a Supreme Court ruling that grew out of the activities that caused Congress to pass the law.
In a 9-0 decision that included then-Justice William Rehnquist, a conservative, the court ruled against the administration in a case called Train v. City of New York. In that case, the Nixon administration had sought to spend only $2 billion of $5 billion in funds approved for water and sewer improvement for 1973 and only $3 billion of $6 billion approved for 1974.
The brief opinion by Justice Byron White in 1975 said even though Congress may pass language in spending bills saying totals should not “exceed” specific amounts, the amounts specified were the binding numbers for spending, and the administration did not have the power to unilaterally spend less.
