The Administration’s Self-Created Inability to Make a Deal

David Super

     Throughout Anglo-American history, various kinds of people have been incapable of entering into legally binding contracts.  This has included enslaved persons, married women during the coverture era, children, and persons deemed to lack mental capacity or otherwise under the control of others.  In each case, the inability to contract has been understood as quite debilitating.  Courts upholding aggressive freedom-of-contract regimes have insisted that the ability to enter into enforceable contracts is key to gaining wealth and power. 

     It therefore is remarkable that the Trump Administration has worked so hard to render itself incapable of entering into enforceable deals.  Its inability to enter into binding contracts with private businesses, non-profits, and state and local governments – the result of its so-far successful insistence that it may cancel any contract merely because its policy preferences have changed – will have profound implications for the provision of public services for decades to come.  Its self-created inability to enter into binding agreements with foreign governments – e.g., casually casting aside trade agreements, including ones it negotiated – will significantly curtail this country's ability to get its way in world affairs.  And, most immediately, its self-created inability to enter into binding agreements with Members of Congress may prevent an agreement to prevent a partial government shutdown after September 30. 

     The latter effect is not widely understood.  Since taking office, this Administration has impounded – simply refused to spend – several hundreds of billions of dollars Congress has appropriated for the current fiscal year.  A few of these impoundments the Administration has publicly announced.  The great bulk of them have been done quietly, without complying with the procedures required under the Impoundment Control Act (ICA). 

     Indeed, the Administration endeavored to conceal the extent of its impoundments by brazenly violating a statute requiring it to make public the “apportionment” decisions transmitting appropriated funds to federal agencies.  When the D.C. Circuit finally compelled it to release its apportionments, they turned out to be chock full of restrictions on spending wholly unauthorized by statute that effectively made it impossible for funds to be spent.  Among these were a requirement that agencies seek the Office of Management and Budget’s approval for a “spending plan” prior to obligating funds, giving OMB a vehicle for interposing more obstacles undisclosed to Congress or the public.  By law, apportionments are only supposed “to prevent obligation or expenditure at a rate that would indicate a necessity for a deficiency or supplemental appropriation”.

     The Administration’s demonstrated unwillingness to abide by appropriation laws makes a deal to prevent a government shutdown on October 1 exceedingly difficult.  When temporary appropriations expired in March, Republicans refused to negotiate a new bill with Democrats.  Instead, they simply tabled a bill of their own that purported to continue programs’ funding at prior levels.  It did not:  it shifted several billion dollars from other programs into the Administration’s priorities.  Democrats nonetheless supplied the votes necessary to enact the legislation because this seemed the best way to protect funding for important programs. 

     Since then, however, the Administration has repeatedly disregarded funding levels in the legislation that it wrote.  It turns out, then, that enacting the Administration’s bill did not, in fact, protect funding for key domestic and international programs.  In addition, the request the Administration submitted in June to rescind funding from international programs and public broadcasting clawed back billions that had been a significant part of why Democrats voted for the legislation.  Although Democrats’ ability to filibuster gives them leverage over the passage of appropriations bills, the ICA prevents filibusters and so allows rescissions to pass on party-lines votes. 

     Thus, the Administration has created a situation in which any promises of funding it makes to achieve bipartisan agreement on appropriations bills are utterly unenforceable:  it can either rescind the money on a party-lines vote or simply ignore the appropriations altogether.  We can hope that the courts eventually will enjoin the Administration’s impoundments, but to date they have thrown one obstacle after another in the way of challengers – reinforcing the sense that, even if codified in law, the Administration’s promises are effectively unenforceable. 

     Lest anyone doubt its intentions, the Administration recently released dramatic revisions in OMB Circular A-11, a venerable (and heretofore mostly unremarkable) document setting out the Administration’s understanding of the rules for formulating and implementing budgets.  Among other things, the new A-11 declares that the Administration may disregard the ICA for “delays in obligations or expenditures [to] change the scope or design of existing programs, or develop policies concerning program implementation to align with Administration policy.”  It also declares that the Administration may freeze appropriated funds for 45 days merely by submitting a request for rescission to Congress even if the funds will lapse before those 45 days expire.  (This is the “pocket rescission” theory that finds no support in the text of the ICA and raises serious constitutional concerns.) 

     Thus, the Administration may simply sit on funds for most of the year under the guise of reworking the program “to align with Administration policy” and then submit a formal rescission request to Congress at the end of the year.  If Congress approves the request, the funds are rescinded; if Congress rejects the request or simply fails to act, the funds lapse.  Either way, the appropriation accomplishes nothing for the people it was intended to help.  Thus, Democrats have no reason to believe that the numbers in the appropriations bill for which they vote will mean anything in the real world, especially if they exceed the amounts in the President’s budget proposal. 

     At the moment, Republican leaders are refusing to negotiate with Democrats, bowing to President Trump’s wishes.  They may intend to present Democrats with another take-it-or-leave it bill as they did in March. 

     It is too early to predict if Democrats would vote for a short-term continuing resolution to prevent a shutdown on October 1:  a host of political, legal, and technical factors affect when is the best time for a confrontation.  But Democrats should not regard any concessions they receive in full-year appropriations bills as meaningful unless those bills include concrete measures both to prevent President Trump from impounding the funds and to prevent Republicans from rescinding on a partisan basis funds that were approved on a bipartisan vote. 

     One vehicle for doing this is an amendment that Oregon Senator Jeff Merkley proposed to make the ICA inapplicable to spending for federal fiscal year 2026 (apart from the ICA’s language disavowing any interpretation that curtails rights under other laws).  Superficially, abandoning the ICA may seem strange.  The ICA, however, is a law seeking to protect Congress’s institutional prerogatives, and neither congressional Republicans nor the D.C. Circuit have given those prerogatives serious weight.  The current Comptroller General has shown no appetite for suing to enforce the ICA even as he chronicles the Administration’s ICA violations, and he is about to be replaced by a Trump appointee. 

     Absent a clear indication of the Supreme Court’s willingness to respond to the Administration’s abuses of the law, the ICA is best set aside to simplify and expedite litigation.  This would focus attention on the Administration’s violations of statutes authorizing programs and appropriating funds for them.  The Court unanimously found such laws binding in Train v. City of New York in 1975. 

     Without this or some other measure improving the enforceability of appropriations acts and blocking partisan rescissions, no deal will be worth the paper on which it is written.  As many businesses can tell you, negotiating contracts with someone lacking the capacity to make binding commitments is a fool’s errand.

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