Monday, May 07, 2018

The Art of the Rescission

David Super

     On May 8, President Trump reportedly will send Congress a request to rescind $15 billion in funds appropriated for a variety of non-defense programs.  Some sources both in the White House and in Congress suggest that this may be the first of several such requests that the President will make over the coming months.  These requests are made under the Impoundment Control Act, on which even many budget process experts find themselves a bit rusty.  Not surprisingly, media coverage of the possibility of rescissions has been confusing and sometimes contradictory.  This post examines the procedural, substantive, and political dimensions of these proposals.

     Congress enacted the Impoundment Control Act in 1974 with Title X of Pub. L. No. 93–344 in response to President Nixon’s repeated refusals to spend appropriated funds on programs he disliked.  The Act represents a truce between congressional and executive interests, albeit one enacted at a time when the President was severely weakened.  In lieu of the chaotic political and legal conflict that resulted from the President’s ad hoc impoundments, the Act established a formal procedure for resolving presidents’ desires not to spend appropriated funds and prohibited impoundments outside those procedures. 

     Under the Act, the President may submit a request to Congress to rescind any funds that have been appropriated but not yet obligated.  Special fast-track procedures, somewhat similar to those used to pass budget resolutions and budget reconciliation laws, then assure these proposals of receiving congressional consideration.  Most importantly, this legislation makes rescission legislation difficult to kill in committee and impossible to filibuster in the Senate, allowing rescissions to pass with simple majority votes in both chambers. 

     If Congress enacts rescission legislation within roughly 45 days, the President prevails.  (Long recesses toll the statutory 45-day clock.)  If not, the general requirement that the President spend appropriated funds reasserts itself and the President is prohibited from submitting a subsequent rescission request relating to the same funds. 

     This procedure has important limitations, which go a long way toward explaining why the process has been so rarely used (and why the Act is so widely considered an important victory for Congress).  In particular, 2 U.S.C. § 681(4) prohibits the President from invoking the Act to seek rescission of money that is already legally obligated.  This means that mandatory programs such as Social Security, Medicare, and school lunches are not subject to rescission because their authorizing statutes obligate those funds in accordance with their benefit eligibility formulas.  This also means that programs that provide grants in aid to state or local governments under a statutory formula, such as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and many elementary and secondary education programs, are exempt from rescission.  The Government Accountability Office (GAO) has confirmed this in opinions at least as early as 1982 and as recently as December. 

     Although the complete list of proposed rescissions is not public at this writing, news accounts suggest that some will attack both programs with mandatory funding, such as the Children’s Health Insurance Program (CHIP), and programs making formula grants to state and local governments.  If legislation to implement the President’s proposals includes these improper rescissions, it would be vulnerable to a point of order depriving it of the special fast-track procedures.  Without immunity from a filibuster, such legislation would have little chance of passing.

     The substantive explanations offered for this rescission proposal are both strange and contradictory.  House Republicans and the White House argue that these rescissions are needed to reduce budget deficits.  These arguments come from the same quarters that were waiving away deficit concerns just a few months ago when passing a tax bill whose ten-year cost is 100 times the amount these rescissions claim to save. 

     In addition, the White House is, on the one hand, touting large savings from these rescissions while on the other hand insisting that they will do no harm because the money would not have been spent anyway.  If the money would not have been spent, there are no savings.  Deficit figures, whether from the Administration or the Congressional Budget Office (CBO), work from money actually spent.  Any rescission of money that would not be spent by definition cannot reduce the deficit. 

     A lot of this seems to be doubling down on short-sightedness.  Some of the amounts involved apparently are contingency funds set aside to continue anti-poverty programs during economic downturns.  The White House argues that, because the economy seems strong, these funds likely will not be needed.  If that is true, the rescission saves no money and is pure theater.  If, however, an economic downturn comes, why would we not want to help the newly impoverished as much as the chronic poor?  Legislation providing in advance for unpleasant contingencies is already too rare; if appropriators see that these funds will constantly be rescinded, they likely will stop trying. 

     The truth is that some programs likely do have more money than they need.  The list of such programs surely includes Defense as well as Non-Defense programs, unlike the President’s reported roster of proposed rescissions.  But after years of deep cuts to discretionary spending, many other programs, such as the Census Bureau and low-income housing, have much less than they need.  The country certainly could benefit from a thoughtful rescission proposal that sought to reallocate funds to where they could do the most good.  This, however, is not that bill.

     The politics of rescission proposals are complex.  Reportedly the White House and the House Republican leadership promised that the President would submit a rescission package in exchange for the votes of some House Republicans for this spring’s omnibus appropriations bill.  This revelation led to a chorus of criticism that Republicans were negotiating in bad faith, already committing themselves to breaking the budget agreement while demanding that Democrats make painful policy concessions in exchange for the funding it provided.  The White House has responded by insisting that its rescissions are not inconsistent with the budget deal and reportedly including only money appropriated in prior legislation.  That is a distinction without a difference:  appropriators determine how much new money a program needs in part with reference to how much carryover it has from prior years.  Whether the rescission nominally covers new money or old, the program will have less funding than was agreed upon in the omnibus appropriations bill.

     House Majority Leader Kevin McCarthy, who underwhelmed far-right Republicans last time he ran for speaker, is clearly using his enthusiastic support for rescissions to buttress his effort to replace Paul Ryan.  Those hoping to outflank him on the right are trying to raise the stakes further.   

     Senate Majority Leader Mitch McConnell, on the other hand, has been openly hostile to moving any contentious fiscal measures this year.  Although a vote on a rescission package could be uncomfortable for red-state Democratic senators up for re-election this fall, the success of such legislation would make it much more difficult to bring Democrats to the bargaining table in September.  Having substantial Democratic support for appropriations bills in recent years has allowed some vulnerable Republicans to vote “no” to appease their bases.  Senator McConnell may doubt whether he can muster a majority entirely from their own ranks to keep the government open after October 1.  And any appropriations bill that can command 218 Republican votes in the House may be so extreme that it weighs down House and Senate Republicans seeking to run as moderates.  Sorting this out with the election just weeks away, and with Members demanding to go home to campaign, would not put their party in the best light.  

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