The Power of the Purse IV: Redistributing Power among the Courts

David Super

     As I previously described, the second Trump Administration has dramatically shifted the Power of the Purse from Congress to the President.  Accompanying this change have been internal structural transformations of both Congress and the Executive Branch that have concentrated power in a few highly partisan hands and damaged or destroyed mechanisms that brought a broader range of views to bear.  These transformations are both causes and consequences of the more visible transfer of power from Congress to the Executive.  This post considers how the President’s seizure of greater fiscal powers has been accompanied and facilitated by a subtle but crucial power shift within the judiciary. 

     Here, a relatively efficient structure allowing timely resolution of disputes on their merits has given way to one that tends to keep the judiciary on the sidelines.  Judicial restraint, of course, is a long-honored value in our system.  Much of its rationale, however, has been that the “political branches” can take care of themselves.  That is an awkward fit for disputes in which the President is depriving Congress of perhaps its most important means of protecting its prerogatives:  the Power of the Purse.    

     For decades prior to this Administration, the federal courts had a fairly stable division of labor on spending matters.  Questions of general law – the interpretation and constitutionality of spending statutes and regulations – were addressed by federal district courts.  Where officials applied policies improperly denying individuals or organizations the benefits they were entitled to receive, the district courts struck down those policies, with the Supreme Court’s blessing.  District courts could act quickly to respond to recipients’ urgent need and had sufficient powers to adapt remedial orders to whatever violations they found.

     Disputes over payments allegedly due under the terms of individual federal contracts went to the Court of Federal Claims.  These cases typically focused on the terms of the given contract and factual issues about whether the contractor had met those terms rather than broader questions of federal law.  The Court of Federal Claims has far narrower remedial powers, but with the narrow disputes before it these were adequate.  If the federal government refused to pay for goods that in fact met contractual specifications, a simple money judgment was all that was needed.  The Court of Federal Claims was slow, which was a genuine problem, but at least it could eventually make financially strong contractors whole by awarding interest penalties under the Prompt Payment Act.

     Now, the federal government is systematically refusing to make payments not because of good-faith disputes about contractual terms or vendors’ compliance but because the Administration is asserting an aggressive new theory about the Separation of Powers.  Specifically, it is arguing that the President is free at any time to reformulate the interests of the United States notwithstanding contractual terms or duly enacted statutes. 

     Whatever one thinks of the merits of this theory, it is very much the kind of dispute that district courts commonly hear and worlds apart from those in the Court of Federal Claims.  To the extent that the Administration’s theory is incorrect, overall or in particular cases, a court adjudicating its actions obviously may need to issue extensive remedial orders, which the Court of Federal Claims lacks the power to do.  That is particularly true given this Administration’s penchant for disregarding court orders.  Because spending programs often target people and small entities in great financial need, payments years late, even with interest, often cannot undo the damage of withheld funds:  agencies that close often lose the capacity to resume their prior work. 

     Treating the Administration’s unilateral terminations or restructurings of federal spending programs as a payments problem fundamentally misconstrues what is at stake and Congress’s purposes in providing for that spending.  Although litigation is often brought, and standing established, by the entities that had been direct recipients of funds, programs’ purposes rarely are just to spend money:  Congress sought to assist a particular set of individuals it deemed in need or a designed set of entities to meet some social purpose.  The harms from ignoring those human needs and social problems often will be irreparable. 

     Moreover, judges on the Court of Federal Claims lack life tenure and other guarantees of independence afforded judges on district courts and other Article III tribunals.  President Trump has aggressively assaulted the independence of other bodies long recognized as independent.  Should the Court of Federal Claims ever seriously impede his agenda, one might expect he would use his considerable statutory powers to direct sensitive cases to judges of his choosing.  That would be much harder with life-tenured district judges. 

     The Supreme Court has acknowledged this reality only in part.  It has allowed district courts to continue to hear challenges to unlawful policies but prevented those courts from ordering payment of improperly withheld funds.  It also specifically warned district courts against granting interim relief against the government in those cases:

And while the loss of money is not typically considered irreparable harm, that changes if the funds “cannot be recouped” and are thus “irrevocably expended.” Philip Morris USA Inc. v. Scott, 561 U. S. 1301, 1304 (2010) (Scalia, J., in chambers). The Government faces such harm here. The plaintiffs do not state that they will repay grant money if the Government ultimately prevails. Moreover, the plaintiffs’ contention that they lack the resources to continue their research projects without federal funding is inconsistent with the proposition that they have the resources to make the Government whole for money already spent.

Of course, if any entity challenging the Administration’s illegal withdrawals of funding did assert that it could pay back the funds if it lost its case, the Supreme Court has indicated that entity would itself lack the irreparable injury required to obtain an injunction.    

     This effectively grants the Administration a two-year runway to eliminate congressionally mandated programs no matter how absurd its rationale may be.  Perhaps some money might eventually be disbursed, but by then the mechanism for achieving Congress’s purposes often will be damaged or gone altogether.    

     A similar picture seems to be coming into view with respect to one of the Administration’s other assaults on Congress’s Power of the Purse:  the tariffs it unilaterally imposed and collected for the better part of a year.  At this writing, it seems likely that many of those that paid this presidential levy will not receive refunds; those to whom the cost of the tariffs was passed along through price increases almost certainly will not.   

     This is far from inevitable.  Having acknowledged that district courts can hear challenges to unlawful policies obstructing the release of funds Congress has directed to a particular problem, the Supreme Court could certainly allow district courts to grant relief sufficient to meet to the problem the Administration’s actions present.  This would ensure that, as the Supreme Court proclaimed two years ago, “[i]f the President claims authority to act but in fact exercises mere ‘individual will’ and ‘authority without law,’ the courts may say so.”  As it did in granting President Trump sweeping immunity from prosecution in the absence of any textual authority for doing so, the Court might “focus on the enduring consequences upon the balanced power structure of our Republic.”  The Court demonstrated in 2024 that it observes an emergency exception to the usual rules of decision for grave threats to the separation of powers.  Few such threats are potentially more far-reaching than depriving Congress of its Power of the Purse. 

     The Court certainly could draw guidance from Contract Law, which is capable of distinguishing between the vast majority of cases involving routine, one-off disputes and a few exceptional instances of systemic bad faith.  Insurance companies contract with vast numbers of people, who assume they will pay in good faith if the insured suffers a covered casualty.  Resisting payment of lawful claims can enhance an insurance company’s margin, but it also undermines the whole concept of insurance.  Accordingly, courts have recognized that insurance companies denying claims in bad faith should not benefit from Contract’s usual rule disallowing punitive damages.  The federal government, too, assumes financial obligations to vast numbers of people, who trust it to pay in good faith.  If this Administration is effectively free to refuse to do so, the federal government’s ability to contract to meet the country’s needs will be damaged for decades to come. 

     It also should be noted that the other two types of presidential intrusions on the Power of the Purse – spending money without a valid appropriation and declining to collect taxes Congress has legislated – are unlikely to be vulnerable to judicial challenge because of the Court’s interpretation of the “cases and controversies” requirement of Article III.  If the Administration is free to impose taxes and to withhold appropriated funds for a year or two no matter how unsustainable its legal theory might be, Congress’s Power of the Purse is well and truly gone as anything more than a ministerial function. 

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