More Fiscal Mismanagement

David Super

              Happy New Year!  I wish you all a joyous, fulfilling, and constitutionally compliant new federal fiscal year.

              Hey, a guy can hope, right?  The dawn of a new federal fiscal year seems a good time to survey the Trump Administration’s latest maneuvering to wrestle the power of the purse out of the hands of a rather snoozy Congress.  And the news is not good.

              On the last Friday of fiscal year 2026, the Administration announced the “pocket rescission” of $810 million of appropriated funds for a variety of programs it dislikes.  A “pocket rescission” is a scheme concocted by OMB Director Russell Vought under which the President submits a “special message” to Congress under the Impoundment Control Act of 1974 requesting rescission of the funds but does so too late in the fiscal year for Congress to act before the funds subject to the request expire.  Under Director Vought’s theory, the submission of the request authorizes the Administration to withhold these funds (although he is unable to identify any provision of the Act that grants this permission) and then the funds expire by the terms of their original appropriation without further action by Congress.  This is legally unfounded, as the Government Accountability Office (GAO) has repeatedly noted.  Even Senator Susan Collins declared it “illegal” (not just “concerning”).  Director Vought clearly has not “learned his lesson.” 

              The Administration reportedly is telling reporters that the Supreme Court upheld “pocket rescissions” last year.  That is false.  The Administration impounded roughly $10 billion in foreign aid funds, about half of which it included in a late-year “pocket rescission” request.  A district court found the entire impoundment unlawful and ordered all the Administration to spend all the funds, whether or not they were included in the “pocket rescission”.  The Administration sought a stay only for the funds covered by the “pocket recission”, arguing that the Impoundment Control Act precluded suit under the Administrative Procedure Act.  On its shadow docket, the Supreme Court granted the requested stay, emphasizing that the litigation was “at [an] early stage”, that its “order should not be read as a final determination on the merits”, and that its stay only “reflects our preliminary view, consistent with the standards for interim relief.”  The Court found that the Administration’s jurisdictional arguments were sufficiently substantial that, combined with “the asserted harms to the Executive’s conduct of foreign affairs”, a stay was warranted.  This action should be read in the context of the Court’s previously stated strong resistance to granting preliminary relief against the government in spending cases because “the funds cannot be recouped and are thus irrevocably expended.”  Nothing in the Court’s short, unsigned order suggests that “pocket rescissions” are lawful:  it exclusively discusses procedural concerns.

              The furor over the “pocket rescission” risks obscuring the broader pattern of the Administration’s impoundments of appropriated funds.  The Administration did not begin impounding the $810 million on September 26:  the only reason the funds were still there to be impounded on that date is because the Administration had been refusing to spend them throughout the fiscal year.  Whenever it decided to withhold the funds – likely at the very beginning of the fiscal year – the Impoundment Control Act required the Administration to send a “special message” to Congress proposing rescission and to abide by Congress’s response. 

Moreover, the Administration has withheld a great deal of appropriated funds without public announcement.  Some of this results from the actions of ideologues running particular agencies.  Some results from a variety of actions OMB has taken to make it illegal for agencies to spend moneys Congress appropriated.  In particular, OMB is exploiting its largely ministerial power to “apportion” appropriated funds to agencies before they are spent.  Early in the 20^th Century, Congress required “apportionments” to prevent agencies from blowing through their entire annual appropriation in a few months and then returning to Congress for more. 

In many cases, OMB has been attaching unmeetable conditions to its apportionments or effectively apportioning far less than Congress provided.  Some of this has triggered litigation, but the procedural minefields the Supreme Court has constructed have slowed these cases’ progress.    

              One puzzle in the Administration’s announced “pocket rescission” is that it purports to be pulling back far more money from some accounts than its previous reports had shown remaining in those accounts.  This could mean it is breaching contracts with grantees en masse again.  Victims of such breaches last year sued but soon found themselves smothered in procedural obstacles preventing them from receiving a prompt decision on the legality of the Administration’s actions.

              Another possibility is even more devious.  The accounts in question provide funds for multiple fiscal years.  In these programs, Congress departs from its usual pattern of appropriating funds only for a single year at a time so that the Administration will have flexibility to respond to irregular need.  Thus, if a surge in need causes the Administration to exhaust the funds expiring in a given year, it can spend funds expiring a year or two later. 

              The Trump Administration apparently is reversing this pattern.  It seems to be reattributing obligations made against funds expiring this year to appropriations for future years.  That increases the amount of funds that will lapse without being spent this year while depleting the resources available in future years.  The next administration may take office in 2029 and discover that it lacks the funds to meet that year’s needs because the Trump Administration gratuitously spent those funds in earlier years to allow more appropriations expire in those years.  Like so many of this Administration’s abuses of discretion, this is likely to result in Congress writing more prescriptive laws giving future administrations less authority to adapt to unanticipated events.  It is enough to make one Against Flexibility. 

              To be clear, many of the Administration’s actions are not mere jockeying for policy advantage:  they are lawless.  The last several years’ appropriations acts, including the one President Trump signed in February, have included prohibitions on spending any government funds to implement any funding cuts that the President proposed and Congress rejected.  (This year, it was section 739 of Division E of Public Law 119-75.)  Obviously OMB, and likely other executive agencies, have been doing just that.  Spending federal money in violation of the requirements of appropriations acts violates the Anti-Deficiency Act, which carries criminal and other penalties. 

              We should not leave the subject of withholding funds before considering what may be the Administration’s most bizarre impoundment of all.  Section 10065(a) of the One Big Beautiful Bill Act, President Trump’s 2025 mega-bill written entirely by Republicans and passed entirely with Republican votes, “appropriate[s] for fiscal year 2025 … $256,657,000, to remain available until September 30, 2029, for necessary expenses for capital repair, restoration, maintenance backlog, and security structures of the building and site of the John F. Kennedy Center for the Performing Arts.” 

To date, the Kennedy Center’s board, chaired by one Donald J. Trump, Sr., apparently has spent none of these funds.  One would think there is plenty of time as the funds remain available for almost three more years.  The Administration, however, has been encouraging speculation that it might tear down the Kennedy Center for supposedly being structurally unsafe.  Neither the Administration nor the Kennedy Center’s board has released any comprehensive itemization of the hazards it perceives in the Kennedy Center, much less an explanation of why those problems cannot be fixed with more than a quarter billion dollars of public funds.

The permanent authorizing statute for the Kennedy Center requires that “The Board shall (A) present classical and contemporary music, opera, drama, dance, and other performing arts from the United States and other countries; (B) promote and maintain the John F. Kennedy Center for the Performing Arts as the National Center for the Performing Arts…; (D) provide facilities for other civic activities at the John F. Kennedy Center for the Performing Arts; (E) provide within the John F. Kennedy Center for the Performing Arts a suitable memorial in honor of the late President…[and] (G) with respect to the building and site of the John F. Kennedy Center for the Performing Arts, plan, design, and construct each capital repair, replacement, improvement, rehabilitation, alteration, or modification necessary to maintain the functionality of the building and site at current standards of life, safety, security, and accessibility...”. 

Failure to perform these functions might be excused if Congress had made it impossible by failing to appropriate sufficient funds.  But Chairman Trump and his colleagues (almost all of whom he appointed) would have no defense for blatantly neglecting these duties by destroying the Kennedy Center as long as vast sums are sitting unused in the Treasury after being appropriated for just this purpose.

The Kennedy Center provides a useful illustration of the pattern in most impoundment cases.  The principal illegality is not a violation of the Impoundment Control Act, which is primarily a set of rules of congressional procedure.  Nor is the illegality always a violation of the appropriations act:  some do mandate spending the full amounts provided, but many do not if the Administration can fully accomplish the appropriation’s specified purposes with less.  Impoundments most commonly are illegal because they lead to violations of the permanent statutes establishing the program in question.  Nothing in the Impoundment Control Act or anywhere else provides a sweeping exemption for violating the Kennedy Center’s authorizing statute or other analogous laws.

@DavidASuper.bsky.social @DavidASuper1