Trump Plans to Use Impoundment to Cut Spending—What Is It?

Trump will challenge the constitutionality of a 1974 law limiting the president’s power to withhold federal funds.

Illustration by The Epoch Times, Shutterstock, Madalina Vasiliu/The Epoch Times

President-elect Donald Trump has said he intends to cut government spending by reasserting the presidential power of impoundment, a move certain to spark a court battle and one that could redefine presidential power for decades to come.

Impoundment occurs when the president chooses not to disburse funds authorized by Congress, instead leaving them unspent in the U.S. Treasury.

This power is not mentioned in the Constitution but has been employed by presidents since Thomas Jefferson. Congress enacted limits on the practice 50 years ago.

Now, Trump intends to challenge the Impoundment Control Act of 1974 (ICA), which he has said is unconstitutional.

“I will use the president’s long-recognized Impoundment Power to squeeze the bloated federal bureaucracy for massive savings,” Trump said when announcing his plan in June 2023.

Others say the ICA was necessary to prevent the misuse of impoundment to alter congressional spending priorities, not merely to eliminate waste.

Expanded use of impoundment power seems certain to be challenged in court, and the result is likely to hinge on two constitutional questions that define the balance of power between the executive and legislative branches of the federal government.

Jefferson appears to have been the first to use impoundment.

In 1803, he delayed purchasing gunboats to patrol the Mississippi River because they were no longer needed after the United States acquired the Louisiana Territory from France.

Since then, most presidents appear to have used the practice from time to time, usually because the subject spending was no longer in the public interest.

President Ulysses S. Grant used impoundment to prevent federal funds from being used on river or harbor projects that would benefit private parties rather than the public.

President Franklin D. Roosevelt used it to limit spending on civilian construction projects to concentrate on wartime spending.

President Lyndon Johnson impounded some money to reduce inflation.

President Richard Nixon used the practice more frequently than had previous executives, and his use of impoundment represented “a difference in kind, not simply in degree” from his predecessors, according to Joshua Chafetz, a professor of law and politics at Georgetown University.

Nixon’s opponents argued that he was assuming the power to do away with certain government programs by simply starving them of funds, which violated the will of Congress.

President Richard Nixon delivers his State of the Union speech on Jan. 22, 1970. Pictorial Parade/Archive Photos/Getty Images

His team argued that presidents have a duty to consider other factors, including inflation, when deciding whether or when to release government funds.

Congress then passed the ICA, which, in addition to reforming the congressional budgeting process, strictly limited the executive’s ability to cut or delay spending the money appropriated by Congress.

Nixon signed the bill into law.

Current Limits

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The ICA stipulates that presidents must ask congressional permission to impound funds. The president can ask Congress to permit either a rescission—a spending cut—or a deferral of spending.

When the president asks Congress to cut certain spending, he may defer that spending for up to 45 days while Congress considers the matter.

If Congress does not grant the request, the president must release the funds.

A deferral is a delay in spending certain funds to a later point within the current fiscal year.

If Congress doesn’t respond to the deferral request, the president may defer the spending.

Robert Kravchuk, professor emeritus of public policy at Indiana University, told The Epoch Times: “In one case, he'd have to hear positively from Congress not to spend money, and that’s the rescission.

“In the second case, he hears nothing, then he could go through with his deferral, but he can’t defer it to the next year or the year after that.”

The U.S. Capitol on Nov. 19, 2024. The president can ask Congress to permit either a rescission or a deferral of spending. Madalina Vasiliu/The Epoch Times

Trump’s Challenge

Article II of the U.S. Constitution states that the president must “take Care that the Laws be faithfully executed.”

Trump has said the ICA violates that clause because it strips the president of discretion in how best to achieve the government’s purposes.

“The [ICA] dramatically limited impoundment, the power of the president to choose not to unnecessarily spend taxpayer dollars, forcing the executive branch to spend every penny of congressionally appropriated funds,” Trump wrote in his statement.

A second argument in favor of impoundment is that congressional appropriations specify a maximum amount that may be spent, not a minimum.

“Congress has the ‘power of the purse,’ so its appropriations necessarily set a ceiling on federal spending for a particular purpose, but it should not set the floor,” Trump said.

That argument was made as early as 1876, when Secretary of War James Cameron wrote that “spending the full amount” of an appropriation “was in no way mandatory.”

Some Scholars Disagree

Some legal experts believe that the ICA is both constitutional and necessary to preserve individual freedom.

David Alexander Bateman, an associate professor of government at Cornell University, told The Epoch Times, “The impoundment act is an expression of what had been a bedrock principle of central importance to the constitutional founders—that the legislative branch must have ultimate control over the purse as an essential safeguard to liberty.”

As for the idea that appropriations bills indicate a cap on spending and not a required amount, Zachary Price, a professor at the University of California Law San Francisco, argues that’s a mistaken interpretation of the Constitution.

The framers wanted to prevent overspending, as they had seen done by kings and governors, according to Price, so they wrote the appropriations clause to state that no federal funds could be spent except as “appropriated by law.”

However, Price says the faithful execution clause also applied to spending.

President Donald Trump speaks to reporters about the $1.3 trillion spending bill passed by Congress, at the White House on March 23, 2018. Mark Wilson/Getty Images

“Appropriations statutes are laws and, as such, fall within this presidential duty of faithful execution,“ Price wrote in a 2024 article in the Yale Journal of Regulation. ”As a general matter, then, presidents are constitutionally obligated to expend appropriated sums if applicable statutes make that expenditure mandatory.”

According to Bateman, presidents can exercise some discretion for efficiency but not to alter Congress’s intent.

“Allowing impoundment beyond the confines of the 1974 act, or re-interpreting this statute much more broadly, would fundamentally alter the separation of powers and the balance of power between the branches,” he said.

Previous Legal Challenges

While the constitutionality of the ICA has not been challenged, previous uses of impoundment have been the subject of litigation.

Those cases have yielded two principles concerning rescissions, according to the Congressional Research Service.

First, the mandatory spending can’t be cut by the president, even if Congress approves his impoundment request.

Mandatory spending, as defined by the U.S. Treasury, is spending required by laws other than annual appropriations bills.

That includes Medicare, Social Security, and payments to state and local governments or to the U.S. Treasury.

Second, planned spending can’t be cut if a plaintiff can show that withholding it would cause the plaintiff harm.

Maine successfully used that argument when President Jimmy Carter deferred the distribution of federal highway funds in 1980 to combat inflation.

Trump made use of impoundment during his first administration, both under the provisions of the ICA and apart from them.

In May 2018, Trump requested $15.4 billion in rescissions of funds previously appropriated by Congress, saying the spending was wasteful and unnecessary.

Congress did not approve the rescissions.

President Donald Trump's signature on a bill. Trump has said the Impoundment Control Act of 1974 is unconstitutional because it infringes on the president’s ability to execute the law. Shealah Craighead/Official White House photo

In June 2019, Trump delayed providing $250 million in military aid to Ukraine without congressional authorization, citing corruption in that country.

The funds were released in September of that year.

Trump was impeached in December 2019 on allegations that the withholding of funds was an attempt to blackmail Ukrainian President Volodymyr Zelenskyy into investigating Hunter Biden for corruption.

Zelenskyy denied that any blackmail had taken place.

The Government Accountability Office issued a finding in January 2020 stating that the administration withheld the funds for “a policy reason” in violation of the law.

Trump was acquitted of the impeachment charges in February 2020.

Trump announced recently that on the first day of his administration, he will direct federal agencies to identify places “where massive savings” can be realized through impoundment without changing the funding levels for defense, Social Security, and Medicare.