Power of the Purse

Could the Presidential impoundment of funds affect fiscal outcomes?

President v. Congress: the issue of the impoundment of spending could eventually end up in the US Supreme Court.

For at least the next two years, the Congress and the Presidency will both be under Republican control. This majority might suggest smoother decision-making on budgetary issues, but in practice, the process remains complex.

Congressional Acts, Impoundment, and the President

This year, as in most years, budget discussions are far from straightforward. One contentious issue under discussion is if the President can unilaterally decide not to spend funds allocated by Congress.

For example, the Department of Government Efficiency (DOGE) could propose significant budget cuts to federal programs. The President might support the cuts, but the Congress could still allocate full funding to some or all of the affected programs. There is a law, the Impoundment Control Act of 1974 (ICA), providing a process by which the President can request the cancellation of enacted funding. In fact, the law was actually designed to limit a President’s ability to withhold funding from activities without Congressional approval to rescind funds. Indeed, any ICA request from a President can simply be ignored by the Congress.

Some have argued that the ICA is unconstitutional. Opponents claim the law represents legislative overreach, asserting that Presidents regularly exercised lawful impoundment actions prior to 1974. In a nutshell, the argument goes that Presidents should be able to go against the Congress on its spending decisions when it makes sense to do so in the context of the President’s own constitutional and executive responsibilities.

An Important Budget Question

When it comes to achieving federal deficit and debt reduction, does this potential constitutional issue hold immediate relevance to the level of federal spending?

The answer: this could depend on the scenario.

Here are a couple scenario examples:

Example: Chaos

In a chaos scenario example, the President unilaterally reduces spending across a wide range of programs without Congressional approval, perhaps citing the need for fiscal restraint due to the budget deficit and debt.

In this scenario, Congress might legally endorse some or all of these actions retroactively—or it might not. Either way, the matter is likely to end up in the courts. And matters that go before the courts can take a lot of time. During such a period, and depending on the scale and scope of the actions, the U.S. spending trajectory could certainly shift for the near term.

Taking his example further, objections to impoundment actions are eventually filed within the courts, one or more cases get to the Supreme Court, and a decision is reached after what is likely to be many months. Would a decision confirm the ICA, fully overturn the practices established by the ICA since 1974, or would it moderately expand Presidential authority beyond established practice?

If our highest court confirms established current law or practice, spending could quickly return to expected levels. If the ICA is fully overturned, then the potential exists for the President to take sweeping and unilateral action to impound funds and reduce spending.

But what if the Supreme Court were to merely expand Presidential authority within the context of the ICA? Under such a scenario, the public could be looking at many more months adjudicating within the courts system determinations that concern which Presidential actions are consistent with a Supreme Court decision, and which are not. Such a delay resulting from this scenario could result in significant near-term budgetary savings.

Example: Selective Use

Under a selective-use scenario, the President targets specific areas for unilateral impoundment. For example, actions might target unspent funds from Biden administration priorities—such as infrastructure, Ukraine aid, or semiconductor industry funding—or focus on conservative targets like welfare, foreign aid, and education.

Again, the courts could eventually be compelled to decide a way forward under a non-ICA, selective impoundment scenario. But under this example, no matter how impactful to historical government practice and our nation’s constitutional democracy, selective actions would likely not move the bottom line on spending and the federal budget deficit in a significant way.

Conclusion

What will likely happen on this issue is difficult to say, as there are significant considerations working against, and for, both example scenarios. 

The most critical consideration may be this: If Republican congressional leadership permits the President to take impoundment actions under ICA authorities, a precedent would be set for future Presidents from the opposing party to do the same. Knowing this, will the 119th Congress defer to the Trump Administration, allowing the President to take unilateral spending impoundment actions?

Perhaps the direction of this matter—at least for the near term given the potential long-term nature of court-centered resolution of difficult legal and constitutional matters—rests on the consideration of precedent for the future.