Though the recently enacted One Big Beautiful Bill has dominated attention in the nation’s capital, other pressing concerns—centering on the limits of presidential budgetary power—will likely emerge in the run-up to the September 30 fiscal year-end. Efforts by the Trump administration to curtail spending rely on unusual and legally dubious budget execution including a novel legal tactic known as a pocket rescission.
That tactic holds that presidential rescission proposals made late in the fiscal year allow the executive branch to not spend lawfully provided funds if the Congress fails to act on such requests. A widespread use of pocket rescissions could prevent many billions of dollars of policy priorities mandated in law, via legislation passed by the Congress and signed by the President Trump, from being carried out.
Are Spending Deferrals Permitted?
An early indication of the novel approach of pocket rescission was a memo issued a week after the inauguration directing agencies to pause a broad range of financial assistance. While later withdrawn, the memo’s intent appears to have remained in place: Delay spending to ensure agencies are delivering assistance that aligns with administration policies.
Presumably, at least some of the rationale for pulling back the memo stemmed from its inconsistency with the Impoundment Control Act, part of a 1974 law stipulating U.S. budgeting procedures. That statute gives the president the power to temporarily withhold funds if Congress is notified. But such deferrals are permissible only to provide for contingencies, to achieve savings from changed requirements or operational efficiencies, or as explicitly provided by law. The Government Accountability Office has supplemented those reasons with a category known as “programmatic delay,” or an unavoidable delay despite good faith efforts to comply with the law.
Delays based on executive branch disagreement with the merits of appropriations are prohibited, and deferrals cannot extend beyond the end of the fiscal year.
Rescissions In The Back Pocket?
Beyond deferrals, the ICA empowers the president to propose the rescission (or cancellation) of spending that has been provided through the appropriations process. Like deferrals, congressional notification is required. However, in the case of rescissions, Congress must pass a new law agreeing to such cuts. Passage is facilitated by expedited legislative procedures—a simple majority required in the Senate—provided in the ICA. While funds proposed for rescission may be withheld for 45 calendar days of continuous session of Congress, they must be released for expenditure if the rescission legislation is not enacted.
The GAO is investigating numerous instances where appropriated funds have not been allocated. Its findings have met resistance from the Office of Management and Budget. While GAO has the statutory authority to sue to compel the release of these funds, the rapidly approaching fiscal year-end likely renders that prospect impractical. (The term of Comptroller General Gene Dodaro, the current head of GAO, concludes later this year, with President Trump to appoint his replacement.)
The White House has now thrown a significant new wrinkle into the mix: The Trump administration appears to have failed to make plans to use some funds before they are scheduled to expire. During a June 1 appearance on CNN, OMB Director Russell Vought asserted, “Even the Impoundment Control Act allows for procedures that both require their assent on a rescissions bill — that’s the one that we’re sending up this — early this week — and also allow for pocket rescissions for those that come later in the fiscal year.”
That latter idea flows from a notion that if rescissions are proposed late in the fiscal year and Congress does not have the full 45-day period to act on any such proposals, the funds expire and become unavailable for obligation. The reasoning extends to assert that even without explicit congressional approval, funds could be allowed to lapse at year’s end in a manner mimicking a pocket veto of legislation. (A pocket veto can occur when Congress sends a bill to the president but then ends its session, thereby preventing the president from returning the bill with objections; if the president does not sign the bill, it does not become law.)
Working at cross purposes with that theory are various statutes and constitutional principles requiring the executive branch to ensure funds are prudently obligated during their period of availability. The president is granted the explicit power to propose rescissions, not to enact them.
To that point, GAO has ruled that an ICA violation occurs if a rescission package is sent late in the fiscal year and funds are not released in a manner allowing for their prudent obligation before expiration.
Can Pocket Rescissions Occur If Budget Is Properly Executed?
While the administration argues the ICA implicitly allows pocket rescissions, if it explicitly follows the requirements of both the ICA and the Antideficiency Act (which demands continuous funding apportionments to agencies), a pocket rescission becomes legally impossible. This is because proper apportionments and timely proposals for deferring or rescinding unneeded appropriations prevent the accumulation of large unobligated balances that could otherwise be offered as late-fiscal-year rescissions.
As of now, the White House has notified Congress only of a pending $9.4 billion rescission request (and no funding deferrals). While the House has approved the request and the Senate is considering it, the administration might attempt a pocket rescission to cancel the funding even if congressional approval is not forthcoming. Operating under the belief that pocket rescissions are legal, a cascade of similar requests could soon be made, potentially resulting in billions of dollars not spent, contrary to appropriations law.