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OMB: Ukraine aid delay was consistent with law, past practice

Mick Mulvaney testifies before a House Appropriations Financial Services and General Government Subcommittee hearing in Rayburn Building on the fiscal year budget for OMB on April 18, 2018. (Tom Williams/CQ Roll Call file photo)
Mick Mulvaney testifies before a House Appropriations Financial Services and General Government Subcommittee hearing in Rayburn Building on the fiscal year budget for OMB on April 18, 2018. (Tom Williams/CQ Roll Call file photo)

The White House budget office on Wednesday defended its temporary withholding of almost $400 million in Ukraine security-related funds earlier this year, saying the episode was in keeping with longstanding authorities that allow the executive branch to control the flow of appropriated funds.

“It was OMB’s understanding that a brief period was needed, prior to the funds expiring, to engage in a policy process regarding those funds,” says the nine-page Office of Management and Budget letter to the Government Accountability Office, which had inquired about the legality of the move. “OMB took appropriate action, in light of a pending policy process, to ensure that funds were not obligated prematurely in a manner that could conflict with the President’s foreign policy.”

OMB initially halted the obligation of a $250 million Ukraine Security Assistance Initiative funded in the fiscal 2019 Defense appropriations bill at the request of President Donald Trump. House Democrats are in the midst of efforts to impeach Trump over what they say was an effort to use the funding as a lever to try to get Ukraine to launch an investigation of former Vice President Joe Biden’s son, Hunter, who was on the board of a Ukrainian gas company.

In the letter, OMB General Counsel Mark R. Paoletta said even with the temporary withholding, the Department of Defense was able to obligate about 84 percent of the $250 million before the end of the fiscal year on Sept. 30.

That’s more than the 79 percent of appropriated security funds for Ukraine that were obligated in fiscal 2016 in the last year of the Obama administration, the letter said. More recently, 83 percent of Ukraine security assistance was obligated in fiscal 2018 and 91 percent in fiscal 2017.

However, in the most recent fiscal year, the administration had more time to spend the money Congress appropriated: The fiscal 2019 Defense spending bill was enacted at the end of September 2018, on time for the first time in years. In the previous two years, final appropriations weren’t enacted until late March and early May, well into the fiscal year, giving the Pentagon much less time to get the money out the door. In fiscal 2016, the funding was signed into law in mid-December.

White House budget officials also noted that in an earlier stopgap funding measure this year, in which about $35 million was “reappropriated” to keep it from expiring after Sept. 30, about $20 million still hadn’t been obligated by Nov. 29. That lag, the letter notes, is “longer than the period of the hold” which occurred between July 25 and Sept. 12, and is the subject of impeachment proceedings.

OMB wrote the letter in response to GAO’s request on Nov. 25 for OMB’s views on the withholding of the funds. The GAO letter is not public.

Et tu, Congress?

The budget office also said in the letter that Congress routinely withholds appropriated funding from agencies, sometimes for months at a time.

In fiscal years 2017 to 2019 alone, OMB said, congressional committees directed that billions of dollars in State and U.S. Agency for International Development funds be withheld for 10 days or more beyond a typically 15-day statutory notice period after Congress is notified of an intent to obligate funds.

For example, in fiscal 2017, the letter says, congressional committee holds of State and USAID funds included one hold of 321 days, one of 228 days, and three holds of more than 100 days past the statutory notice period. The budget office said there were at least 115 instances of congressionally directed holds in foreign aid funds in fiscal 2017 that extended 10 or more days past the statutory notice period.

Democrats have charged that it may have been illegal for OMB to delay the obligation of the security funds through a process called apportionment, in which the budget office gives agencies a rate at which they can obligate appropriated funds. OMB used an apportionment device called a “footnote” to freeze the security assistance on July 25, and the office renewed the freeze eight times to allow for what OMB described as an “interagency process to determine the best use of such funds.”

OMB said the action made about $214 million of the unspent security funds unavailable for obligation, but allowed the Defense Department to continue planning for the spending of the money. 

In addition, a separate pot of money, $141.5 million in Foreign Military Financing funded through a State Department appropriations bill, was held up until mid-September. Those funds were apportioned and obligated near the end of September.

Don’t spend it all in one place

OMB said its apportionment authority covers a wide range of situations beyond preventing agencies from exhausting their funds. The office sometimes pauses an agency’s ability to spend funds to ensure the money is being spent efficiently, spent in accordance with statutory directives, or to assess whether funds should be used for a particular activity, the letter says.

“In fact, OMB regularly uses this apportionment authority to temporarily pause agency obligations to obtain additional information needed to determine the best possible use of the funds consistent with the law,” the letter says. “Most commonly, OMB executes this action by placing a footnote on the apportionment that suspends obligations for a period pending receipt from an agency of a ‘spend plan’ from an agency, or pending a policy determination, including an interagency process, on the most efficient and effective use of the funds consistent with the law.”

OMB also sought to distinguish its pauses in the ability to obligate funding from a deferral. The 1974 budget law bars the president from deferring — or withholding or delaying — the obligation of funding without first notifying Congress.

The office characterized its withholding of the funds as a “programmatic delay.” The letter said such delays can take various forms, including a “process to determine the best policy for the efficient and effective use of funds consistent with the intent of the statute” and “when the Executive branch needs time to develop or change policy.”

Noting the many times congressional committees halted funding, OMB said in the letter that “if compliance with constitutionally non-binding directives from Congressional committees to ‘hold’ funds is not a deferral, then certainly a delay in obligating funds arising from a Presidential direction that a policy process is necessary prior to making obligations cannot be.”

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