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Trump budget office slams 1974 ‘impoundment’ law on way out

The administration says the law limits the president's powers, running counter to Democrats' own proposals intended to give Congress greater 'power of the purse'

The law “has plagued Administrations for nearly a half-century," departing OMB director Russell Vought wrote with another official.
The law “has plagued Administrations for nearly a half-century," departing OMB director Russell Vought wrote with another official. (Tom Williams/CQ Roll Call)

As Democrats prepare to take control of the White House and Congress, the outgoing Trump administration is defending controversial actions taken by its budget office over the past four years and making a pitch to lawmakers to amend the 1974 budget law which officials say shifted power away from the president.

In a letter to House Budget Chairman John Yarmuth, Office of Management and Budget Director Russ Vought and OMB general counsel Mark Paoletta say the 1974 law that bars presidents from withholding funds appropriated by Congress “is unworkable in practice and should be significantly reformed or repealed.”

The law “has plagued Administrations for nearly a half-century now due to uncertainty and confusion as to its interpretation and execution,” the letter says, referring to the law enacted partly in reaction to President Richard Nixon’s refusal to spend money appropriated by Congress. OMB officials planned to send the letter, which CQ Roll Call obtained in advance, to Yarmuth on Tuesday.

The White House officials said the law limits the president’s ability to avoid spending money when more has been appropriated than is needed, and that it incentivizes agencies to spend as much as was appropriated “regardless of whether such spending is necessary to run a program.”

The White House argument runs counter to Democratic proposals to make changes in budget law they say would restore the “power of the purse” to Congress.

Yarmuth, D-Ky., proposed legislation in April 2020 that he said would rein in abuses of budget law by President Donald Trump and prevent abuses by future administrations. Congress took no action on the proposal last year, and Yarmuth said he plans to try to get it passed in the new Congress.

At the root of the conflict was OMB’s withholding of some $400 million in military assistance to Ukraine in 2019 that had been appropriated and signed into law. The White House eventually released the funding before it expired, but it led to the House’s impeachment of Trump last year. The then GOP-led Senate voted to acquit Trump of the charges.

The Government Accountability Office concluded that the withholding of some $200 million of the aid was an illegal impoundment rather than a permitted “programmatic” delay, as the White House claimed.

OMB officials disagreed and said they were not bound by the GAO opinion due to the constitutional separation of powers doctrine, arguing the GAO is a legislative agency. Budget officials said they withheld the money to provide time to “ensure that funds were not obligated prematurely in a manner that could conflict with the President’s foreign policy.”

OMB withheld the funds through a process called apportionment, under which funds can only be spent at a certain rate to prevent agencies from running out of money prematurely.

Battle over the purse

The 1974 law restricts the ability of a president to withhold funds, specifying he or she can do so only through a temporary deferral that must meet certain requirements or through a proposed rescission of funds that requires a special message to Congress that lawmakers must then approve.

The White House last week sent a rescissions package to Congress that will put a temporary hold on $27.4 million in appropriated funds for 45 days, though after Joe Biden is sworn in as president Wednesday he will have the authority to cancel or modify it.

On Monday, House Budget Committee ranking member Jason Smith, R-Mo., and Jim Banks, R-Ind., chairman of the House Republican Study Committee, urged House Appropriations Chairwoman Rosa DeLauro, D-Conn., to take up Trump’s rescission request.

Smith and Banks wrote that the request “identifies wasteful and unnecessary spending, spending which is particularly egregious during the pandemic and hard economic times we face.” Democrats have largely dismissed the Trump request.

In Tuesday’s letter to Yarmuth, OMB said that while the law curtailed the president’s ability to withhold funds, it “did not (and could not) alter his constitutional duty to faithfully execute the spending laws.”

Executing the laws requires the president to make determinations on the legality, constitutionality, and most efficient and effective uses of the funds, the letter says. It adds that to do so the president “may need to temporarily pause expenditures to allow the process for making such determinations to play out.”

OMB faulted the law for a lack of precision, saying its definition of a temporary deferral of spending is “so broad that one could conclude that it includes any action taken by OMB under its statutory authority to apportion funds.”

The White House said Congress should change the law to allow the president to permit funds to lapse before they are spent “if Congress appropriates more money than what it costs to fully but efficiently execute government programs.”

The legislation Yarmuth proposed last year would tighten restrictions on the president’s budget authority.

Among other changes, it would require that any funds the president proposes for rescission or deferral be made available for obligation at least 90 calendar days before they would expire. The proposal also would restrict OMB’s practice of temporarily withholding funds through a process called apportionment and make apportionments publicly available.

While the White House proposal to make changes in the 1974 law is unlikely to get traction in a Democrat-controlled Congress, administration officials speaking on background noted that both the House and Senate are closely divided and said the proposal should be part of any discussion about amending budget law.

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