President Trump’s Likely Rescission Package, Explained

by Sam Wice — Tuesday, May 8, 2018

President Trump recently complained about the size of the Consolidated Appropriations Act, 2018 and wanted a way to negotiate reduced spending. House Republicans suggested that President Trump use the rescission process to avoid a Democratic filibuster. However, appropriators in both parties objected to the suggestion because it would undercut any future negotiations. In response, President Trump plans later today to propose a more “limited” rescission package, which despite being the largest ever, would likely not have any major impact.

What Is a Rescission?

A rescission is a decision by the president to not spend appropriated money. Traditionally, rescissions were not controversial. A president would rescind funds when the ability to spend them had expired. For instance, if Congress had appropriated $100 million to build a highway, but the highway only cost $95 million, the president would rescind $5 million.

Impoundment Control Act of 1974

President Nixon deviated from tradition and started using rescissions to oppose the policy goals of Congress. In response, Congress passed the Impoundment Control Act of 1974 (ICA) to specify the process the president must use to rescind funds. To rescind even a portion of appropriated funds, the president must (i) send a message to Congress informing it of the president’s desire to rescind funding and (ii) print the message in the Federal Register. The president may only rescind the funds if Congress approves the rescission within 45 days. Congress can either approve the package as proposed, amend it, or reject it in its entirety. When considering the rescission package, both houses treat the package as privileged, with limited debate. Specifically, the Senate cannot filibuster a rescission package.

To ensure that the president is complying with the legally set appropriations levels, the ICA empowers non-partisan career staff in Congress to enforce the law. Specifically, the Government Accountability Office (GAO) may investigate whether the president is violating the law. If it determines that he is violating the law, it may bring a suit against the administration.

History of Rescissions Packages

Initially, rescissions under the ICA were common. According to GAO, presidents have requested 1,178 rescissions, totaling over $76 billion, and Congress has approved approximately $25 billion of the requests. However, President Clinton made the last rescission request in 2000. For reasons that are not clear, President Bush and President Obama both chose not to make any rescission requests.

Trump’s Rescission Package

In an op-ed in the Wall Street Journal, the Deputy Director of the Office of Management and Budget said that later today President Trump will request a $15.4 billion rescission of “wasteful spending.” From the op-ed’s description, it appears that the proposal will not have any controversial rescissions. It would officially rescind funds that are “no longer necessary, ha[ve] been diverted from its original intent, or ha[ve] sat unused for years.”

Although this language allows a fair amount of room for President Trump to propose substantive rescissions based on policy disagreements, it seems like on its face, President Trump plans to propose rescissions that are consistent with the original use of rescissions (i.e., to rescind funds when the ability to spend them had expired). For instance, the package would rescind “$148 million in Agriculture Department funds intended for animal and plant disease outbreaks that have already been resolved.”

As a result, President Trump’s proposal, if adopted, would not prevent any “wasteful spending” because the government has not been spending the money. The rescission package is the largest ever only because President Trump has 18 years of unspent funds to include in a rescission package.

Likely Impact of Trump’s Rescission Package

Despite not reducing actual spending, the rescissions package would provide two benefits. First, the rescissions package would help prevent Congress from circumventing the purpose behind the Pay-As-You-Go Act (PAYGO). PAYGO generally requires that legislation cannot increase the deficit within a five-year or ten-year window. However, Congress can offset costs by cutting spending to programs that no longer need funding. For instance, Congress offset the costs of Dodd-Frank by cutting unused funds in the Troubled Asset Relief Program. The proposed rescissions would prevent Congress from avoiding PAYGO requirements by using phantom cost savings to offset increased costs.

Second, the rescissions package would ensure that the Executive Branch complies with the ICA. Even though it is impossible to spend the funds, President Bush and President Obama have violated the ICA by rescinding funds without congressional approval. Hopefully, this package will bring increased attention to the ICA and encourage GAO to enforce the act.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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About Sam Wice

Sam Wice is a former analyst at the Congressional Budget Office and a former Council Member of the American Bar Association’s Section of Administrative Law and Regulatory Practice. He can be reached at sam.wice[at]outlook.com.

2 thoughts on “President Trump’s Likely Rescission Package, Explained

  1. Budgeteer

    With all due respect (honestly) to a former CBOer, your statements on how this interacts with PAYGO need some refinement. PAYGO savings can only be counted if rescinding the budget authority also reduces baseline outlays. Since much of the BA proposed for rescission doesn’t have OL associated with it, cancelling the BA wouldn’t count for PAYGO purposes, so there would be no “phantom offsets” counted by either your former agency or OMB.

    Also, you included a statement about Presidents Bush and Obama “rescinding” funds (a Congressional activity) without Congressional approval, but did not provide citations to documentation for either event.

    Reply
  2. Peter Orlowicz

    Both the Third and Fourth Editions of GAO’s Principles of Federal Appropriations Law state that a rescission is a cancellation of budget authority before that authority would otherwise expire, not after the budget authority has already expired. For non-expiring indefinite appropriations, Congress has already provided a statutory mechanism for account closure and cancellation of outstanding amounts in 31 U.S.C. §1555. GAO also has differentiated between refusal to use budget authority (a rescission) from programmatic delays (where operational factors unavoidably impede the obligation of budget authority, notwithstanding the agency’s reasonable and good-faith efforts to implement the program). Why then would an unspent budget excess of $5 million after a highway construction project is complete qualify as a rescission, rather than a programmatic delay or an account balance subject to closure under 31 U.S.C. §1555?

    Reply

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