The move could provide a path for OMB to circumvent spending levels spelled out by Congress.
The White House is asking the State Department to pause some of its diplomatic spending while it accounts for how much money it has left, positioning the Trump administration to potentially cut off the balance of unspent funds altogether.
The request has lawmakers and stakeholders worried, and raises questions about President Trump’s authority to circumvent line-by-line funding levels as appropriated by Congress. The freeze follows a similar hold last year in which the Office of Management and Budget proposed a rescission of funding for the U.S. Agency for International Development as a means to put a chokehold on money the Trump administration did not wish to see spent. The administration ultimately abandoned that effort.
In a letter to both State and USAID, OMB Associate Director for National Security Programs Michael Duffey asked for an accounting of more than a dozen accounts to determine how much in unobligated resources is still available. Such resources “shall be unavailable for obligation” until three business days after OMB receives the information, Duffey said. The letter was first reported by The Washington Post.
The 1974 Impoundment Control Act allows the president to propose to rescind funding previously approved by Congress. Lawmakers have 45 days to consider the request and if they do not act to support the rescissions during that window, the request is denied. OMB can direct agencies not to spend the funding proposed for rescission for the entire 45-day period, regardless of when Congress acts.
In this case, OMB has not yet submitted a rescission proposal and is still waiting for State and USAID to report back on its budget numbers.
“It is incumbent on all federal agencies to properly use funds provided by Congress,” said Rachel Semmel, and OMB spokesperson. “In an effort to ensure accountability, OMB has requested the current status of several foreign assistance accounts to identify the amount of funding that is unobligated. On behalf of American taxpayers, OMB has an obligation to ensure their money is being used wisely.”
The request has sparked concerns that OMB will seek to run out the clock on the diplomatic funding, which State and USAID must spend by Sept. 30, the end of the fiscal year. If the administration were to issue the rescission proposal in the coming weeks, the funding could be frozen until it expires. OMB began the process for a similar effort toward the end of fiscal 2018, but decided not to pursue it.
“In a reckless and irresponsible move, OMB appears set on taking a sledgehammer to one of the most miniscule parts of the entire federal budget that would significantly damage America’s security and economic interests—and thwart congressional authority,” said Liz Schrayer, CEO of the U.S. Global Leadership Coalition, a nonprofit that promotes U.S. diplomatic efforts. Schrayer noted the administration waited until Congress went on a five-week recess to submit the request, making it difficult for it to act if OMB follows through with a rescission proposal.
Also at issue is a legal opinion the Government Accountability Office issued last year that found the president’s powers to rescind money to be “strictly limited.” The act’s legislative history, Supreme Court precedent and the constitutional framework of the legislative and executive branches “provide no basis to construe the ICA as a mechanism by which the president may, in effect, unilaterally shorten the availability of budget authority by transmitting rescission proposals shortly before amounts are due to expire,” GAO General Counsel Thomas Armstrong said.
Armstrong added: “To dedicate such broad authority to the president would have required affirmative congressional action in legislation, not congressional silence.” He went on to say it would be an “abuse” of presidential power to place a new deadline on appropriations that differs from “the time period established by Congress in duly enacted appropriations legislation."
In a letter to Armstrong, Mark Paoletta, OMB's general counsel, said the Trump administration was simply following the precedent set by its predecessors and the opinion broke with GAO’s own findings in 1982. Paoletta said the rescissions law “clearly allows” the administration to freeze spending at the end of a fiscal year, calling the statutory language “unambiguous.”
“The text of the ICA places no limit on how late in the fiscal year a president may propose funds for rescission or withhold funds pending congressional consideration of a rescission proposal,” Paoletta said. “Moreover, there is bipartisan historical precedent for budget authority being withheld late in the fiscal year...including withholding such amounts through the end of the fiscal year.”
The frozen funding would go toward solar panels in the Caribbean, aid to the Northern Triangle and development work in Pakistan, among other issues, according to a senior administration official, areas that are not priorities for the White House.
Trump has consistently proposed dramatic cuts to U.S. foreign assistance, including suggesting a 24% reduction in his fiscal 2020 budget. The Global Leadership Coalition estimated the freeze could affect $2 billion to $4 billion in foreign aid funds.