The stage is set for a constitutional battle between President Donald Trump and a federal watchdog over the extent of presidential authority on spending, as Trump seeks to make sweeping federal spending and personnel cuts.
Trump and administration officials want to reduce existing restrictions on the president’s impoundment power, which allows a president to decline to spend money appropriated by Congress.
According to Trump, the Impoundment Control Act of 1974—which requires the president to seek permission to rescind, or officially end, funding—violates the Constitution and the separation of powers.
Specifically, Trump argues that the chief executive has broad authority to interpret and make decisions about congressionally mandated spending—including the decision not to disburse funding.
His critics, meanwhile, say that the White House is transgressing Congress’s power of the purse.
Since taking office, Trump and the Department of Government Efficiency (DOGE) have sought to identify and implement budget cuts, through actions such as shuttering or reorganizing federal agencies, mass staff reductions, and blocking funds.
In response, the Government Accountability Office (GAO)—the watchdog that oversees the Impoundment Control Act—has opened dozens of investigations into the executive branch.
The office issued its first finding on May 22, saying that the Department of Transportation had violated the impoundment law in its directive to revoke electric vehicle-related funding that had been mandated by Congress.
A series of lawsuits related to the issue is also pending in federal courts, meaning the issue could make its way to the Supreme Court.
Here’s what to know about the legal conflict and the potential court showdown.
Impoundment Use
In legal terms, impoundment refers to a situation in which the president declines to spend money appropriated by Congress.
It has been used often by presidents throughout history, beginning with President Thomas Jefferson.
In that instance, Congress called for the construction of 15 new gunboats at a cost of $50,000. Jefferson decided against it. In October 1803, in his third annual address, he informed Congress that the boats remained unconstructed and the money unspent.
The legislation had “authorized and empowered” Jefferson to build “a number not exceeding fifteen gunboats.”
Devin Watkins, an attorney at the right-leaning Competitive Enterprise Institute think tank, wrote that this was entirely within Jefferson’s power as Congress had not explicitly required him to spend the money or build the boats.
Supporters of presidential impoundment point to the unilateral decision as the basis for the practice in U.S. law.
In Kendall v. U.S. ex Rel. Stokes, the Supreme Court ruled that there were limits to the doctrine, however. The president could not unilaterally refuse to delegate funding when Congress’s intention was clear, the court found.
The issue has been barely litigated since then—meaning that many of the questions involved still haven’t been defined by the courts. Those questions primarily have to do with the separation of powers.
The Impoundment Control Act
Impoundment gained more attention during President Richard Nixon’s tenure in office.
The Clean Water Act of 1972 authorized federal funding to municipalities including New York City to combat water pollution.
Nixon initially vetoed the legislation. Congress overrode his veto by a two-thirds vote.
After the law was enacted, Nixon sought to block funding to New York City, prompting the city to sue.
In Train v. City of New York, the Supreme Court ruled 8–0 that Nixon had superseded his authority in refusing to disburse the funding.
Congress said that Nixon’s actions had crossed from the executive function into the policy-making function—a prerogative of Congress.
In response, it passed the Impoundment Control Act. It was the first legislative effort to define the limits between Congress and the president on the impoundment issue.
“[Impoundment] wasn’t an issue until Nixon made it an issue,” Neama Rahmani, a former federal prosecutor, told The Epoch Times.
Watkins said that the perception of policy-making through impoundment was the main driver behind the 1974 law, in which Congress imposed new limits on the president’s power.
The law requires the president to send a rescission request to Congress if he wishes to reduce or alter spending previously required by Congress. Congress then has 45 days of continuous session to respond to the request.
Within that time, Congress must vote to either approve the president’s request and rescind the funding, or reject it, in which case the president is obligated to spend the funds as originally appropriated.
GAO Investigations and Lawsuits
The GAO says it’s investigating various moves made by Trump that may violate the legislation.
U.S. Comptroller General and GAO head Gene Dodaro told a Senate panel in April that 39 investigations into impoundment violations are currently open.
If any of those investigations yield evidence of violations of the Impoundment Control Act, the GAO could bring a suit against the administration.
In the past, Watkins said, Impoundment Control Act disputes have often arisen between the GAO and the Office of Management and Budget (OMB): “A lot of times, what you see is this jousting between OMB and the GAO.”
Russ Vought, Trump’s director of the OMB, has been an outspoken critic of the Impoundment Control Act, vowing to work to strengthen the president’s impoundment power in Trump’s second term.
It’s rare for an impoundment issue to make it all the way to trial, however.
In the 1970s, the GAO brought a suit against President Gerald Ford for his use of impoundment in Staats v. Ford. However, the case was resolved before being litigated.
In Trump’s first term, he faced challenges from the GAO over his handling of federal funding related to the temporary impoundment of $214 million in military aid to Ukraine.
That act was referenced during the first impeachment proceedings against Trump, though the GAO didn’t file a lawsuit.
The GAO’s May 22 report marks the first escalation of the dispute.
That report centers around a Feb. 6 Transportation Department (DOT) announcement of a freeze on new electric vehicle infrastructure grants under the Infrastructure Investment and Jobs Act of 2021. That legislation appropriated $5 billion toward constructing new charging stations and other electric vehicle infrastructure as part of President Joe Biden’s push to phase out gas-powered vehicles.
The GAO said that the move to cancel funding appropriated by Congress is in violation of the 1974 law. It said the 2021 infrastructure law included a “mandate to spend,” so the department “is not authorized to withhold these funds from expenditure and DOT must continue to carry out the statutory requirements of the program.”
The report said the administration needs to resume funding to comply with the law, but proposed that the department could also send a rescission request to Congress.
Responding to the findings, Vought posted on X that over the next few months, the GAO is “going to call everything an impoundment because they want to grind our work to manage taxpayer dollars effectively to a halt.”
Other agencies besides the GAO have also brought suits against the Trump administration’s spending cuts and federal worker firings, arguing they are unlawful uses of impoundment.
Most of these have failed to result in court action.
One exception is State of Rhode Island v. Trump, an ongoing case involving a suit from 21 attorneys general, who argue that Trump’s sweeping executive moves to shrink the federal bureaucracy violate the Impoundment Control Act and other separation of powers laws.
A judge granted a preliminary injunction in the case.
The U.S. Conference of Catholic Bishops sued on similar grounds, contending that a Jan. 24 State Department notice suspending federal funding for refugee and asylum programs violated the Impoundment Control Act.
Both a temporary restraining order and an injunction were denied in this case.
Purse Strings and Executive Authority
Trump has made the case for broad presidential impoundment authority, saying it is simply a means for the president to exercise oversight on taxpayer funding.
“This disaster of a law is clearly unconstitutional—a blatant violation of the separation of powers,” Trump said in a 2024 campaign video. He vowed to attempt to overturn the Impoundment Control Act during his second term.
However, Democrats and other critics say that Trump’s use of impoundment transgresses congressional authority.
“From day one, President Trump has unilaterally frozen or contravened critical funding provided in our bipartisan laws,” Sen. Patty Murray (D-Wash.) said during the April Senate hearing in which Dodaro testified.
“That is really not what the Constitution envisioned. Congress has the power of the purse period, our presidents cannot pick and choose which parts of a law that they can follow.”
Rahmani echoed Murray’s perspective, saying he disagrees with the argument that the Impoundment Control Act unfairly intercedes on executive authority.
“The bottom line is … Congress passes a law. The president can’t choose to ignore the law, especially when it comes to the appropriation of funds. So this is a pretty clear issue,” Rahmani said.
He suggested Republicans wouldn’t be as open to a Democrat exercising such power over funding.
In contrast, Watkins argued for a more expansive interpretation, noting that presidents throughout American history have refused to spend appropriated money for a variety of reasons.
The 1974 legislation could be interpreted as making changes to the balance of power between the legislative and executive branches, he said—which could render some components of the bill unconstitutional.
Congress foresaw this concern, stating in the opening to the legislation that nothing in it “assert[s] or conced[es] the constitutional powers or limitations of either the Congress or the President.”
Watkins argued that the 1974 law was a legislative overcorrection “with significant interpretive challenges,” and proposed that the criteria for impoundment be based on whether Congress explicitly set terms around the use of funding.
Often when Congress appropriates funds, it doesn’t “specify either the amount of money or who that money should be going to, or when that money should be spent,” he said.
In less clear cases, he said, the presumption should be in favor of presidential authority.
Several congressional Republicans, meanwhile, are currently pursuing legislation that would repeal the Impoundment Control Act altogether.
However, that faces long odds in the Senate, where at least seven Democrats would need to sign on for the legislation to pass.