There is an old saying in Washington that “The President proposes and Congress disposes.” The idea is that the Congress gets the last word on matters related to its constitutional authorities. That includes what is often referred to as the “power of the purse.” Bills to raise revenue have to originate in the House of Representatives, and both the House and Senate have to approve the annual budget and appropriate the money before it can be spent.
Whether that money gets spent is an issue that has been contested by the Executive and Legislative branches. President Richard M. Nixon impounded funds Congress had appropriated, leading to passage of the Congressional Budget and Impoundment Control Act of 1974. The Impoundment Control Act was intended to force the executive branch to obligate the funds appropriated by the Congress, the idea being that once appropriations are passed by the Congress and signed by the President, the President is required to spend the money. In the years since the Nixon impoundments and the passage of the Act, there has not been a significant test of the effectiveness of the Act.
The Impoundment Act provides for a mechanism for the President to request a recession of appropriations, by notifying the House and Senate of his intent via a “Special Message” which outlines, among other things, the amount to be rescinded, the reasons for doing so, the estimated economic and budget impact, and the effects on the programs that are affected.
The Act goes on to require that the funds be made available for obligation if the Congress does not pass a rescission bill within 45 days. It also provides for a course of action when the President fails to transmit a “special message” and simply does not obligate the funds. It puts the onus on the Comptroller General (the head of the Government Accountability Office) if the Comptroller General finds that the President, the Director of the Office of Management and Budget, an agency head or other officer of the government wants to defer spending appropriated funds. The Comptroller General is required to send a notice to both the House and Senate. It goes on to say that “If … budget authority is required to be made available for obligation and such budget authority is not made available for obligation, the Comptroller General is hereby expressly empowered, through attorneys of his own selection, to bring a civil action in the United States District Court for the District of Columbia to require such budget authority be made available for obligation.” It goes on to say that such a suit cannot be filed 25 days after the Comptroller General has notified the Congress of the deferred spending.
It is clear that the Impoundment Act is not an easy means of forcing an Administration to comply with the spending plans approved by the Congress, and the ease with which the Comptroller General might get the court to mandate that the executive branch spend money is untested.
That brings us to where we are today. The Congress did not pass final appropriations until six months into the fiscal year. Getting the money into the hands of agency managers who can start obligating the money took a few more weeks. Agencies were left with about 5 months to complete the process before most of the money turns into a pumpkin on September 30 when the fiscal year ends.
I am hearing from a number of agencies that spending is not moving rapidly. The combination of a complex and time-consuming procurement process and contracting offices that get almost an entire year worth of work dumped on them in the last half of the year makes it difficult to know if the Administration is slow-rolling obligations in agencies where it wanted cuts, or if it is just the normal run up to the end-of-year contract rush that we have seen for years.
If it is the former, and the Administration does not intend to obligate all of the money that was appropriated, there may be little the Congress can do about it. By the time it is apparent that they are doing it, Congress may not have time to follow the Impoundment Act process. If the Comptroller General made a determination in the next few weeks, say by August 1, either the House or Senate could refuse to go along with the cuts and the Administration would be obligated to spend the money. If they do not comply, the Comptroller General could go to court, but that may not do much good. By the time the court issues an order to obligate the money, there may not be enough time left in the fiscal year to do it.
At that point, it is likely that the only way the money would be obligated is if the Congress adds it into the 2019 budget and the President signs it. That is unlikely. It is also unlikely that the Congress would put such a large pot of money in play for a single year. It is also unlikely that the Congress will have appropriations in place for Fiscal 2019 in September (or October or November), so we may find ourselves in a position where de facto impoundments happen with little recourse to stop them. What that would do to the 2019 budget process is anybody’s guess, but I suspect it will poison the well for bipartisan agreement on the budget and may lead to requirements for far more reporting on progress in obligating funds throughout the year or some measure that ties nondefense spending to defense and homeland security more closely.
The bottom line on this is that the federal budget process is broken. Agencies are not getting appropriations until too late in the fiscal year. They operate under continuing resolutions that limit their ability to plan and to start new work or to hire new staff. Contractors are left not knowing if work will continue or terminate, and everyone in the contracting process (government and industry) crams most of the contracting process into six months of the year or less. The impact is significant. In a 2017 letter to Senator John McCain, Defense Secretary Mattis said “Long term CRs impact the readiness of our forces and their equipment at a time when security threats are extraordinarily high. The longer the CR, there greater the consequences for our force.”
The ongoing problems with the appropriations process and delayed obligations are not insignificant. Budget deals might be deals, or they might not. Agencies might have money, or they might not. Programs might exist, or they might not. None of that is good for government, industry, taxpayers or anyone else who relies on a stable and well-run federal government. While some might blame the Administration, others will argue that they are simply exercising executive power. Whatever the cause, the Legislative branch can far more effectively exercise its constitutional powers when it passes appropriations bills before the beginning of a fiscal year.