President Donald Trump’s order to freeze all federal grants, loans and financial assistance on Monday could provoke a blockbuster case on the president’s authority to subvert the separation of powers and control spending without Congress’ input.
The directive sent out to federal agencies by Trump’s Office of Management and Budget on Monday ordered a temporary freeze on all grants, loans and financial assistance programs in order to “advanc[e] administrative priorities” and root out “Marxist equity, transgenderism, and green new deal social engineering policies.”
The spending freeze memo set off a chaotic 24 hours where the Medicaid and Head Start systems crashed, and grant recipients for everything from health care, housing, food assistance, and medical and scientific research did not know if they were affected.
It also spurred immediate separate legal challenges from Democratic state attorneys general and a coalition of nonprofits. District Court Judge Loren AliKhan issued a temporary restraining order Tuesday evening to stop the freeze from going into effect. This likely sets up a blockbuster case before the Supreme Court over whether the president has the power to unilaterally refuse to spend money appropriated by Congress for any reason at all.
At issue is whether the blanket freeze violates the Impoundment Control Act of 1974, which greatly limits the ability of presidents to not spend congressionally appropriated funds; and the Constitution, which gives Congress the power to appropriate funds to be spent by the executive branch ― the power of the purse ― where the president must then “take Care that the Laws be faithfully executed.”
The Impoundment Control Act was passed by Congress following highly controversial efforts by President Richard Nixon to not spend funds appropriated by Congress for such things as pollution clean-up and mental health centers. Courts rebuked Nixon’s impoundment efforts, and Congress passed the law to stop future presidents from impounding funds when they simply disagreed with the policy enacted by Congress.
Presidents are allowed to delay congressionally-authorized spending in some circumstances under the law. They can defer spending in the case of contingencies that have arisen, to reduce costs or improve efficiency, or if the law tells them they can. These deferrals cannot be granted, however, if the president intends on rescinding the funds in the future.
“[Trump’s OMB directive] clearly violates the Impoundment Control Act,” said David Super, an administrative and constitutional law professor at Georgetown University Law Center.
The memo announcing the policy does not provide any rationale that aligns with the reasons a president may grant a deferral under the Impoundment Control Act, Super noted. Instead, it makes policy arguments about “Marxist equity,” “transgenderism” and the “green new deal.”
“The OMB memo makes it very clear this is about policy disagreements,” said Josh Chafetz, a constitutional law professor at Georgetown University Law Center.
The memo also “makes clear,” according to Super, that Trump intends to rescind at least some of the funds he’s frozen, in violation of the law.
Courts will need to sort out whether or not the freeze constitutes a deferral rooted in a policy disagreement or if it is allowed under the Impoundment Control Act’s deferral exemptions.
The Government Accountability Office has ruled certain deferrals of congressional spending, like Joe Biden’s freeze on border wall construction in 2021, did not violate the act because the delay related to reevaluating contracts and restoring the oversight of laws that Trump had waived. On the other hand, the watchdog office ruled that Trump’s impoundment of funds meant for Ukraine in 2019 did violate the act because it constituted a policy dispute.
Trump’s impoundment of those funds for Ukraine provoked his first impeachment, as he sought to withhold them as blackmail to get Ukrainian President Volodymyr Zelenskyy to falsely claim Biden was under investigation for corruption. Back then, OMB director Russ Vought signed off on the impoundment. Vought has stated he believes the Impoundment Control Act is unconstitutional, and the president has the power to block congressionally authorized funding at will.
Vought, who has been nominated but not yet confirmed to lead OMB again, and Trump are now fomenting a constitutional showdown in the courts with their broad spending freeze.
“This sweeping federal funding freeze is a trial balloon to see how Congress, the Supreme Court, and the public react to the President’s openly assuming monarchical power in a way that will tangibly hurt millions of everyday Americans,” said Alex Aronson, executive director for Court Accountability, a liberal judicial watchdog group.
This trial balloon may not take off though.
“There are very few people who are more pessimistic about the judiciary than I am,” Chafetz said. “That said, this is one area where Trump is very likely to lose.”
While there is not a large case history for efforts to circumvent the Impoundment Control Act in the manner Trump is attempting, court precedents do reject the sweeping arguments Vought and other Trump allies have made about the president’s inherent authority to impound.
In a case that preceded the passage of the Impoundment Control Act, the Supreme Court ruled in Train v. City of New York in 1975 that presidents cannot impound funds authorized by Congress unless the law in question allows them to. While past presidents have declined to spend such funds in the past, they did so with congressional authorization in almost every case.
The Supreme Court’s conservative supermajority has shown a strong tendency to support executive power, but those cases have largely fallen under the rubric of the unitary executive theory, which focuses on the president’s power to direct the executive branch. This is a case about Congress’ constitutionally authorized power of the purse, and whether the president can subvert it and seize it for himself. It’s likely to face a much tougher hearing before the court.
“I don’t think there is any colorable argument that this is constitutional,” Chafetz said. “This is anti-constitutional.”
This was the argument coming from some in Congress opposed to Trump’s actions.
“If this stands, then Congress may as well adjourn, because the implications of this is the executive can pick and choose which congressional enactments they will execute,” Sen. Angus King, an independent from Maine who caucuses with Democrats, said.
Before this makes its way to the courts, the OMB directive will have already caused damage. Nonprofits, churches and governments that administer vital programs for seniors, children, the homeless, domestic violence victims and more are frozen as they seek to understand whether they will be able to continue operating.
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“A local church running a meal delivery program, if they happen to have reserve funds, they might be able to last but a lot of them don’t,” Super said. “This will likely close some important local charitable programs. Which is tragic.”