Overview of Rescissions and Deferrals:
- A rescission (cancellation) of appropriations, proposed by the President, does not take effect unless Congress affirmatively passes a law approving the cancellation within 45 days (of continuous session). Consequently, if either the House or Senate fails to enact the President’s proposed rescission of budget authority in a timely manner, the President has no choice but to release the budget authority to the agency. Rescission legislation in the Senate is protected by statutory debate limitations and therefore cannot be filibustered, requiring only a simple majority (51) for passage.
- Deferrals. Unlike a rescission proposal, a presidential deferral takes effect unless overturned by statute. The purpose of the deferral mechanism is to permit the Executive Branch to temporarily set money aside until later in the year. Funds may not be deferred for a period that is too long to allow the agency to obligate the funds before the end of the fiscal year.
Background:
A major impetus for development of the congressional budget process was an executive-legislative power struggle that erupted during the Nixon Administration over presidential authority to impound funds appropriated by Congress. In response to President Nixon’s attempt to withhold congressionally appropriated funds, Title X of the Congressional Budget and Impoundment Control Act of 1974 established legal procedures to prevent a recurrence of this dispute and is separately referred to as the Impoundment Control Act (ICA).[1]
Under the procedures put in place by the ICA, the President may (1) “defer” (delay) using an amount of appropriated budget authority until later in a fiscal year or (2) propose to “rescind” (cancel) an amount of budget authority.
The portion of the budget that is susceptible to rescissions or deferrals is the nearly one-third of the budget that is “discretionary” and subject to annual funding decisions. However, this authority does not apply to the more than two-thirds of the budget consisting of entitlement and other mandatory programs or interest payments on the debt.[2] Reducing spending for entitlement or other mandatory programs would require changes to the statutes that legally guarantee specific payments to eligible individuals or entities.
Deferrals:
The purpose of the deferral mechanism is to permit the President to set money aside until later in a fiscal year to provide for a contingency, or to save money due to changes in operations. The President may not propose a deferral simply because he disagrees with Congress’ appropriations decisions. A further restriction is that funds may not be deferred for a period that is too long to allow the agency to obligate the funds prudently by the end of the fiscal year. A deferral proposed by the President takes effect unless Congress passes, and the President signs, a law disapproving the deferral, in which case the funds must be immediately released.[3]
Rescissions:
Unlike deferrals which take effect unless overturned, a rescission (cancellation) of appropriations proposed by the President, does not occur unless Congress affirmatively passes a law approving the cancellation within 45 days. The funds proposed for rescission are withheld during the 45-day-period, but must be released after 45 days unless both chambers have passed, and the President has signed, a rescission measure. Rescission legislation in the Senate is subject to statutory debate limitations and therefore cannot be filibustered, requiring only a simple majority for passage.[4]
Apart from the President’s authority to propose rescissions, Congress retains authority to initiate its own rescission legislation to revise earlier appropriations decisions, and has done so on many occasions.
Role of the Comptroller General in Enforcement of the ICA:
In drafting the ICA, Congress put teeth in its limitations on presidential impoundment by empowering the Comptroller General, who heads the Congress’ investigative arm, the Government Accountability Office (GAO),[5] to file suit in federal Court to require the release of appropriated funds that have been illegally deferred or rescinded.[6] In addition, the Comptroller General analyzes for Congress all deferrals and proposed rescissions for compliance with the ICA’s statutory requirements.[7]
The important role of the GAO in enforcing the Impoundment Control Act was underscored in 2020 when they ruled that the Trump Administration in the summer of 2019 had violated the Impoundment Control Act by attempting to use the apportionment process to withhold funds appropriated to the Department of Defense for security assistance to Ukraine.[8]
[1] Impoundment Control Act of 1974, as amended, § 1001, 2 U.S.C. 681.
[2] For budgetary totals for discretionary and mandatory spending, and interest payments, see Cong. Budget Off., The Budget and Economic Outlook: 2022 to 2032, Table 1-1, (2022), https://www.cbo.gov/publication/58147.
[3] Impoundment Control Act of 1974, as amended, § 1013, 2 U.S.C. § 684.
[4] Id. at § 1012, 2 U.S.C. § 683.
[5] The Government Accountability Office was previously known as the General Accounting Office when the Impoundment Control Act was enacted in 1974.
[6] Impoundment Control Act of 1974, as amended, § 1016, 2 U.S.C. § 687.
[7] Id. at § 1015, 2 U.S.C. § 686.
[8] U.S. Gov’t Accountability Off. Decision, B-331564, January 16, 2020, https://www.gao.gov/assets/710/703909.pdf.