Trump Readies a Vaguely Nixon-Like Package of Spending Clawbacks

President Trump this week will press ahead with a package of proposed cancellations of some of the domestic program spending agreed to in the March bipartisan budget deal, according to his legislative strategist.

That’s in spite of warnings by key senators and others in his own party that such a do-over would poison the well for future bipartisan budget negotiating.

“We would ask the Senate to have patience and look at the package that gets sent up,” White House Director of Legislative Affairs Marc Short said Sunday on “Meet the Press.” “Did you know that between President Ford and President Clinton, there were over 1,200 rescissions submitted to Congress? The last two presidents have chosen not to utilize that.”

For budget specialists, the expected action recalls the famous fights over impoundments of enacted appropriations that took President Nixon to court against a Democratic Congress in the early 1970s.

There are some major differences in the two eras, the specialists said, but the potential for a modern-day clash between the branches persists.

Trump, who signed the bipartisan omnibus appropriations bill on March 23 vowing never again to tolerate what he viewed as excessive domestic spending, has been cooperating on the clawback plan with several House members.  Majority Leader Kevin McCarthy, R-Calif., issued a statement on April 12 expressing disappointment that Democrats didn’t join Republicans in passing a Balanced Budget Amendment to the Constitution. “But this is not the only battle line in the fight to fix our spending problem,” he said. “We’ve passed policies to grow the economy like tax reform and regulatory reform, we’re looking at other tools to cut spending like the Impoundment Act and rescission.”

On the Senate side, the idea of rescissions—the exact amount of which is unclear—was rejected by newly installed Appropriations Committee Chairman Richard Shelby, R-Ala., and Majority Leader Mitch McConnell, R-Ky., who said, “You can’t make an agreement one month, and then say ‘OK, we really didn’t mean it.’ ”

But Short was undeterred, telling Meet the Press host Chuck Todd that McConnell “hasn’t seen the package. In many cases, what I think you’ll see us putting forward are dollars that have been leftover in programs for years that are not being utilized. But second, we did have negotiations, and we did have a top-line agreement about what we should spend on military, and how we should get the first funding to build the wall in over 10 years.”

The problem with this winter’s spending negotiations was that “nobody saw the text of the bill within 24 hours because the process in Congress is broken,” Short said. “They dump an appropriations bill that says okay you can either keep government open or shut it down…. If Congress would do its job and actually get an appropriations bill on time, then there probably wouldn’t be a rescissions package.”

The White House is proceeding with the package of clawbacks, the dollar amounts of which are unclear. The Office of Management and Budget, according to inside sources cited by Steve Bell, the longtime Capitol Hill budget staffer now with the Bipartisan Policy Center, has just sent memos to agencies saying to prepare for cuts in the rescission-related areas in fiscal 2019. (OMB did not respond to Government Executive’s requests for confirmation.)

Ironically to some, Trump’s rescission plan would make use of authority created in the 1974 Congressional Budget and Impoundment Control Act. Passed just as Nixon was preparing to resign after his Watergate troubles, the act created the modern budget process and the budget committees. It also limited the president’s impoundment powers but permitted presidential requests for rescissions. Congress gets 45 days to enact or reject them.

The fight in the courts and political arena in 1970-74 had been huge. As National Journal reporter Andrew Glass wrote on May 15, 1971, it began when Nixon instructed his agencies to withhold a record-high $12.3 billion in housing, transportation, water (primarily in the south) and urban renewal funds, infuriating mayors and Democratic office seekers.

Nixon’s defenders argued that impoundments went back decades to 1921, with the creation of the Bureau of the Budget, and rose during the Kennedy and Johnson administrations. Nixon’s team planned to “release appropriated funds on an orderly basis; meet spending limits imposed on them by Congress, such as the debt ceiling;” and reduce the danger of an inflationary spiral.

Democrats who controlled Congress viewed the impoundments as a “reordering of priorities” set by the last election and said the “the money being withheld is heavily weighted with sums culled from programs enacted during Democratic administrations.” They accused Nixon of planning to release the funds after the fiscal year ended to “shock the economy out of its doldrums and cut the unemployment rate prior to the 1972 elections.”

As Bell recalled from that time, the “question of whether a president can withhold spending he has already signed into law by simply ordering the budget office not to spend the money had not been fully decided.” But Nixon “was in a weakened political position” and resigned in August 1974.

Today, by contrast, “Trump doesn’t feel he’s on dangerous political ground,” Bell added. The issue of curbing “excess spending in fact could appeal to his base, and to the media who was critical of him for signing the omnibus bill, and gives him a way to keep the conservative wing of the House happy by allowing them a chance to vote.”

Richard Kogan, a veteran congressional budget staffer now a senior fellow at the Center for Budget and Policy Priorities, told Government Executive that the parallels with Nixon’s clash with Congress over impoundments are limited. “Nixon would just say, ‘Congress passes the buck, but that doesn’t mean I have to spend it,’ and his budget director, Roy Ash, asserted a constitutional authority,” Kogan said. But that notion that the president could override a congressional appropriations bill that the president himself had signed never got any traction in the courts, Kogan added.

Once the budget reform law was enacted, Republican presidents Ford and Reagan—who also faced a mostly Democratic Congress—used its provisions to request their own impoundments, or delays in spending they did not favor. But the difference then was that there were no defense and domestic spending caps like those negotiated in the 2011 Budget Control Act and increased for 2018 and 2019, Kogan noted.

So the Trump approach to rescissions is really the third iteration of this conflict between the branches, he said. The fiscal 2018 spending bills were enacted six months late, which puts the agencies in a rush to spend money, which Trump can point to. Given the deadline of 45 days for Congress to act, the debate on rescissions that normally unfolded in the fall or early spring under past presidents could spill into July or August.

“My view is that Congress made a deal on the appropriate spending levels for defense and domestic programs for fiscal 2018, and Trump signed it,” Kogan said. “Congress fulfilled the deal by writing appropriations. But if smart detail people in OMB or the agencies can manage to demonstrate in one or 30 accounts that you can do what Congress intended to do with less money—perhaps there’s a new pile of money due to a deobligation or a contract that came in under budget—then it’s perfectly appropriate for the president to propose a rescission. Congress could enact it and put money back in other accounts that are perpetually short,” Kogan suggested, citing the Internal Revenue Service, Section 8 subsidized housing, or child care.

Those types of programs, however, do not appear to be high on Trump’s priority list.

Marc Goldwein, senior vice president and senior policy director of the Committee for a Responsible Federal Budget, agreed that what makes the Trump situation different is that “if we assume the agencies started spending money on the day the bill passed, they have only two-fifths of the year to spend the money. So in that sense it’s possible there isn’t enough time.”

Speculating before the rescission package has been released, Goldwein said he envisions senators blocking the bill for fear of “creating bad blood.” Recent stories suggest a “a package that totally undermines the omnibus,” he noted, “but a lot of times this president scares people like a big boogey man, and then political people get involved and what comes out is much more modest. The president may decide it’s just a talking point, and Congress could pass a small rescission package that he could get.”  

Bell expressed more alarm. The lateness of this year’s appropriations bills, he said, could give Trump an opening to set up a confrontation, a scenario Bell and his colleagues have been examining urgently. If agencies cannot spend all their money “intelligently” in fiscal 2018, “clever budget people” can make the case that they should count it toward fiscal 2019, Bell said, and then Congress could appropriate fewer funds for those programs that year.

 “The president will probably be accused of having broken the budget agreement,” Bell added, “which almost guarantees another continuing resolution and a possibility of a shutdown.”