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Impoundment

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An action taken by the president in which he or she proposes not to spend all or part of a sum of money appropriated by Congress.

The current rules and procedures for impoundment were created by the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C.A. § 601 et seq.), which was passed to reform the congressional budget process and to resolve conflicts between Congress and President Richard M. Nixon concerning the power of the executive branch to impound funds appropriated by Congress. Past presidents, beginning with Thomas Jefferson, had impounded funds at various times for various reasons, without instigating any significant conflict between the executive and the legislative branches. At times, such as when the original purpose for the money no longer existed or when money could be saved through more efficient operations, Congress simply acquiesced to the president's wishes. At other times, Congress or the designated recipient of the impounded funds challenged the president's action, and the parties negotiated until a political settlement was reached.

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Changes During the Nixon Administration

The history of accepting or resolving impoundments broke down during the Nixon administration for several reasons. First, President Nixon impounded much greater sums than had previous presidents, proposing to hold back between 17 and 20 percent of controllable expenditures between 1969 and 1972. Second, Nixon used impoundments to try to fight policy initiatives that he disagreed with, attempting to terminate entire programs by impounding their appropriations. Third, Nixon claimed that as president, he had the constitutional right to impound funds appropriated by Congress, thus threatening Congress's greatest political strength: its power over the purse. Nixon claimed, "The Constitutional right of the President of the United States to impound funds, and that is not to spend money, when the spending of money would mean either increasing prices or increasing taxes for all the people—that right is absolutely clear."

In the face of Nixon's claim to impoundment authority and his refusal to release appropriated funds, Congress in 1974 passed the Congressional Budget and Impoundment Control Act, which reformed the congressional budget process and established rules and procedures for presidential impoundment. In general, the provisions of the act were designed to curtail the power of the president in the budget process, which had been steadily growing throughout the twentieth century.

The Impoundment Control Act divides impoundments into two categories: deferrals and rescissions. In a deferral, the president asks Congress to delay the release of appropriated funds; in a rescission, the president asks Congress to cancel the appropriation of funds altogether. Congress and the president must follow specific rules and procedures for each type of impoundment.

Deferrals

To propose a deferral, the president must send Congress a request identifying the amount of money to be deferred, the program that will be affected, the reasons for the deferral, the estimated fiscal and program effects of the deferral, and the length of time for which the funds are to be deferred. Funds cannot be deferred beyond the end of the fiscal year, or for so long that the affected agency could no longer spend the funds prudently.

In the original Impoundment Control Act, the president was allowed to defer funds for any reason, including opposition to a specific program or for general policy goals, such as curtailing federal spending. Congress retained the right to review deferrals, and a deferral could be rejected if either the House or the Senate voted to disapprove it. In 1986, several members of Congress and a number of cities successfully challenged the constitutionality of these deferral procedures in City of New Haven v. United States, 809 F.2d 900 (D.C. Cir. 1987). New Haven was based on a 1981 case, INS v. Chadha, 454 U.S. 812, 102 S. Ct. 87, 70 L. Ed. 2d 80, in which the Supreme Court ruled that one-house vetoes of proposed presidential actions are unconstitutional. The Chadha ruling invalidated Congress's right to review and disapprove deferrals. In response, Congress took away most of the president's deferral power through provisions in the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (2 U.S.C.A. § 901 et seq.) (otherwise known as Gramm-Rudman-Hollings II). These provisions allow presidential impoundment for only three reasons: to provide for special contingencies, to achieve savings through more efficient operations, and when such deferrals are specifically provided for by law. The president can no longer defer funds for policy reasons.

Once the president sends a message to Congress requesting a deferral, the comptroller general must submit a report on the proposed deferral to Congress. A proposed deferral is automatically considered to be approved unless the House or the Senate passes legislation specifically disapproving it. If the president still refuses to spend appropriated funds after Congress has formally disapproved of a deferral, the comptroller general has the power to sue the president in federal court.

Rescissions

The rules and procedures for rescissions are very similar to those for deferrals. As with a deferral, the president must send Congress a message proposing a rescission. In this message, the president must detail how much money is to be rescinded, the department or agency that was targeted to receive the money, the specific project or projects that will be affected by the rescission, and the reasons for the rescission. The comptroller general handles a rescission as she or he would a deferral, preparing a report on the rescission for Congress. Unlike a deferral, a rescission must be specifically approved by both houses of Congress within forty-five legislative days after the message requesting the rescission is received. Congress can approve all, part, or none of the proposed rescission. If either house disapproves the rescission or takes no action on it, the president must spend the appropriated funds as originally intended. If the president refuses to do so, the comptroller general can sue the president in federal court.

Legislative Line Item Veto Act of 1995

The Legislative Line Item Veto Act of 1995 (Pub. L. No. 104-130, 110 Stat. 1200), signed by President Bill Clinton on April 9, 1996, and made effective January 1, 1997, affects the way impoundments are handled. The Line Item Veto Act does not actually give the president the authority to veto individual line items, which would require a constitutional amendment. It does, however, give the president the functional equivalent, allowing the president to veto, or rescind, specific items in appropriations bills, as well as targeted tax breaks affecting one hundred or fewer people and new entitlement programs. The president proposes these rescissions to Congress and they become effective in thirty days unless Congress passes a bill rejecting them. The president can in turn veto any congressional bill of disapproval, and Congress can override that veto with a two-thirds vote in both houses. Under the Line Item Veto Act, therefore, Congress still retains the ultimate power to override the president's rescission requests, but the president enjoys significantly enhanced rescission authority.

Further Readings

Collender, Stanley E. 1994. The Guide to the Federal Budget, Fiscal 1995. Washington, D.C.: Urban Institute Press.

Pfiffner, James P. 1979. The President, the Budget, and Congress: Impoundment and the 1974 Budget Act. Boulder, Colo.: Westview Press.

Schick, Allen. 1995. The Federal Budget: Politics, Policy, Process. Washington, D.C.: Brookings.

Shuman, Howard E. 1984. Politics and the Budget. Englewood Cliffs, N.J.: Prentice-Hall.

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