What Is Impoundment? Trumps New Plan To Control Spending In Second Term

US President-elect Donald Trump is planning to cut federal spending, and one of the methods he may use is impoundment. This little-known presidential power allows the leader to refuse spending funds appropriated by Congress. In line with his recent threat to use recess appointments to bypass Senate approval for his controversial cabinet positions, Trump has a plan to circumvent federal spending as well. If Congress continues to allocate funds to projects, agencies, or departments he opposes, he may use impoundment to withhold those funds.

What is impoundment?

Impoundment, simply put, occurs when the president declines to spend funds that Congress has appropriated. The practice has a long history in US politics, beginning with President Thomas Jefferson in 1803, who chose not to spend money allocated for gunboats to patrol the Mississippi amid negotiations with France for the Louisiana Purchase.

Impoundment became a controversial issue during Richard Nixon's presidency. After his reelection in 1972, Nixon sought to use impoundment to reduce federal spending, halt housing programmes and cut disaster aid. When Congress overrode his veto of the Clean Water Act, he withheld a large portion of the $24 billion allocated to clean municipal sewage systems. These clashes led to the passage of the Impoundment Control Act of 1974, limiting a president's ability to withhold funds for policy reasons. It also led to the creation of the Congressional Budget Office.

Even during his first term, Trump attempted impoundment when he withheld military aid to Ukraine in 2019, using it as leverage to press President Volodymyr Zelensky for an investigation into Joe Biden. This eventually led to Trump's first impeachment. Despite the controversy, the funds were released, and the Government Accountability Office ruled Trump's step as illegal.

Before his reelection, Trump said that reclaiming the power of impoundment would be a priority for his second term, either through legal challenges or by persuading Congress to relinquish some of its spending power. In one video, Trump criticised the Impoundment Control Act of 1974, calling it “not a very good act” and “a blatant violation of the separation of powers.” He vowed to use impoundment to “squeeze the bloated federal bureaucracy for massive savings.”

Trump says in a second term he will seek to repeal the Impoundment Control Act of 1974 so that he will have unilateral power as president to seize funds appropriated by Congress for govt agencies and programs and use that money to give out tax cuts. pic.twitter.com/AFMiHV80lK

— Ron Filipkowski (@RonFilipkowski) June 20, 2023

While Trump may face opposition, even from fellow Republicans, in efforts to cede more power to the executive, he may look to the Supreme Court for support. With the current conservative majority, the Court has recently curtailed the powers of federal agencies, offering a possible opening for Trump to challenge impoundment limits.

Some Republican figures such as Vivek Ramaswamy have proposed the repeal of the Impoundment Control Act entirely. Ramaswamy, who has been tapped by Trump to lead the "Department of Government Efficiency" (DOGE), advocates for a radical downsizing of the federal government. 

Ramaswamy has suggested that a president could reinterpret existing laws to drastically reduce the size of the federal workforce, potentially firing up to 75 per cent of federal employees within four years.