Trump Administration Is Preparing to Challenge Budget Law, U.S. Officials Say

Yomiuri Shimbun

7 hours ago

The Trump administration is preparing to test a 1974 budget law by refusing to spend congressionally mandated funds, senior federal officials say – an escalation that could change the balance of power between Congress and the White House.
In both internal communications and interviews, more than two dozen current and former employees across multiple agencies said the administration appears to be readying to push the boundaries of the law meant to prevent the president from unilaterally overturning spending decisions made by Congress.
Key White House aides have long argued that the law is an unconstitutional limit on presidential power and suggested that they will seek court rulings to overturn it, which could allow the White House to determine which spending to carry out.
The nonpartisan Government Accountability Office has issued two rulings that funds have been illegally withheld already, and congressional Democrats have said a far wider scope of funding freezes has broken the budget law. Although the White House denies that any funds have been 'impounded' so far, officials at a half-dozen agencies expressed alarm to The Washington Post over how the disbursement of funds has slowed, stopped or been delayed – often, they say, with little clear legal justification. The scale of canceled or withheld funds remains opaque.
Deadlines in the coming weeks will clarify how much the administration wants to test the law, enacted in 1974 after President Richard M. Nixon's Watergate scandal. White House officials are planning to 'defer' roughly 200 separate accounts across the federal government, according to two people familiar with the matter, who, like many others interviewed for this story, spoke on the condition of anonymity for fear of retribution. These delays, which would affect billions of dollars at a wide range of U.S. agencies, probably would be illegal if they prevent the funds from being spent before this fiscal year ends on Sept. 30, the people said.
Interviews with federal workers show that a wide spectrum of government spending has already been stalled. Major scientific research grants have been terminated without public notice in recent weeks. At one federal agency, staff were told – via a directive that took effect on a Sunday – that almost all contracts over $250,000 no longer could be signed. At the General Services Administration, which manages federal real estate, the Trump administration is trying to cut costs by rejecting many agencies' requests for facilities repairs paid for by those agencies. In some instances, officials say it's unclear whether the budget law has been violated already or is merely on track to be breached – but the rejections have provoked internal alarm about their legality either way.
The administration still could disburse money for many stalled programs before the end of the fiscal year. Rachel Cauley, a spokeswoman for the Office of Management and Budget, said in a statement that while they have not happened thus far, 'impoundments remain an option at the president's disposal.'
Though billionaire Elon Musk's U.S. DOGE Service drew significant attention for its speedy cuts, Russell Vought, President Donald Trump's budget director, is expected to be key to the coming fight over spending. Vought has spearheaded the administration's campaign to assert sweeping executive power over spending, arguing that the Impoundment Control Act, the law at issue now, is unconstitutional.
The Trump administration has justified its cost-cutting measures by pointing out that the United States is $36 trillion in debt, although the type of funding that officials have targeted represents a small fraction of the overall budget.
'We are seeing multiple major, major violations of the budget law,' said G. William Hoagland, who served as a GOP aide to the Senate Budget Committee and is now at the Washington-based Bipartisan Policy Center. 'I think this is on its way to becoming a really big issue. This is going to blow up more than the administration can imagine.'
Health officials say funding has been 'vaporized'
The frozen spending is most visible in the research community, where science and health funding has ground to a halt with little public explanation.
In one example, the U.S. DOGE Service has failed to post dozens of planned funding opportunities since it took control of a key federal grants website in April, according to two people familiar with the process. Agencies were previously able to post notices of funding opportunities (NOFOs) directly to grants.gov, but DOGE now requires them to submit through a centralized mailbox it controls.
The new process has created a bottleneck for agencies such as the National Aeronautics and Space Administration that seek to award grants. The Department of Health and Human Services, for instance, is waiting for the federal government to post at least 30 planned funding opportunities that encompass tens of millions of dollars in congressionally appropriated funds for health and elder care initiatives – including $8 million for Holocaust survivor support and $6 million for Alzheimer's caregiver assistance – risking their expiration within the fiscal year. The backlog has alarmed career officials who warn that it could amount to illegal impoundment of funds.
Major funding agencies, including the National Institutes of Health and the National Science Foundation, have been mired in dysfunction that has slowed the routine work of awarding new grants and sending billions in funding, appropriated by Congress, to researchers and projects across the country.
In a federal lawsuit filed last month in Rhode Island, 20 states sued HHS, seeking an injunction 'to prevent the unconstitutional dismantling of this vital department.' The states alleged that a reduction in force that laid off 10,000 employees in April was 'terminating the people necessary for [HHS] to meet its own mandates, and paralyzing it by means of a confusing reorganization.' The suit called the job cuts 'an unlawful effort to undercut the will of Congress who ordered the agencies and programs to run.'
Since Trump's inauguration, the National Science Foundation has awarded about half as many grants as it did in the same period in 2024, according to a Post analysis of the NSF database. The agency has terminated about 1,700 grants in the past few weeks and slowed new funding to a trickle, according to public records, internal data obtained by The Post and an employee familiar with the situation, who spoke on the condition of anonymity for fear of retaliation.
So far this year, the agency has received only $6.5 billion of the congressionally appropriated $9 billion that it is supposed to spend on research, according to the employee and the records. No money at all has gone into a 'facilities' spending account that is supposed to contain $230 million for fiscal 2025, the employee said and the records show. Because of the halt in funding, new research in areas including environmental science and neuroscience is not getting underway, the employee said.
The agency is also mostly not giving out awards this year, the employee said. The Office of the Director will not 'release money into our accounts to do anything,' the employee said. 'Essentially, money has been vaporized.'
At NIH, the agency will end the fiscal year on Sept. 30 with unspent funds unless it starts awarding new grants much faster, according to Jeremy Berg, a former director of the National Institute of General Medical Sciences, who has been closely tracking spending.
Berg recently shared his analysis with NIH Director Jay Bhattacharya, urging him to 'do your job … to make sure that these appropriated funds are committed through approved processes by the end of the fiscal year in September.'
Bhattacharya replied, 'Contrary to the assertion you make in the letter, my job is to make sure that the NIH spends the money that the American people have entrusted us with on projects that advance the health and longevity of the American people.' He said he was preventing funds from being spent on 'ideological boondoggles' and dangerous research.
Spokespeople for NIH and NSF declined to comment.
Agency officials warn of illegal fund cancellations
At the Army Corps of Engineers, a different kind of freeze has emerged. In June, employees were told that, effective immediately, they could no longer award most 'noncommercial' contracts above $250,000 – thanks to an April executive order titled 'Ensuring Commercial, Cost-Effective Solutions in Federal Contracts.'
The result, staff say, is halted surveys, delayed sediment analysis and stalled construction.
'It feels like temporary impoundment,' one Corps employee said. (An impoundment is the unilateral cancellation of government funds.)
In March, that same employee escalated concerns internally, asking whether repeated contract halts might count as impoundment. In a subsequent meeting, government attorneys told the employee that it was ultimately 'up to the courts' to determine whether the situation constituted a violation – but that civil servants following guidance would not be liable. If uncomfortable, they advised, the employee could ask to have the task reassigned.
A spokesman for the Army Corps of Engineers said that it was following guidance related to an executive order on procurement and that it is 'committed to continuing to deliver its mission for the American people in accordance with the administration's policies and priorities.'
Meanwhile, the GSA is also refusing or interminably slow-walking requests from agencies to repair their facilities, three employees there said. Only requests for work projects that directly service one of three goals – Trump's return-to-office plans, 'safety/emergency' or 'national security' – are being allowed to go forward, the three people said.
The restrictions have been in place for at least a few weeks, the employees said. The new rules are being enforced by the Office of Management and Budget, one of the employees said. What the new OMB policy means in practice, one of the employees said, is that basic jobs are stalled, with unclear legal justification.
'If an agency has funding in their budget to renovate an office because it's old, or buy new furniture or something, OMB is telling GSA not to accept the money,' the employee said. 'This is likely a violation of the law, if those funds were appropriated by Congress.'
A spokesperson for GSA did not immediately respond to a request for comment.
Targeting the enforcer
For government officials who believe the administration is illegally withholding or canceling funds, the main recourse is to report violations to the nonpartisan Government Accountability Office. The GAO – an arm of Congress – has already opened more than three dozen inquiries into potential White House violations of federal budget law.
But that avenue is also under threat. On Monday, House Republicans unveiled a new spending proposal for next year that would cut the GAO's budget and bar it from suing the federal government over canceled appropriations, effectively removing one of the few independent bodies capable of enforcing budget law if it's enacted.
The Trump administration has asked Congress for approval to cancel roughly $9 billion in spending – including funding for foreign aid and public broadcasting. The House has signed off, but if the request doesn't pass the Senate, officials have signaled they may use a novel legal tactic to let the funds expire at the end of the fiscal year.
Still, scholars on both the right and left say the administration could persuade the Supreme Court to side with it, further expanding presidential authority over federal spending.
'I've spent a fair amount of time talking with government employees, and it's just utter chaos,' said Richard Pierce, an administrative law professor at George Washington University. As for how the courts will rule, he added: 'I'm not willing to predict a result. I can see it going either way.'
To some experts, however, the stakes are clear.
'The administration appears to be preparing to run the clock out,' said Hoagland of the Bipartisan Policy Center. 'To me, it's clearly a violation of Article I, Section 9 of the Constitution. It's fundamental to the way the government is supposed to operate.'