It’s the last week of fiscal year 2026, and for once there’s no shutdown drama. A continuing resolution runs through December 11. But late Friday, the White House sent Congress $810 million in “pocket rescissions.” That’s money Congress appropriated and the president signed into law, which the administration now plans to hold until it expires at midnight Wednesday. Congress won’t vote on it. The calendar will decide instead.

TCS President Steve Ellis and Director of Research and Policy Josh Sewell go through what’s in the package, including $567 million in HHS programs and grants at Education and Justice. They explain how the 1974 Impoundment Control Act’s 45-day clock is supposed to work, and what last year’s Supreme Court ruling decided and what it left open. They also cover why GAO calls the move illegal. Two Republicans on Senate Appropriations disagree: Sen. John Kennedy attacks the programs, while Chair Susan Collins attacks the process. Josh and Steve also test the principle by asking what happens when a future president in the other party does the same thing to shipbuilding or highways. Then they look ahead to what taxpayers should watch from GAO, the courts, and a lame-duck Congress after the midterms.

Announcer (00:02)

Welcome to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending, and tax issues facing the nation. Cut through the partisan rhetoric and talking points for the facts about what’s being talked about, bandied about, and pushed in Washington, brought to you by Taxpayers for Common Sense. And now the host of Budget Watchdog AF, TCS President Steve Ellis.

Steve Ellis (00:40):

Welcome to All American Taxpayers Seeking Common Sense. You’ve made it to the right place. For 30 years, TCS, that’s Taxpayers for Common Sense, has served as an independent nonpartisan budget watchdog group based in Washington, DC. We believe in fiscal policy for America that is based on facts. We believe in transparency and accountability because no matter where you are in the political spectrum, no one wants to see their tax dollars wasted. It’s the last week of September 2026, the last week of the fiscal year. And for the first time in a long time, there’s no shutdown drama. The House passed a continuing resolution early, Senate followed suit, it runs through December 11th, but there is a deadline. It’s Wednesday at midnight. Late Friday, the White House sent Congress $810 million in what it calls pocket rescissions. Money Congress appropriated, money the president signed into law, but the administration now plans to hold it until the fiscal year runs out and the money expires.

(01:38):

No vote, just a calendar. On Sunday’s Face the Nation, Senator John Kennedy of Louisiana, a Republican on the appropriations committee, called what’s being cut, “spending porn.” The Republican who chairs that committee, Senator Susan Collins, called the moves illegal. Same party, same chamber, same committee, two different arguments. Josh Sewell has read the fine print. He always does. Josh, welcome back to Budget Watchdog AF.

Josh Sewell (02:03):

Hey Steve, good to be here.

Steve Ellis (02:05):

So Josh, it’s always Friday night, isn’t it, when this stuff comes up? I mean, walk us through what landed. $810 million, what’s in that?

Josh Sewell (02:13):

Yeah, it is always Friday, especially in this administration. So $567 million in this package was from health and human services programs, mostly for immigrants and asylum seekers that the administration claims are not needed anymore because basically of the progress on closing the border. The rest of the funds are programs at Department of Education, DOJ, and others that the administration claims are either woke, DEI, or somehow duplicative.

Steve Ellis (02:42):

DOJ being the Justice Department. So Josh, I detect a little bit of skepticism in your voice on the claims of this administration.

Josh Sewell (02:51):

Yeah, because you read the letter from OMB and the programs they cite are, they’re not rogue programs, but they’ve been around for decades. And one like the Department of Education’s special program for migrant students, well, that’s a grant program for communities to help kids whose parents are migrant workers, who by the way are immigrant or not, and often legal, not necessarily undocumented, and those folks that they move with the season and thus they move school districts sometimes multiple times through the season. And so it’s not a controversial program usually, it’s a way of helping educate kids who otherwise would fall through the crack and would honestly put a burden on those local communities, which are often rural and poor.

Steve Ellis (03:35):

So Josh, the White House says these dollars went to “pro illegal immigration programs and non-governmental organizations.” Now I’ll play the skeptic. $810 million in a budget measured in trillions. Why should Budget Watchdog AF Faithful care about this one?

Josh Sewell (03:54):

Principles and the Constitution. So whether you like a program or not, these funds were provided in a bill passed by Congress and signed by the president. In fact, this president, the law is clear, you have to spend the funds when it goes through the process. It’s just the law and the constitution.

Steve Ellis (04:14):

Well, let’s do civics, Josh. I mean, rescissions exist. They’re part of the budget policy environment. So what is a rescission and why does the president have to ask Congress in the first place to rescind funds?

Josh Sewell (04:26):

So a rescission in itself is when unspent funds that have been appropriated by Congress are pulled back into the treasury, simple as that.

Steve Ellis (04:34):

And they’re not rare. Congress rescinds money all the time, basically in every spending bill, right?

Josh Sewell (04:39):

Yes. I don’t think I’ve ever seen one that didn’t rescind something. So Congress, let’s say, provides a billion dollars to respond to ag disasters, but when the money is actually doled out that year, they only end up needing $500 million. So in the next approps bill, they rescind the 500 million and typically reappropriate it to something else, a different program.

Steve Ellis (04:57):

So how are these rescissions different?

Josh Sewell (05:00):

This is different because this isn’t Congress looking to rescind the funds. That’s the key. It’s the president. And Congress, they’re the ones that have the power of the purse. You cannot exercise a power the Constitution grants to another branch. This is basic civics and beyond basic civics, this particular question was settled with the passage of the Budget and Impoundment Control Act of 1974.

Steve Ellis (05:23):

TCS favorite, though not a favorite of Office of Management and Budget Director Russ Vought, besides establishing the budget process as we know it today, had that impoundment control part, what does that do?

Josh Sewell (05:36):

So it creates a front door for the president to request rescissions, and that’s the key. Again, the president cannot just do this on his own. The president under this process sends a message to Congress requesting the rescissions of particular programs, particular amounts of funds under particular programs. Then Congress has a 45-day clock to act. They can agree and rescind those funds, take a vote, support it, or if they vote it down, or if they just don’t act, the money is spent. So they either have to vote for it, vote against it, or do nothing. And then if they do nothing after the 45 days, it goes into effect because Congress has already passed these funds in a different bill previously.

Steve Ellis (06:18):

The 1974 bill or law was really directed because the Nixon administration were impounding funds they didn’t want to spend, and they passed this bill over the president’s veto. So clearly this is a statement, but they still gave the president a role in the process to request a rescission. It’s just in this case, they’re running up against that 45-day clock. So Josh, Congress walked through that front door last year with about $9 billion in a rescissions package, mostly focused on cutting public broadcasting and foreign aid, and the president signed that into law in July of 2025.

Josh Sewell (06:57):

Yeah, and this bears repeating, that’s the key. Congress acted on the request. They voted, and this time they voted in support. They voted other times in the past, including in the last Trump administration, there was a rescissions package and the Republicans who were in control of the time voted it down. But in each instance, Congress is actually voting on the request.

Steve Ellis (07:17):

So Josh, I was kind of getting ahead of myself there a little bit. What makes the current request a pocket rescission?

Josh Sewell (07:26):

So it’s late September. We are within 45 days of September 30th, which is when one-year money, the money passed in the last fiscal year expires because it is the end of the fiscal year. So the House, it’s out at least until November, maybe forever it seems like. The Senate plans to adjourn in a few days. So Congress won’t affirmatively act one way or the other. They’re not going to vote up or down on this request, but that 45-day clock also can’t run out because we don’t have 45 days. So it’s basically like a pocket veto where the president doesn’t have to actually veto something because the clock just runs out.

Steve Ellis (08:04):

And this isn’t the first time they’ve tried this or done this, right, Josh? Last year it was nearly $5 billion in foreign aid, and one year ago this week, the Supreme Court let it stand. What did the court decide and what didn’t it decide?

Josh Sewell (08:21):

So yes, so last year there was an actual rescission package that was voted on and went into effect. There was also, subsequent to that, additional attempts to rescind more through this pocket rescission, and that’s what ended up being subject to litigation. Basically, it came down to an emergency stay like so much does now, and the Supreme Court leaned on foreign affairs authority and whether the aid groups could in fact sue. So it came down to not so much a ruling on whether pocket rescissions were lawful or not, it became a technical ruling about standing. So it left open a lot of gray area and a lot of unresolved discussion, we’ll call it.

Steve Ellis (08:56):

Congress has its own referee on this issue. Their investigative watchdog arm nonpartisan government accountability office says pocket rescissions are illegal. And the aforementioned OMB director, Russ Vought, points to a GAO letter from the 1970s and says there’s precedent for pocket rescissions. Who’s right? And does it matter if nobody can make it stick?

Josh Sewell (09:21):

Well, the GAO is right. I mean, sometimes if it’s been 50 years and no one else has thought of something, you might be an innovator or you just might be an idiot. The GAO is right on this, and frankly, it comes down to a plain language test. Vought is getting creative, and he even stated in the letter, in the last impoundment request, and then this one that it’s the Impoundment Control Act, not the Impoundment Elimination Act. And he went on through a bunch of other little technical things about trying to find exceptions to the long established, again, 50 plus years of established precedents on this. And frankly, I don’t like to say this, but I think it epitomizes the worst characterizations of Washington. Here you have an unelected bureaucrat finding a supposed technical exception to push their agenda after everyone else, including their own party, thought the issue was done because they passed the bills.

(10:13):

The president, this president signed these bills into law, and now they’re trying to re-litigate something that was done a year ago.

Steve Ellis (10:20):

It’s not about the underlying funds. It’s not about what they were going to fund and whether that was a good use of the taxpayer dollars or a bad use of the taxpayer dollars. It’s an abuse of the system, and this is something that isn’t constitutional and it’s against the law. And that, as Josh was pointing out, has been on the books for half a century. So let’s go to the tape. Sunday on Face the Nation, Margaret Brennan asked Senator Kennedy whether he agreed with Chairwoman Collins. His answer, “I love Susan like a taco, but she’s wrong. First, Congress didn’t approve this stuff.” He then goes on to say that Congress appropriates in broad categories and the bureaucracy fills in the details and then Congress ought to get up off its ice-cold, lazy butt and cut it itself. Josh, is he right that Congress didn’t approve this funding?

Josh Sewell (11:16):

Congress doesn’t micromanage every account. They appropriate money for a particular purpose with different degrees of guidance. Sometimes they provide a spending formula, maybe minimum amounts. They can attach all kinds of eligibility criteria, but then the details are added by the agencies. There’s decades, if not hundreds of years of precedence in this and laws on this and Supreme Court rulings, but in the end, Congress did make a decision, the president signed it, and now everyone involved, they have to spend the money on the original purpose. It’s then called the purpose statute. We go into that later, but someone in an administration can’t just shift to a new program, take money and spend it somewhere else. It has to be spent. Again, say it over and over, it’s the law.

Steve Ellis (12:05):

And where Senator Kennedy is also wrong, in my opinion, is that they did approve $810 million. And so even if it wasn’t to these particular programs or narrow, they approved that money and this is going to mean that it’s not spent.

Josh Sewell (12:20):

And I think it’s really important too is yes, Congress, they could do their job better. They could spend more time focusing on where they’re spending money and they should, but also this is very similar to every debate we have in the spring when the president makes a budget request and every president, not just President Trump, makes some substantial cuts usually or some massive shifts. Those are all requests and then Congress acts on those. The challenge with doing these pocket rescissions is that you essentially, you up in that process. And so after you’ve made your request, Congress has gone through all the trappings, people have had their say, then to come back and implement your request, your desired budget after we’ve already voted on it, it takes away stability and predictability. It’s unconstitutional, and it just makes for an inefficient government and a more partisan government one way or the other.

Steve Ellis (13:10):

Well, we let Senator Kennedy have his piece. So let’s hear what Senator Collins, on the other hand, she called it, “The most recent attempt by this Office of Management and Budget to undermine Congress’s constitutional power of the purse.” Senator Patty Murray, the ranking Democrat on the appropriations committee, called it “theft from the American people.” So Kennedy’s arguing about the programs. Collins is arguing about the process. Here at TCS, we’ve spent 30 years, more than 30 years telling Congress to make hard choices. Where does that leave us?

Josh Sewell (13:45):

Well, Congress needs to do its job. They do need to make our budget more fiscally sustainable, but that’s not something the president can do on his own. It’s not something one party is going to do. And if members of Congress and the Senate are more than welcome to get off their ice-cold butts and go back to the private sector if they don’t want to do what is their actual job, which is to make a more sustainable budget and think of the future, and frankly, it’s the responsibility of Congress. I know we go back to that all the time, but it’s a select few people that are up there, and if you volunteer for this job, you want to do the hard work, do your job.

Steve Ellis (14:18):

Back in the Bush administration, Taxpayers for Common Sense supported this enhanced rescission authority that the Bush administration proposed. It was what they called the constitutional line item veto, and basically Congress had to vote up or down on the rescission package. The president couldn’t keep sending the same rescission package, but Congress had to vote. They couldn’t just stick it in a drawer, and then after 45 days, the money gets spent. They had to actually affirmatively say, “Yes, let’s spend the money,” or, “No, let’s not spend the money.”

Josh Sewell (14:48):

And there’s all kinds of technical changes that we can do, and there are a lot of folks on both sides of the aisle, liberals, progressive, fiscal conservatives who have these ideas, and I think that’s something we should explore. We do need to find ways of saving more money and raising more revenue, and sometimes Congress has to pass laws to force themselves to act. And so if they want to have that conversation, I think there are plenty of us who’d be willing to do that.

Steve Ellis (15:11):

All right, Josh, try this one on. Despite threats to run for a third term, a future president in the other party, same timing, only this time the money that expires is shipbuilding or border security or highways. Does the rule still hold up?

Josh Sewell (15:27):

Here you go. That’s the test, and this is why we default to principles in the Constitution. I have to tell you, I got up and I was reading through my email and I read my email from the Cato Institute, our good libertarian friends. In their article, they talked about how, I should quote them, but basically they don’t think these social programs that are targeted for rescission should exist. It’s what you should do in the private sector. It’s not the role of government. However, pocket rescissions are unconstitutional and illegal, and the Congress should reject this package, and if they want to rescind it, rescind the money. And so I think that’s where the real test is, and that’s why we stand on this and we have our position is that we want to have the debate out in the open and have Congress make decisions. You can’t leave it up to one person.

(16:11):

You can’t leave it up to an institution that works OMB mostly in the dark. It’s not constitutional. It’s not common sense. It’s not the American way.

Steve Ellis (16:19):

Let’s get you out of here on this. Last one. The money lapses Wednesday. Congress comes back after midterms with the December 11th deadline. What should taxpayers watch for from GAO, from the courts, and from the appropriators?

Josh Sewell (16:34):

Well, I’d anticipate you’ll get some kind of GAO ruling on this particular issue, this particular pocket rescission. You’re going to see lawsuits. Standing was the issue last year. That might be another issue here, but in every issue now, it seems like we’re going to see some lawsuits. And then maybe there’ll be some discussion about a way to ban pocket rescissions or to do, as you alluded to, a Congress finding a way to force funds to be spent out quicker or earlier or other ways to avoid these kind of last minute decisions and questions. And finally, it’s a lame duck after a midterm election. And so especially if one or both chambers switch, it’s going to be a wild and potentially very, very expensive lame duck.

Steve Ellis (17:16):

Josh Sewell, thank you.

Josh Sewell (17:18):

Happy to do it, Steve.

Steve Ellis (17:19):

And there you have it, Budget Watchdog AF Faithful. $810 million appropriated by Congress, signed into law, and come Thursday morning, poof, gone. Not because anybody voted to cancel it, because the calendar ran out on the funds. You can love these programs or hate them, but the Constitution gives the power of the purse to Congress. Doesn’t say anything about a pocket. This is the frequency. Mark it on your dial, subscribe and share, and know this, Taxpayers for Common Sense has your back, America. We read the bills, monitor the earmarks, and we highlight the wasteful programs that poorly spend your money and shift long-term risk to taxpayers. We’ll be back with a new episode soon. I hope you’ll meet us right here to learn more.