The federal fiscal year ends on September 30. Normally, that date is just a marker on the calendar for budget wonks, like us. This year, it marks the crossroads for something much bigger. It's a constitutional cage match to determine whether the executive branch can fire federal workers during a shutdown and, separately, if it can cancel funds Congress already appropriated simply by running out the clock.

Last night, Office of Management and Budget (OMB) Director Russ Vought directed federal agencies to prepare plans for mass firings in the event of a government shutdown, a major departure from the norm of temporarily sending workers home, with back pay when the government reopens. To rattle the saber, the OMB memo explicitly says that the mass firings it directs won't be necessary if Democrats support the Republican plan to fund the government with a clean continuing resolution.

Belying this brinksmanship is a broader fight over not just the coming year's federal spending, but the rules of the road for federal spending already on the books. It's a fight that's been simmering since the administration took office, and that's about to boil over—a tug of war to determine which branch of government will truly hold the nation's purse strings.

The immediate battle is over what's known as a "pocket rescission". Under the Impoundment Control Act of 1974, a president can propose rescinding funds, but Congress must agree within 45 days. If Congress does nothing, the money must be spent. The law was written in response to President Nixon's habit of impounding funds he didn't like. Under the Constitution, Congress holds the power of the purse. Article I authorizes it to levy taxes, raise revenue, and decide how money is spent, while Article II charges the president with faithfully executing those laws.

The Trump administration has taken a different view. Late last month, it proposed canceling nearly $5 billion in foreign aid, and then it directed agencies to stop spending those dollars until the fiscal year ends. By September 30, the funds expire on their own, and the administration claims it no longer has to release them. Critics argue that this tactic guts the very law meant to prevent impoundments. If the executive can wait until the eleventh hour to propose a rescission, Congress never has a fair chance to respond.

That's why the fight is already in the courts. A lower court told the administration it had to spend the money. But Chief Justice John Roberts stepped in, issuing a temporary stay that lifted that order and allowed the administration to keep withholding funds while the full Court considers the issue. Over the weekend, the Justice Department even admitted to a "minor error" in its calculations—some aid money outside the five-billion-dollar package was swept up by mistake. The government insists it's not significant, but it underscores how murky this all gets once the executive starts pulling on budget threads behind closed doors.

The stakes in this case are clear. If the Court lets this stand, it's not just foreign aid that can be pocket-rescinded. Future presidents could target any domestic program, waiting until late September to propose a cut, then running out the clock. "No action" by Congress would suddenly mean the same as "yes, cancel the funds." That flips the Impoundment Control Act on its head. The Government Accountability Office has already said pocket rescissions are illegal. The statute doesn't allow for playing games with the calendar.

Some observers think the Court may be wary of wading in too deeply. Disputes over appropriations are politically charged, and the justices often prefer to avoid making sweeping rulings on the power of the purse. That means they could decide the case on narrow, procedural grounds rather than issuing a broad statement about pocket rescissions. In other funding disputes, like over NIH grants, the Court has taken the same approach—allowing the executive to hold money back temporarily while the litigation plays out.

Meanwhile, as mentioned earlier, Congress is again edging toward a fiscal cliff. The House passed a stopgap to fund the government into November, but the Senate rejected it, and a Democratic alternative failed. Now Rep. Rosa DeLauro (D-CT) and Sen. Patty Murray (D-WA) have offered a resolution extending funding through October 31 that also blocks a pocket rescission of foreign aid. Its prospects are dim, however, with some Republicans calling the language an overreach. The likelier outcomes are either a pared-down stopgap that skirts the issue or, most likely, a government shutdown. Sigh.

The collision of these two dramas—shutdown politics and pocket rescission litigation—could turn the week ahead into a fiscal powder keg. Agencies don't know whether they'll be funded, or if already-appropriated dollars will actually reach them. Foreign aid groups will certainly be watching. But domestic programs should be, too. If pocket rescissions become an accepted tool, the precedent won't stop at the water's edge.

For taxpayers, the issue is simple. Congress decides how money is spent. Presidents don't get to cancel line items by inertia. That question was answered fifty years ago. If the Court opens the door to pocket rescissions now, it would shift power back toward unilateral executive budgeting. And—as we've said before—once that balance tips, it's hard to tip back. The party in power may enjoy that leverage today, but sooner or later it will regret handing future presidents a veto pen they were never meant to hold. 

So, as the fiscal year runs out, watch two clocks: the shutdown clock, and the Supreme Court's clock. If both strike at once, we could wake up on October 1 not only with a shuttered government, but also with new precedents that make Congress's power of the purse weaker than it's been in a generation, and that could take another generation to fix.