logo
Pocket Rescissions May Be Part Of U.S. Fiscal 2025 End Game

Pocket Rescissions May Be Part Of U.S. Fiscal 2025 End Game

Forbes2 days ago
The current U.S. fiscal year closes on September 30.
Though the recently enacted One Big Beautiful Bill has dominated attention in the nation's capital, other pressing concerns—centering on the limits of presidential budgetary power—will likely emerge in the run-up to the September 30 fiscal year-end. Efforts by the Trump administration to curtail spending rely on unusual and legally dubious budget execution including a novel legal tactic known as a pocket rescission.
That tactic holds that presidential rescission proposals made late in the fiscal year allow the executive branch to not spend lawfully provided funds if the Congress fails to act on such requests. A widespread use of pocket rescissions could prevent many billions of dollars of policy priorities mandated in law, via legislation passed by the Congress and signed by the President Trump, from being carried out.
Are Spending Deferrals Permitted?
An early indication of the novel approach of pocket rescission was a memo issued a week after the inauguration directing agencies to pause a broad range of financial assistance. While later withdrawn, the memo's intent appears to have remained in place: Delay spending to ensure agencies are delivering assistance that aligns with administration policies.
Presumably, at least some of the rationale for pulling back the memo stemmed from its inconsistency with the Impoundment Control Act, part of a 1974 law stipulating U.S. budgeting procedures. That statute gives the president the power to temporarily withhold funds if Congress is notified. But such deferrals are permissible only to provide for contingencies, to achieve savings from changed requirements or operational efficiencies, or as explicitly provided by law. The Government Accountability Office has supplemented those reasons with a category known as 'programmatic delay,' or an unavoidable delay despite good faith efforts to comply with the law.
Delays based on executive branch disagreement with the merits of appropriations are prohibited, and deferrals cannot extend beyond the end of the fiscal year.
Rescissions In The Back Pocket?
Beyond deferrals, the ICA empowers the president to propose the rescission (or cancellation) of spending that has been provided through the appropriations process. Like deferrals, congressional notification is required. However, in the case of rescissions, Congress must pass a new law agreeing to such cuts. Passage is facilitated by expedited legislative procedures—a simple majority required in the Senate—provided in the ICA. While funds proposed for rescission may be withheld for 45 calendar days of continuous session of Congress, they must be released for expenditure if the rescission legislation is not enacted.
The GAO is investigating numerous instances where appropriated funds have not been allocated. Its findings have met resistance from the Office of Management and Budget. While GAO has the statutory authority to sue to compel the release of these funds, the rapidly approaching fiscal year-end likely renders that prospect impractical. (The term of Comptroller General Gene Dodaro, the current head of GAO, concludes later this year, with President Trump to appoint his replacement.)
The White House has now thrown a significant new wrinkle into the mix: The Trump administration appears to have failed to make plans to use some funds before they are scheduled to expire. During a June 1 appearance on CNN, OMB Director Russell Vought asserted, 'Even the Impoundment Control Act allows for procedures that both require their assent on a rescissions bill -- that's the one that we're sending up this -- early this week -- and also allow for pocket rescissions for those that come later in the fiscal year.'
That latter idea flows from a notion that if rescissions are proposed late in the fiscal year and Congress does not have the full 45-day period to act on any such proposals, the funds expire and become unavailable for obligation. The reasoning extends to assert that even without explicit congressional approval, funds could be allowed to lapse at year's end in a manner mimicking a pocket veto of legislation. (A pocket veto can occur when Congress sends a bill to the president but then ends its session, thereby preventing the president from returning the bill with objections; if the president does not sign the bill, it does not become law.)
Working at cross purposes with that theory are various statutes and constitutional principles requiring the executive branch to ensure funds are prudently obligated during their period of availability. The president is granted the explicit power to propose rescissions, not to enact them.
To that point, GAO has ruled that an ICA violation occurs if a rescission package is sent late in the fiscal year and funds are not released in a manner allowing for their prudent obligation before expiration.
Can Pocket Rescissions Occur If Budget Is Properly Executed?
While the administration argues the ICA implicitly allows pocket rescissions, if it explicitly follows the requirements of both the ICA and the Antideficiency Act (which demands continuous funding apportionments to agencies), a pocket rescission becomes legally impossible. This is because proper apportionments and timely proposals for deferring or rescinding unneeded appropriations prevent the accumulation of large unobligated balances that could otherwise be offered as late-fiscal-year rescissions.
As of now, the White House has notified Congress only of a pending $9.4 billion rescission request (and no funding deferrals). While the House has approved the request and the Senate is considering it, the administration might attempt a pocket rescission to cancel the funding even if congressional approval is not forthcoming. Operating under the belief that pocket rescissions are legal, a cascade of similar requests could soon be made, potentially resulting in billions of dollars not spent, contrary to appropriations law.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Gitlab (GTLB) Falls 9.3% on Critical Security Concerns
Gitlab (GTLB) Falls 9.3% on Critical Security Concerns

Yahoo

time20 minutes ago

  • Yahoo

Gitlab (GTLB) Falls 9.3% on Critical Security Concerns

GitLab Inc. (NASDAQ:GTLB) is one of the GitLab saw its share price drop by 9.3 percent week-on-week, as investor sentiment turned cautious following the release of several critical patches to address vulnerabilities. In a statement posted on its website last week, GitLab said the most critical flaw carries a CVSS (Common Vulnerability Scoring System) score of 8.7, considered highly severe, as it could allow hackers to execute malicious actions on behalf of its users through content injection. Another one, rated medium, could allow restriction bypass through API manipulation. Two others with low severity scores were also addressed, which could allow authenticated users to bypass various group-level restrictions through crafted API requests or manipulation of group invitation functionality. GitLab Inc. (NASDAQ:GTLB) urged all its users to immediately upgrade all self-managed installations to the latest security patches. A team of software engineers working together in an open office, developing innovative solutions. In other news, GitLab Inc. (NASDAQ:GTLB) remained a stock 'buy' for BofA Securities, giving the company a whopping price target of $72, marking a 71.3-percent upside from its last closing price of $42.03. BofA Securities said it was optimistic about the company's duo strategy, which it expected to drive higher adoption of premium paid tiers and add-on AI products such as Duo Pro, Duo Enterprise, and the Agent Platform. While we acknowledge the potential of GTLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data

Oscar Health (OSCR) Loses 12.7% as Wells Fargo Downgrades Stock
Oscar Health (OSCR) Loses 12.7% as Wells Fargo Downgrades Stock

Yahoo

time20 minutes ago

  • Yahoo

Oscar Health (OSCR) Loses 12.7% as Wells Fargo Downgrades Stock

Oscar Health, Inc. (NYSE:OSCR) is one of the Oscar Health declined by 12.7 percent week-on-week as investor sentiment was dampened anew by another rating downgrade for its stock. Last week, Wells Fargo lowered its stock rating and price target for Oscar Health, Inc. (NYSE:OSCR) to 'underweight' from 'equal weight' and to $10 from $16 previously, amid concerns about rising medical costs and inadequate pricing for 2025. The new price marked a 30.4-percent downside from its latest closing price of $14.38. This followed Barclays' first coverage of Oscar Health, Inc. (NYSE:OSCR) on July 2, assigning the firm with an 'underweight' rating but with a price target higher than Wells Fargo's, of $17 apiece. A close up of a patient and a healthcare professional engaging in conversation, showing the company's commitment to patient care. According to Barclays, its coverage reflected policy risks that could derail the insurer's ambitious margin and growth targets. It can be recalled that Oscar Health, Inc. (NYSE:OSCR), under new leadership, set a goal of more than $2.25 earnings per share by 2027. While we acknowledge the potential of OSCR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio

Rigetti (RGTI) Computing Declines 9.4% as Analyst Says 'Sell'
Rigetti (RGTI) Computing Declines 9.4% as Analyst Says 'Sell'

Yahoo

time20 minutes ago

  • Yahoo

Rigetti (RGTI) Computing Declines 9.4% as Analyst Says 'Sell'

Rigetti Computing, Inc. (NASDAQ:RGTI) is one of the Rigetti Computing dropped its share prices by 9.44 percent week-on-week as investor sentiment was dragged down by an investment company's pessimistic comments about its stock. In a market note last week, Zacks Research gave Rigetti Computing, Inc. (NASDAQ:RGTI) a 'sell' recommendation, taking path from the first quarter's surprisingly disappointing earnings results and expectations that it will carry over to its next earnings results. '[Rigetti Computing, Inc. (NASDAQ:RGTI)] reported revenues of $1.47 million in the last reported quarter, representing a year-over-year change of -51.8 percent. EPS of -$0.08 for the same period compares with -$0.14 a year ago. Compared to the Zacks Consensus Estimate of $2.46 million, the reported revenues represent a surprise of -40.16 percent. The EPS surprise was -60 percent,' Zacks Research underscored. A close up of an engineer typing at a quantum computing station in a modern office space. 'Over the last four quarters, the company surpassed EPS estimates just once. The company topped consensus revenue estimates times over this period,' it added. According to Zacks Research, Rigetti Computing, Inc. (NASDAQ:RGTI) is currently trading at a premium to its peers, having returned 21.5 percent over the past month, while the Internet/Software industry, to which it belongs, gained by only 2.7 percent during the period. While we acknowledge the potential of RGTI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store