Trump’s $810 Million in Funding Cuts Are Unconstitutional: Watchdog

Happy Tuesday! Senate Judiciary Committee Republicans today grilled Jack Smith, the former special counsel who led investigations into President Trump over the January 6 riot at the Capitol and his alleged mishandling of classified documents. The most memorable moment may have been when GOP Sen. Eric Schmitt tried to score a "gotcha moment" only to have it blow up in his face, quite spectacularly (because the Atlanta Hawks and the Iowa Hawkeyes are not the same thing).\n\nHere's what else we're watching while also keeping an eye on baseball's postseason.

Trump's $810 Million in New Funding Cuts Are Unconstitutional, Watchdog Says

President Trump's move last week to unilaterally cancel $810 million in funding violates Congress's constitutional power over spending, the Government Accountability Office said Tuesday in a letter to congressional leaders.

Trump last week sent a letter to Congress proposing 11 cuts across various departments, mostly focused on programs and services for immigrants and minorities as well as climate efforts. Most of the cuts, $567 million, involve funding for the Office of Refugee Resettlement at the Department of Health and Human Services.

This type of request to cancel congressionally approved spending is called a rescission, though when the request is delivered to Congress just before the end of the fiscal year, leaving lawmakers little time to act, it is known as a pocket rescission.

Appropriators in both parties blasted the White House's latest cuts, and GAO, an independent, non-partisan government watchdog agency, had previously said that a president's use of such pocket rescissions is unlawful.

GAO's view: In GAO's latest letter, the agency's general counsel, Edda Emmanuelli Perez, reiterates that finding, writing that the Congressional Budget and Impoundment Control Act of 1974, or ICA, does not allow the president to withhold budget authority through its expiration date.

"The Constitution vests in Congress the power of the purse, and Congress did not cede this important power through the ICA," the letter says. "The ICA permits only the temporary withholding of budget authority and provides that unless Congress rescinds the amounts at issue, they must be made available for obligation. The President cannot rely on the authority in the ICA to withhold amounts from obligation, while simultaneously disregarding the ICA's limitations."

Perez added that the plain language of the 1974 law as well as its legislative history, Supreme Court precedent and the broader constitutional framework all support the GAO's view that the proposed cuts can't go through unless Congress completes action on a bill rescinding the funds.

"As a result, the rescission proposals contained in the President's September 25, 2026, special message to Congress do not permit the President to withhold the appropriations beyond the end of fiscal year 2026," Perez wrote, adding, "Any withholding of appropriated funds beyond their date of expiration, regardless of size, subverts both the constitutional process for enacting federal law and Congress's constitutional power of the purse."

Political punches: Rep. Brendan Boyle, the top Democrat on the House Budget Committee, called on Congress to pass a bill he has proposed to prevent the president from rescinding funds without congressional approval. The bill would require the White House budget office to release appropriated funds at least 90 days before they expire.

"He isn't a king - he can't cancel programs created by law and spend your tax dollars on whatever he wants," Boyle said. "Congress must pass my Congressional Power of the Purse Act to stop his illegal power grabs."

The White House insists that its rescissions are legal, and Russ Vought, the White House budget director, attacked GAO as "hyper partisan" in a social media post Tuesday.

"Not a surprise," Vought wrote on X. "GAO has become hyper partisan and Congress recently attempted to cut their spending because of it. GAO changed its long-time opinion on this very issue from the 1970s when they specifically noted the tool was available to the president. They make their legal assessments based on whether Democrats are in the White House."

Will the courts decide this legal issue? The Supreme Court last year allowed $4 billion in foreign aid funds to be cut under a previous Trump pocket rescission, though it did not decide more broadly about the legality of pocket rescissions.

Politico's Jennifer Scholtes notes that a legal challenge to Trump's latest cuts may not be so simple.

"Some federal judges have concluded that only the head of GAO is able to sue under the 52-year-old law governing rescissions, since that legislation tasked the watchdog with tracking cash the executive branch spends and challenging any illegal withholding of federal dollars on Congress' behalf," Scholtes writes. "But GAO has not taken legal action against Trump, even after repeatedly concluding that the administration has illegally impounded federal dollars during the president's second term. The watchdog has been operating without a Senate-confirmed leader since former Comptroller General Gene Dodaro retired in December."

Pro-Trump Ads Being Funded by $20 Million From Homeland Security: Report

The controversial new TV ads prominently featuring President Trump that say they have been "Paid for by the U.S. government" are being funded by an agency within the Department of Homeland Security, senior Democrats said Tuesday, adding that the spots could cost the federal government upwards of $20 million.

U.S. Customs and Border Protection, which is part of DHS, has paid an estimated $1.7 million so far to air three ads on national and local TV networks. CBP reportedly runs TV and radio ads on a regular basis, carrying messages aimed at undocumented immigrants, but the pro-Trump ads are different. They are aimed broadly at American citizens, and highlight Trump's extravagant vows to defeat his enemies, including "Marxists," the "fake news media" and the "deep state."

The White House has characterized the ads as public-service announcements that "are about reminding Americans to love their country."

Senators demand answers: The trio of ads, including one that appears to be a repurposed Trump campaign ad from 2024, has drawn criticism from lawmakers on both sides of the aisle. In a letter to DHS Secretary Markwayne Mullin, Sens. Patty Murray, the top Democrat on the Appropriations Committee, and Chris Murphy, the senior Democrat on the subcommittee that oversees Homeland Security, slammed the department's use of "Americans' tax dollars to fund government propaganda."

"It has come to our attention that the Department of Homeland Security (DHS) may be using Americans' hard-earned tax dollars to bankroll the obscene political ads celebrating President Trump that have aired on stations nationwide in recent days," Murray and Murphy wrote. "We should not have to remind you that using government funding to create or air political ads like the ones that have been running over the last few days is illegal and a shockingly corrupt misuse of taxpayer dollars."

The lawmakers said that "it appears DHS has dedicated $20 million to this outrageous scheme," using funds that were provided by Republicans' One Big Beautiful Bill Act and intended to be used by U.S. Customs and Border Protection for "commemorative events relating to border security."

The senators demanded that the ads be taken down, the federal government be reimbursed for the "theft" of federal funds and all those involved in "this corrupt and illegal propaganda" be held accountable. They also submitted a list of questions seeking more details on how the ads came to be aired and funded, with a 48-hour deadline.

White House involved: According to The Wall Street Journal, the people involved in the effort to air the ads include Trump himself: "President Trump personally pushed for the ads and has been involved in their creation, according to a person familiar with the matter," the Journal reported Tuesday.

We may be seeing more publicly funded pro-Trump ads soon. Axios reported Tuesday that Trump has handpicked the ads that are playing, and more are in the pipeline. "This is just the beginning," an administration official told Axios.

Number of the Day: $1 Billion

Nearly $1 billion in U.S. tariffs on certain Canadian imports, including alcoholic beverages, dairy products and motorcycles, took effect Tuesday. The new tariffs aren't expected to have a major economic impact, given that they affect only a small slice of the roughly $880 billion in annual trade between the United States and its neighbor to the north. Still, it represents the latest escalation in President Trump's tit-for-tat trade war with a close American ally.

In remarks to reporters in the Oval Office on Monday, Trump lashed out at Canada. "The problem is that they've treated the United States very unfairly. They have been one of the worst countries in the entire world. You know, we get along with China, we get along with people and we make good deals," Trump said. "But Canada has been really very difficult to deal with, actually."

Canadian Prime Minister Mark Carney has responded to the U.S. tariffs by retaliating in kind while also seeking to foster closer economic ties with other countries, including potentially having Canada become the first associate member of the European Union.

Carney has pushed back on U.S. demands in trade talks, saying that the Trump administration was asking for too much and offering too little.

"The past 40 years has been a period of deeper economic integration with the United States," Carney said in a YouTube video posted earlier this month. "Truth is, it was easy business, but it meant we relied too much on one economic partner. It's clear that time is over."

Fiscal News Roundup

• Federal Watchdog Says Trump's $810M Funding Cancellation Is Unconstitutional – Politico
• Appropriators Seek Ways to Curb Trump's Spending Cancellations – Roll Call
• Homeland Security Taps $20M in Taxpayer Funds for Pro-Trump Ads – Associated Press
• Senate Republican Blocks Democratic Resolution Disapproving of Taxpayer-Funded Ads Promoting Trump – Associated Press
• From Motorcycles to Booze, US Ban on $1 Billion Worth of Canadian Imports Goes Into Effect – Associated Press
• ICE Plans 5,000 New Hires to Help With Deportation Drive – New York Times
• US 30-Year Treasury Yield Rises to Highest Level Since 2002 – Bloomberg
• 'Black Holes' for Capital-Gains Tax Come Under Treasury Fire – Bloomberg
• GOP Senator Blocks Move to Prevent Trump From Tearing Down Buildings Honoring Presidents – The Hill
• Hegseth to Announce 20% Cut to Senior Officer Ranks – Wall Street Journal
• Trump Accounts Will Auto-Enroll Children, Potentially Adding 60 Million Accounts: Treasury – CNBC
• Trump Administration Launches AI Tool Aimed at Streamlining Government Online Services – Wall Street Journal
• Ex-Trump Prosecutor Smith Forcefully Defends Investigations as Republicans Assail His Team's Tactics – Associated Press
• Judge Orders New York to Scrap Rollout of Second-Home Tax and Start Over – New York Times
• Congress Votes to End Production of the Penny After 234 Years, Sending a Bill to Trump – Associated Press

Views and Analysis

• Trump Chooses the Worst Way to Cut Federal Spending – Washington Post Editorial Board
• Washington Needs a Fiscal Intervention – Committee for a Responsible Federal Budget
• The Trump Brand Has Tanked. The GOP May Pay the Price – Kristen Soltis Anderson, New York Times
• As the US Midterms Approach, Trump's Boasts on the Economy Fall Flat With Voters – Steven Greenhouse, The Guardian
• The 'Affordability' Democrats? You Have to Be Kidding – Wall Street Journal Editorial Board
• The Flawed Logic of Medicare for All – Bloomberg Editorial Board
• Is Neoliberalism to Blame for America's Health Care Woes? – Merrill Goozner, Washington Monthly
• The Grim Reality Behind a New Census Report – Wendy Chun-Hoon, Washington Monthly
• Trump Just Banned Canadian Booze - but There's a Big Catch – Elisabeth Buchwald and Matt Egan, CNN
• Trump Touts America.gov, but Its Government-Sourced AI Answers Undercut Many of His Statements – Meg Kinnard, Chris Rugaber and Will Weissert, Associated Press
• This Japanese Tax Has a Problem: It's Too Popular – Gearoid Reidy, Bloomberg