Trump’s $4.9 Billion ‘Pocket Rescission’ Sets Up Congressional Clash

Trump in the Oval Office on Tuesday (Reuters)
By Yuval Rosenberg and Michael Rainey

Happy Tuesday! We're back, and so is Congress! After a lengthy summer recess, House and Senate lawmakers return to Washington, D.C., with just four weeks to go before a September 30 government funding deadline and no clear plan to avert a shutdown. The coming weeks may also determine the future of President Trump's trade war, the direction of monetary policy and independence of the Federal Reserve and a wide range of pressing political matters, from Trump's anti-crime crackdown to congressional redistricting to, yes, the Epstein files.

Here's what you need to know as we deal with the fallout from August and head into a busy September.

Trump's Turbulent August Sets the Stage for a Wild September

Before we look ahead to a September that's bound to be critical both in terms of fiscal policy and U.S. politics more broadly, let's take a moment to reflect on the turbulent month of presidential power plays that just passed. Whether you followed all the headlines or unplugged for part or all of August, last month's developments set up a slew of legal and spending battles for President Donald Trump and his administration. These are just some of the ways Trump and his team roiled the federal government last month as they continue to "flood the zone."

Slamming government statistics: After the release of a miserable July jobs report that he baselessly claimed was "rigged," Trump fired Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, and nominated E.J. Antoni, a conservative loyalist with questionable qualifications, to the role.

Taking out the tax man: Trump ousted Billy Long, his pick to lead the IRS, after less than two months on the job. Long was the sixth person to head the tax agency this year. Treasury Secretary Scott Bessent is now filling the role in an acting capacity.

Deploying federal troops in D.C.: The president deployed the National Guard and authorized a federal takeover of the D.C. police as part of what he called a crackdown on a "crime emergency" in the nation's capital. Trump has said he'll be asking Congress to provide funding to police and beautify D.C. and suggested that federal troops will soon be sent to other cities, with Chicago atop the list, despite strong pushback from officials at the state and local levels. Relatedly, a federal judge ruled Tuesday that the Trump administration "willfully" broke the law when it sent National Guard troops to Los Angeles in June in response to protests over immigration raids.

Picking a fight with the Fed: Trump announced the firing of Federal Reserve governor Lisa Cook, who then sued, challenging the legality of the president's action, setting up a court fight with huge implications for both the Fed and the presidency.

A shake-up at the CDC: Trump also fired the newly installed director of the Centers for Disease Control and Prevention, Dr. Susan Monarez, after she clashed with Health Secretary Robert F. Kennedy Jr. over vaccine policy. Republican Sen. Bill Cassidy of Louisiana, who heads the Senate committee overseeing the Department of Health and Human Services and provided a key vote to confirm Kennedy, said the firing would "require oversight" from his panel. He also called for the postponement of a CDC vaccine advisory committee meeting. Nine former CDC directors wrote in an op-ed published Monday that Kennedy is endangering Americans' health. Kennedy is scheduled to testify before the Senate Finance Committee on Thursday.

Attacking congressional appropriations: The White House last week ramped up its assault on Congress's power of the purse, announcing that it is canceling $4.9 billion in foreign aid funding via a so-called pocket rescission. The move - the first such rescission since 1977 - quickly drew criticism from Democrats and some Republicans, who called it an illegal withholding of funding appropriated by Congress. See more below.

Uncertainty over Trump's tariffs: A federal appeals court ruled on Friday that most of Trump's tariffs are illegal. In a 7-4 decision, the judges said that Trump had exceeded his authority by invoking the International Emergency Economic Powers Act (IEEPA) to impose most of his tariffs. The court allowed the import duties to stay in effect through October 14, giving the administration time to appeal the decision to the Supreme Court.

In a social media post, Trump called the appeals court "Highly Partisan" and predicted the Supreme Court would deliver him a victory. "If these Tariffs ever went away, it would be a total disaster for the Country," Trump wrote. "If allowed to stand, this Decision would literally destroy the United States of America."

The Congressional Budget Office said last month that the tariffs will decrease deficits by $4 trillion over the next 10 years. That would mostly offset the projected cost of the massive tax-and-spending bill Trump signed into law in July.

Trump's $4.9 Billion 'Pocket Rescission' Sets Up Congressional Clash

President Trump announced late last week that he intends to claw back $4.9 billion in foreign aid funds, muddying the waters ahead of this month's negotiations over the 2026 budget while setting up what could be a major battle over the White House's authority to ignore the will of Congress.

Known as a pocket rescission, the move - which can occur only when there are fewer than 45 days left in the fiscal year - quickly drew criticism from Democrats and some Republicans, who called it an illegal withholding of funding appropriated by Congress. "Any effort to rescind appropriated funds without congressional approval is a clear violation of the law," said Republican Sen. Susan Collins, who heads the Senate Appropriations Committee. She noted that the Government Accountability Office has also said that pocket rescissions, which haven't been attempted since 1977, are illegal.

Republican Sen. Lisa Murkowski joined the critics Tuesday. "I strongly object to the Office of Management and Budget's unlawful attempt to pursue a nearly $5 billion pocket rescission," Murkowski wrote on social media. "Congress alone bears the constitutional responsibility for funding our government, and any effort to claw back resources outside of the appropriations process undermines that responsibility."

The White House remains undeterred by the criticism, arguing that the limitations placed on executive authority by the Impoundment Control Act of 1974, which prevents the president from unilaterally withholding funds appropriated by Congress, are unconstitutional. One budget office official reportedly indicated in a statement that the administration is determined to challenge congressional appropriators, saying, "Congress can choose to vote to rescind or continue the funds - it doesn't matter."

Budget officials weigh in: Ten former congressional staffers who worked for decades in appropriations wrote a letter Tuesday expressing opposition to the Trump administration's effort to cut spending via the pocket rescission, an effort being led by Office of Management and Budget Director Russell Vought.

The bipartisan group, which includes G. Willam Hoagland of the Bipartisan Policy Center, who spent 25 years as a senior Republican staffer in the senate, warned that Vought's effort to cut spending approved by Congress "threatens to fracture the centuries-old process of careful compromises that underlies the passage of laws making appropriations and, consequently, heightens the risk of a government shutdown."

Saying the Supreme Court has made it clear that Congress must be involved in changes to existing law, the group argued that the pocket rescission "is simply a different name for an unconstitutional line-item veto."

The Shutdown Blame Game Has Begun

Federal agencies will be forced to shut down on October 1 unless lawmakers can reach a deal to extend federal funding. House Speaker Mike Johnson and House Minority Leader Hakeem Jeffries on Tuesday each laid the responsibility for avoiding a shutdown at the other's feet.

With the fiscal year coming to an end on September 30, lawmakers will be scrambling this month to provide funding for the federal government, either through annual spending bills or, more likely, a continuing resolution that extends current funding levels.

On Tuesday, Jeffries repeated his warning that House Democrats would oppose any GOP spending bills that are purely partisan and do not include their input.

"The ball is in the court of the Trump administration and Republicans, because if they continue to proceed down the lane of trying to jam a partisan bill down the throats of the American people without working with Democrats in the House or the Senate, our position will be the same as it was in March," Jeffries told reporters, referring to the showdown over government spending this past spring, when House Democrats voted against a continuing resolution plan put forth by Republicans.

He added that he had spoken with House Speaker Mike Johnson about the issue last week and "made clear we're not going to support partisan funding legislation. Period. Full stop."

Democrats in the Senate took a different approach in March. Nine Democrats and one independent voted in favor of the Republican spending bill that had squeaked through the House, providing enough support to push the legislation through Congress. Senate Minority Leader Chuck Schumer may face the same situation in the coming weeks, forcing him to weigh the political costs and benefits of a government shutdown in October.

In a letter Tuesday, Schumer indicated that he and Jeffries are more aligned now. "The only way to avoid a shutdown is to work in a bipartisan way, with a bill that can get both Republican and Democratic votes in the Senate," Schumer wrote.

Johnson told reporters that Democrats will have to decide whether to allow a shutdown or not. "The ball will be in their corner," the speaker told reporters Tuesday, adding that House Republicans have been advancing annual appropriations legislation. "We do not believe it's in the nation's interest to close the government down," he said. "So if Schumer and the Democrats have that in mind, I think that's deeply regrettable."

Johnson also insisted that Republicans would not agree to roll back the health care cuts they passed as part of their megabill as a way to get Democrats to cut a deal on the current spending bill.

The White House reportedly indicated on Friday that it prefers a "clean" CR - which would continue Biden-era spending levels from 2024 - while gambling that Democrats won't oppose such a measure or would bear the blame for a shutdown if they do.

"It's very hard for me to believe that they are going to oppose a clean CR that would cause them to be responsible for a government shutdown," a White House budget official told reporters on a call Friday. "The people that are asking for more than the clean CR are normally the ones that absorb the blame within this town for a shutdown occurring."

But the White House also undermined the chances of bipartisan cooperation by issuing its new $4.9 trillion rescission plan. Democrats have called on Republicans to resist Trump's attempts to override Congress, while hinting that they'll be less likely to cooperate with the budget process if Trump gets his way.

"Republicans don't have to be a rubber stamp for this carnage," Schumer said on Friday. "But if Republicans are insistent on going it alone, Democrats won't be party to their destruction."

Fiscal News Roundup

Views and Analysis