
Rod Lamkey/AP Photo
Russell Vought, President Trump’s nominee to be director of the Office of Management and Budget, appears before a Senate Homeland Security Committee hearing for his pending confirmation, January 15, 2025, on Capitol Hill in Washington.
After a day of confusion over the unlawful pause on federal grants and loans, with Democrats finally finding their voice in unified condemnation and a federal judge quickly putting a temporary stay on the order, the Office of Management and Budget (OMB) rescinded the pause on Wednesday. That is a victory for persistent opposition to the Trump administration’s radical schemes. When it started to reflect badly on the president, the plug had to be pulled. Rinse and repeat.
That being said, even if the pause on grants and loans is dead—and there’s some confusion on that point—the constitutional crisis around the president nullifying spending he doesn’t like still exists. Trump issued a day one executive order and subsequent memorandum pausing disbursement (pending a 90-day review) of so-called “Green New Deal” funding under the Inflation Reduction Act and the bipartisan infrastructure law. He placed a pause on research grants at the National Institutes of Health, as well as a pause on foreign aid, although on the latter the State Department is trying desperately to reverse negative publicity by adding a “humanitarian assistance” exemption that will allow things like the distribution of HIV drugs in Africa to continue.
In all of these cases, the White House is asserting the power to stop funding on programs, projects, or activities that don’t fit with its policy goals. But the underlying laws were passed by Congress, and money was appropriated to these programs. The president has no authority under the Impoundment Control Act of 1974 (ICA) to unilaterally halt the spending, particularly if it’s based on policy preferences.
As I noted on Tuesday, Trump’s MAGA allies have been spoiling for this fight. Trump himself said in June 2023 that he would “do everything I can to challenge the Impoundment Control Act in court” and then “use the president’s long-recognized impoundment power to squeeze the bloated federal bureaucracy for massive savings.”
But the intention to challenge 50 years of statutory and judicial precedent on impoundment actually goes back to the last day of Trump’s first term. And it was co-authored by Mark Paoletta, a close confidant of Clarence Thomas, suggesting that the eventual Supreme Court case on impoundment that Trump’s allies want will likely trigger demands for Thomas’s recusal.
A PAUSE IS A “DEFERRAL” OF SPENDING, which per the ICA can only be enacted through a special message to Congress, and only under very specific terms: providing for contingencies, achieving budgetary savings through improved operational efficiency, or as specifically provided by law. “Policy isn’t a basis to do this,” said Daniel Schuman of the American Governance Institute, who has written about impoundment for the Prospect. “You can’t pick and choose what to spend on, exercising the equivalent of a line-item veto.”
Any pause, even without a special message to Congress, triggers a 45-day process where the Government Accountability Office (GAO) monitors the situation and can sue to release the funds at the end of that time, if the money is still being deferred without proper justification. Any entity having their funds withheld could sue even earlier, though while there were numerous lawsuits over the pause on grants and loans, I haven’t seen one on these other actions yet.
But the litigation is coming, and the people who will be in charge of OMB when it does are ready.
Russell Vought, the nominee for director of OMB, and Paoletta, who has just been installed as its general counsel, were also in those positions at the end of Trump’s first term. In November 2020, the House Budget Committee, then chaired by Rep. John Yarmuth (D-KY), issued a report on what it called OMB’s “systemic abuse of executive spending authority” going back to 2018. Trump tried to use executive orders to block funding from “anarchist” state and local jurisdictions, and tried to shift budgeting authority to political appointees. GAO repeatedly determined that Vought and Paoletta violated the impoundment rules; Trump was even impeached for illegally impounding Ukraine funding to force the country to investigate Joe Biden.
In all of these cases, the White House is asserting the power to stop funding on programs, projects, or activities that don’t fit with its policy goals.
Vought and Paoletta responded to this report on the very last full day of Trump’s first term—January 19, 2021—with a 14-page letter asserting their views on the federal budget process. In the letter, they insist that everything they did was lawful, that presidents have deferred and rescinded spending going back to Thomas Jefferson, that Congress’s power of the purse “infringes upon the President’s own constitutional authorities,” and that the ICA “is unworkable in practice and should be significantly reformed or repealed.”
Their theory is that appropriations have historically been a ceiling and not a floor, and that the president’s various authorities allow discretion to apportion and delay spending. For example, they assert apportionment authority to manage foreign aid spending to ensure that it is “executed consistent with the President’s foreign policy objectives.” While claiming that all their pauses in spending were mere programmatic delays allowed under the ICA, Vought and Paoletta also lament that the ICA makes it “nearly impossible” to run the government in an efficient and effective manner.
The letter even hints that presidents can block spending they don’t like. “Contrary to GAO’s view, the ICA’s bar on ‘policy deferrals’ does not mean that the Executive Branch may never pause spending to make policy decisions,” it states.
The logic is familiar: It asserts extreme executive power and claims that checks and balances improperly overstep that power. The ICA is denounced as ahistorical and impermissible micromanagement. In fact, most of the letter savages the ICA, going up to the line of declaring it unconstitutional, which Paoletta says directly in a piece co-authored at the Center for Renewing America, which was founded by Vought.
So none of the tumult around impoundment should have been a surprise; advocates and policymakers had an entire presidential term to prepare for the prospect of Trump, Vought, and Paoletta coming back into the government to challenge congressional funding powers.
VOUGHT IS NOT YET OMB DIRECTOR AGAIN, but he will get a Senate Budget Committee vote on his nomination today, despite pleas from Democrats on the committee to delay it. In confirmation hearings, Vought refused to say whether he would comply with the ICA if he returned to government.
To state the obvious, a world where presidents have unilateral authority to cancel spending is one that eliminates a core power of the legislative branch. Vought and Paoletta are careful in their letter to assert that they merely engaged in temporary delays to assess effectiveness, but they give the game away by stating that the ICA shouldn’t control the authorities of the president to spend. They want a situation where recipients of federal spending have to beg OMB for their money, where Congress has to pass authorizations without knowing whether they will be carried out.
“The system of checks and balances the Founders designed does not give the president unchecked power to execute only the laws passed by Congress that he agrees with,” write Cerin Lindgrensavage and William Ford of Protect Democracy. Most of Vought and Paoletta’s historical examples of presidents spending less than what was authorized neglect to mention that Congress gave them the flexibility to spend less, or that the courts revoked several impoundments as unconstitutional.
But while many Supreme Court precedents back up Congress’s power of the purse and its mechanisms for presidential impoundment, it’s likely coming back again, as Vought and Paoletta test the boundaries of executive power. And that’s where Paoletta’s close friendship with Justice Thomas kicks in.
As assistant counsel to George H.W. Bush, Paoletta assisted with Thomas’s confirmation back in the early 1990s. He co-edited a recent Thomas autobiography, and he represented Thomas’s wife Ginni in disputes involving the January 6th Committee. Paoletta even appears in the infamous painting of Thomas holding court at mega-donor Harlan Crow’s luxury resort.
Paoletta is a prime mover in the bid for legalizing impoundment. Thomas will be hearing the case. This raises the question of whether that should occur. It’s worth noting that the most vociferous defender of Thomas being able to hear January 6th or other cases during the documented ethical lapses of the past few years was Mark Paoletta, who called the charges “baseless” and requests to recuse “double standards.”
Thomas is highly unlikely to recuse. He will probably hear a case about his longtime friend’s bid to arrogate extreme executive power. Will the Court effectively delete Congress? Stay tuned.