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Precisely by granting government funding that leaves the particulars up to the executive, the legal arguments against Trump’s impoundment have been harmed.
Thanks to a continuing resolution that passed Congress last week, the government is currently operating under fiscal year 2024 spending levels, but without any specifications on how that money is to be spent. There’s a lump sum available for the Department of Education, for example. But there isn’t any specificity concerning how much of the education budget must go to Title I spending for low-income students, or IDEA spending for schooling students with disabilities, or student loan servicing costs, or anything else. Any of that can be shifted, repurposed, zeroed out in one program and reallocated elsewhere by the Trump administration, as long as the total amount of spending does not exceed the appropriated total.
At the same time, numerous legal groups, states, unions for federal workers, and others are entrenched in litigation over whether the Trump administration is illegally firing workers, canceling programs, and shuttering entire agencies of the government. The nominal grounds for these lawsuits are that the executive branch cannot usurp the power of the purse from Congress and violate the separation of powers by controlling decisions over what parts of the government get what portions of federal dollars.
But Congress literally just handed over that authority to the president in the continuing resolution.
That doesn’t mean that statutorily prescribed functions can just be ditched. The administration had so many legal problems with its attempted destruction of the Consumer Financial Protection Bureau that it has had to bring back fired workers and restart previously shuttered operations. (When doing something unsanctioned, don’t mess with compliance lawyers.) But it does give Trump a toehold to make his case that Congress blessed his conduct by giving him a six-month blank check to shift money around. Thus, the premise of the lawsuits is damaged by Congress’s actions.
That leaves still the question of whether the president can simply choose not to spend at the level indicated, known as impoundment. That will continue to work through the courts. But other than that, there are far fewer checks on Trump and Elon Musk’s behavior now. And if Trump can reprogram spending toward things he likes—moving Justice Department money to immigration enforcement, moving Homeland Security dollars to border security, moving Education Department money to fighting antisemitism, moving any agency’s money into Musk’s pocket, and so on—they can probably manage to spend up to the line while transforming government’s role and purpose.
A government shutdown would have alerted the nation that there was a lapse in congressional activity that needed to get fixed.
This is the backdrop for Chuck Schumer’s insistence that things would be worse with Donald Trump in control of a government shutdown. He would have the power to decide what to unilaterally cut and what to preserve, Schumer claims. But the bill gave him that authority through the end of the fiscal year, while setting a new and permanent baseline for what government will spend on in future years.
To some, this is just proof that there were no good options. But the key difference is that a shutdown would have alerted the nation that there was a lapse in congressional activity that needed to get fixed. Instead, no new spending bill can or will be needed until the end of September, and having played this continuing resolution game once and brought Democrats to heel, there’s every reason for Republicans to keep doing it again as long as they’re in power. There’s a strong possibility we won’t see any more budget bills until 2027. By contrast, a government shutdown is a sign of crisis, a problem that must be solved.
The bigger point here is that if the only way to constrain Trump on these budgetary issues is through the courts, then you would want to take a course that doesn’t materially harm the legal arguments. Precisely by granting government funding that leaves the particulars up to the executive, those legal arguments have been harmed. Even outside of the political argument that cowering in the face of a fight makes the Democrats a more toxic and disliked institution, Schumer’s decision had negative consequences.
A good example of Trump’s newfound authority involves the Greenhouse Gas Reduction Fund, something passed in Joe Biden’s Inflation Reduction Act. The GGRF operates like a green infrastructure bank, with working capital used to finance renewable energy, electrification, and other projects to lower greenhouse gas emissions and improve air quality. The seed money, totaling $20 billion, is technically at Citigroup, while eight nonprofits were given a slice of the funding to manage. The money is obligated to a host of projects across the country; when a deal is made, Citigroup is supposed to pay out that portion of the funds. This was intended to allow the private sector to get involved in these green banks.
But EPA administrator Lee Zeldin, mostly because of a Project Veritas video, has decided that the GGRF is somehow corrupt, and has spent the first two months of the administration trying to claw back the $20 billion. The Justice Department and the FBI have initiated an investigation into the program, and Citigroup in particular is being encouraged to not forward the money to grantees.
The nonprofits, which say they cannot draw down the money Citi is holding, have begun to file lawsuits against the EPA and Citi, seeking the funding that has already been approved and obligated to borrowers. The EPA says that the program is terminated, and that the money would be re-obligated to other organizations. Citi has said that the FBI, the EPA, and the Treasury have all asked them to freeze the funds, and as a financial agent of the United States, they are complying with that request.
Because the money is at Citi, it’s harder for plaintiffs to force it to be spent, as they’ve done with rollbacks of Trump spending freezes paid out by the Treasury Department. That’s ironic, because the whole point of the financial agency agreement was to keep the money out of Trump’s hands.
This is a devastating result, because banks need credibility to continue to lend. A bank that is prevented from lending to projects it has already approved isn’t going to be a bank for very long; it won’t attract customers or private capital. So the GGRF needs this resolved quickly to avoid total collapse.
It just so happens that a federal district court judge just yesterday blocked the EPA from terminating the grants. This is similar to other fights where the Trump administration has yanked funding for projects that were approved and appropriated by Congress, and had that yanking reversed. But these are temporary restraining orders, with plenty of time for the Trump administration to form a response.
And notice what the EPA’s commitment is: They want to terminate the funds for these nonprofits, but then re-obligate and redirect them. That could be seen as consistent with the authority granted in the continuing resolution. The EPA is not vowing to spend less than the authorized amount, just to send the money elsewhere. And so these lawsuits from the nonprofits, which were promised these funds and set up operations to make loans with them, now encounter a problem, in that Congress undercut them by agreeing to give Trump discretion on how money is spent.
The nonprofits may yet win, since Biden had already approved the GGRF for use. The EPA doesn’t seem to have met the bar for terminating a grant, which would be specific examples of waste, fraud, and abuse. But the picture got muddier because Congress passed that funding law. And if, as Schumer intimated, only the judiciary can rein in Trump, he just damaged the judiciary’s ability to do that.
