Congressional Budget and Impoundment Control Act of 1974

Based on Wikipedia: Congressional Budget and Impoundment Control Act of 1974

The Law That Keeps Presidents From Simply Ignoring Congress

What happens when a president decides he simply won't spend money that Congress has already allocated? It's not a hypothetical question. In the early 1970s, President Richard Nixon did exactly that, refusing to release funds for programs he personally opposed. Congress, understandably furious at this end-run around their constitutional power of the purse, struck back with one of the most consequential budget laws in American history.

The Congressional Budget and Impoundment Control Act of 1974 fundamentally reshaped how the federal government handles money. It created new institutions, established new procedures, and most importantly, it drew a line in the sand: presidents cannot simply pocket money that Congress has voted to spend.

But the story of this law is far from dusty history. It has shaped major tax legislation, influenced presidential impeachment proceedings, and remains at the center of constitutional battles to this day.

Why Nixon's Power Grab Backfired

To understand the 1974 Act, you need to understand impoundment. This is the practice of a president withholding funds that Congress has appropriated. For most of American history, presidents occasionally impounded funds for practical reasons. Maybe a program finished under budget, or circumstances changed and the money was no longer needed. These were generally uncontroversial housekeeping decisions.

Nixon changed that.

He began systematically refusing to spend money on programs he opposed politically, treating impoundment not as an administrative tool but as a de facto veto. If Congress passed a law funding environmental programs Nixon didn't like, he would simply not release the money. This was constitutionally extraordinary. The Constitution gives Congress the power to appropriate funds. By impounding money Congress had allocated, Nixon was essentially claiming the authority to override congressional spending decisions unilaterally.

Congress responded with the 1974 Act, and the Supreme Court backed them up. In the 1975 case Train versus City of New York, the Court made clear that the president couldn't simply refuse to spend money Congress had allocated. The era of presidential impoundment as a policy weapon was over.

Or so everyone thought.

A New Architecture for Budgeting

The 1974 Act did far more than just curb impoundment. It rebuilt the congressional budget process from the ground up.

The most visible change was the creation of the Congressional Budget Office, commonly known as the CBO. Before this, Congress had to rely on the president's Office of Management and Budget for fiscal projections and analysis. This put Congress at a significant disadvantage. The executive branch controlled the numbers, and the numbers shape every budget debate.

The CBO gave Congress its own team of economists and budget analysts. It provides independent, nonpartisan analysis of what legislation will actually cost. When you hear news reports about a bill's "CBO score," this is the legacy of the 1974 Act. That score can make or break legislation, since a CBO finding that a bill costs more than advertised has derailed many proposals.

The Act also established the budget resolution process. Each year, Congress adopts a blueprint for spending and revenue that sets overall fiscal policy. This resolution isn't a law in the traditional sense. The president doesn't sign it. Instead, it's an internal congressional agreement that creates binding procedural rules.

Here's where it gets interesting. Those procedural rules can be enforced through something called points of order. If a spending bill violates the limits set in the budget resolution, any senator can object, and the bill is stopped unless a supermajority votes to waive the objection. This gives the budget resolution real teeth.

The Reconciliation Loophole That Shaped Modern Politics

The 1974 Act included a procedure called budget reconciliation. Originally, this was meant to help Congress adjust existing laws to meet the targets in the budget resolution. It was a cleanup mechanism.

But reconciliation came with a crucial feature: bills considered under reconciliation rules cannot be filibustered in the Senate. Normally, ending debate in the Senate requires sixty votes. Reconciliation bills need only a simple majority of fifty-one.

This loophole has become one of the most important features of American lawmaking. Major legislation that couldn't survive a filibuster can be passed through reconciliation with just fifty votes plus the vice president as a tiebreaker. The 2001 and 2003 Bush tax cuts, the Affordable Care Act's budget provisions, the 2017 Trump tax cuts, and major portions of Biden-era legislation all moved through reconciliation.

But there's a catch, and it has a wonderfully odd name.

The Byrd Rule and Its Droppings

Senator Robert Byrd of West Virginia saw a problem developing. Because reconciliation bills couldn't be filibustered, senators started trying to attach all sorts of unrelated provisions to them. Why fight for sixty votes when you could hitch a ride on a reconciliation bill and pass with fifty-one?

Byrd pushed through a rule, now bearing his name, that limits what can be included in reconciliation bills. Provisions must be genuinely budget-related. If they're "extraneous," meaning they don't change spending or revenue in more than an incidental way, a senator can raise a point of order against them.

The Byrd Rule creates six tests for what counts as extraneous. The most consequential is the fifth: if a provision increases the deficit in any year after the period covered by the reconciliation bill, it's out unless sixty senators vote to waive the rule.

This is why major tax cuts often come with built-in expiration dates.

The Bush tax cuts of 2001 and 2003 were passed through reconciliation. To comply with the Byrd Rule, many provisions were set to expire, or "sunset," after ten years. The per-child tax credit of one thousand dollars, the ten percent income tax bracket for lower earners, deductions for state and local sales taxes: all of these were scheduled to vanish after fiscal year 2010 unless Congress acted to extend them.

This wasn't because anyone actually wanted temporary tax policy. It was a procedural workaround. The cuts had majority support but not the sixty votes needed to waive the Byrd Rule. So supporters accepted sunset clauses to get the legislation through.

Provisions that get struck down under the Byrd Rule have acquired a colorful nickname on Capitol Hill. They're called "Byrd droppings."

How Impoundment Actually Works Now

The 1974 Act didn't completely eliminate presidential impoundment. It created a formal process for it.

If a president wants to cancel spending that Congress has appropriated, known as a rescission, he must submit a formal request to Congress. Both the House and Senate then have forty-five days of continuous legislative session to approve the rescission by passing actual legislation.

Here's the key point: if Congress doesn't act, the money must be released and spent as originally intended. The president can't just sit on the funds indefinitely. Congress doesn't even have to vote against the rescission. They can simply ignore it, and after forty-five days, the money flows.

This represents a fundamental shift in power. Before 1974, a president could impound money and dare Congress to do something about it. After 1974, Congress can ignore a president's objections and the money gets spent anyway.

Presidents have generally complied with this system, though some have chafed at it. Various proposals have emerged over the years for a line-item veto that would give presidents more power to cut specific spending, but these face serious constitutional obstacles. The Supreme Court struck down a line-item veto law in 1998 as an unconstitutional violation of the separation of powers.

Ukraine, Trump, and the Law's Modern Relevance

For decades, the Impoundment Control Act operated in relative obscurity. Then came 2019.

In the summer of that year, the Trump administration began withholding approximately 214 million dollars in military assistance to Ukraine that Congress had already appropriated. The hold was implemented through a series of nine apportionment schedules from the Office of Management and Budget, each containing footnotes that effectively froze the funds.

This wasn't a formal rescission request to Congress. The administration simply held the money.

Two budget office staffers resigned over concerns about the propriety of these actions. Elaine McCusker, the Acting Undersecretary of Defense for financial management, sent emails to the White House budget office expressing concern that the hold might violate the Impoundment Control Act. Her warnings began in July 2019 and continued as the freeze dragged on.

In January 2020, the Government Accountability Office, the nonpartisan investigative arm of Congress, issued a formal legal opinion. Their conclusion was blunt: the Office of Management and Budget had violated the law.

The report found that the administration withheld funds "for a policy reason, which is not permitted." The law requires presidents to execute congressional spending decisions. They can request rescissions through the proper process. They cannot simply refuse to spend money because they disagree with the policy.

This finding became part of the broader controversy that led to Trump's first impeachment. While the impeachment centered on allegations that the president conditioned the aid on Ukraine investigating his political opponents, the underlying question of whether the hold itself violated the Impoundment Control Act added another layer to the constitutional dispute.

The 2025 Grant Pause and Continuing Battles

The impoundment question didn't go away. In 2025, a federal government grant pause triggered thirty-nine separate investigations by the Government Accountability Office into whether the administration was again violating the 1974 Act. The law that Nixon's overreach inspired continues to define the boundaries of presidential power over spending.

Some conservatives have argued that the Impoundment Control Act is itself unconstitutional, that it improperly constrains inherent presidential authority over the executive branch. This view holds that the president should be able to decline to spend money he considers wasteful or contrary to good policy.

Others counter that the Constitution explicitly gives Congress the power of the purse. The president's job is to execute the laws Congress passes, including spending laws. Allowing presidents to simply ignore appropriations would fundamentally shift power away from the legislative branch.

This debate isn't academic. It touches on basic questions about how American government works: Who decides where federal money goes? What happens when the branches disagree? How do you enforce the Constitution when one branch simply refuses to comply?

The Hidden Infrastructure of Democracy

The Congressional Budget and Impoundment Control Act of 1974 is not glamorous legislation. It doesn't have the rhetorical sweep of the Declaration of Independence or the Bill of Rights. It's a law about procedures, timelines, and points of order.

But procedures matter. They're the scaffolding that holds the constitutional structure together.

The CBO's independent analysis has prevented countless budget gimmicks and kept Congress honest about what legislation actually costs. The reconciliation process has enabled major legislation to pass despite Senate filibuster rules. The impoundment provisions have prevented presidents from simply ignoring Congress when they don't like how the money is being spent.

Every time a president complains about congressional spending, every time a major tax cut includes a sunset clause, every time the CBO releases a score that reshapes a political debate, you're seeing the 1974 Act at work. It's the plumbing of American fiscal policy, usually invisible, but essential.

The law emerged from a specific crisis: a president who believed he could simply ignore Congress's spending decisions. Fifty years later, that same tension continues to define American government. The boundaries drawn in 1974 remain contested terrain.

Understanding this law means understanding one of the central ongoing arguments in American democracy: the balance between presidential power and congressional authority over how we spend public money. It's an argument that began with the founders, crystallized in the Nixon era, and shows no signs of resolution. The 1974 Act didn't end the debate. It gave us the rules by which we continue to fight it.