While the government funding deadline isn’t until December, last week proved that the power of the purse remains very much the topic of the day.
As readers of the Approps Drop know, the continuing resolution (CR) signed into law on September 2, funds the federal government through December 11. It also temporarily blocks implementation of the Office of Management and Budget’s (OMB) proposed changes to the Uniform Guidance governing federal grants. But OMB has chosen to test the limits of this blocking statutory language, and Congress is responding.
OMB and NIH; A Bridge Too Far
As a reminder, the administration’s proposal would give political appointees a greater role in reviewing discretionary grants to ensure alignment with presidential priorities and expand agencies’ ability to terminate grants “for convenience.” For more on this proposed rule, please see our previous Akin Alert.
The CR prevents OMB from implementing that proposal, or any substantially similar proposal, for the duration of the stopgap.
But the issue did not end there.
Early last week, reports surfaced that the White House was considering an executive order (EO) that would impose an additional layer of political review on grants awarded by the National Institutes of Health (NIH). The proposal would shift the decision-making process away from traditional scientific peer review and toward alignment with presidential priorities. It would give political appointees, including OMB Director Russell Vought and NIH Director Jay Bhattacharya, the ability to block NIH grants.
The congressional response, especially appropriators, was swift. Senate Appropriations Committee Chair Susan Collins said that OMB “should not be involved in any agency decisions on the awards of grants.” This was in line with her previous public comments earlier this summer, as it related to OMB’s proposed rule revising the framework for grant administration. As loyal readers will recall, we discussed this here. She also argued that imposing similar requirements through an EO or guidance would run contrary to the intent of the CR provision Congress had just enacted.
On September 22, Collins followed up with a letter to Vought and Bhattacharya warning that the proposed EO would undermine NIH’s merit-review process. By September 23, reports indicated that the White House was backing away from the planned EO.
The larger takeaway: Appropriations is becoming a key venue for Congress to push back against Executive Branch efforts to reshape federal spending and grantmaking. December 11 isn’t just the next government funding deadline. It is also the next major decision point in this OMB-Congress clash.
Another Pocket Rescission Package, and Appropriators Are Not Amused
If appropriators needed another reminder that their fight with OMB is about more than grant policy, they got one late Friday night.
On September 25, the White House sent Congress 11 proposed rescissions totaling $810 million, targeting funding across the Departments of Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development, and Justice, as well as international assistance programs. The largest piece is roughly $567 million from HHS’s Refugee and Entrant Assistance account. The Trump administration characterizes the move as another “pocket rescission,” invoking the Impoundment Control Act (ICA) days before the affected funds expire at the end of the fiscal year.
A quick refresher: the ICA allows the President to propose that Congress permanently cancel appropriated funds. Once the President sends Congress a formal rescission request, the Administration may withhold those funds for 45 days of continuous congressional session while Congress considers the request. If Congress approves the rescission, the funds are canceled. If Congress does not approve it within that period, the funds must be released for obligation at the end of the 45-day period.
A “pocket rescission” occurs when the President proposes canceling congressionally appropriated funds so close to the end of their availability that the money expires before Congress has the full opportunity to act on the rescission request. GAO has concluded that the ICA does not permit this maneuver. Last year’s fight over $4.9 billion in foreign assistance made it all the way to the Supreme Court, but the Court did not rule on the merits and thereby did not resolve the underlying statutory question of whether the ICA permits pocket rescissions.
The most recent pocket rescissions package drew a sharp response from Chair Collins, who said that Congress received the package “without warning or consultation” and called any rescission without congressional approval “a clear violation of the law.” She pledged to work with colleagues to address the administration’s actions. Her reaction is particularly notable because opposition to pocket rescissions is not new: Sen. Jeff Merkley (D-OR) has already pushed legislation that would prohibit special messages proposing rescissions within 90 days of the affected funding’s expiration.
What Does This Mean for FY27?
If appropriators believe that funding they negotiate, enact, and see signed into law can later be withheld until it expires, it raises fundamental questions about the value of the deals they strike in the first place. We find it hard to believe that statutory guardrails on OMB wouldn’t be part of an end-of-year funding conversation. Our read is that Friday night’s action makes some protections necessary for successful negotiations, whether through restrictions on impoundment, changes to the availability of particular funds, or appropriations language designed to preserve congressional control over enacted spending.
The Lame Duck Is Getting Crowded
The FY 2027 appropriations process has almost certainly entered its election-season holding pattern.
Whispers in the Capitol indicate that Senate appropriators are unlikely to take meaningful action on FY27 bills before Election Day, including posting the bills. Chair Collins has said she would like to move “an appropriations bill or two” on the floor, but expectations are that significant Senate appropriations activity will wait until lawmakers return after the midterms.
That’s notable because the clock gets very unforgiving, very quickly.
Post-election, Congress will have roughly five legislative weeks before the CR expires. For conference negotiations to begin, Senate bills must be either released or marked up. If that waits until after the election, staff will have precious little time to begin the mechanics of preparing for conference, to say nothing of the limited time available to negotiate a topline spending agreement.
Several possibilities remain for the lame duck: appropriators could negotiate and package multiple full-year bills; Congress could punt some or all of them into another CR; or we could end up with some combination of the two (a “CRomnibus”).
And Then There’s Reconciliation 3.0
One thing that could make an already complicated lame duck even messier is reconciliation.
If Republicans emerge from the midterms intent on pursuing another reconciliation package, congressional leaders will have to balance that effort against a December 11 government-funding deadline and unfinished FY27 appropriations work. Democrats are unlikely to take kindly to a nearly $100 billion defense spending reconciliation package being pushed through, especially if Republicans lose majorities in one or both chambers.
Will this impact the hopefully ongoing bipartisan negotiations on appropriations bills? It’s hard to see how it would not.
One Last Thing: Save the Date -- Akin Approps 101
If all of that has you thinking there has to be an easier way to understand this process, we have you covered.
On October 15 at 12PM, we will be hosting our Appropriations 101 webinar, where we'll break down how the appropriations process actually works, who the key players are, how and when funding decisions get made, and what you should be doing to prepare for fiscal year 2028.
Consider it one last night of Approps 101 before everyone starts cramming for the December 11 final.
Because once Congress returns after Election Day, the appropriations process is going to move from hurry up and wait to simply hurry up.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
