Budget Basics: What Are Budget Rescissions?
Given the country’s daunting fiscal outlook, America’s leaders should look for opportunities to find savings wherever they can. One option available to lawmakers is the rescission process, which allows the administration to request that Congress rescind funding that was previously approved. While rescission authority has not been used meaningfully in the past and is limited to certain areas of the budget, it does represent one statutory tool available to lawmakers in the legislative and executive branches to reduce deficits.
What Are Rescissions?
Proposed by the president for approval by Congress, rescissions are requests to cancel all or part of allocated budget authority. Rescissions target unobligated funds, which are dollars previously appropriated by Congress, but not yet formally obligated by a government agency. Ultimately, rescissions can lead to savings for the federal government that could help reduce the budget deficit.
The Impoundment Control Act (ICA) governs the process for rescissions in a given fiscal year. Under that law, the president must transmit a special message to both the House and Senate. That message should include the requested amount of budget authority to be rescinded, the specific accounts or functions, justifications for the rescissions, and other details for Congress to evaluate. Legislation to address the rescission request can be considered with limited debate in each house of Congress and a simple majority in the Senate (rather than the supermajority often required to end debate for legislation). If Congressional action on the bill does not finish before the end of a 45-calendar-day period of continuous session beginning with the president’s transmittal of a rescission package, the proposal is rejected. During those 45 days, the funding subject to potential rescission is effectively frozen.
What Types of Funds Can the President Ask Congress to Rescind?
Rescission authority under the ICA only applies to funding provided through the appropriation process. Such funding, also known as discretionary spending, accounted for 27 percent or $1.8 trillion of federal outlays in 2024. Defense programs represent nearly half of total discretionary spending. Other major activities funded through appropriations include homeland security, education, transportation, research, food safety, science and space programs, disaster assistance, environmental protection, public housing, and federal law enforcement. Appropriated spending generally does not include spending that is mandatory under law, such as Social Security and Medicare, so those programs are not subject to rescission authority.
What Are “Pocket Rescissions”?
“Pocket rescissions” occur when the president withholds appropriated funds or delays spending indefinitely through administrative action. One way a president may avoid, or refuse, to spend approved funds is by asking Congress to rescind funds close enough to the end of the fiscal year so that the appropriated funds expire before they can be obligated again.
There are significant questions surrounding the legality of pocket rescissions with respect to Congress's constitutional “power of the purse,” and the ICA. According to the nonpartisan Government Accountability Office (GAO), pocket rescissions fundamentally circumvent the formal rescissions process established by the ICA and are illegal. The ICA requires that Congress be given 45 days to review and vote on any presidential request to cancel spending. A pocket rescissions package transmitted with less than 45 days remaining in the fiscal year allows the executive branch to sidestep that requirement, unilaterally overriding spending decisions that appropriations law and the Constitution reserve for Congress. However, GAO has also previously suggested Congress amend the ICA to more clearly preclude pocket rescissions.
History of Congressional Rescissions
Prior to the ICA and beginning with President Jefferson, presidents used impoundment as a tool to advance policy and economic goals, but these instances were routine and relatively small in scale. President Nixon dramatically increased the use of impoundments to advance his policy goals, withholding more than a third of all domestic discretionary spending in 1973. That sweeping interpretation of the Executive’s authority to impound funds is what prompted Congress to enact the ICA — to reassert Congress's "power of the purse" and ensure that the executive branch could not unilaterally withhold or delay the expenditure of funds.
Before the first Trump administration, rescission authority had not been used since 2000, when President Clinton requested $6.7 billion in rescissions. Only $3.6 billion of those proposed rescissions were accepted by Congress.
According to GAO, rescissions proposed by administrations from President Ford to Trump (first term) totaled $119.4 billion, of which Congress approved $22.7 billion. President Reagan and Trump submitted most ($43.4 and $42.2 billion, respectively) of all rescissions requested over the last 50 years. Presidents George W. Bush, Obama, and Biden requested none.
During President Trump’s first administration, he transmitted a special message to Congress proposing rescissions from 38 appropriation accounts. Ultimately, the president amended his initial special message by withdrawing four and revising six rescission proposals. The final rescission request targeted 34 appropriation accounts and totaled $14.8 billion. Congress did not enact any of the 34 proposals.
In January 2021, President Trump submitted a second rescission request to Congress, rescinding budget authority from 73 accounts, totaling $27.4 billion. However, Congress did not enact any of the proposals.
Most recently, Congress approved a $9.4 billion rescissions package submitted by President Trump. That package focused on foreign aid and public broadcasting funding and was the first request in decades that Congress approved.
Conclusion
Rescission packages can serve as a tool for the president and Congress to manage and control government spending through a formal statutory process. Rescissions target unobligated funds that have not yet been spent or promised through binding agreements. By canceling those funds, the government can reduce overall spending levels, which can help reduce the federal deficit and improve fiscal responsibility.
Rescission authority has its limits, as it only can be applied to discretionary programs, which represent only about a quarter of all federal spending. Some of the largest drivers of spending growth — such as Social Security, Medicare, and Medicaid — are excluded from that process and achieving cost savings within those programs would require broader budget reform. Moreover, rescission authority does not apply to the revenue side of the budget ledger.
Even so, using the rescission process could be a step in the right fiscal direction. The nation’s $37 trillion national debt is large and growing — lawmakers should take advantage of every chance they have to establish a more sustainable fiscal path.
Photo by Samuel Corum/Getty Images
Further Reading
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The reconciliation process avoids the potential need to gather 60 votes to end debate and, therefore, allows the Senate to adopt legislation with a simple majority.
Budget Basics: National Defense
The national defense budget funds a wide range of activities and represents a significant share of overall federal spending.