Explainers/Budget
The power of the purse, explained: appropriations, impoundment and who controls federal spending
Congress decides what money is spent on. A 1974 law governs what happens when a president wants to spend less. Here is the mechanism.
9 min read|Updated August 5, 2026
The Constitution says no money may be drawn from the Treasury except through appropriations made by law. That gives Congress control over federal spending. Presidents have periodically tried to withhold appropriated funds, a practice called impoundment. After President Richard Nixon withheld billions of dollars in the early 1970s, Congress passed the Impoundment Control Act of 1974, which sets out the only two lawful ways to hold back appropriated money — rescission and deferral — and gives the Government Accountability Office a role in enforcing them.
- Constitutional basis
- Article I, Section 9: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."
- Governing statute
- The Impoundment Control Act of 1974, Title X of the Congressional Budget and Impoundment Control Act, codified at 2 U.S.C. 681 and following.
- Rescission
- The president proposes canceling funds in a special message. The money may be withheld for up to 45 days of continuous session; if Congress does not pass a rescission bill in that window, the funds must be released.
- Deferral
- The president may delay spending only for specified reasons such as contingencies or efficiency savings, must report it, and may not defer past the end of the fiscal year.
- Enforcement
- The Comptroller General, who heads the Government Accountability Office, may report violations and may sue to compel release of funds. GAO issues public legal decisions on whether a withholding violates the act.
What is the difference between authorization and appropriation?
An authorization act creates or continues a program and may set a spending ceiling; it does not provide money. An appropriations act provides the budget authority that lets an agency incur obligations and spend. Programs can be authorized without being funded, and Congress sometimes appropriates money for programs whose authorization has lapsed. Discretionary spending flows through the 12 annual appropriations bills; mandatory spending such as Social Security and Medicare is set by permanent law and is not part of the annual bills.
What led to the 1974 act?
President Nixon withheld funds appropriated for water pollution control, highways, housing and other programs, asserting a constitutional authority to decline to spend. States and grantees sued and generally won; in Train v. City of New York (1975) the Supreme Court held that the executive could not withhold water-pollution funds Congress had directed to be allotted. Congress simultaneously wrote the Impoundment Control Act to create a formal process and remove the ambiguity.
How does a rescission proposal work in practice?
The president sends a special message to Congress identifying the amount, the account and the reasons. Funds may be withheld for 45 days of continuous session while Congress considers a rescission bill under expedited procedures. If Congress does not enact the rescission in that period, the executive must make the money available for obligation. Congress can also rescind funds on its own initiative in any appropriations bill.
What counts as an illegal impoundment?
Withholding funds for policy reasons — because an administration disagrees with the program — without submitting a rescission message, or withholding them so late in the fiscal year that they expire unspent, which GAO has described as an impoundment by another name. GAO has issued decisions finding violations in several administrations of both parties. Its remedy is a public legal opinion, a report to Congress, and, if necessary, a civil suit by the Comptroller General.
Does the president have any constitutional impoundment power?
Some executive-branch lawyers have argued that presidents historically declined to spend funds and that the Constitution's vesting and take-care clauses permit it, particularly where an appropriation sets a ceiling rather than a directive. Most scholars and GAO take the contrary view: an appropriation is a legal directive, and the Impoundment Control Act supplies the lawful process for seeking to spend less. The Supreme Court has not resolved a broad constitutional impoundment claim; Train was decided on statutory grounds.
What is a line-item veto and why doesn't the president have one?
Congress gave the president one in the Line Item Veto Act of 1996, allowing cancellation of individual spending items after signing a bill. In Clinton v. City of New York (1998) the Supreme Court struck it down, holding that it let the president amend a duly enacted statute unilaterally, which the Presentment Clause does not allow. Any equivalent power would require a constitutional amendment.
Who audits whether money was spent as directed?
GAO reviews agency use of appropriations and issues binding-in-practice legal decisions on availability of funds, including whether spending violated the purpose, time or amount limits known as the Antideficiency Act framework. Agency inspectors general and the appropriations committees conduct their own oversight, and agencies submit apportionment schedules through the Office of Management and Budget, which are published on a public website.