It’s Rescission Time

By David A. Stockman

By David A. Stockman

The politicians who run the GOP on Capitol Hill are about ready to rug-pull Elon Musk and his patron in the Oval Office big time. That is, the so-called “clean CR [continuing resolution]” that Speaker Johnson is apparently cooking up will ratify the entirety of the runaway spending in the last Biden budget, thereby canceling virtually every single dime that the DOGE operation has purportedly saved.

This awful outlook, of course, is a consequence of the stacked institutional mechanics that Elon Musk is just beginning to grasp.

For example, the appropriations authority for every one of the hundreds, if not thousands, of idiotic foreign aid contracts that DOGE has exposed and canceled must by law be recycled and respent on another contract. And therefore spent on projects perhaps only slightly less stupid but in any case no less unaffordable.

We are referring to the Impoundment Control Act of 1974 and the passel of UniParty-appointed Federal district judges waiting to pounce in favor of lawsuits claiming funds are being illegally withheld by the executive.

To be sure, the anti-impoundment provisions of the 1974 Act are inconvenient, albeit probably consistent with the black letters of the Constitution that delegate the power of the purse to Congress. But fortunately, there is a pretty creative hack that might be the next best thing to the now-proscribed impoundment tool that Richard Nixon overused, thereby triggering the rebuke to presidential discretion embodied in the 1974 Act.

In Congress, rescission refers to the repeal or cancellation of previously appropriated budget authority. The recission process allows for the cancellation of funds that were previously allocated by Congress before the funds would otherwise expire. The Impoundment Control Act of 1974 (2 U.S.C. § 683) provides the framework for this process, which can be initiated by the President or Congress itself. -RW Malone, MD

To wit, as Elon Musk apparently discovered earlier this week, the Congressional rescission tool is a pretty good workaround to unspend money that has already been appropriated. This method of cutting existing spending authority does require Congressional approval within 45 days, but rescissions are subject to an up-or-down vote and no filibuster in the Senate.

So what the DOGE team needs to do right now is bundle up a massive pile of rescissions and send them to Capitol Hill to be voted upon as a pre-condition to consideration of the next CR.

We think there is enough fraud, waste, and abuse lying around, in fact, that a $300 billion rescission package could be sent to the Hill within the next week, which might well become known as “The Mother of All Rescissions”(MOAR)!

The proposition would be simple. Either pass MOAR or shut down the government when the current CR expires on March 14th. You choose. And keep it closed until the $300 billion of savings are approved by both Houses and signed by President Trump.

Moreover, to add stiffening to backbones on Capitol Hill, a “nay” vote on MOAR should carry an expectation of being primaried in 2026 on the GOP side of the aisle or being targeted for all-out attack on the Dem side among incumbents in districts/states that returned strong Trump majorities in 2024.

With interest expense having crossed the $1 trillion per year mark and rising rapidly, the nation’s fiscal accounts are now on the verge of plunging into a doom loop. That is to say, a cycle of rising Treasury yields, rising interest expense, and accelerating growth of the public debt that feeds back upon itself.

For instance, just since the end of FY 2024 on September 30th, the public debt has risen by nearly $850 billion, which amounts to $5.5 billion of new borrowing per day, including weekends, holidays, and snow days. So if the cycle is not broken soon, it will become beyond repair—especially if the impending tariff wars lead to an economic upheaval, which is entirely likely.

So in summary, here are the elements from which a $300 billion MOAR package could be assembled. It should be cautioned, however, that even something this big would be merely a down payment on the $2 trillion of annual deficit reductions actually needed, and not all of it would reduce cash outlays and borrowing immediately. That’s because, as will be explained in Part 2, some of the rescission amounts are for unobligated appropriations that might otherwise expire unused.

Still, the MOAR would amount to the crossing of the Fiscal Rubicon. If the Trump/DOGE forces can show that Congress can be compelled to walk the plank on real, material spending cuts, the remaining herculean tasks—sweeping reform of entitlement and drastic downsizing of the War Machine—will be far easier to accomplish.

• Rescission of Leftover Pandemic Relief Appropriations at SBA and the Departments of Energy, Education, HHS, Labor, and HUD: $139 billion.

• Rescission of Wasteful Foreign Aid Spending: $31 billion.

• Rescission of Funding For 5 Wasteful DOD Weapons Programs: $30 billion.

• 6.5% Across-the-board Rescission of FY 2025 CR Funding Levels For all Discretionary Appropriations: $100 billion.

• Total Rescission Package (MOAR): $300 billion.

We will provide a detailed analysis of the first three lines of the MOAR package later. But it should be noted here that the proposed 6.5% rescission of what would otherwise be Biden-level CR spending for each and every agency, department, and program in FY 2025 would hardly take a nick out of the inflation-adjusted dollars available to the far-flung agencies of the Federal government.

Thus, in nominal terms, combined defense and nondefense appropriations have risen by 47% since FY 2016—from $1.128 trillion to $1.658 trillion in FY 2024. As shown in the table below, about 40% of that gain came on Trump’s watch and 60% under Biden.

The $1.658 trillion figure would be the basis for the “cut-and-paste” CR for FY 2025, but even when you adjust the 2016 figure for the Federal spending deflator according to the Commerce Department, the constant dollar figure for Obama’s last budget would be $1.426 trillion (FY 20-24 $).

What that means is that Speaker Johnson believes the Federal bureaucracy can’t live with a +16% raise in real terms from Big Spender Obama’s funding level.

We have reached the point where a purported Republican Speaker wants not only to embrace Biden spending in current dollars, but even best Obama levels in constant dollars!

Yet here’s the thing: Real median household income only grew by 10% during that eight-year period. So what the DOGE team and their allies in the House Freedom Caucus should be shouting to the rafters is why in the hell should govenrment bureaucracies be getting a raise nearly twice as large as Main Street America has experienced since 2016?

And, besides, the 2016 funding level was the result of the Obama years, which were not exactly characterized by austerity.

In any event, the proposed 6.5% or $100 billion across-the-board rescission from what would otherwise be FY 2025 CR levels would still result in discretionary appropriations at $1.558 trillion. That’s a +9.3% gain from Obama levels and should be more than enough for a government that is otherwise plunging into fiscal calamity.

---

---

Malone News is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber. We are deeply grateful to the decentralized network of paid subscribers that enables us to continue doing what we do to support freedom.

---

---

This article was first published at the Brownstone Institute and is being republished via a Creative Commons license.

The author, David Stockman, is a Senior Scholar at Brownstone Institute and the author of many books on politics, finance, and economics. He is also a former congressman from Michigan and the former Director of the Congressional Office of Management and Budget. He runs the subscription-based analytics site ContraCorner.