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Trump Sued Over $810M Federal Funds Clawback

Bloomberg Markets •
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A White House plan to cut hundreds of millions of dollars in federal funding approved by Congress faces a legal challenge on the eve of the end of the fiscal year, when the money is set to expire. President Donald Trump notified Congress on Sept. 25 that he had proposed pulling back approximately $810 million through what’s known as a “pocket rescission,” testing the executive branch’s ability to override lawmakers’ constitutional authority over government spending.

A lawsuit filed Tuesday in Washington federal court focuses on more than $56 million for housing counseling services that the administration aims to cut. The challengers — a collection of nonprofit groups that work on housing issues — contend that Trump is usurping Congress’ authority over spending and also unconstitutionally targeting grantees based on their speech and perceived viewpoints in violation of the First Amendment’s protections.

“The White House effectively has admitted that this rescission was motivated, at least in part, by criticism of the administration’s policies,” said Marc Morial, president of the National Urban League. “No president has the authority to retaliate against critics by blocking investments Congress has already approved.” The legal fight is a repeat of court wrangling that unfolded a year ago, when the Trump administration canceled more than $4 billion in federal funding for foreign aid programs using the same tactic.

The dispute turns on a 1974 law, the Impoundment Control Act. The GAO published a report reiterating its stance that the president can’t unilaterally decide to withhold funds, a move that “subverts both the constitutional process for enacting federal law and Congress’s constitutional power of the purse.”