The federal fiscal year ended at midnight on September 30, and with it, about $810 million in spending that the Trump administration decided taxpayers should not have to cover.
The White House used a little-known budget move called a “pocket rescission.” It asked Congress to cancel the money just five days before the funds were set to expire, then held the money back until the clock ran out. Now seven states have filed suit, and a federal watchdog says the move broke the law.
What got cut
According to a breakdown by the American Action Forum, the September 25 request covered 11 federal accounts totaling $809.5 million. The biggest by far was $567.4 million from the Department of Health and Human Services’ Refugee and Entrant Assistance account.
The rest of the list reads like a tour of programs many taxpayers have never heard of:
- $69.6 million for international education and foreign language programs at the Education Department
- $56.1 million for housing counseling at HUD
- $27.7 million for the Agency for Healthcare Research and Quality
- $24.9 million in migrant student grants
- $15 million for a DHS “alternatives to detention” case management pilot
- $15 million for the Justice Department’s Community Relations Service
- $10 million each for the Minority Business Development Agency and a DHS citizenship grant program
- $8.7 million for tropical forest and coral reef conservation
As Fox News reported, the White House pointed to specific examples to make its case. It said migrant student money had supported items like “an LGBT youth summit” and “Therapy for Latinx” workshops. It labeled the international education spending “Woke International Education,” citing grants that included foreign exchange programs and dissertation research abroad.
How a pocket rescission works
Under the Impoundment Control Act of 1974, a president can ask Congress to cancel spending and hold the money for up to 45 days while lawmakers decide. If the request comes late enough in the fiscal year, the money expires before Congress has to act.
Office of Management and Budget Director Russ Vought argues the law does not forbid this. According to Fox News, his position is that nothing in the Act explicitly prohibits sending a rescission request near the end of the fiscal year.
The Government Accountability Office disagrees. “The President may not force the expiration of budget authority Congress has already enacted and did not rescind,” Comptroller General Perez wrote, as quoted by Congress.net. Vought hit back on X, calling the GAO partisan, according to Spectrum News’ State of Politics.
The pushback, including from a Republican
Opposition was not limited to Democrats. Republican Sen. Susan Collins of Maine called the move “the most recent attempt by this Office of Management and Budget (OMB) to undermine Congress’s Constitutional power of the purse,” Fox News reported.
On October 1, California, Maine, Maryland, Michigan, Nevada, New Mexico and Oregon sued President Trump and Vought in federal court in Northern California, JURIST reported. The states claim the move violates the Impoundment Control Act and several parts of the Constitution. “Just because the President doesn’t like a program doesn’t mean he can defund it,” said California Attorney General Rob Bonta.
One piece of the money has already been frozen in place. Late on September 30, U.S. District Judge Jia Cobb in Washington issued a temporary order keeping the $56.1 million in HUD housing counseling funds from expiring while a lawsuit by the National Urban League and nine other groups moves forward, according to WRE News. The judge did not rule on whether the administration acted unlawfully.
This has happened before
This is the second year in a row the administration has used the tactic. In August 2025, President Trump sent Congress a $4.9 billion rescission package timed to the end of the fiscal year. The Supreme Court allowed the administration to keep holding the money while the case continued, but noted it was “not a final determination on the merits.” That means the big legal question is still open.
The bottom line
Washington spends trillions every year, and Congress rarely stops to ask whether a specific grant still makes sense. The administration did ask, and it found $810 million going to refugee service contractors, ideological education grants and small programs most Americans never knew they were paying for. Cutting that money is exactly what voters who want a smaller government have been asking for.
Critics, including Sen. Collins, have a fair point that Congress holds the power of the purse, and the courts will have to settle how far a president can go. But the deeper problem is a Congress that funds programs year after year and then cries foul when someone finally reads the receipts. If lawmakers want to keep this spending, they can vote to restore it in the open.
Taxpayers should watch the states’ lawsuit closely. Its outcome will decide whether any president can trim waste without waiting for a Congress that rarely cuts anything at all.