Trump cancels $4.9B in foreign aid using fiscal year loophole

On Aug. 29, 2025, Trump sent Congress a special message invoking pocket rescission under the 1974 Impoundment Control Act to cancel $4.9 billion in USAID foreign aid. The White House framed this as eliminating what they called woke, weaponized, and wasteful spending.

The pocket rescission technique exploits fiscal year timing by submitting cancellation requests just 30 days before Sep. 30. Congress can't override because they don't have enough time to vote before the money expires at the fiscal year deadline.

Senate Appropriations Chair SCSusan Collins called Trump's action illegal and said it violates Congress's constitutional appropriations authority. Democratic leaders CSChuck Schumer and Hakeem Jeffries warned the move creates dangerous precedent for future budget fights.

The Government Accountability Office concluded pocket rescissions are unlawful because they bypass Congress. GAO's Aug. 2025 guidance states that funds proposed for rescission must be made available for obligation before they expire.

The canceled funds targeted USAID Democracy Fund grants and State Department civil society programs. The administration claimed the rescission would immediately reduce the deficit by $4.9 billion, though legal challenges may limit actual savings.

No president has attempted pocket rescission in nearly 50 years. Legal experts call this the most aggressive use of presidential budget authority since the 1974 Impoundment Control Act was designed to prevent Nixon-era executive manipulation of Congressional appropriations.

A federal district court initially blocked Trump's foreign aid cuts on Sep. 3-4, 2025, ordering the funds be released. However, the Supreme Court overruled this decision on Sep. 26, 2025, voting 6-3 along ideological lines to allow Trump to freeze the $4 billion in foreign aid. The conservative majority ruled Trump's foreign policy authority outweighed the Congressional appropriations concerns.

The Supreme Court ruled 6-3 on Sep. 26, 2025, allowing Trump to proceed with the pocket rescission. While a district court initially blocked the cuts in early Sep., the Supreme Court's conservative majority sided with Trump, ruling his foreign policy authority outweighed Congressional appropriations concerns.