Inside (the Beltway) Scoop

By: Ellen Kuo
Wednesday, October 14, 2026
GAO Says Appropriated Funds Illegally Held

When the White House announced an $810 million rescission package targeting 11 federal appropriations accounts, including the Department of Health and Human Services, just 5 days before the end of FY 2026, members of Congress expressed outrage. According to the Government Accountability Office (GAO), this was an illegal action since this money was approved and signed into law. The package includes approximately $28 million in health research funding that the administration characterized as wasteful, duplicative, or ideologically driven and caused a flashpoint in the debate over whether the executive branch can effectively cancel congressionally approved spending without completing the normal legislative process.
 
The central legal issue is the administration’s use of a “pocket rescission,” which seeks to prevent funds from being spent by submitting a rescission request so close to the end of the fiscal year that Congress cannot complete its review before the funds expire. The Government Accountability Office (GAO) concluded on September 29 that the Impoundment Control Act of 1974 does not permit the administration to withhold the affected appropriations beyond September 30 without congressional approval. Senate Appropriations Committee Chair Susan Collins (R-Maine) also criticized the move as unlawful, while an effort by Democratic senators to block the cuts was stopped by an objection in the Senate. The dispute raises fundamental questions about the balance of power between Congress and the executive branch over federal spending.

The implications extend beyond the immediate rescission package to the administration of federal research programs and the stability of grant funding. On October 7, GAO separately determined that the Department of Health and Human Services violated the Impoundment Control Act when it withheld more than $78 million in fiscal year 2025 funds at the Agency for Healthcare Research and Quality (AHRQ) following staff reductions that impaired its ability to administer grants. Although this decision concerns earlier funding rather than the new $810 million package, it reinforces concerns about the consequences of withholding appropriated research funds and weakening agencies’ capacity to award grants. For universities, research institutions, investigators, and scientific advocacy organizations, the developments underscore the importance of congressional oversight, timely grant administration, and clear legal limits on executive actions affecting federal research investments.