power to impound may, however, be unnecessary in order to deal with the problem of expenditures for segregated schools under the impacted areas legislation. An acceptable argument can be made that Congress never intended by the "non-intervention" clauses of the education acts to preclude administrative discretion as to the disbursal of funds for segregated schools. It will be recalled that the "non-intervention" clauses provide that "no department, agency, officer or employee of the United States shall exercise any direction, supervision, or control over the personnel, curriculum, or program of instruction of any school or school system of local or State educational agency."" The ambiguity of the phrase "personnel, curriculum, or program of instruction" is obvious, and this phrase is susceptible of construction so as to eliminate what has been administratively interpreted as a prohibition of denial of funds to segregated schools. That the "non-intervention" clause has been incorrectly construed by the responsible administrators is demonstrated by the fact that the National Defense Education Act, containing the same phraseology, was passed in 1958 after the school segregation decisions. If Congress did not intend the "non-intervention" clause to have an unconstitutional meaning in 1958, which may be assumed, it presumably would have changed the phrasing of the clause if the words were to carry a different intent than when used before the desegregation decisions. It follows that segregation was never intended to be embraced within the language "personnel, curriculum, or program of instruction." Administrative interpretation to this effect, and application of the education acts accordingly, would be subject to judicial review. Such a procedure would not, as would impounding by Executive Order, place the courts in the position of upholding an unconstitutional act in order to determine the unconstitutionality of Federal grants-in-aid for segregated schools.

V. CONCLUSIONS

80

The President has no general statutory authority to impound appropriated funds for reasons other than economy and efficiency of operation, the power to impound for which is a specific statutory grant of power. Nor can the President validly claim such authority as derived from the duty "to take care that the laws are faithfully executed." Still less can power to impound be attributed to inherent powers of the office. Bolling v. Sharpe and Cooper v. Aaron, in holding that the National Government might not segregate or support segregation under the Fifth Amendment, did not thereby confer upon the President power to impound portions of appropriations to prevent their use for the unconstitutional purpose. Certain grant-in-aid statutes permit sufficient administrative discretion to provide for the withholding of Federal funds for purposes involving racial segregation, and the impacted area acts are susceptible of construction to permit such discretion, although it would seem that the Hill-Burton Act is not. That Congress has not acted to correct unconstitutional legislation and that doctrines of standing to sue make it difficult to obtain court action, however, lend no support to the argument that an executive power to correct the law, specifically by the impounding device, need exist. The dangers of the impounding device, giving the President the power to dispense with the execution of the law and giving him a retroactive veto based upon his present opinion of the constitutionality of any statute, are so great as to require resort to alternative methods of bringing grant-in-aid statutes into conformity with the Constitution as respects segregation. An alternative method of procedure worthy of consideration has been recommended by the Civil Rights Commission: treat grants-in-aid as contracts and impose a non-discrimination condition precedent to the receipt of funds as is presently the case with government contracts. This proposal has the great merit that it does not strike at the separation of powers of government, which is basic to our constitutional system. The establishment of a Presidential power to impound funds goes too far upon this road. "The temptation of many men of good will is to cut corners, take short cuts, and reach the desired end regardless of the means.

Worthy as . the ends are . . . the particular means [proposed is] uncon

982

stitutional."

79 See note 73, supra.

80 National Defense Education Act, 72 Stat. 1582 (1958), 20 U.S.C. §§ 401, 402.

81 1961 Report, pt. V, "Employment" at 162, recommendation 3. The question as to Presidential authority to accomplish this recommendation is not, however, satisfactorily solved by the Commission report.

82 Douglas, J., dissenting in Hannah v. Larche, 363 U.S. 420, 494 (1960).

To: Hon. Sam J. Ervin, Jr.

THE LIBRARY OF CONGRESS,
CONGRESSIONAL RESEARCH SERVICE,

Washington, D.C., April 12, 1971.

From: Government and General Research Division;

Frederick Scott, Acting Division Chief.

Research by-Louis Fisher.

Subject-Presidential impoundment of funds.

This report examines the points raised by Mr. Caspar W. Weinberger, deputy director of the Office of Management and Budget, with regard to the impoundment of funds by the President. The points appeared in Mr. Weinberger's testimony on March 4, 1971, before the Senate Subcommittee on Housing and Urban Affairs of the Committee on Banking, Housing and Urban Affairs; in his testimony on March 24, 1971, before the Senate Subcommittee on Separation of Powers of the Committee on the Judiciary; and in his interview with Mr. Edwin L. Dale, as reported in The New York Times, March 28, 1971 (attached). (1) Mr. Dale observes that the amount of funds withheld this year "is actually a little less than the $12.9-billion of last year at the same stage when there was no Congressional criticism." Actually, there was considerable criticism in the summer of last year when education funds were impounded. The funds were released a few weeks before the November elections. The fact that congressional criticism of impoundment is more intense this year is understandable in terms of the unemployment situation and Administration fiscal policy.

The unemployment rate in January 1970 was 3.9 percent. A year later it was up to 6.0 percent. Marked changes have occurred in the number of major labor areas experiencing "substantial unemployment"-areas with 6 percent or more unemployment. A Labor Department survey dated April 1, 1970, listed eight such areas. A recent survey, dated March 26, 1971, lists 50 major labor areas with 6 percent or more unemployment.

The budget messages of the President reflect this change in the unemployment situation. The fiscal 1971 budget was "anti-inflationary" and depended on a balanced budget-in fact on a small surplus of $1.3 billion. The President said that a surplus was essential "both to stem persistent inflationary pressures and to relieve hard-pressed financial markets." In contrast, the budget message for fiscal 1972 speaks of a "turnaround of this inflationary trend," thereby permitting the Administration to follow "more expansive economic policies without losing ground in the battle against inflation." The estimated deficit for fiscal 1971 is now put at $18.6 billion by the Administration. The estimated deficit for fiscal 1972 is $11.6 billion. The emphasis is now on alleviating unemployment via the "full employment budget" concept. It is therefore understandable for congressional criticism of impoundment to increase in proportion to the unemployment rate, particularly when the Administration's own budget has an expansionary thrust.

(2) Mr. Dale reports that the question of whether the President is exercising item-veto power "is a different issue from the amount currently involved, which is apparently normal and largely technical." The word "technical" deserves to be explored. For instance, part of the reason given for holding up mass transit funds is supposedly the long delay in enacting the Department of Transportation appropriation bill. Still, there is no evidence that the appropriation delay caused any impoundment of funds for the supersonic transport. Something more than a technical point is involved here.

A prominent "non-technical" factor is the reason given by the Administration for withholding Model Cities funds, urban renewal funds, low-rent public housing funds, and other funds for urban programs. When Secretary Romrev appeared before the Senate Committee on Banking, Housing and Urban Affairs, on March 4, 1971, he explained that funds were being held back from various urban programs because there was no point in accelerating programs that were "scheduled for termination." He was referring to the fact that Congress had added funds to grant-in-aid programs which the Administration wanted to consolidate and convert into its revenue sharing proposal. To impound funds in this prospective sense-holding on to money in anticipation that Congress will enact an Administration bill-is an entirely new departure for impoundment. Impoundment is being used not to avoid deficiencies. or to effect savings, or even to fight inflation, but rather to shift the scale of priorities from one Administration to the next, prior to congressional action.

(3) Another non-technical factor concerns the degree to which programs are affected by impoundment. As of March 17, 1971, the total amount of impounded funds came to $12.7 billion. Of that amount, the funds withheld from Department of Defense (Military) came to $1.341 billion, or 10.5 percent. That compares with the 34.4 percent of DOD (Military) funds in the fiscal 1971 budget ($73.4 billion out of $212.8 billion). Even that is a poor measure, because much of the $212.8 billion consists of trust funds and other moneys over which the Administration has little, or no, opportunity to impound. On page 527 of the budget for fiscal 1972, the Administration estimates that it has relatively no control over $146.0 billion. That money is reserved for social security, interest on the debt, Medicaid, veterans benefits, contractual obligations, and other items. Furthermore, $1.4 billion is being set aside as an allowance for pay raises.

Impoundment, obviously, must take place in the controllable part of the budget. That amounts to $65.3 billion, of which $49.6 billion consists of funds for national defense. In short, DOD's portion of the controllable part of the budget comes to 76.0 percent, while its portion of impounded funds comes to 10.5 percent. If DOD is underrepresented in the area of impounded funds, domestic programs are necessarily overrepresented and must bear the brunt of the burden. Perhaps that is how it should be. Perhaps there are good reasons for withholding funds in this fashion. But it is not a mere technical point. To impound funds straight across-the-board on controllable programs would be one thing; to favor one sector at the expense of another is something else.

(4) At the end of Mr. Dale's column he refers to Mr. Weinberger's claim that there is "a long series of precedents and decisions justifying the President's right to withhold appropriated funds." That raises two points. As for precedents, we know of many precedents for impoundment, but none that justify the withholding of urban funds on the grounds that an existing grantin-aid program will be superseded by an Administration program. Nor does it seem consistent to justify impoundment as an anti-inflation action while at the same time the Administration is pursuing an expansionary budget policy.

As for the court decisions that supposedly justify the President's power to withhold appropriated funds, the author of this report once looked into that question for the George Washington Law Review and came away unimpressed by the legal argument, and that applies to both groups: those who believe that prior decisions justify impoundment, and those who believe that prior decisions forbid impoundment. Close examinations of those decisions revealed that they have little, if any, bearing on the issue of impoundment.

(5) In Mr. Weinberger's statement before the Senate Committee on Banking. Housing and Urban Affairs. on March 4, 1971, he cited the following as part of the legal authority by which the President may impound funds: "the President may be confronted with specific limitations upon expenditures and he may from time to time be obliged to impose restrictions upon certain programs in order to insure that such limitations are not exceeded." In his statement before the Senate Subcommittee on Separation of Powers, he reiterated the same point: "several laws explicitly restrict the spending of funds regardless of what sums may have been appropriated. The non-mandatory character of an appropriation is evident in this very fact."

While it is true that Congress has established spending ceilings in recent years, and that this may create a situation in which the President is forced to withhold funds to remain within the ceiling, it is also true that Congress reserved for itself the right to add funds to the President's budget. In such situations the "ceiling" is raised automatically, and the President would have no statutory basis for impounding the add-ons.

The flexible nature of spending ceilings is well understood. In a letter to the leadership of the House of Representatives and the Senate, on December 17, 1969, the President spoke of the congressional limit as a "rubber ceiling" in the sense that it provided that "increased spending later enacted by the Congress would be added to the ceiling and decreases taken away." The Administration is relying not on statutory authority from the spending ceilings but rather on an administrative decision to fix the height of the ceiling. That is evident in many statements released from the White House. On several occasions in the last two years the President has threatened to withhold any additional funds that Congress adds to his budget. Such decisions are based on administrative policy, not on legislative authority.

A different situation occurs with statutory limits on the public debt. If Congress proceeds to add to the President's budget, without making com

mensurate changes in the tax laws to raise revenue, this can lead to the need for impoundment. This is a technical problem for the Administration, but it can be met by non-technical remedies, particularly in the way that the President distributes impoundments and reserves among the various programs.

(6) In his statement before the Senate Committee on Banking, Housing and Urban Affairs, Mr. Weinberger justified impoundment in terms of the Employment Act of 1946. He said that mention should be made of the Act, "which declares it to be . . . the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy . . . to promote maximum employment, production, and purchasing power.' In order to promote purchasing power (which Mr. Weinberger had underlined), it is the position of the Office of Management and Budget that the President has an obligation to withhold funds as part of his anti-inflation policy. Mr. Weinberger repeated this argument, including the underlining of "purchasing power," in his statement before the Subcommittee on Separation of Powers.

That emphasis on purchasing power would have been more appropriate last year, with a budget of restraint; it is less applicable this year with an expansionary budget. In fact, the emphasis this year would presumably be that the Federal Government has a responsibility to promote "maximum employment, production, and purchasing power." It is interesting to observe that one of the key arguments made by the Administration on behalf of the supersonic transport was that it would provide jobs. At least that is consistent with the objective of an expansionary budget. But why are jobs associated with Model Cities, urban renewal, regional medical programs-and other programs affected by impoundment-of less importance? On what basis does the Administration make such decisions?

In conclusion, it should be said that impoundment of funds in the past has often been necessary and desirable. A number of developments can take place, after funds have been appropriated, which would justify the impounding or reserving of funds. It frequently happens that what appears at first to be an arbitrary exercise of Presidential power will be found later, upon closer exomination, to be a reasonable decision by administrative officials. But the justification for impoundment will have to be by individual case, not by generalizations for or against impoundment. That is why it will be especially valuable to have impoundment reported to Congress on a regular basis, with an opportunity for Members of Congress to challenge the Administration specific cases.

[From the New York Times, March 29, 1971]

IMPOUNDING RATE CALLED 'NORMAL'

FUNDS WITH HOLDING TERMED TECHNICAL BY WEINBERGER

(By Edwin L. Dale)

on

Washington, March 27-The Government's chief budget officer said today that the current level of funds appropriated by Congress but held back from spending was "normal" and "approximately the same percentage of the total budget as for every year since at least 1959."

Caspar W. Weinberger, Deputy director of the Office of Management and Budget. made the comment to a reporter in response to rising charges by Congressional Democrats, and some Mayors, that the President was holding back billions of dollars of badly needed funds at the same time that he was blaming Congress for not passing a program of revenue sharing with the states and cities.

The amount withheld-funds appropriated by Congress and not released for spending by the Budget Bureau-now amounts to $12.8-billion. But most of this is essentially technical and does not represent a decision to reduce or retard Government programs, budget officials said.

THE LARGEST ITEM

For example, the largest single item-$5.9-billion in highway funds-represents the accumulation over many years of excesses of high-trust fund revenues over the amount successive Presidents have decided to spend. The highway program is proceeding at the level long since decided upon and made known in the budget.

In the case of other items, funds will be released as certain procedures are completed. Whatever the reasons for the withholding, this year's amount, at this stage of the budget year, is actually a little less than the $12.9-billion of last year at the same stage when there was no Congressional criticism.

Mr. Weinberger readily conceded that some of the items withheld involved "policy" determinations. For example, in several areas, the withheld funds amount to the excess of Congressional appropriations over Administration requests.

These include the grants to cities and towns for water and sewerage projects, an item frequently mentioned by the Mayors. Mass transit funds have been held up in part because of the long delay in enactment of the Department of Transportation appropriations bill, but a policy decision was involved in this area, too.

Despite the various explanations for the specific programs in which funds have been withheld, the process of withholding has again raised charges in Congress that the President is, in practice, exercising an "item veto" over appropriations—something barred by the Constitution. This is a different issue from the amount currently involved, which is apparently normal and largely technical.

Mr. Weinberger, while not directly disputing that interpretation, has cited to at least two Congressional committees a long series of precedents and decisions justifying the President's right to withhold appropriated funds.

It is doubtful, however, whether these explanations will satisfy the members of Congress who are concerned. Senator Sam J. Ervin, Jr., Democrat of North Carolina, said last week, "Under the present impoundment practice, the President has an item veto over acts of Congress. There is not a word in the Constitution giving such a power."

[Excerpts from House of Representatives Document 91-353, 91st Congress 2d Session] MESSAGE FROM THE PRESIDENT OF THE UNITED STATES

MEDICAL FACILITIES CONSTRUCTION AND MODERNIZATION AMENDMENTS OF 1970 RETURNING WITHOUT APPROVAL THE BILL (H.R. 11102), THE MEDICAL FACILITIES CONSTRUCTION AND MODERNIZATION AMENDMENTS OF 1970

JUNE 23, 1970.-Message, together with the accompanying bill, ordered to be printed as a House document

To the House of Representatives:

I am returning without my approval H.R. 11102, the Medical Facilities Construction and Modernization Amendments of 1970. My reason for this veto is basic: H.R. 11102 is a long step down the road of fiscal irresponsibility, and we should not take that road.

This bill authorizes direct grants which are more than $350 million in excess of the budget which I presented to the Congress for Fiscal Year 1971. More than that, it would (1) significantly restrict Presidential options in managing Federal expenditures, (2) isolate the financing of one group of Federal programs as untouchable without assessing its merits against the financial needs for other programs, and (3) encourage pressures to extend this provision to other areas thereby further complicating management of the Federal budget.

One of the most unacceptable provisions of the bill is in Section 601. Here, the Congress insists that funds appropriated for any fiscal year through 1973 to carry out the programs involved must be spent. In addition to restricting flexibility in management of Federal expenditures, this provision would interfere with my ability to comply with the limitation on total 1971 spending that has already passed the House of Representatives and has been reported by the Senate Appropriations Committee. The amount of money involved is large; Section 601 would affect $2.5 billion of my budget request for the Department of Health, Education, and Welfare for 1971. This kind of provision puts the Congress in the position of withdrawing with one hand the authority necessary to do what it requires with the other. I ask the Congress to eliminate Section 601.

Looking to other deficiencies in H.R. 11102, I ask the Congress to remove the authorization for hospital construction grants and to reduce the remaining