The incoming administration of Donald Trump, along with Elon Musk and Vivek Ramaswamy, is preparing an ambitious plan to cut at least $2 trillion from the annual federal budget. However, they face a key limitation: Congress has the “power of the purse,” meaning that only it can decide how government money is used. Given this, the Trump team could resort to the controversial concept of “budget sequestration.”
What is budget retention?
Spending restraint refers to the president's decision not to spend funds that have already been appropriated by Congress. Although this practice was common in the past, it underwent a drastic change following the abuses of Richard Nixon, who attempted to thwart projects approved by Congress. This led to the creation of the Spending Restraint Control Act of 1974, which limits the president's ability to divert funds without Congressional authorization.
Musk and Ramaswamy's strategy
Musk and Ramaswamy have argued that the current system unconstitutionally limits presidential power. In a recent op-ed, both noted that they plan to challenge these restrictions in the Supreme Court, arguing that the court's current makeup could be on their side.
According to Musk, “with budget withholding, we can just cut off the flow of money,” referring to a strategy to stop funding for specific programs.
Budget withholding and tensions with Congress
The implementation of large-scale budget withholding could lead to a significant showdown with Congress, especially with Democrats, who have already warned against “executive overreach.” Trump already tried to use this tool during his first term by delaying funds to Ukraine, which contributed to his first impeachment.
Trump’s team is now aiming for even more drastic measures, such as eliminating entire departments and reducing agencies to their bare minimum. These actions could meet strong legislative resistance, but they also reflect Musk and Ramaswamy’s bold approach to delivering on their austerity promises.
What could change?
If the Supreme Court sides with Trump, the budget hold could become a powerful tool for redesigning federal spending. This would include eliminating bureaucracy, shrinking agencies and cutting popular programs, such as veterans benefits, which currently account for a significant portion of the budget.