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Do Democrats Need To Create Court Ordered Escrows To Protect The Funds Wrongly Impounded By Trump? [1]

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Date: 2025-05-04

Josh Marshall at Talking Points Memo raises a lurking issue concerning all the funds wrongfully impounded, i.e., not spent per Congressional appropriations), as a result of DOGE and the Trump administration’s wave of cancelled grants to the NIH and other organizations. See The White House’s Next Orchestrated Budget Crisis.

Mr. Marshall admits that the issue is confusing, but essentially Republicans are planning to run out the clock and make these grant cuts permanent because the calendar year in which they must be spent is due to run out by August. As Mr. Marshall explains it:

At the end of the summer we’ll be coming to the end of the fiscal year. DOGE has canceled tons of NIH grants and done various other things to make it really hard for NIH and other grant-making parts of HHS to do their work and spend the congressionally appropriated money. So by late August a very large pot of money will have built up and you will be coming to the end of the fiscal in which Congress mandated that it be spent. The White House apparently wants to essentially create a crisis around what to do with that pile of money and force Democrats either to allow them to pass or actually support passing what’s called a rescission bill. . . . . As this was originally presented to me it’s presented as a kind of constitutional crisis. If we don’t spend this money we’re violating the constitution. By this time we’re maybe two [months] left in the fiscal year so it’s not possible to spend it even if you wanted to. So the White House says if you don’t help us you’ll be forcing us to violate the constitution. As I told the people I discuss this with, the logic here didn’t make a lot of sense to me. But I think the idea is slightly different. Either Democrats help the White House keep the whole thing in constitutional bounds or it becomes de facto impoundment of those funds and in essence impoundment becomes the law of the land by force of action if not legal review.

The TPM commentary is preliminary and focuses on whether, logically, this really presents a political problem for Democrats. But it does seem that apart from the politics of the issue, there is a real timing problem in seeking to reclaim these grant sums because the fiscal calendar is expiring. A “win-win” scenario for the White House, as TPM puts it.

Mr. Marshall ends by asking everyone to think about solutions here. To me, one answer may be to go into court — hopefully already existing court challenges — and request that the court order the grant amounts be paid into escrow now, and be released to plaintiffs if they later prevail that the funds were wrongfully impounded (or returned, if plaintiffs do not prevail). The idea would be that the funds would have been “spent” this year. The appropriated money would have been transferred to a third party escrow agent (i.e., bank) before the end of the fiscal year.

It would seem to me if a court in equity can enjoin Trump from cutting off spending during the pendency of a lawsuit*/, it should have the power to order the government to pay the money into escrow to preserve the opportunity for meaningful relief. I do not know though if there are problems with this approach because once again we are in uncharted territory.

But I also think this is a perfect example of a number of issues that Democratic leadership should be publicly explaining their strategy. Indeed, that is the essential plea of Mr. Marshall’s post too. We are in a complicated and multi-front legal and political war against an aggressive and renegade opponent. I don’t have any understanding of what the Democratic response is across these fronts, much less see a coordinated strategy.

*/ Last note and an example of the confusion: the TPM article appears to discuss this as a problem of reclaiming wrongfully cancelled “grants,” and not necessarily the other funding associated with wrongful spending cuts or mass firings. Is that because the injunctions against such cuts protects them from this issue, or due to some other technical aspects? This is another example of the general confusion that has been caused by the failure of Democratic leadership to communicate what, if any, coherent opposition and strategy is being mounted against Trump in the courts.

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