Most Americans have never heard the term “impoundment”—a process through which the president withholds federal money that Congress has already appropriated for a specific purpose. But for anyone following the events out of Washington recently, the term has been in the news frequently. In fact, the issue is potentially one that might produce a major constitutional crisis in the coming months. President Donald Trump has been hell-bent on using executive authority to cut as much federal spending as possible. He has already gone after a number of targets, ranging from the U.S. Agency for International Development to the National Institutes of Health.

During his campaign for the 2024 election, Trump made clear what he would do. He asserted “the president’s long-recognized impoundment power” and vowed to use it “to squeeze the bloated federal bureaucracy for massive savings.”

As a result of his early moves, federal courts have blocked his efforts and are currently examining whether some of his executive orders that “pause” congressionally appropriated money violate the laws regarding impoundment. With Trump determined to move forward with his plan—and administration officials, including Vice President J.D. Vance, openly attacking judges who dare to challenge them—this question could easily culminate in an epic clash, the kind that the nation has not seen since the early 1970s, when President Richard Nixon and a Democratic Congress faced off over this constitutional test of the imperial presidency.

At the center of the struggle is a law that came out of the Nixon years. In 1974, Congress passed a major budget reform that severely curbed the ability of presidents to act unilaterally on budgeting. By all indications, Americans are about to find out whether this legislation will continue to stand—or whether we will enter a period when presidents can do whatever they want with public funds.

The U.S. Constitution places the power of the purse with Congress. Article I, Section 8, Clause 1 states: “The Congress shall have Power to lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.”

Yet presidential impoundment is nothing new. In 1803, President Thomas Jefferson impounded approximately $50,000 that had been allocated for building and maintaining gunboats for the U.S. Navy. Since Jefferson had completed negotiations on the Louisiana Purchase, tensions had calmed, and the expenditures were no longer relevant. Georgetown Professor Josh Chafetz has shown how the law itself gave the president discretion to defer the gunboat funds. And when Jefferson went further a few years later, seeking to withhold money that was to pay for federal government salaries, he backed away when Congress threatened him.

There were other instances of impoundment in the 19th century, though they were extremely limited. Administrations tended to find congressional consent to stop sending out the money in those limited cases, or didn’t spend every dollar when Congress established a budgetary ceiling rather than a specific amount that had to be used. The Anti-Deficiency Acts of 1905 and 1906 empowered the president to adjust appropriations to achieve efficiencies in government. The Budget Reform Act of 1921 modernized the budget process, establishing the submission of an annual budget proposal and creating the Bureau of the Budget to provide the White House with expertise.

Presidential impoundment became more frequent in the 20th century as the executive branch and the federal government expanded. There was more money to fight over. Most of the decisions continued to center on money for programs that were no longer operative.

Within constitutional limits, there were also occasional clashes over funding related to specific weapons systems, where presidents claimed decision-making rights based on their role as commander in chief. President Harry Truman impounded $735 million for expanding the size of the Air Force. President John F. Kennedy withheld $180 million that Congress passed for B-70 bombers.

Nonetheless, in a majority of these disputes, as historian Arthur Schlesinger Jr. explains in his book The Imperial Presidency, “Presidential impoundment in these years remained … within the framework of predominant congressional intent and was controlled by the give-and-take of the political process. If Congress made enough of an outcry, Presidents released the funds. Moreover, such impoundment was rooted in statutes or in the President’s military authority; it was not based on a general claim to constitutional power.”

The most controversial case before 1969 revolved around President Lyndon Johnson impounding funds in an effort to curb worsening inflation caused by spending in Vietnam.

But President Richard Nixon changed everything. For him, impoundment was a blunt political bludgeon to destroy programs that he opposed and go after liberals on Capitol Hill. With impoundment, Nixon went after all sorts of liberal initiatives involving the environment, health care, and education by refusing to spend the money that had been made available for these programs.

When the Missouri Highway Commission attempted to gain access in 1970 to federal funds needed to finish work on Interstate 44, state officials discovered that the White House had impounded the money. In 1972, Nixon imposed a devastating moratorium on subsidized housing and community development. The following year, he withheld $6 billion of Clean Water Act monies.

“President Nixon,” noted the editors of the New York Times in February 1973, “exploits ambiguous constitutional precedents and pretends that what is cloudy is actually well-defined. The power [to] impound is one of those powers that are always implicit in any grant of executive power. Obviously, if a President finds that he can administer a program with fewer employes or in a more efficient manner than Congress had contemplated when it approved an appropriation, it would be absurd of him to spend the extra money. But efficient management is quite different from a decision to kill a program by not spending any money at all.”

When Nixon moved to impound $2.5 billion from the Highway Trust Fund, North Carolina Democratic Sen. Sam Ervin, who would later chair the Watergate committee, headed a team of 20 colleagues who went to the U.S. Circuit Court of Appeals to claim that the president was violating the law. The Constitution granted the “power of the purse exclusively to Congress,” they claimed, whereas presidential impoundment was “contemptuous” of the Constitution. The senators were triumphant. The court ruled that Nixon had violated the law.

For Nixon, the issue came down to his expansive view of presidential power. According to Schlesinger, “The Nixon theory of impoundment was a central attack on the role of Congress in the American polity.” Despite the court decision on clean water funds, Nixon did not intend to stop using this mechanism, and there were doubts as to whether Congress would continue standing up to him.

Reporting on this and other battles taking place between the White House and Capitol Hill, Time magazine argued that “[t]he U.S. is facing a constitutional crisis. That branch of Government that most closely represents the people is not yet broken, but it is bent and in danger of snapping.”

Nixon didn’t only impound funds; he also insisted on his constitutional right to do so. In a 1973 press conference, he spoke to reporters about “the constitutional right for the President of the United States to impound funds and that is not to spend money, when the spending of money would mean … increasing prices or increasing taxes for all people, that right is absolutely clear.”

Under Nixon, wrote the historian Stanley Kutler in his classic work on Watergate, The Wars of Watergate, “[i]mpoundment became an instrument serving preferred presidential policies, policies that aided fiscal restraint and at the same time frustrated congressional wishes.”

In 1974, Nixon’s relentless assault on congressional power did trigger a reaction. As the Watergate scandal unfolded and put a spotlight on the multiple ways in which Nixon had abused presidential power, Congress passed major legislation that aimed to address the fiscal side of these threats.

The Congressional Budget and Impoundment Act of 1974, which Nixon grudgingly signed one month before resigning from office in disgrace in August, clarified the rules of impoundment. According to the new law, presidents had the right to slow down spending appropriated funds—what’s called deferral—but only if the House and Senate did not vote against it. If a president wanted to put the permanent brakes on spending—recission—then they needed Congress to approval of doing so within 45 days of continuous session; since recesses of over three days were not included in the count, this usually meant about 60 days. If the House and Senate did not agree to the request, the president had to release the funds.