The Two-Track Strategy to Control Federal Spending

In the last week of July 2026, two things happened 48 hours apart. On July 27, the Office of Management and Budget published a proposed rule that would give political appointees discretion over hundreds of billions of dollars in federal research grants, allowing them to align spending with "agency priorities" and presidential executive orders ^[1]. On July 29, the Environmental Protection Agency stripped a $19.8 million Community Change Grant from Thomasville, Georgia, citing a conflict with administration policies on "merit, fairness, and excellence" ^[2]. One action was formal rulemaking, the other an ad hoc termination. Both served the same underlying purpose: aligning federal spending with presidential priorities. The compression is not a coincidence. It is the visible surface of a strategy that has been running on two tracks since at least November 2025, when OMB Director Russell Vought stated plainly what the administration intended.

And we have now been embarked on deconstructing this administrative state. — Russell Vought

The goal has not changed. What has changed is that the administration is no longer relying on a single method to achieve it. It is running both tracks at once — and accelerating on each. The first track is legislative. Since April, the administration and its congressional allies have used budget reconciliation — a process that passes with a simple Senate majority, bypassing the 60-vote filibuster — to lock security spending into statute through the end of Trump's term. In April, the Senate passed a $70 billion budget resolution to fund Immigration and Customs Enforcement and Customs and Border Protection through 2029 ^[3]. In June, after an earlier version stalled over a controversial Justice Department "anti-weaponization fund," the House passed a clean $70 billion version, the Secure America Act, on a 214-212 vote ^[4]. By mid-July, House Republicans had advanced a second, larger package — "Reconciliation 3.0" — bundling $60 billion in military funding, $13 billion for intelligence, $12 billion in farmer subsidies, and $10 billion for election photo-ID requirements into a single $95 billion resolution ^[5]. The mechanism is the same each time: use reconciliation to pass spending that would otherwise need Democratic votes, and bundle enough priorities together to hold the Republican caucus. The second track is administrative, and it is the one that has evolved most visibly. Through the winter and spring of 2026, the administration pursued control over federal spending through direct, ad hoc actions — and courts blocked them, repeatedly. In December 2025, a federal judge ordered FEMA to restore $3.6 billion in disaster-preparedness grants, ruling the administration's termination was "unlawful executive encroachment on the prerogative of Congress to appropriate funds" ^[6].

This is a case about unlawful Executive encroachment on the prerogative of Congress to appropriate funds for a specific and compelling purpose, and no more than that. — Richard Stearns

In March 2026, the First Circuit unanimously upheld blocks on the administration's attempt to freeze trillions in federal loans and grants. The court found the OMB acted arbitrarily and framed the move as the president treating congressionally approved spending as something he could turn on and off at will ^[7].

We thus agree that the States are likely to succeed in showing that it was ‘arbitrary and capricious to ignore such matters,’ — David Barron Corona

In May, a federal judge ruled that the administration's use of ChatGPT to terminate more than 1,400 National Endowment for the Humanities grants — flagged for DEI-related keywords without reviewing scholarly substance — was unconstitutional viewpoint discrimination ^[8].

What mattered to DOGE was not whether a grant lacked scholarly merit, failed to comply with its terms, or fell outside NEH’s statutory purposes. What mattered was that the grant concerned a ’minority group’ — Colleen McMahon

In July, another federal judge blocked the administration from using a "Termination Clause" to revoke over $5 billion in already-awarded state grants, finding OMB lacked the authority to cancel grants based on priorities identified after the funds were awarded ^[9]. The rulings shared a common thread: the administration was trying to exercise a power over spending that belonged to Congress, and it was doing so without the legal authority to back it up. Then the administrative track shifted. In late May, OMB proposed revisions to the Uniform Guidance — the government-wide framework that governs how federal grants are awarded and managed — to give political appointees greater say over grant decisions ^[10]. In late July, it followed with the proposed rule on science funding, a restructuring of roughly $200 billion in federal research grants that would allow political appointees to review and override agency decisions to align with presidential priorities ^[10]. The rulemaking does not abandon the goal of the ad hoc actions. It formalizes the authority those actions lacked. Where a funding freeze could be blocked as arbitrary, a duly promulgated rule carries the force of law. Where a ChatGPT keyword search could be struck down as viewpoint discrimination, a rule that vests discretion in political appointees creates a procedural framework courts are more likely to defer to. The two tracks converge on the same outcome. The legislative track locks spending priorities into statute through 2029, using Congress's own reconciliation process to make them filibuster-proof. The administrative track codifies political-appointee discretion over grants in rule, building the legal authority that courts found missing in the ad hoc attempts. And the Thomasville grant, stripped 48 hours after the rule was proposed, is the evidence that the ad hoc mode has not been retired. It runs alongside the formal one, as if testing what the rule, once finalized, will permit.