Trump's $4.9 Billion Foreign Aid Cut Sparks Congressional Showdown, Raises Shutdown Fears

As the United States approaches the September 30 deadline to renew federal funding, President Donald Trump's recent decision to cancel $4.9 billion in foreign aid has intensified tensions in Congress, raising the specter of a government shutdown.

On August 29, 2025, President Trump utilized a "pocket rescission" to block the disbursement of $4.9 billion in foreign aid previously approved by Congress. This maneuver, last employed nearly five decades ago, allows the president to propose canceling funds late in the fiscal year, effectively preventing Congress from acting within the mandated 45-day period and leaving the money unspent. The rescinded funds were designated for the State Department and the U.S. Agency for International Development (USAID), which is now being dismantled and placed under State Department control.

The legality of this action has been met with bipartisan criticism. Senator Susan Collins (R-Maine) stated, "Article I of the Constitution makes clear that Congress has the responsibility for the power of the purse." She further emphasized that any effort to rescind appropriated funds without congressional approval is a clear violation of the law. Senate Minority Leader Chuck Schumer (D-N.Y.) warned that such executive overreach could upend negotiations to avert a government shutdown when the next fiscal year begins in October.

Legal experts have also raised concerns about the legality of the pocket rescission. The Impoundment Control Act of 1974 does not permit rescissions without congressional approval by the deadline. The Government Accountability Office has previously stated that such rescissions are unlawful, highlighting the legal and political risks of the president's move.

The cancellation of foreign aid has significant implications for international organizations. The International Labour Organization (ILO), for example, is facing uncertainty and fears of job losses following a proposed $107 million funding cut by the Trump administration. The U.S., which contributes 22% of the ILO’s regular budget, has withheld its 2024 and 2025 dues, prompting concern about the future of the organization's staffing and operations. ILO Director-General Gilbert F. Houngbo stated in an internal memo that the full implications of the cut are still unclear, and the organization is in contact with the U.S. government for clarification.

In addition to the foreign aid controversy, Democratic leaders are demanding the reversal of Medicaid cuts implemented during the Trump administration as a key condition for avoiding the looming shutdown. This demand adds another layer of complexity to the funding negotiations, as it ties domestic healthcare policy to the broader budgetary discussions.

The path to a resolution is further complicated by internal conflicts within the Republican Party and strained relations between Senate Minority Leader Chuck Schumer and President Trump. These dynamics make it challenging to reach a consensus on funding legislation and increase the risk of a government shutdown.

The current situation bears similarities to previous instances where budgetary disputes led to government shutdowns. For example, in 1990, a budget impasse resulted in a brief shutdown, highlighting the potential for significant disruptions when the executive and legislative branches fail to agree on funding.

The potential government shutdown and the cancellation of foreign aid have far-reaching social and societal implications. Domestically, a shutdown could disrupt public services, delay federal employee salaries, and impact the economy. Internationally, the withdrawal of foreign aid could weaken U.S. diplomatic engagement, undermine global health initiatives, and create strategic openings for rival powers such as China to expand their influence.

As the September 30 deadline approaches, the urgency for Congress and the administration to find common ground intensifies. The coming weeks will be critical in determining whether a government shutdown can be averted and how the United States navigates its foreign aid commitments amid domestic fiscal challenges.