Trust Us, It's An Interagency Agreement

If this week's House Appropriations hearings seem like a wonky September oversight lineup, look closer. Between the Economy Act, a review of the Federal Aviation Administration (FAA), and a hearing on trade and investment agencies, House appropriators seem to be focusing on a much broader question: how much control is Congress ceding to the executive branch and what can be done to reclaim it?

The Economy Act

The Financial Services and General Government Subcommittee's (FSGG) September 15 oversight hearing on the Economy Act is notable not because the statute is novel, but because appropriators increasingly view it as a window into how executive spending flexibility is managed beyond the appropriations process.

The Economy Act allows agencies to purchase goods and services from one another using reimbursable agreements. At its best, it promotes efficiency and reduces duplication. At its worst, critics argue it can obscure how appropriated funds are ultimately used and make it difficult, if not impossible, for Congress to track spending decisions across agencies.

As Approps Drop readers know, the administration has used the Economy Act and interagency agreements to move funding and execute priorities across the government.

The September 15 hearing will feature witnesses from the Government Accountability Office (GAO) and the Congressional Research Service (CRS), which signals to us that members are interested in the legal framework and practical application of the law rather than any single program or instance.

Questions Members Should Be Asking

Where Is the Money Actually Going?

Congress regularly receives agency budget requests, reprogramming notices, and spending plans. Economy Act agreements can obscure this picture.

Questions members could ask include:

• What are the largest active Economy Act agreements across government?
• Which agencies are the most frequent users of Economy Act authorities?
• How much funding has moved through Economy Act agreements over the last three fiscal years?
• Are there government-wide initiatives that could not have proceeded absent Economy Act authorities?

The goal of these questions should establish a baseline: does Congress have sufficient visibility into these transactions, or is executive spending operating in a black box?

Is Congress Losing Control?

Appropriators are protective of congressional spending authority and may view broad use of interagency agreements as an erosion of their constitutional role.

Members could ask:

• Has GAO identified examples where agencies used Economy Act authorities in ways that potentially stretched congressional intent?
• At what point does an interagency agreement functionally become a transfer or reprogramming?
• What reporting requirements would improve congressional oversight?
• Should Congress establish approval thresholds for large Economy Act agreements?

These questions are likely to resonate with members on both sides of the aisle. At their core, they protect institutional prerogatives as much as policy outcomes.

Is This Part of a Larger Executive Branch Trend?

The Economy Act discussion does not exist in isolation. It comes as appropriators continue wrestling with another major executive branch initiative: the Administration's proposed revisions to Uniform Guidance that would increase political involvement in federal grant awards.

Although Congress included language in the recent continuing resolution preventing the Administration from finalizing the proposal before December 11, House Appropriations Chairman Cole described the issue as a battle that has merely been postponed.

The Uniform Guidance Debate and the Power of the Purse

At first glance, a grant management rule and the Economy Act seem unrelated. In reality, both revolve around the same issue: executive discretion.

The Administration argues that political leadership should have greater influence over grant awards to ensure programs align with administration priorities. Critics argue that doing so injects politics into traditionally merit-based grant processes and reduces the influence of Congress, universities, local governments, nonprofits, and tribal entities. It is easy to understand why the Administration seeks to claim additional authority, and it is even easier to question why Congress would allow such a power grab. That same dynamic may surface throughout FSGG's Economy Act hearing on Tuesday.

FAA and Trade Agencies May Face Similar Questions

The FAA oversight hearing presents another opportunity for Appropriators to examine how federal dollars are being translated into outcomes. Appropriators are likely to focus on modernization efforts, workforce challenges, air traffic control upgrades, and technology investments.

Likewise, the following day's hearing on trade and investment agencies could extend the discussion into export promotion, manufacturing competitiveness, and interagency coordination. Members may seek assurances that agencies are not duplicating efforts or relying excessively on cross-government funding structures that reduce transparency.

One More Thing

This wave of oversight unfolds against a turbulent economic backdrop. Last week, the Bureau of Labor Statistics reports that the consumer price index, a measure of inflation, rose 3.4% on an annual basis in August, the same pace as July. This indicates that inflation has remained high, and consumers are likely to continue feeling the effects. It leaves some suspecting that the Federal Reserve will raise interest rates at its policy meeting this week in order to cool the economy. This will likely factor into the Congressional conversation regarding the deficit and spending levels. Stay tuned.

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