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Federal Budget Freeze Prospect Making You Shiver? Don’t Panic Until You Hear the “R” Word: Rescission

President Obama highlighted his proposed partial “freeze” on discretionary federal spending during his State of the Union address last week, which set off a flurry of predictable wrangling among Democratic and Republican members of Congress (for a pretty good summary of what’s going on, see Democrats, Republicans Spar Over Cutting Deficit). While talk of budget freezes may make most grant applicants start to get the sniffles, there is little to worry about at the moment.

So far, President Obama is talking about freezing some domestic spending programs in FY ’11, which doesn’t start until October 1. He also seems to love spending for things like education, stimulating jobs, green energy, etc. The proposed FY ’11 budget, which debuted February 1, shows increases in a number of discretionary programs along with freezes in others. But remember that appropriations for most domestic discretionary programs in the current FY ’10 budget are wildly higher than in the FY ’09 budget. At the moment, there are unprecedented amounts of money available for all kinds of initiatives. As I wrote last September in “Graffiti, Windmills, CAP Agencies, and an Answer to the Question As to Whether This is 1975 or 1965,” “This really is the best of times for grant applicants, so let’s all party like its 1965.” Or, to paraphrase Max in Where the Wild Things Are,* “Let the wild grant writing rumpus continue.”

Despite the happy talk above, however, there is one not-so-minor thing to worry about—the dreaded “R” word. No, not the recession “R” word, which, as I have pointed out repeatedly, is actually good for grant writing. I’m talking about “rescission”. Rescission should strike fear into your hearts, as shown in the following Congressional definition:

“Rescission–The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.”

Since the Democrats control both houses of Congress, and assuming that President Obama is good at herding cats, he could propose rescission of any authorized spending program anytime he wants to. As with so many aspects of grant writing, I actually experienced a budget rescission when I was a Community Organizer Intern in 1972 in North Minneapolis, as noted in my first post, “They Say a Fella Never Forgets His First Grant Proposal.” When I started work, one of my first tasks was to explain to low-income homeowner applicants for home rehabilitation loans that they could not get their money because the funds had been rescinded by President Nixon. At that time, there was nothing Congress could do about a rescission, which led to the 1974 law that requires Congress to go along with a presidential rescission. Given the hysteria that is building over the huge budget deficits, compounded by the upcoming election, a successful rescission is quite possible, and much more worrisome that supposed spending freezes.

This means that if your organization—nonprofit, public agency or eligible business—is thinking about applying for a grant, stop thinking and start writing.

* I have fond memories of reading “Where the Wild Things Are” to Jake and my other kids when they were two or three. It’s one of the best children’s books ever.