Watchdog: Trump administration illegally withheld federal research funds

The Trump administration violated federal law by withholding tens of millions of dollars in research grant funding Congress had appropriated for the Agency for Healthcare Research and Quality (AHRQ), according to a federal watchdog report .

The Government Accountability Office (GAO) on Wednesday found the Department of Health and Human Services (HHS) violated the Impoundment Control Act (ICA) by withholding more than $78 million in fiscal 2025 after mass layoffs dismantled the agency’s grantmaking capabilities.

The 1974 law regulates how the president can cancel or delay federal funds that Congress has already appropriated.

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“We conclude that HHS withheld funds when it declined to obligate or expend more than $78 million of its FY 2025 appropriation before the close of the fiscal year,” the GAO found. “We further conclude that this withholding constituted an impoundment under the ICA rather than a programmatic delay. Because HHS did not submit a special message proposing to rescind AHRQ funds, HHS’s actions violated the ICA.”

The HHS did not immediately return a request for comment.

The executive branch doesn’t have the authority to pick and choose where to spend congressionally appropriated funding. The Constitution grants the president no unilateral authority to withhold funds from obligation.

The formal legal decision comes more than a year after Democratic lawmakers officially requested an investigation following mass firings from the agency in July 2025, including all employees who process grants.

After the firings, the AHRQ’s obligation and expenditure of funds slowed, resulting in an unobligated balance of $78 million at the close of fiscal 2025, the GAO said.

The AHRQ had discretion to decide how to allocate its spending, but a GAO examination of budget documents showed that the agency did not increase funding elsewhere to compensate for the declining rate of grant obligations.

“Collectively, the substantial unobligated balance of funds near the close of the fiscal year, the cancellation of grant peer review sessions, the RIF [reduction in force] separating key grant personnel from the agency, and admissions by agency management of funding uncertainty suggest a lack of intent to prudently obligate funds,” the GAO wrote in its report.

The AHRQ is a relatively small federal agency dedicated to making healthcare safer, more affordable and more effective and is estimated to have funded research that’s saved thousands of lives and billions of dollars over the past 27 years.

But the agency’s failure to spend appropriated dollars continues.

Congress allocated about $345 million for the AHRQ this year, but the agency in July told researchers it was halting nearly every grant that previously had been awarded.

Last month, the White House told Congress it intended to claw back $28 million of AHRQ funding as part of a broader move to cancel nearly $1 billion in federal funding across various agencies.

Democrats said they have been sounding the alarm for more than a year that the administration was breaking the law and applauded the findings for making it official.

“This decision confirms what we’ve long known: President Trump lit health research funding on fire last year, and it’s clear as day he’s just done the same again this year,” Sen. Patty Murray (Wash.), the top Democrat on the Senate Appropriations Committee, said in a statement.

“This is research that has saved tens of thousands of lives and saved billions of dollars in health care costs—but President Trump and Secretary Kennedy are intent on breaking the law to cut it off, and Republicans in Congress have all but let them do it,” Murray added, referring to Health and Human Services Secretary Robert F. Kennedy Jr. “It’s past time Congress imposes real consequences on this administration for killing lifesaving health research—I’ll keep fighting to do just that.”

In the House, Reps. Diana DeGette (D-Colo.), Doris Matsui (D-Calif.) and Don Beyer (D-Va.) called on Republicans to demand “the Constitution is upheld.”

“The administration’s unilateral dismantling of the Agency for Healthcare Research and Quality’s grantmaking operations is an illegal impoundment of Congressionally appropriated funds,” the Democrats said in a joint statement.

“Trump’s administration cannot simply refuse to spend the resources we authorized for lifesaving health care research. Republicans must join Democrats in demanding that the Constitution is upheld,” the lawmakers continued.