White House budget officials resigned amid frustration with Ukraine aid freeze

Two White House budget officials resigned in part out of frustration with President Donald Trump’s order to freeze U.S. military assistance to Ukraine, a senior budget official told House impeachment investigators.

Mark Sandy, whose closed-door deposition transcript was released Tuesday, said the initial concerns about the hold on military aid caused at least two officials within the Office of Management and Budget to resign.

One of those officials, a lawyer, stepped down over concerns that the hold was violating the Impoundment Control Act of 1974, which sharply curbs the executive branch’s authority to alter congressionally appropriated funds; another resigned over “frustrations about not understanding the reason for the hold.”

Sandy did not name the officials and emphasized that he could not know the exact reasons for each official’s decision to resign.

Sandy’s deposition was among the final transcripts released as part of House Democrats’ impeachment inquiry. Democrats held two weeks of public hearings in the House Intelligence Committee where they heard from key witnesses; the investigation moves to a new phase after Thanksgiving when the Judiciary Committee begins the process of drafting articles of impeachment.

The hold on nearly $400 million of U.S. military aid to Ukraine is central to the House’s impeachment inquiry, as investigators have sought to learn whether Trump conditioned the aid on Ukraine’s willingness to launch an investigation targeting former Vice president Joe Biden and his son, Hunter.

The hold was released on Sept. 11, just hours after a whistleblower complaint about the matter was circulating around the government, and after House committees began investigating Trump’s personal lawyer Rudy Giuliani and his efforts in Ukraine in spur Trump’s desired investigations.

Sandy was the only OMB official to testify as part of the inquiry. Other officials, including acting Director Russell Vought and national security chief Michael Duffey, spurned subpoenas seeking documents and testimony. Investigators have tried but largely failed to learn critical information about Trump’s order to freeze the aid, including the motivations behind it and the way in which it was implemented within OMB.

Sandy also told investigators that Duffey told him on June 19 that Trump had seen a media report on the military aid to Ukraine, which triggered his interest in the issue. It was not clear to Sandy which article Duffey was referencing.

Sandy said he tried for months to get an explanation from Duffey and other officials about the reasoning behind the president’s order that the aid be frozen, but said he later was told in early September that Trump was concerned about “other countries not contributing more to Ukraine.”

Other officials from across the government — including the Pentagon, State Department and National Security Council — similarly tried to figure out why the hold was put in place, but never could conclusively find out.

The release of Sandy’s deposition transcript came just hours after House Democrats accused OMB of “a pattern of abuse” in halting the crucial aid to Ukraine earlier this summer, as Democrats released a timeline of executive actions that they say ran afoul of congressional spending powers.

The timeline also shows how a political appointee at OMB retained control of the Ukraine aid, a point underscored by Democrats who said it was highly unusual.

Much of the chronology is corroborated by the testimony of Sandy, a long-time OMB career official. Sandy said he raised concerns about how the hold might conflict with federal budget law.

House Budget Chairman John Yarmuth and House Appropriations Chairwoman Nita Lowey said they’re now considering unspecified “legislative proposals and reforms” to rein in the OMB’s ability to slow or limit the flow of foreign assistance appropriated by Congress, known as apportionment.

The summary of executive moves says that the OMB's “unlawful” actions “suggest a pattern of abuse” by the agency. “Although the committees only received a partial production of the requested materials, OMB’s responses and documentation to date confirm that the apportionment process has been misused to withhold Congressionally enacted appropriations,” Democrats said.

An OMB spokesperson dismissed the charge, saying in a statement that the agency “has and will continue to use its apportionment authority to ensure taxpayer dollars are properly spent consistent with the President’s priorities and with the law. This is the same old spin from Democrats.”

A timeline of OMB’s actions to withhold Ukraine aid from the Pentagon and the State Department has largely come to light amid depositions and hearings during Democrats’ impeachment inquiry.

But the chronology released Tuesday by the House Budget and Appropriations committees — which comes after Yarmuth (D-Ky.) and Lowey (D-N.Y.) demanded answers from OMB in September on the Ukraine aid freeze — still offers several points of interest.

The House Budget Committee released only a summary of the documents provided by OMB, noting the agency failed to turn over the bulk of requested material. An OMB spokesperson contended that the agency provided the committee with “hundreds” of documents.

The summary shows that OMB first inquired with the Pentagon about a $250 million pot of military assistance, known as the Ukraine Security Assistance Initiative, on June 19. That date is also confirmed by Sandy, who told House impeachment investigators that Trump sought a “description of the program“ from the Defense Department.

On July 12, acting White House chief of staff Mick Mulvaney’s office informed OMB that Trump planned to halt Ukraine’s military aid without providing an explanation for the freeze, Sandy said.

Sandy said he later raised concerns to Duffey, a political appointee, that the hold could potentially violate the Impoundment Control Act of 1974, which spells out the steps that the president must take in order to pull back funds appropriated by Congress.

That’s because the funds were set to expire at the end of the fiscal year on Sept. 30, and “we need to ensure that agencies are able to obligate funds before they expire,” Sandy told impeachment investigators.

Military assistance to Ukraine was halted on July 25. Several days later, Duffey told Sandy that he would be taking over the Ukraine accounts due to “interest among the leadership in tracking the issues of moneys closely.”

Duffey assumed control of the agency’s hold on State Department and Pentagon funding from a long-time career official on Aug. 3 and Aug. 6, respectfully. Duffey still maintains control over apportioning aid through those accounts, OMB confirmed. The security assistance wasn’t made available again until Sept. 12.

House spending leaders said the decision to remove career staff from the apportionment process is “unprecedented” and “a troubling deviation from long-standing procedures.” OMB has previously asserted that there was nothing unusual or improper about shifting the responsibility into the hands of Duffey, and that the decision had nothing to do with the career staff concerns that the hold was not legal.

“Given Congress’ constant penchant to tell agencies they are not allowed to spend appropriated money and hold money for months on end, in scores of examples, we find it laughable that Congress is taking issue with the administration’s actions,” a senior administration official said on Tuesday.

While military assistance to Ukraine was freed up by Sept. 12, millions of dollars in State Department funding wasn’t released until Sept. 27 and Sept. 30, the summary provided by the House Budget Committee shows.

“Significant amounts” of State Department and military funding never reached Ukraine before the end of the fiscal year, Democrats noted. Ukraine is still waiting to receive at least $35 million in military assistance.

Kyle Cheney contributed to this report.