Where this goes is anyone's guess. The lawsuit by the Democrat Attorneys General seems a bizarre claim to entitlement. Likewise, the GAO opinion ignores the law it claims to enforce, as the Trump administration has not refused to spend the funds, but is reexamining how those funds are used. In a sane world, the Democrat lawsuit would fail for lack of standing, as no one is entitled to federal funds. Even though no one was found to have requisite standing to challenge the 2020 election results in court, we're seeing a new legal philosophy in play under President Trump where anyone has standing to challenge any act by the administration.
Ultimately, I think the Supreme Court will have to rule on the legality of the Impoundment Control Act. This was enacted by a hostile Democrat Congress against the efforts of a Watergate-damaged Richard Nixon to stop spending on stupid stuff to bring inflation under control (some of this should sound familiar). It was one of at least two pieces of legislation intended to make the president into a servile butler rather than the Chief Executive. The other piece is the, in my opinion, facially unconstitutional War Powers Act. There is a large amount of evidence that, previous to the Impoundment Control Act, presidents treated Congressional appropriations as a ceiling that could not be exceeded, rather than a mandatory number to be achieved. The former makes sense if the president controls the executive branch; the latter only makes sense if the president's only function is to do as he's ordered. As we're seeing with the struggle in Congress to cut spending, the only way to control the budget is for presidents to have the right to refuse to spend.
The administration is on course to bring all "independent" agencies under the control of the White House.
It will push the envelope until the impoundment issue reaches the Supreme Court, and I think it will win.