[Analytical Perspectives]
[Budget Enforcement Act Preview Report]
[12. Preview Report]
[From the U.S. Government Printing Office, www.gpo.gov]
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BUDGET ENFORCEMENT ACT
PREVIEW REPORT
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[[Page 201]]
12. PREVIEW REPORT
The Budget Enforcement Act of 1990 (BEA) contains procedures designed
to enforce the deficit reduction agreement of the Omnibus Budget
Reconciliation Act of 1990. For 1991 through 1995, the BEA limited
discretionary spending and established a ``pay-as-you-go'' requirement
that legislation changing direct spending and receipts must, in total,
be at least deficit neutral. These provisions were extended through 1998
by the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993), which
became law on August 10, 1993. The Administration will propose to extend
the BEA again, through the year 2002, and make other amendments to the
BEA requirements. (See ``Proposals to Extend and Amend the BEA and Other
Reforms to Strengthen the Budget Process'' below.)
This Preview Report discusses the status of discretionary
appropriations and pay-as-you-go legislation based on laws enacted as of
March 1, 1996. In addition, it explains the differences between the OMB
and CBO estimates of the discretionary caps.
The OMB estimates use the economic and technical assumptions
underlying the President's budget submission, as required by the BEA.
The OMB Update Report that will be issued in August, and the Final
Report that will be issued after the end of the Congressional session,
must also use these economic and technical assumptions. Estimates in the
Update Report and the Final Report will only be revised to reflect laws
enacted after the Preview Report.
Discretionary Sequestration Report
Discretionary programs are, in general, those that have their program
levels established annually through the appropriations process. The
scorekeeping guidelines accompanying the BEA identify accounts with
discretionary resources. The BEA, as amended, limits budget authority
and outlays available for discretionary programs each year through 1998.
Appropriations that cause either the budget authority or outlay limits
to be exceeded will trigger a sequester to eliminate any such breach.
Adjustments to the limits.--The BEA permits certain adjustments to
the discretionary limits--also known as caps. On January 18, 1996, the
Office of Management and Budget submitted the Final Sequestration Report
for 1996 required by the BEA. This report described adjustments
permitted by the BEA as of the time the report was issued. The caps
resulting from these adjustments are the starting points for this
Preview Report. Included in this report are cap adjustments for
differences between current and previous estimates of inflation, changes
in concepts and definitions, and estimates of emergency spending. Table
12-1 is a summary of all changes to the 1991 through 1998 caps
originally enacted in law. Table 12-2 shows the impact on the caps of
adjustments being made in this Preview Report. Table 12-2 displays both
the General Purpose Discretionary Spending caps and the Violent Crime
Reduction Trust Fund caps established by Public Law 103-322, the Violent
Crime Control and Law Enforcement Act of 1994.
TABLE 12-1. SUMMARY OF CHANGES TO DISCRETIONARY SPENDING LIMITS
(In billions of dollars
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998 1991-98
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TOTAL DISCRETIONARY
Statutory Caps as set in OBRA 1990 and OBRA 1993.............................................. BA 491.7 503.4 511.5 510.8 517.7 519.1 528.1 530.6 4,113.0
OL 514.4 524.9 534.0 534.8 540.8 547.3 547.3 547.9 4,291.4
Adjustments for changes in concepts and definitions........................................... BA ...... 7.7 8.2 8.2 8.8 -0.6 -0.4 -0.5 31.4
OL ...... 1.0 2.4 0.6 1.0 -2.9 -2.6 -2.7 -3.1
Adjustments for changes in inflation.......................................................... BA ...... -0.5 -5.1 -9.5 -11.8 1.0 2.6 4.2 -19.1
OL ...... -0.3 -2.5 -5.8 -8.8 0.6 1.8 3.2 -11.6
Adjustments for credit reestimates, IRS funding, debt forgiveness, and IMF.................... BA 0.2 0.2 13.0 0.6 0.7 0.1 0.1 0.1 14.8
OL 0.3 0.3 0.8 0.8 0.9 0.0 0.0 0.1 3.3
Adjustments for emergency requirements........................................................ BA 0.9 8.3 4.6 12.2 7.7 3.4 ...... ...... 37.2
OL 1.1 1.8 5.4 9.0 10.1 5.4 3.9 1.4 38.0
Adjustment pursuant to Sec. 2003 of P.L. 104-19\1\............................................ BA ...... ...... ...... ...... -15.0 -0.1 -0.1 ...... -15.1
OL ...... ...... ...... ...... -1.1 -3.5 -2.4 -1.5 -8.5
Adjustments for special allowances:
Discretionary new budget authority.......................................................... BA ...... 3.5 2.9 2.9 2.9 ...... ...... ...... 12.1
OL ...... 1.4 2.2 2.6 2.7 1.1 0.5 0.1 10.7
Outlay allowance........................................................................... BA ...... ...... ...... ...... ...... ...... ...... ...... ........
OL 2.6 1.7 0.5 1.0 ...... ...... ...... ...... 5.7
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Subtotal, adjustments excluding Desert Shield/Desert Storm............................... BA 1.1 19.2 23.6 14.3 -6.7 3.8 2.2 3.7 61.3
OL 3.9 5.9 8.8 8.3 4.8 0.8 1.3 0.6 34.5
Adjustments for Operation Desert Shield/Desert Storm.......................................... BA 44.2 14.0 0.6 * * ...... ...... ...... 58.8
OL 33.3 14.9 7.6 2.8 1.1 ...... ...... ...... 59.6
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Total adjustments............................................................................. BA 45.4 33.2 24.2 14.3 -6.7 3.8 2.2 3.7 135.3
OL 37.2 20.8 16.4 11.1 5.9 0.8 1.3 0.6 102.5
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Preview Report spending limits\2\............................................................. BA 537.1 536.6 535.7 525.1 511.0 523.0 530.3 534.4 4,233.2
OL 551.6 545.7 550.4 545.9 546.7 548.0 548.7 548.5 4,385.4
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AAALess than $50 million.
\1\P.L. 104-19, Emergency Supplemental Appropriations for Additional Disaster Assistance, for Anti-Terrorism Initiatives, for Assistance in the Recovery from the Tragedy that Occurred at
Oklahoma City, and Rescissions Act, 1995, was signed into law on July 27, 1995. Section 2003 of that bill directed the Director of OMB to make a downward adjustment in the discretionary
spending limits for FYs 1995-1998 by the aggregate amount of the estimated reductions in new budget authority and outlays for discretionary programs resulting from the provisions of the
bill, other than emergencies appropriations.
\2\Reflects combined General Purpose Discretionary and Violent Crime Reduction Trust Fund Discretionary spending limits. For 1996-1998 Statutory limits, see footnote 2 in Table 12-2.
OBRA 1993 extended the original discretionary caps through 1998 and
it also requires OMB to adjust these caps for differences between the
inflation estimates contained in the House Conference Report on the 1994
Budget Resolution and those that are assumed in the President's Budget.
The inflation estimates in the 1997 Budget are lower than those
contained in the 1996 Budget and are computed on a different basis.
Consistent with the new approach adopted by the Bureau of Economic
Analysis this year (and followed by the Congressional Budget Office) for
measuring inflation and real growth in the Gross Domestic Product (GDP),
the inflation measure used to adjust the discretionary caps is on a
chain-weighted rather than fixed-weighted basis.
Because of this shift in measurement method, the inflation estimates
in the economic assumptions for the 1996 Budget were, first, restated to
a chain-weighted basis. Then, the difference between the restated 1996
Budget inflation estimates and the comparable estimates for the 1997
Budget were compared to produce the necessary inflation adjustment to
the discretionary caps. The restated 1996 Budget inflation estimates for
1996, 1997, and 1998 are 3.1 percent, 3.2 percent, and 3.3 percent,
respectively. For the 1997 Budget, the comparable inflation estimates
are 2.7 percent a year for 1996 through 1998. Thus, inflation estimates
are lower in 1996, 1997, and 1998 by 0.4 percent, 0.5 percent, and 0.5
percent, respectively. Adjusting the caps for these changes in inflation
estimates reduces budget authority by $2.0 billion in 1996, $4.7 billion
in 1997, and $7.3 billion in 1998. The estimated spendout of these
reductions in budget authority reduces the outlays by $1.2 billion in
1996, $3.3 billion in 1997, and $5.7 billion in 1998.
Several cap adjustments represent changes in concepts and definitions
resulting from legislative action that reclassified certain programs.
These actions shifted programs between the mandatory (i.e., direct
spending) category and the discretionary category. For instance, several
1996 appropriations bills included provisions that modified mandatory
programs. Since funding controlled by appropriations action is
considered discretionary, the effects of these provisions are recorded
as adjustments to the caps. The caps were also adjusted to reflect the
proper classification of the National Service Trust Fund account under
current law.
[[Page 202]]
Another adjustment is for certain programs in the Department of
Transportation's Federal-aid highways account. Some Federal-aid highways
programs are not subject to the obligation limitation imposed by the
Appropriations Committee and, therefore, are not controllable through
the annual appropriations process. The budget authority for these
programs was already classified as mandatory. Outlays for programs that
are exempt from obligation limitation are reclassified as mandatory.
Adjustments are shown for 1994 through 1998 to provide a comparable
basis for consideration of highway programs that are exempt from
Appropriations Committee control.
Other adjustments to the limits.--The BEA identifies other
adjustments to the discretionary caps that can be made only after
legislation has been enacted. For example, spending that is designated
as emergency requirements by the President and Congress will result in
adjustments to the caps. On February 21, 1996, the President submitted a
1996 supplemental request for $620 million for Department of Defense
operations associated with the NATO-led Bosnia Peace Implementation
Force (IFOR) and Operation Deny Flight, and $200 million for civilian
implementation of the Dayton Peace Accords. Table 12-2 displays
estimated adjustments for these emergency appropriations. The actual
adjustments to the discretionary caps to be included in the final
sequestration report at the end of the current session of Congress
cannot be determined until appropriations have been enacted.
The Administration proposes to shift funding for the prevention of
Medicare fraud and abuse from discretionary spending for this purpose in
the Department of Health and Human Services and in the Justice
Department to mandatory spending. The discretionary caps and baseline
would be adjusted consistent with this shift.
Table 12-2 also displays proposed adjustments to the caps to reflect
the President's proposals to amend the BEA to reduce allowable
discretionary spending. From 1996 through 1998, these adjustments reduce
total budget authority by $79.3 billion and total outlays by $22.6
billion. The President will also propose to extend the discretionary
caps through 2002. The extended caps are displayed in Table 12-3. This
table also compares the President's discretionary proposals to the
proposed caps. If the President's proposed cap reductions are enacted,
the caps and discretionary spending proposed by the President will be
equal.
[[Page 203]]
TABLE 12-2. DISCRETIONARY SPENDING LIMITS
(In millions of dollars)
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1994 1995 1996 1997 1998
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General Purpose Discretionary
Total General Purpose Discretionary spending limits, January 18, 1996 Final Sequestration Report....... BA 525,146 508,546 520,713 529,845 536,087
OL 547,559 547,930 549,276 549,955 551,147
Adjustments:
Inflation.......................................................................................... BA .......... .......... -2,037 -4,656 -7,316
OL .......... .......... -1,222 -3,303 -5,717
Changes in concepts and definitions:
Statutory and other shifts between categories................................................... BA .......... .......... .......... 117 86
OL .......... -88 -61 211 17
Transportation programs exempt from Appropriations Committee control............................. BA .......... .......... .......... .......... ..........
OL -1,708 -1,848 -2,302 -2,121 -1,860
Contingent emergency appropriations release........................................................ BA .......... .......... 17 .......... ..........
OL .......... .......... 13 3 *
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Subtotal, adjustments for the Preview Report..................................................... BA .......... .......... -2,020 -4,539 -7,230
OL -1,708 -1,936 -3,572 -5,210 -7,560
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Preview Report General Purpose Discretionary limits\1\................................................. BA 525,146 508,546 518,693 525,306 528,857
OL 545,850 545,994 545,704 544,745 543,588
Adjustments to Reflect Budget Reconciliation:
Combating Medicare fraud and abuse (reclassification of discretionary to mandatory spending)......... BA .......... .......... -477 -476 -475
OL .......... .......... -467 -472 -474
Reduce discretionary limits to reflect President's proposals......................................... BA .......... .......... -23,395 -28,559 -27,350
OL .......... .......... -6,837 -6,328 -9,429
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Revised Budget Enforcement Act Discretionary Limits.................................................... BA 525,146 508,546 494,821 496,271 501,032
OL 545,850 545,994 538,400 537,945 533,685
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Adjustments Under the Revised Budget Enforcement Act for Appropriations Committee Action:
Emergency supplemental appropriations................................................................ BA .......... .......... 821 .......... ..........
OL .......... .......... 566 208 30
Funding to Implement Welfare Reform Provisions....................................................... BA .......... .......... 110 510 475
OL .......... .......... 103 486 478
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General Purpose Discretionary Spending Limits Including Further Adjustments............................ BA 525,146 508,546 495,752 496,781 501,507
OL 545,850 545,994 539,069 538,639 534,193
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Violent Crime Reduction Trust Fund Discretionary
Total Violent Crime Reduction Trust Fund Discretionary spending limits, January 18, 1996 Final
Sequestration Report.................................................................................. BA .......... 2,423 4,287 5,000 5,500
OL .......... 703 2,334 3,936 4,904
Preview Report Violent Crime Reduction Trust Fund Discretionary spending limits........................ BA .......... 2,423 4,287 5,000 5,500
OL .......... 703 2,334 3,936 4,904
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Combined General Purpose and Violent Crime Reduction Trust Fund Discretionary spending limits.......... BA 525,146 510,969 500,039 501,781 507,007
OL 545,850 546,697 541,403 542,575 539,097
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AAA*Less than $500 thousand.
\1\The discretionary spending limits shown in this table represent what the limits would be if the inflation adjustments and changes in concepts and definitions were made on a consistent
basis. The reclassification of transportation programs and the changes in estimates of inflation would impact the 1996 discretionary spending limits as shown above if such adjustments were
permitted under statute. However, the statutory adjustments can only be applied to the 1997 and 1998 limits. The statutory General Purpose Discretionary spending limits for 1996 through 1998
are as follows (in millions of dollars):
1996 1997 1998
Budget authority..................... 520,730 525,306 528,857
Outlays.............................. 549,289 545,254 543,750
[[Page 204]]
The Administration also has proposed to adjust the caps for increases
in discretionary spending by the Social Security Administration that
will be necessary to implement the Administration's welfare reform
proposals. The savings in mandatory spending--benefit payments--are
expected to more than offset the increase in discretionary spending.
Table 12-2 displays estimated adjustments for appropriations. The actual
adjustments to the discretionary caps to be included in the final
sequester report at the end of the current session of Congress cannot be
determined until appropriations have been enacted.
Sequester determinations.--Five days after enactment of an
appropriations act, OMB must submit a report to Congress estimating the
budget authority and outlays provided by the legislation for the current
year and the budget year. These estimates must be based on the same
economic and technical assumptions used in the most recent President's
budget. In addition, the report must include CBO estimates and explain
the differences between the OMB and CBO estimates. The OMB estimates are
used in all subsequent calculations to determine whether a breach of any
of the budget authority or outlay caps has occurred, and whether a
sequester is required.
Compliance with the discretionary caps is monitored throughout the
fiscal year. The first determination of whether a sequester is necessary
for a given fiscal year occurs when OMB issues its Final Sequestration
Report after Congress adjourns to end a session--near the beginning of
the fiscal year. The monitoring process begins again after Congress
reconvenes for a new session. Appropriations for the fiscal year in
progress that cause a breach in the caps would, if enacted before July
1st, trigger a sequester. When such a breach is estimated, a ``within-
session'' sequestration report and Presidential sequestration order are
issued. For a breach that results from appropriations enacted on or
after July 1st, reductions necessary to eliminate the breach are not
applied to the budgetary resources available in the current year.
Instead, the corresponding caps for the following fiscal year are
reduced by the amount of the breach. A within-session sequester can only
be caused by newly enacted appropriations. Reestimates of budget
authority and outlays for already enacted funds cannot trigger a
sequester.
OMB reported in its most recent Final Sequestration Report to the
President and the Congress that discretionary appropriations enacted for
1996 were within the prescribed spending limits. Since that time, the
President has signed the 1996 Foreign Operations Appropriations bill and
the Ninth Continuing Resolution. Given the constraint on discretionary
spending imposed by the Congressional Budget Resolution for 1996,
neither OMB or CBO anticipate that subsequent appropriations for 1996
will cause a sequester.
TABLE 12-3. BUDGET PROPOSALS
(In millions of dollars)
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1996 1997 1998 1999 2000 2001 2002
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General Purpose Discretionary Spending
Estimated Limits................................................................... BA 495,752 496,781 501,507 ......... ......... ......... .........
OL 539,069 538,639 534,193 ......... ......... ......... .........
President's General Purpose Discretionary Proposals................................ BA 495,752 496,781 501,507 ......... ......... ......... .........
OL 539,069 538,639 534,193 ......... ......... ......... .........
President's Proposals Compared to the General Purpose Discretionary Limits.......... BA ......... ......... ......... ......... ......... ......... .........
OL ......... ......... ......... ......... ......... ......... .........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Violent Crime Reduction Trust Fund Spending
Estimated Limits................................................................... BA 4,287 5,000 5,500 ......... ......... ......... .........
OL 2,334 3,936 4,904 ......... ......... ......... .........
President's Violent Crime Reduction Trust Fund (VCRTF) Proposals.................... BA 4,081 5,000 5,500 ......... ......... ......... .........
OL 2,118 3,661 4,904 ......... ......... ......... .........
President's Proposals Compared to the Violent Crime Reduction Limits................ BA -206 ......... ......... ......... ......... ......... .........
OL -216 -275 ......... ......... ......... ......... .........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Discretionary Spending
Estimated Limits................................................................... BA 500,039 501,781 507,007 511,066 516,098 511,727 514,672
OL 541,403 542,575 539,097 535,693 536,821 526,563 527,097
Fiscal Dividend.................................................................... BA ......... ......... ......... ......... ......... 34,341 55,282
OL ......... ......... ......... ......... ......... 21,663 45,763
Adjusted Estimated Limits........................................................... BA 500,039 501,781 507,007 511,066 516,098 546,068 569,954
OL 541,403 542,575 539,097 535,693 536,821 548,226 572,860
President's Discretionary Proposals................................................. BA 499,833 501,781 507,007 511,066 516,098 546,068 569,954
OL 541,187 542,300 539,097 535,693 536,821 548,226 572,860
President's Discretionary Proposals Compared to the Adjusted Discretionary Limits... BA -206 ......... ......... ......... ......... ......... .........
OL -216 -275 ......... ......... ......... ......... .........
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[[Page 205]]
TABLE 12-4. COMPARISON OF OMB AND CBO DISCRETIONARY SPENDING LIMITS
(In millions of dollars)
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1996 1997 1998
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General Purpose Discretionary
CBO Preview Report limits:\1\
BA..................................................................... 520,730 525,145 528,303
OL..................................................................... 549,284 544,822 543,308
OMB Preview Report statutory limits:
BA..................................................................... 520,730 525,306 528,857
OL..................................................................... 549,289 545,254 543,750
Difference:
BA..................................................................... ........... -161 -554
OL..................................................................... -5 -432 -442
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Violent Crime Reduction Trust Fund Discretionary:
CBO Preview Report limits:\1\
BA..................................................................... 4,287 5,000 5,500
OL..................................................................... 2,334 3,936 4,904
OMB Preview Report statutory limits:
BA..................................................................... 4,287 5,000 5,500
OL..................................................................... 2,334 3,936 4,904
Difference:
BA..................................................................... ........... ........... ...........
OL..................................................................... ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
\1\CBO Preview Report limit estimates are preliminary.
Sequester calculations.--If either the discretionary budget authority
or outlay caps are exceeded, an across-the-board reduction of
sequestrable budgetary resources would be required to eliminate the
breach. The percentage reduction for certain special-rule programs would
be limited to 2 percent. Once this limit is reached, the uniform
percentage reduction for all other discretionary sequestrable resources
would be increased to a level sufficient to achieve the required
reduction. If both the budget authority and outlay caps are exceeded, a
sequester would first be calculated to eliminate the budget authority
breach. If estimated outlays still remained above the cap, even after
applying the available outlay allowance, further reductions in budgetary
resources to eliminate the outlay breach would then be required.
Comparison between OMB and CBO discretionary limits.--Section
254(d)(5) of the BEA requires an explanation of differences between OMB
and CBO estimates for the discretionary spending limits. Table 12-4
compares OMB and CBO limits for 1996 through 1998. Differences for 1996
through 1998 are due primarily to the difference in forecast inflation
and spendout rate differences for other adjustments to the caps.
Pay-As-You-Go Sequestration Report
This section of the Preview Report discusses the enforcement
procedures that apply to direct spending and receipts. The BEA defines
direct spending as budget authority provided by law other than
appropriations acts, entitlement authority, and the food stamp program.
Social Security and the Postal Service are not subject to pay-as-you-go
enforcement. Legislation specifically designated as an emergency
requirement and legislation fully funding the Government's commitment to
protect insured deposits are also exempt from pay-as-you-go enforcement.
Current law requires that direct spending and receipts legislation
should not increase the deficit in any year through 1998. If it does,
and if it is not fully offset by other legislative savings, the increase
must be offset by sequestration of direct spending programs. Net savings
enacted for one fiscal year can be used to offset net increases in the
subsequent year. The tables entitled Summary of Budget Proposals,
Estimates of Mandatory Budget Proposals by Program, and Effect of
Proposals on Receipts in the Summary Tables chapter of the Budget
demonstrate that the President's budget meets the PAYGO requirement.
Sequester determinations.--Within five days after enactment of direct
spending or receipts legislation, OMB is required to submit a report to
Congress estimating the change in outlays or receipts for each fiscal
year through 1998 resulting from that legislation. The estimates must
use the economic and technical assumptions underlying the most recent
President's budget. These OMB estimates are used to determine whether
the pay-as-you-go requirements have been met.
The cumulative nature of the pay-as-you-go process requires
maintaining a ``scorecard'' that shows, beginning with the 102nd
Congress, the deficit impact of enacted direct spending and receipts
legislation and required pay-as-you-go sequesters. The pay-as-you-go
Preview Report is intended to show how these past actions affect the
upcoming fiscal year.
As of March 1, 1996, OMB had issued 308 reports on legislation
affecting direct spending and receipts. Most of these (82 percent)
either had no effect on the deficit or changed it by less than $10
million in each year. Less than ten percent of the pay-as-you-go
[[Page 206]]
legislation had a deficit impact greater than $50 million in any one
year.
Table 12-5 shows OMB estimates for legislation enacted through March
1, 1996. In total, pay-as-you-go legislation enacted to date has
increased the combined 1996 and 1997 deficits by $2.4 billion. As
required by Section 254 (d)(3)(c) of the Budget Enforcement Act, if
legislation offsetting this increase is not enacted, a sequester of
certain direct spending programs is required. This report projects a
sequester of 1.1 percent of mandatory spending would be required to
eliminate this increase. Any such sequester would take place after OMB's
final sequester report for 1997 is issued. Table 12-6 shows the amounts
that would be sequestered from major mandatory programs if legislation
offsetting the deficit increase is not enacted in the current session of
Congress.
A pay-as-you-go sequester would apply solely to direct spending
accounts. By law, most direct spending is exempt from sequestration, and
there are special rules that limit the size of a sequester for several
direct spending accounts. In 1997, total direct spending is estimated to
be $863.1 billion. Of this, only $26.0 billion is subject to
sequestration. Table 12-6 shows the composition of the direct spending
sequestrable universe.
TABLE 12-5. PAY-AS-YOU-GO LEGISLATION ENACTED AS OF MARCH 1, 1996
(In millions of dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in the baseline deficit
Report Act number Act title ----------------------------------
number 1996 1997 1998 1996-1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Legislation enacted in the 2nd session of the 104th Congress:
302 P.L. 104-93 Intelligence Authorization Act:
H.R. 1655 Revenue effect ...... ...... ...... .........
Direct spending effect ...... ...... ...... .........
Net deficit effect ...... ...... ...... .........
303 P.L. 104-96 Smithsonian Institution Sesquicentennial Commemorative Coin Act of 1995
H.R. 2627 Revenue effect ...... ...... ...... .........
Direct spending effect ...... ...... ...... .........
Net deficit effect ...... ...... ...... .........
304 P.L. 104-104 Telecommunications Act of 1996:
S. 652 Revenue effect ...... 400 1,200 1,600
Direct spending effect ...... 404 1,205 1,609
Net deficit effect ...... 4 5 9
305 P.L. 104-105 Farm Credit System Reform Act:
H.R. 2029 Revenue effect ...... ...... ...... .........
Direct spending effect -1 -1 -1 -3
Net deficit effect -1 -1 -1 -3
306 P.L. 104-106 Defense Authorization Act:
S. 1124 Revenue effect ...... ...... ...... .........
Direct spending effect 315 609 852 1,776
Net deficit effect 315 609 852 1,776
307 P.L. 104-110 Extension of VA Medical and Housing Programs:
H.R. 2353 Revenue effect ...... ...... ...... .........
Direct spending effect -3 -1 ...... -4
Net deficit effect -3 -1 ...... -4
308 P.L. 104-111 Congressional Gold Medal for Ruth and Billy Graham:
H.R. 2657 Revenue effect ...... ...... ...... .........
Direct spending effect ...... ...... ...... .........
Net deficit effect ...... ...... ...... .........
------------------------------------------------------------------------------------------------------------------------
Subtotal, enacted this session, as of March 1, 1996:
Revenue effect................................................................... ...... 400 1,200 1,600
Direct spending effect........................................................... 311 1,011 2,056 3,378
Net deficit effect............................................................... 311 611 856 1,778
========================================================================================================================
Total, legislation enacted:
Revenue effect................................................................. -1,432 -1,421 -999 -3,853
Direct spending effect......................................................... -404 -33 1,373 936
Net deficit effect............................................................. 1,028 1,389 2,371 4,789
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[[Page 207]]
TABLE 12-6. SEQUESTRABLE MANDATORY SPENDING AND POTENTIAL SEQUESTER
AMOUNTS
(1997 outlays in millions of dollars)
------------------------------------------------------------------------
Subject
to Projected
Sequester Sequester\1\
------------------------------------------------------------------------
Sequestration limited to automatic spending
increases:
Special milk program........................ ......... .............
Vocational rehabilitation basic State grants 45 45
-------------------------
Subtotal, automatic spending increases.... 45 45
Sequestration according to special rules:
Federal Family Education Loan program....... 66 66
Payments to states for foster care and
adoption assistance........................ 8 8
-------------------------
Subtotal, special rules................... 74 74
Medicare (maximum sequester of 4 percent)..... 7,740 2,101
Subject to across-the-board sequestration:
Commodity Credit Corporation (incl.
sequestrable 1988 amount).................. 3,988 43
Social Services Block Grants................ 2,520 27
Family support payments to states........... 2,182 24
Crop insurance corporation fund............. 1,117 12
Justice activities financed by immigration
and border fees............................ 904 10
Veterans Education and Readjustment Benefits 822 9
Payments to States for AFDC Work Programs... 750 8
Direct student loans program account........ 531 6
Payments to States for Mineral Leasing Act.. 515 6
Forest Service permanent appropriations..... 493 5
Assets Forfeiture Fund...................... 363 4
Rehabilitation services and handicapped
research................................... 266 3
Customs salaries and expenses, unclaimed or
abandoned goods............................ 284 3
Surcharge collections, sales of comissary
stores..................................... 255 3
Forest Service, Cooperative Work Trust Fund. 232 3
Federal Unemployment Benefits and Allowances 211 2
Lower Colorado River Basin fund............. 141 2
Treasury Forfeiture Fund.................... 121 1
VA medical cost recovery fund............... 118 1
Agricultural marketing service,
miscellaneous trust funds.................. 90 1
Fees and expenses of witnesses.............. 88 1
Crime victims fund.......................... 84 1
Unemployment insurance extended benefits.... 69 1
Judiciary filing fees....................... 63 1
Other sequestrable spending................. 1,862 20
-------------------------
Subtotal, subject to across-the-board
sequestration.............................. 18,069 196
Total, sequestrable mandatory outlays......... 25,928 2,417
------------------------------------------------------------------------
AAA\1\ These are the amounts that would be sequestered based on
legislation enacted as of 3/1/96. OMB's final determination of the
need for a sequester will be made at the end of this session of
Congress and will take into account legislation enacted during the
current session.
Proposals to Extend and Amend the BEA and Other Reforms to Strengthen
the Budget Process
The Administration proposes to extend the BEA requirements generally,
to reduce the discretionary caps below current levels, and to make other
procedural changes to improve budget enforcement. In addition to the BEA
changes, the Administration urges the Congress to complete legislation
granting the President line-item veto authority.
Extend the BEA's discretionary spending and ``pay-as-you-go'' (PAYGO)
requirements.--The BEA has been an effective constraint on laws that
would increase discretionary spending or increase the deficit. That is
why, in 1993, the Congress and the President agreed to extend the
requirements of the BEA through 1998. Now, the BEA requirements need to
be extended again to support the goal of a balanced budget by the year
2002. The Administration proposes to lower the discretionary spending
caps for 1996 through 1998 and to enact caps for 1999 through 2002 that
are below baseline discretionary spending levels for those years. The
Administration proposes to extend, through 2002, the PAYGO requirements
for offsets to legislation that would increase mandatory spending or
reduce receipts.
Cap adjustment authority for savings initiatives.--When the BEA was
enacted in 1990, it authorized cap adjustments, within specified limits,
for each of the years 1991 through 1995 in order to accommodate annual
appropriations for an Internal Revenue Service compliance initiative.
The Administration proposes that similar cap adjustment authority be
provided to accomodate increases in discretionary spending by the Social
Security Administration necessary to implement the Administration's
welfare reform proposals. The savings in mandatory spending (benefit
payments) are
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expected to more than offset the increase in discretionary
spending.
The Administration proposes to increase funding for the prevention of
Medicare fraud and abuse. Rather than increase discretionary spending,
legislation will be proposed to substitute increased levels of mandatory
spending for the current levels of discretionary spending for this
purpose in the Department of Health and Human Services and in the
Justice Department. The savings in mandatory Medicare benefit payments
are expected to more than offset the increase in mandatory spending.
Alternatively, Congress could continue to provide discretionary funding
for fraud and abuse prevention with increases accommodated through cap
adjustment authority like that proposed for the welfare reform
initiative.
Amend the asset sale scoring rule.--The BEA's asset sale scoring rule
prohibits scoring the proceeds from asset sales as offsets to
discretionary spending or PAYGO legislation, even where there is general
agreement that selling the asset is good policy. The rule was originally
intended primarily to stop uneconomic loan asset sales, before the
Credit Reform Act of 1990 effectively ended this practice.
The Congress waived the scoring rule for purposes of the concurrent
resolution on the 1996 budget. In the conference report on the budget
resolution, the conferees said that the asset sale scoring prohibition
should be repealed and consideration should be given to replacing it
with a methodology that takes into account the long-term budgetary
impact of asset sales. They said that assets should not be sold if such
sale would increase the budget deficit over the long run. The
Administration agrees and proposes to work with the Congress to develop
a new scorekeeping guideline. At a minimum, the guideline should require
that all losses of receipts and reductions in outlays resulting from the
sale, as well as the immediate receipts from the sale, be taken into
account in determining whether an asset should be sold.
Establish ``fiscal dividend'' procedures.--The Administration
proposes to establish procedures for dividing any ``fiscal dividend'' in
2000 among tax cuts, spending increases, and deficit reduction in 2001
and 2002. Under the Administration's proposal, a fiscal dividend would
occur if the actual deficit in 2000 were below the deficit target for
that year. The deficit target would be fixed at CBO's estimate in the
1997 budget process of the deficit for 2000. The dividend would be
applied in as many as three steps, depending on the whether the dividend
were less than $20 billion, between $20 and $40 billion, or greater than
$40 billion. To illustrate, if the deficit target were $100 billion,
then any dividend would be applied as follows: