[Analytical Perspectives]
[Budget Enforcement Act Preview Report]
[14. Review of Direct Spending and Receipts]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 257]]

========================================================================
 
                         BUDGET ENFORCEMENT ACT

                             PREVIEW REPORT

========================================================================

[[Page 259]]
                           14. PREVIEW REPORT

  The Budget Enforcement Act (BEA) of 1997, which was enacted as part of 
the Balanced Budget Act (BBA) of 1997, extended and modified the 
enforcement requirements of the Budget Enforcement Act of 1990. The BEA 
of 1997 established new limits, or ``caps,'' for discretionary spending 
through 2002. It also eliminated existing pay-as-you-go balances and 
extended the requirement that legislation affecting direct spending or 
receipts not increase the deficit. An across-the-board reduction of non-
exempt spending, known as ``sequestration,'' enforces compliance with 
these constraints. The BEA requires that OMB issue a report on the 
impact of each piece of legislation seven days after enactment of a 
bill. Three additional reports throughout the year are required on the 
overall status of discretionary and pay-as-you-go legislation.
  This Preview Report, the first of the three required overall status 
reports, provides the status of discretionary appropriations and pay-as-
you-go legislation based on laws enacted as of the end of the first 
session of the 105th Congress. 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 funded annually through the appropriations 
process. The scorekeeping guidelines accompanying the Budget Enforcement 
Act of 1990, as amended by the Omnibus Budget and Reconciliation Act of 
1993, and by the Budget Enforcement Act of 1997, identify accounts with 
discretionary resources. The BEA of 1997 limits budget authority and 
outlays available for discretionary programs each year through 2002. For 
1998 and 1999, the BEA of 1997 establishes three separate categories of 
discretionary spending: defense, non-defense (excluding violent crime 
reduction spending), and violent crime reduction spending. For 2000, the 
law divides discretionary spending into two categories: violent crime 
reduction spending and all other discretionary spending. For 2001 and 
2002, there is a single category for all discretionary spending. OMB 
monitors compliance with the discretionary spending limits throughout 
the fiscal year. Appropriations that cause a breach in the budget 
authority or outlay caps trigger a sequester to eliminate that breach.
  The Administration is proposing that the Congress include in the 1999 
Budget Resolution a total of $75.5 billion in 1999 for three deficit 
neutral ``Reserve Fund'' mechanisms for the: Research Fund for America, 
Environmental Resources Fund for America, and Transportation Fund for 
America. This proposal is discussed in the ``Funds for America'' section 
of this report.
  Adjustments to discretionary limits.--The BEA permits certain 
adjustments to the discretionary limits--also known as caps. On November 
24, 1997, the Office of Management and Budget submitted the Final 
Sequestration Report for 1998 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 
changes in concepts and definitions and estimates of emergency spending, 
which the BEA permits to be made at this time. Before enactment of the 
BEA of 1997, section 251(b)(1) authorized adjustments for changes in 
inflation estimates from those in the House Conference Report on the 
1994 Budget Resolution. The BEA of 1997 no longer provides for such an 
adjustment. Table 14-1 summarizes changes to the caps since 1990.
  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 
1998 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.
  After consultation with the Congress and the Congressional Budget 
Office, OMB has also reclassified the Corps of Engineers' Formerly 
Utilized Sites Remedial Action Program (FUSRAP) from the energy function 
to the national defense function. The non-defense discretionary spending 
limits have been adjusted downward, and the defense discretionary 
spending limits have been adjusted upward to accommodate this 
classification change.
  Another cap adjustment for changes in concepts and definitions is for 
the redefinition of obligation limitations for certain transportation 
programs as discretionary budget authority. This conceptual change is 
explained in the ``Transportation Obligation Limitations Defined as 
Discretionary Budget Authority'' section of this report.
  Table 14-2 shows the impact on the discretionary spending limits of 
the adjustments being made in this Preview Report.

[[Page 260]]



 Table 14-1.  HISTORICAL SUMMARY OF CHANGES TO DISCRETIONARY SPENDING LIMITS                                      
                           (In billions of dollars)                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1991    1992    1993    1994    1995    1996    1997    1998    1999    2000    2001     2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
         TOTAL DISCRETIONARY                                                                                                                            
                                                                                                                                                        
Statutory Caps as set in OBRA 1990    BA                 491.7   503.4   511.5   510.8   517.7   519.1   528.1   530.6     N/A     N/A     N/A       N/A
 and OBRA 1993.                                                                                                                                         
                                      OL                 514.4   524.9   534.0   534.8   540.8   547.3   547.3   547.9     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for changes in concepts   BA                ......     7.7     8.2     8.2     8.8    -0.6    -0.4     3.1     N/A     N/A     N/A       N/A
 and definiitions.                                                                                                                                      
                                      OL                ......     1.0     2.4     2.3     3.0    -0.5    -2.6    -2.8     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for changes in inflation  BA                ......    -0.5    -5.1    -9.5   -11.8     3.0     2.6       *     N/A     N/A     N/A       N/A
                                      OL                ......    -0.3    -2.5    -5.8    -8.8     1.8     2.3     0.9     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for credit reestimates,                                                                                                                     
 IRS funding, debt forgiveness, IMF,                                                                                                                    
 and CDRs...........................  BA                   0.2     0.2    13.0     0.6     0.7     0.1     0.2     0.1     N/A     N/A     N/A       N/A
                                      OL                   0.3     0.3     0.8     0.8     0.9     0.1     0.3     0.1     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for emergency             BA                   0.9     8.3     4.6    12.2     7.7     5.1     1.6  ......     N/A     N/A     N/A       N/A
 requirements.                                                                                                                                          
                                      OL                   1.1     1.8     5.4     9.0    10.1     6.4     5.4     1.7     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustment pursuant to Sec. 2003 of   BA                ......  ......  ......  ......   -15.0    -0.1    -0.1  ......     N/A     N/A     N/A       N/A
 P.L. 104-19 \1\.                                                                                                                                       
                                      OL                ......  ......  ......  ......    -1.1    -3.5    -2.4    -1.5     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for special allowances:                                                                                                                     
  Discretionary new budget authority  BA                ......     3.5     2.9     2.9     2.9  ......  ......  ......     N/A     N/A     N/A       N/A
                                      OL                ......     1.4     2.2     2.6     2.7     1.1     0.5     0.1     N/A     N/A     N/A       N/A
                                                                                                                                                        
  Outlay allowance..................  BA                ......  ......  ......  ......  ......  ......  ......  ......     N/A     N/A     N/A       N/A
                                      OL                   2.6     1.7     0.5     1.0  ......  ......  ......  ......     N/A     N/A     N/A       N/A
                                                       -------------------------------------------------------------------------------------------------
    Subtotal, adjustments excluding                                                                                                                     
     Desert Shield/Desert Storm.....  BA                   1.1    19.2    23.6    14.3    -6.7     7.5     4.0     3.1     N/A     N/A     N/A       N/A
                                      OL                   3.9     5.9     8.8    10.0     6.8     5.5     3.7    -1.5     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustments for Operation Desert      BA                  44.2    14.0     0.6       *       *  ......  ......  ......     N/A     N/A     N/A       N/A
 Shield/Desert Storm.                                                                                                                                   
                                      OL                  33.3    14.9     7.6     2.8     1.1  ......  ......  ......     N/A     N/A     N/A       N/A
                                                       -------------------------------------------------------------------------------------------------
Total adjustments...................  BA                  45.4    33.2    24.2    14.3    -6.7     7.5     4.0     3.1     N/A     N/A     N/A       N/A
                                      OL                  37.2    20.8    16.4    12.8     7.8     5.5     3.7    -1.5     N/A     N/A     N/A       N/A
                                                       -------------------------------------------------------------------------------------------------
Spending limits as of 2/6/97 \2\....  BA                 537.1   536.6   535.7   525.1   511.0   526.7   532.0   533.8     N/A     N/A     N/A       N/A
                                      OL                 551.6   545.7   550.4   547.6   548.6   552.7   551.0   546.4     N/A     N/A     N/A       N/A
                                                                                                                                                        
Adjustment to reach discretionary                                                                                                                       
 spending limits included in the                                                                                                                        
 1997 Bipartisan Budget Agreement...  BA                   N/A     N/A     N/A     N/A     N/A     N/A     N/A    -6.9     N/A     N/A     N/A       N/A
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A     N/A     6.9     N/A     N/A     N/A       N/A
                                                                                                                                                        
Statutory Caps as set in 1997         BA                   N/A     N/A     N/A     N/A     N/A     N/A     N/A   526.9   533.0   537.2   542.0     551.1
 Bipartisan Budget Agreement \3\.                                                                                                                       
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A     N/A   553.3   559.3   564.3   564.4     560.8
                                                                                                                                                        
  Adjustments for changes in          BA                   N/A     N/A     N/A     N/A     N/A     N/A     N/A  ......    28.1    28.7    29.3      29.9
   concepts and definitions.                                                                                                                            
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A     N/A  ......    -0.3    -0.4    -0.5      -0.5
                                                                                                                                                        
  Adjustments for emergency           BA                   N/A     N/A     N/A     N/A     N/A     N/A     7.7     0.3  ......  ......  ......  ........
   requirements.                                                                                                                                        
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A     2.7     2.6     1.8     0.8     0.1         *
                                                                                                                                                        
  Adjustments for CDRs, Arrearages,   BA                   N/A     N/A     N/A     N/A     N/A     N/A  ......     0.9  ......  ......  ......  ........
   EITC.                                                                                                                                                
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A  ......     0.5     0.1     0.1     0.1       0.1
                                                                                                                                                        
  Adjustments for special                                                                                                                               
   allowances:                                                                                                                                          
    Outlays.........................  BA                   N/A     N/A     N/A     N/A     N/A     N/A  ......  ......  ......  ......  ......  ........
                                                                                                                                                        
                                      OL                   N/A     N/A     N/A     N/A     N/A     N/A  ......     1.2  ......  ......  ......  ........
                                                       -------------------------------------------------------------------------------------------------
Preview Report spending limits \3\..  BA                 537.1   536.6   535.7   525.1   511.0   526.7   539.7   528.0   561.1   565.9   571.3     581.0
                                      OL                 551.6   545.7   550.4   547.6   548.6   552.7   553.7   557.6   560.9   564.7   564.1     560.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Less 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 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 emergency             
  appropriations.                                                                                                                                       
                                                                                                                                                        
\2\ Reflects combined General Purpose Discretionary and Violent Crime Reduction spending limits.                                                        
                                                                                                                                                        
\3\ Reflects combined Defense Discretionary, Non-defense Discretionary (Excluding Crime), and Violent Crime Reduction spending limits.                  


[[Page 261]]

                Table 14-2.  DISCRETIONARY SPENDING LIMITS                                                                           
                         (In millions of dollars)                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                         1998        1999        2000        2001        2002   
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           NON-DEFENSE DISCRETIONARY SPENDING, EXCLUDING VIOLENT CRIME REDUCTION SPENDING \1\                                                                                                   
                                                                                                                                                                                                
End-of Session Sequestration Report Non-Defense Discretionary                                                                                                                                   
  Spending Limits (Excluding Violent Crime Reduction)..................................................   BA                             253,500     255,699     257,326     255,785     256,964
                                                                                                         OL                              285,680     289,678     290,527     287,914     283,249
Adjustments:                                                                                                                                                                                    
  Changes in Concepts and Definitions:                                                                                                                                                          
    Statutory and Other Shifts Between Categories......................................................   BA                          ..........        -249        -270        -283        -293
                                                                                                         OL                           ..........        -333        -470        -552        -591
  Conversion of Discretionary Transportation Department Obligation                                                                                                                              
     Limitations to Discretionary Budget Authority \2\.................................................   BA                            (27,732)      28,287      28,881      29,516      30,165
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
                                                                                                                                                                                                
   Contingent Emergency Appropriations Released........................................................   BA                                   6  ..........  ..........  ..........  ..........
                                                                                                         OL                                    6  ..........  ..........  ..........  ..........
                                                                                                                                                                                                
   Reestimate of Multilateral Development Bank (MDB) Arrears...........................................   BA                          ..........  ..........  ..........  ..........  ..........
                                                                                                         OL                           ..........         -48  ..........  ..........  ..........
                                                                                                                                     -----------------------------------------------------------
    Subtotal, Adjustments for the Preview Report.......................................................   BA                                   6      28,038      28,611      29,233      29,872
                                                                                                         OL                                    6        -381        -470        -552        -591
                                                                                                                                     -----------------------------------------------------------
Preview Report Non-Defense Discretionary Spending Limits (Excluding Violent Crime Reduction)...........  BA                              253,506     283,737     285,937     285,018     286,836
                                                                                                         OL                              285,686     289,297     290,057     287,362     282,658
================================================================================================================================================================================================
Anticipated Other Adjustments:                                                                                                                                                                  
   Line Item Veto Cancellations........................................................................   BA                                 -49          -1          -1          -1  ..........
                                                                                                         OL                                  -19         -22          -5          -4          -2
Budget Proposals:                                                                                                                                                                               
  Repeal of Sec. 642 of the 1998 Treasury and General Government Appropriations bill (CSRS/FERS ``Open                                                                                          
   Season'')...........................................................................................   BA                          ..........         110         125         133         140
                                                                                                         OL                           ..........         110         125         133         140
                                                                                                                                                                                                
   Contingent Emergency Spending Contained in the 1999 Budget..........................................   BA                          ..........     (2,660)  ..........  ..........  ..........
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
                                                                                                                                                                                                
  EITC Tax Compliance Initiative.......................................................................   BA                          ..........         143         144         145         146
                                                                                                         OL                           ..........         143         144         145         146
                                                                                                                                                                                                
   Continuing Disability Reviews (CDRs)................................................................   BA                          ..........         355         405         405         405
                                                                                                         OL                           ..........         327         401         405         405
                                                                                                                                                                                                
  MDB Arrearage Payments...............................................................................   BA                          ..........         502  ..........  ..........  ..........
                                                                                                         OL                           ..........          35          51          70          86
                                                                                                                                                                                                
   Adoption Incentive Payments.........................................................................   BA                          ..........          20          20          20          20
                                                                                                         OL                           ..........           2          15          20          20
   Supplemental Security Income (SSI) Non-disability Redeterminations of Eligibility...................   BA                          ..........          50  ..........  ..........  ..........
                                                                                                         OL                           ..........          46           4  ..........  ..........
   Transfer within NDD to Funds for America:                                                                                                                                                    
     Research Fund for America \2\.....................................................................   BA                           (-27,907)     -27,054     -26,026     -26,335     -23,080
                                                                                                         OL                            (-26,439)     -23,780     -24,554     -25,099     -21,586
                                                                                                                                                                                                
     Environmental Resources Fund for America \2\......................................................   BA                            (-6,647)      -5,897      -5,608      -5,644      -5,582
                                                                                                         OL                             (-5,301)      -4,725      -5,735      -5,807      -5,671
                                                                                                                                                                                                
     Transportation Fund for America \2\...............................................................   BA                           (-36,140)     -36,739     -35,620     -36,139     -36,671
                                                                                                         OL                            (-33,499)     -34,819     -34,290     -35,093     -35,940
                                                                                                                                                                                                
  Emergency Discretionary Funding from Designated Offsets..............................................  BA                           ..........       2,424  ..........  ..........  ..........
                                                                                                         OL                           ..........       2,424  ..........  ..........  ..........
                                                                                                                                     -----------------------------------------------------------
       Subtotal, Budget Proposals......................................................................   BA                                 -49     -66,087     -66,561     -67,416     -64,622
                                                                                                         OL                                  -19     -60,259     -63,844     -65,230     -62,402
                                                                                                                                     -----------------------------------------------------------
Preview Report Non-defense Discretionary Spending (Excluding Violent Crime Reduction), Including                                                                                                
 Further Adjustments...................................................................................   BA                             253,457     217,650     219,376     217,602     222,214
                                                                                                         OL                              285,667     229,038     226,213     222,132     220,256
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                  VIOLENT CRIME REDUCTION SPENDING \1\                                                                                                                          
                                                                                                                                                                                                
End-of Session Sequestration Report Violent Crime Reduction Spending Limits............................   BA                               5,500       5,800       4,500       4,400       4,500
                                                                                                         OL                                4,833       4,953       5,554       5,981       4,530
Adjustments:                                                                                                                                                                                    
  No Adjustments.......................................................................................   BA                          ..........  ..........  ..........  ..........  ..........
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
                                                                                                                                                                                                

[[Page 262]]

                                                                                                                                                                                                
Preview Report Violent Crime Reduction Spending Limits.................................................   BA                               5,500       5,800       4,500       4,400       4,500
                                                                                                         OL                                4,833       4,953       5,554       5,981       4,530
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   DEFENSE DISCRETIONARY SPENDING \1\                                                                                                                           
End-of Session Defense Discretionary Spending Limits...................................................   BA                             269,000     271,500     275,367     281,847     289,610
                                                                                                         OL                              267,124     266,566     269,011     270,670     273,100
                                                                                                                                                                                                
Adjustments:                                                                                                                                                                                    
  Changes in Concepts and Definitions:                                                                                                                                                          
    Statutory and Other Shifts Between Categories......................................................   BA                          ..........          70          62          61          59
                                                                                                         OL                           ..........          69          61          60          58
                                                                                                                                     -----------------------------------------------------------
      Subtotal, Adjustments for the Preview Report.....................................................   BA                          ..........          70          62          61          59
                                                                                                         OL                           ..........          69          61          60          58
                                                                                                                                     -----------------------------------------------------------
Preview Report Defense Discretionary Spending Limits...................................................   BA                             269,000     271,570     275,429     281,908     289,669
                                                                                                         OL                              267,124     266,635     269,072     270,730     273,158
================================================================================================================================================================================================
Anticipated Other Adjustments:                                                                                                                                                                  
  Line Item Veto Cancellations.........................................................................   BA                                -431  ..........  ..........  ..........  ..........
                                                                                                         OL                                  -95        -153         -94         -51         -18
                                                                                                                                                                                                
Budget Proposals:                                                                                                                                                                               
  Repeal of Sec. 642 of the 1998 Treasury and General Government Appropriations bill (CSRS/FERS ``Open                                                                                          
   Season'')...........................................................................................   BA                          ..........          73          84          88          93
                                                                                                         OL                           ..........          73          84          88          93
                                                                                                                                     -----------------------------------------------------------
    Subtotal, Anticipated Other Adjustments and Adjustments for 1999 Budget Proposals..................   BA                                -431          73          84          88          93
                                                                                                         OL                                  -95         -80         -10          37          75
                                                                                                                                     -----------------------------------------------------------
Preview Report Defense Discretionary Spending Limits, Including Further         Adjustments............   BA                             268,569     271,643     275,513     281,996     289,762
                                                                                                         OL                              267,029     266,555     269,062     270,767     273,233
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                       RESEARCH FUND FOR AMERICA                                                                                                                                
                                                                                                                                                                                                
Research Fund for America Spending \2\.................................................................  BA                             (27,907)      31,102      32,222      33,715      35,523
                                                                                                          OL                            (26,439)      27,828      30,750      32,479      34,029
                                                                                                                                                                                                
Designated Offsets.....................................................................................   BA                          ..........      -4,048      -6,196      -7,380     -12,443
                                                                                                          OL                          ..........      -4,048      -6,196      -7,380     -12,443
                                                                                                                                                                                                
Transfer within NDD to Research Fund for America (non-add, included above).............................   BA                           (-27,907)   (-27,054)   (-26,026)   (-26,335)   (-23,080)
                                                                                                          OL                           (-26,439)   (-23,780)   (-24,554)   (-25,099)   (-21,586)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................   BA                          ..........  ..........  ..........  ..........  ..........
                                                                                                          OL                          ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                ENVIRONMENTAL RESOURCES FUND FOR AMERICA                                                                                                                        
                                                                                                                                                                                                
Environmental Resources Fund for America Spending \2\..................................................   BA                             (6,722)       7,672       7,015       7,054       7,003
                                                                                                          OL                             (5,376)       6,500       7,142       7,217       7,092
                                                                                                                                                                                                
Designated Offsets.....................................................................................   BA                               (-75)      -1,775      -1,407      -1,410      -1,421
                                                                                                          OL                               (-75)      -1,775      -1,407      -1,410      -1,421
                                                                                                                                                                                                
Transfer within NDD to Environmental Resources Fund for America (non-add, included above)..............   BA                            (-6,647)    (-5,897)    (-5,608)    (-5,644)    (-5,582)
                                                                                                          OL                            (-5,301)    (-4,725)    (-5,735)    (-5,807)    (-5,671)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................   BA                          ..........  ..........  ..........  ..........  ..........
                                                                                                          OL                          ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                    TRANSPORTATION FUND FOR AMERICA                                                                                                                             
                                                                                                                                                                                                
Transportation Fund for America Spending \2\...........................................................   BA                            (36,140)      36,739      37,320      37,839      38,371
                                                                                                          OL                            (33,499)      34,819      35,990      36,793      37,640
                                                                                                                                                                                                
Designated Offsets.....................................................................................   BA                          ..........  ..........      -1,700      -1,700      -1,700
                                                                                                         OL                           ..........  ..........      -1,700      -1,700      -1,700
                                                                                                                                                                                                
Transfer within NDD to Transportation Fund for America (non-add, included above).......................   BA                           (-36,140)   (-36,739)   (-35,620)   (-36,139)   (-36,671)
                                                                                                          OL                           (-33,499)   (-34,819)   (-34,290)   (-35,093)   (-35,940)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................   BA                          ..........  ..........  ..........  ..........  ..........
                                                                                                          OL                          ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 263]]

                                                                                                                                                                                                
                                    TOTAL DISCRETIONARY SPENDING \1\                                                                                                                            
                                                                                                                                                                                                
Preview Report Total Discretionary Spending, Including Funds for America...............................   BA                             527,526     570,606     575,946     582,606     597,373
                                                                                                         OL                              557,529     569,693     574,711     575,369     576,780
                                                                                                                                                                                                
Designated Offsets for:                                                                                                                                                                         
  Funds for America....................................................................................  BA                           ..........      -5,823      -9,303     -10,490     -15,564
                                                                                                         OL                           ..........      -5,823      -9,303     -10,490     -15,564
                                                                                                                                                                                                
  Emergency Discretionary..............................................................................  BA                           ..........      -2,424  ..........  ..........  ..........
                                                                                                         OL                           ..........      -2,424  ..........  ..........  ..........
                                                                                                                                                                                                
Proposed Adjustments...................................................................................  BA                                  480      -1,252        -777        -790        -804
                                                                                                         OL                                  114        -561        -725        -806        -870
                                                                                                                                                                                                
Preview Report Total Discretionary Spending Limits.....................................................   BA                             528,006     561,107     565,866     571,326     581,005
                                                                                                         OL                              557,643     560,885     564,683     564,073     560,346
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Detail may not add to total due to rounding                                                                                                                                               
\1\ Amounts in Table 14-2 are split by spending category for comparability purposes. The Balanced Budget Agreement of 1997 included: separate spending limits for Non-Defense Discretionary     
  (Excluding Violent Crime Reduction) Spending, Violent Crime Reduction spending limits for Discretionary (Excluding Violent Crime Reduction) Spending, Violent Crime Reduction Spending, and   
  Defense Discretionary Spending for 1998 and 1999; separate spending limits for Discretionary (Excluding Violent Crime Reduction) Spending and Violent Crime Reduction Spending for 2000; and, 
  a single spending limit for Total Discretionary Spending for 2001 and 2002.                                                                                                                   
\2\ 1998 adjustment displayed for comparability purposes (non-add).                                                                                                                             

  Adjustments to the Limits That Would be Made Under Existing Adjustment 
Authority:
    Line Item Veto Cancellations.--Pursuant to Section 1024(b) 
          of the Line Item Veto Act, P.L. 104-130, the discretionary 
          spending caps must be reduced by the amount of any 
          cancellation of discretionary budget authority and outlays 
          that is not disapproved by the Congress. The caps must be 
          adjusted in the sequester report following ten calendar days 
          (excluding Sundays) after the expiration of the time period 
          (30 days when the Congress is in session) for expedited 
          congressional consideration of a bill to overturn a veto. The 
          estimates in Table 14-2 represents line item veto cancellation 
          of items in the 1998 appropriations bills, assuming that no 
          disapproval bills are enacted into law.
    Repeal of Sec. 642 of the 1998 Treasury and General 
          Government Appropriations Act.--Section 642 provided for an 
          ``Open Season'' in which Federal employees could switch from 
          the Civil Service Retirement System (CSRS) to the Federal 
          Employees Retirement System (FERS). The budget proposes to 
          repeal the provision. (The provision was canceled under the 
          Line Item Veto Act, but reinstated by Court Order.) OMB 
          estimates the provision would result in reductions in receipts 
          from employee contributions to the Civil Service Retirement 
          and Disability Fund (CSRDF). Because this requirement was 
          enacted in an appropriations act, the provision results in a 
          change to the discretionary caps to reflect the loss of 
          receipts. The proposed repeal of the provision would eliminate 
          the reduction in the cap.
    Contingent Emergency Appropriations.--The budget contains 
          requests for appropriations for the Federal Emergency 
          Management Agency's Disaster relief program, Health and Human 
          Services' Low-Income Home Energy Assistance Program, and the 
          Agriculture Department's Wildland firefighting program. 
          Language is included in the budget requesting that the 
          Congress designate these appropriations as ``emergency 
          requirements.'' The funds could only be obligated if the 
          President were to submit a subsequent formal budget request 
          that included the President's ``emergency designation;'' 
          hence, the name ``contingent emergency appropriation.''
    Earned Income Tax Credit (EITC) Compliance Initiative.--The 
          budget contains funding for EITC compliance initiatives, 
          including the detection and enforcement of EITC eligibility in 
          order to reduce EITC overpayments. The 1998 Treasury and 
          General Government bill provided $138 million for this 
          initiative.
    Continuing Disability Reviews.--The budget includes funding 
          for additional continuing disability reviews (CDRs) under the 
          heading ``Limitation on Administrative Expenses'' for the 
          Social Security Administration. CDRs are conducted to verify 
          that recipients of Social Security disability insurance 
          benefits and Supplemental Security Income benefits for persons 
          with disabilities continue to meet the definition of 
          disability. The 1998 Labor, Health and Human Services, 
          Education and Related Agencies appropriations bill provided 
          $290 million for CDRs.
    Allowance for Multilateral Development Bank International 
          Arrearages funding.--The BBA limited the amount of the cap 
          adjustment for funding for arrearages for international 
          organizations, international peacekeeping, and multilateral 
          development banks to $1.884 billion for 1998 through 2000. A 
          total of $460 million was provided for international arrearage 
          payments in the 1998 appropriations bills.
    Adoption Incentive Payments.--The Adoption and Safe Families 
          Act of 1997 authorizes bonus payments to States that increase 
          the number of adoptions from the foster care system. It 
          provides for

[[Page 264]]

          a discretionary cap adjustment for appropriations up to $20 
          million annually in each of the years 1999 through 2003. It is 
          assumed that the cost of adoption bonuses will be offset by 
          reductions in mandatory foster care costs.
  Other Adjustments:
    Supplemental Security Income (SSI) Non-disability 
          Redeterminations of Eligibility.--The budget proposes a cap 
          adjustment of $50 million in 1999 only to conduct 
          approximately 268,000 additional non-disability 
          redeterminations of eligibility in the Supplemental Security 
          Income program. This effort would result in estimated program 
          savings of $97 million in 1999 and $216 million from 1999 to 
          2003.
    Funds for America Proposals.--The budget includes funding 
          for three new funds - the Research Fund for America, the 
          Environmental Resources Fund for America and the 
          Transportation Fund for America. This proposal is discussed in 
          more detail in the ``Budget Policy Reforms'' section of this 
          report.
  The actual adjustments to the discretionary spending caps to be 
included in subsequent sequester reports cannot be determined until all 
appropriations have been enacted. Table 14-3 compares the President's 
discretionary proposals to the proposed caps for 1998 through 2002. The 
estimates for 1998 are based on BEA scoring of enacted appropriations 
bills and have been adjusted for a subsequent emergency release.

                      Table 14-3.  BUDGET PROPOSALS                                                                                 
                        (in millions of dollars)                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                         1998        1999        2000        2001        2002   
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Defense Discretionary Spending \1\                                                                                                                           
Estimated Limits.......................................................................................  BA                              269,000     271,643         N/A         N/A         N/A
                                                                                                         OL                              267,124     266,555         N/A         N/A         N/A
                                                                                                                                                                                                
President's Proposals \2\..............................................................................  BA                              268,491     271,643         N/A         N/A         N/A
                                                                                                         OL                              262,391     266,555         N/A         N/A         N/A
                                                                                                                                                                                                
President's Proposals Compared to the Limits...........................................................  BA                                 -509  ..........         N/A         N/A         N/A
                                                                                                         OL                               -4,733  ..........         N/A         N/A         N/A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           Non-defense Discretionary Spending, Excluding Violent Crime Reduction Spending \1\                                                                                                   
Estimated Limits.......................................................................................  BA                              253,506     217,650         N/A         N/A         N/A
                                                                                                         OL                              285,686     229,038         N/A         N/A         N/A
                                                                                                                                                                                                
President's Proposals \2\..............................................................................  BA                              252,124     217,650         N/A         N/A         N/A
                                                                                                         OL                              284,833     225,582         N/A         N/A         N/A
                                                                                                                                                                                                
President's Proposals Compared to the Limits...........................................................  BA                               -1,382  ..........         N/A         N/A         N/A
                                                                                                         OL                                 -853      -3,456         N/A         N/A         N/A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Research Fund for America                                                                                                                                
                                                                                                                                                                                                
Research Fund for America Spending \3\.................................................................  BA                             (27,907)      31,102      32,222      33,715      35,523
                                                                                                         OL                             (26,439)      27,828      30,750      32,479      34,029
                                                                                                                                                                                                
Designated Offsets (non-add)...........................................................................  BA                           ..........    (-4,048)    (-6,196)    (-7,380)   (-12,443)
                                                                                                         OL                           ..........    (-4,048)    (-6,196)    (-7,380)   (-12,443)
                                                                                                                                                                                                
Transfer within NDD to Research Fund for America (non-add).............................................  BA                            (-27,907)    (-27,054   (-26,026)   (-26,335)   (-23,080)
                                                                                                         OL                            (-26,439)   (-23,780)   (-24,554)   (-25,099)   (-21,586)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................  BA                           ..........  ..........  ..........  ..........  ..........
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                Environmental Resources Fund for America                                                                                                                        
                                                                                                                                                                                                
Environmental Resources Fund for America Spending \3\..................................................  BA                              (6,722)       7,672       7,015       7,054       7,003
                                                                                                         OL                              (5,376)       6,500       7,142       7,217       7,092
                                                                                                                                                                                                
Designated Offsets (non-add)...........................................................................  BA                                (-75)    (-1,775)    (-1,407)    (-1,410)    (-1,421)
                                                                                                         OL                                (-75)    (-1,775)    (-1,407)    (-1,410)    (-1,421)
                                                                                                                                                                                                
Transfer within NDD to Environmental Resources Fund for America (non-add)..............................  BA                             (-6,647)    (-5,897)    (-5,608)    (-5,644)    (-5,582)
                                                                                                         OL                             (-5,301)    (-4,725)    (-5,735)    (-5,807)    (-5,671)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................  BA                           ..........  ..........  ..........  ..........  ..........
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Transportation Fund for America                                                                                                                             
                                                                                                                                                                                                
Transportation Fund for America Spending \3\...........................................................  BA                             (36,140)      36,739      37,320      37,839      38,371
                                                                                                         OL                             (33,499)      34,819      35,990      36,793      37,640
                                                                                                                                                                                                
Designated Offsets (non-add)...........................................................................  BA                           ..........  ..........    (-1,700)    (-1,700)    (-1,700)
                                                                                                         OL                           ..........  ..........    (-1,700)    (-1,700)    (-1,700)
                                                                                                                                                                                                
Transfer within NDD to Transportation Fund for America (non-add).......................................  BA                            (-36,140)   (-36,739)   (-35,620)   (-36,139)   (-36,671)
                                                                                                         OL                            (-33,499)   (-34,819)   (-34,290)   (-35,093)   (-35,940)
                                                                                                                                                                                                
Net Impact on Deficit/Surplus..........................................................................  BA                           ..........  ..........  ..........  ..........  ..........
                                                                                                         OL                           ..........  ..........  ..........  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 265]]

                                                                                                                                                                                                
                                  Violent Crime Reduction Spending \1\                                                                                                                          
                                                                                                                                                                                                
Estimated Limits.......................................................................................  BA                                5,500       5,800       4,500         N/A         N/A
                                                                                                         OL                                4,833       4,953       5,554         N/A         N/A
                                                                                                                                                                                                
President's Proposals..................................................................................  BA                                5,500       5,800       4,500         N/A         N/A
                                                                                                         OL                                4,833       4,953       4,895         N/A         N/A
                                                                                                                                                                                                
President's Proposals Compared to the Limits...........................................................  BA                           ..........  ..........  ..........         N/A         N/A
                                                                                                         OL                           ..........  ..........        -659         N/A         N/A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                 Discretionary Spending, Excluding Violent Crime Reduction Spending \1\                                                                                                         
                                                                                                                                                                                                
Estimated Limits.......................................................................................  BA                                  N/A         N/A     494,889         N/A         N/A
                                                                                                         OL                                  N/A         N/A     495,275         N/A         N/A
                                                                                                                                                                                                
President's Proposals..................................................................................  BA                                  N/A         N/A     493,981         N/A         N/A
                                                                                                         OL                                  N/A         N/A     495,062         N/A         N/A
                                                                                                                                                                                                
President's Proposals Compared to the Limits...........................................................  BA                                  N/A         N/A        -908         N/A         N/A
                                                                                                         OL                                  N/A         N/A        -213         N/A         N/A
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Total Discretionary Spending, Excluding Funds for America \1\                                                                                                              
                                                                                                                                                                                                
Estimated Limits.......................................................................................  BA                                  N/A         N/A         N/A     503,998     516,476
                                                                                                         OL                                  N/A         N/A         N/A     498,880     498,019
                                                                                                                                                                                                
President's Proposals..................................................................................  BA                                  N/A         N/A         N/A     503,878     507,683
                                                                                                         OL                                  N/A         N/A         N/A     498,658     498,019
                                                                                                                                                                                                
President's Proposals Compared to the Limits...........................................................  BA                                  N/A         N/A         N/A        -120      -8,793
                                                                                                         OL                                  N/A         N/A         N/A        -222  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                              Total Discretionary Spending--All Categories                                                                                                                      
                                                                                                                                                                                                
Estimated Limits Plus Funds for America Spending.......................................................  BA                              528,006     570,606     575,946     582,606     597,373
                                                                                                         OL                              557,643     569,693     574,711     575,369     576,780
                                                                                                                                                                                                
President's Proposals \4\..............................................................................  BA                              526,115     570,606     575,038     582,486     588,580
                                                                                                         OL                              552,057     566,237     573,839     575,147     576,780
                                                                                                                                                                                                
President's Proposals Compared to the Limits Plus Funds for America Spending...........................  BA                               -1,891  ..........        -908        -120      -8,793
                                                                                                         OL                               -5,586      -3,456        -872        -222  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MEMORANDUM:                                                                                                                                                                                     
                                                                                                                                                                                                
                                Total Non-defense Discretionary Spending                                                                                                                        
                                                                                                                                                                                                
Estimated Limits Plus Funds for America Spending.......................................................  BA                              259,006     298,963     298,989     297,820     309,283
                                                                                                         OL                              290,519     303,138     305,008     304,599     303,646
                                                                                                                                                                                                
President's Proposals..................................................................................  BA                              257,624     298,963     298,081     297,700     300,490
                                                                                                         OL                              289,666     299,682     304,136     304,377     303,646
                                                                                                                                                                                                
President's Proposals Compared to the Limits Plus Funds for America Spending...........................  BA                               -1,382  ..........        -908        -120      -8,793
                                                                                                         OL                                 -853      -3,456        -872        -222  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The Balanced Budget Agreement of 1997 included: Separate spending limits for Non-defense Discretionary (Excluding Violent Crime Reduction) Spending, Violent Crime Reduction Spending, and  
  Defense Discretionary Spending for 1998 and 1999; separate spending limits for Discretionary (Excluding Violent Crime Reduction) Spending, Violent Crime Reduction Spending, and Defense      
  Discretionary Spending for 1998 and 1999; separate spending limits for Discretionary (Excluding Violent Crime Reduction) Spending and Violent Crime Reduction spending for 2000; and a single 
  spending limit for total discretionary spending in 2001 and 2002.                                                                                                                             
\2\ Includes $3,250 million in budget authority and outlays as an allowance for emergencies, including unforeseen defense and non-defense costs, natural disasters, and unanticipated non-      
  emergency expenses of the year 2000 computer conversion.                                                                                                                                      
\3\ 1998 adjustment displayed for comparability purposes (non-add).                                                                                                                             
\4\ 1999 budget authority and outlays exclude mandatory offsets of $2,424 thousand.                                                                                                             

  Sequester determinations.--Seven 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 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 
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 continues when 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. If such a breach is estimated, a ``within-session'' 
sequestration report and Presidential sequestration order would be 
issued. For a breach that results from appropriations enacted on or 
after July

[[Page 266]]

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 Final Sequestration Report to the President and 
the Congress that discretionary appropriations enacted for 1998 were 
within the prescribed spending limits.
  Sequester calculations.--If either the discretionary budget authority 
or outlay caps are exceeded, an across-the-board reduction of 
sequestrable budgetary resources is required to eliminate the breach. 
The percentage reduction for certain special-rule programs is limited to 
two percent. Once this limit is reached, the uniform percentage 
reduction for all other discretionary sequestrable resources is 
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 remain above the cap, after applying the available 
outlay allowance, further reductions in budgetary resources to eliminate 
the outlay breach would 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 14-4 
compares OMB and CBO limits for 1998 through 2002. This table excludes 
Presidential proposals.

  CBO and OMB also differed in their estimates of the effect of 
discretionary changes made to mandatory accounts in 1998 appropriations 
bills, and thus, the effect of those changes in the 1999 discretionary 
spending caps. The largest difference in this category is due to the 
difference between OMB and CBO scoring for the CSRS/FERS ``open season'' 
provision that was contained in the 1998 Treasury and General Government 
appropriations bill.
  In addition, CBO did not include the functional reclassification of 
the FUSRAP program in their report. CBO has indicated that it will make 
this adjustment at a later date. Finally, CBO did not make an adjustment 
for the conversion of Transportation Department obligation limitations 
to discretionary budget authority. OMB adjusted the 1999 through 2002 
caps upward for this conceptual change.

                   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.
  The BEA of 1997 requires that direct spending and receipts legislation 
should not increase the deficit in the current year, the budget year, 
and the following four fiscal years. If legislation does increase the 
deficit for the budget year, and if it is not fully offset by other 
legislative savings, the increase must be offset by sequestration of 
non-exempt direct spending programs. For this Preview Report, the pay-
as-you-go calculation to determine if a sequester is required for FY 
1999 also includes the FY 1998 deficit impacts of legislation for which 
the pay-as-you-go report was issued after OMB's Final Sequester Report 
was issued in November.
  Sequester determinations.--Within seven 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 2003 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, if any. This Report 
shows how these past actions affect the upcoming fiscal year.
  As of December 31, 1997, OMB had issued 437 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 
legislation had a deficit impact greater than $50 million in any one 
year.
  Table 14-5 shows OMB and CBO estimates for legislation enacted through 
December 16, 1997. The sum of the 1998 impact of pay-as-you-go 
legislation scored after OMB's Final Sequester Report and the 1999 
impact of all legislation enacted since the balances were eliminated is 
savings of $142 million. Therefore, no sequester is projected at this 
time.

[[Page 267]]

    Table 14-4.  COMPARISON OF OMB AND CBO DISCRETIONARY SPENDING LIMITS                      
                           (In millions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                                              1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
    Non-defense Discretionary, Excluding Violent Crime                                                          
                                                                                                                
CBO Preview Report limits:                                                                                      
  BA.....................................................    253,506    255,704        N/A        N/A        N/A
  OL.....................................................    285,686    289,594        N/A        N/A        N/A
                                                                                                                
OMB Preview Report limits:                                                                                      
  BA.....................................................    253,506    283,737        N/A        N/A        N/A
  OL.....................................................    285,686    289,297        N/A        N/A        N/A
Difference:                                                                                                     
  BA.....................................................  .........     28,033        N/A        N/A        N/A
  OL.....................................................  .........       -297        N/A        N/A        N/A
                                                                                                                
                 Violent Crime Reduction                                                                        
                                                                                                                
CBO Preview Report limits:                                                                                      
  BA.....................................................      5,500      5,800      4,500        N/A        N/A
  OL.....................................................      4,833      4,953      5,554        N/A        N/A
                                                                                                                
OMB Preview Report limits:                                                                                      
  BA.....................................................      5,500      5,800      4,500        N/A        N/A
  OL.....................................................      4,833      4,953      5,554        N/A        N/A
                                                                                                                
Difference:                                                                                                     
  BA.....................................................  .........  .........  .........        N/A        N/A
  OL.....................................................  .........  .........  .........        N/A        N/A
                                                                                                                
                  Defense Discretionary                                                                         
                                                                                                                
CBO Preview Report limits:                                                                                      
  BA.....................................................    269,000    271,502        N/A        N/A        N/A
  OL.....................................................    267,124    266,568        N/A        N/A        N/A
                                                                                                                
OMB Preview Report limits:                                                                                      
  BA.....................................................    269,000    271,570        N/A        N/A        N/A
  OL.....................................................    267,124    266,635        N/A        N/A        N/A
                                                                                                                
Difference:                                                                                                     
  BA.....................................................  .........         68        N/A        N/A        N/A
  OL.....................................................  .........         67        N/A        N/A        N/A
                                                                                                                
Discretionary Spending, Excluding Violent Crime Reduction                                                       
                         Spending                                                                               
                                                                                                                
CBO Preview Report limits:                                                                                      
  BA.....................................................        N/A        N/A    532,656        N/A        N/A
  OL.....................................................        N/A        N/A    559,240        N/A        N/A
                                                                                                                
OMB Preview Report limits:                                                                                      
  BA.....................................................        N/A        N/A    561,366        N/A        N/A
  OL.....................................................        N/A        N/A    559,129        N/A        N/A
                                                                                                                
Difference:                                                                                                     
  BA.....................................................        N/A        N/A     28,710        N/A        N/A
  OL.....................................................        N/A        N/A       -111        N/A        N/A
                                                                                                                
               Total Discretionary Spending                                                                     
                                                                                                                
CBO Preview Report limits:                                                                                      
  BA.....................................................    528,006    533,006    537,156    541,989    551,023
  OL.....................................................    557,643    561,115    564,794    564,198    560,479
                                                                                                                
OMB Preview Report limits:                                                                                      
  BA.....................................................    528,006    561,107    565,866    571,326    581,005
  OL.....................................................    557,643    560,885    564,683    564,073    560,346
                                                                                                                
Difference:                                                                                                     
  BA.....................................................  .........     28,101     28,710     29,337     29,982
  OL.....................................................  .........       -230       -111       -125       -133
----------------------------------------------------------------------------------------------------------------

[[Page 268]]

Table 14-5.  DEFICIT IMPACT OF PAY-AS-YOU-GO LEGISLATION ENACTED AS OF DECEMBER 16, 1997                                                    
                          (In millions of dollars)                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Report Number           Act Number                                                   Act Title                                             1998     1999     2000     2001     2002     2003 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Legislation enacted in the 1st session--105th Congress (reflected in Final Sequester Report):                                                                                                   
                                                                                                                                                                                                
                                              Enacted after the BBA and included in Final Sequester Report:                                                                                     
                    ........................    OMB estimate..............................................................................    (-11)        6        6        3        1       NA
                                                CBO estimate..............................................................................     (-7)       41       43       40       39       NA
                                                                                                                                                                                                
Legislation enacted in the 1st session--Reports issued after 11/21/97 (not reflected in Final Report):                                                                                          
                                                                                                                                                                                                
417                 P.L. 105-85               National Defense Authorization Act for Fiscal Year 1998:                                                                                          
                    H.R. 1119                   OMB estimate..............................................................................     -156        3       10       15       -4      -24
                    ........................    CBO estimate..............................................................................     -159        9       17       19      -13      -35
                                                                                                                                                                                                
418                 P.L. 105-89               Adoption and Safe Families Act of 1997:                                                                                                           
                    H.R. 867                    OMB estimate..............................................................................       -1  .......        3       11       40       76
                    ........................    CBO estimate..............................................................................       -1  .......  .......  .......  .......        7
                                                                                                                                                                                                
419                 P.L. 105-92               Savings are Vital to Everyone's Retirement (SAVER) Act of 1997:                                                                                   
                    H.R. 1377                   OMB estimate..............................................................................  .......  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
420                 P.L. 105-96               Asian Elephant Conservation Act of 1997:                                                                                                          
                    H.R. 1787                   OMB estimate..............................................................................  .......        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
421                 P.L. 105-98               Veterans' Compensation Rate Amendments of 1997:                                                                                                   
                    H.R. 2367                   OMB estimate..............................................................................  .......  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
422                 P.L. 105-101              Veterans' Cemetery Protection Act of 1997:                                                                                                        
                    S. 813                      OMB estimate..............................................................................        *        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
423                 P.L. 105-103              Congressional Medal of Honor to Robert R. Ingram:                                                                                                 
                    H.R. 2813                   OMB estimate..............................................................................        *        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
424                 P.L. 105-104              Apalachicola-Chattahoochee-Flint River Basin Compact:                                                                                             
                    H.J.R. 91                   OMB estimate..............................................................................  .......  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
425                 P.L. 105-105              Alabama-Coosa-Tallapoosa River Basin Compact:                                                                                                     
                    H.J.R. 92                   OMB estimate..............................................................................  .......  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
426                 P.L. 105-111              Revisions of Veterans Benefits Decisions Based on Clear and Unmistakable Error:                                                                   
                    H.R. 1090                   OMB estimate..............................................................................        *        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
427                 P.L. 105-114              Veterans' Benefits Act of 1997:                                                                                                                   
                    S. 714                      OMB estimate..............................................................................  .......  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................        1        1        1  .......  .......  .......
                                                                                                                                                                                                
NA                  P.L. 105-115              Food and Drug Administration Modernization Act of 1997:                                                                                           
                    S. 830                      OMB estimate..............................................................................                                                      
(5)OMB does not                                                                                                                                                                                 
 consider this                                                                                                                                                                                  
 bill to be                                                                                                                                                                                     
 subject to pay-as-                                                                                                                                                                             
 you-go.                                                                                                                                                                                        
                    ........................    CBO estimate..............................................................................  .......       12       33       54       28        7
                                                                                                                                                                                                
428                 P.L. 105-116              To Prohibit Interment or Memorial in Certain Veterans Cemeteries:                                                                                 
                    S. 923                      OMB estimate..............................................................................       -*       -*       -*       -*       -*       -*
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
429                 P.L. 105-124              50 States Commemorative Coin Program Act:                                                                                                         
                    S. 1228                     OMB estimate..............................................................................        1       -3       -1       -3       -4       -4
                    ........................    CBO estimate..............................................................................        1       -5       -2       -4       -5       -5
                                                                                                                                                                                                
NA                  P.L. 105-127              Hispanic Cultural Center Act of 1997:                                                                                                             
                    S. 1417                     OMB estimate..............................................................................                                                      
(5)OMB does not                                                                                                                                                                                 
 consider this                                                                                                                                                                                  
 bill to be                                                                                                                                                                                     
 subject to pay-as-                                                                                                                                                                             
 you-go.                                                                                                                                                                                        
                    ........................    CBO estimate..............................................................................  .......        6        6        1  .......  .......
                                                                                                                                                                                                
430                 P.L. 105-130              Surface Transportation Extension Act of 1997:                                                                                                     
                    S. 1519                     OMB estimate..............................................................................  .......       -1       -7      -18      -30      -45
                    ........................    CBO estimate..............................................................................  .......       -2       -8      -19      -33      -47
                                                                                                                                                                                                
431                 P.L. 105-132              Lower Brule Sioux Tribe Infrastructure Development Trust Fund Act of 1997:                                                                        
                    S. 156                      OMB estimate..............................................................................  .......  .......        1        2        3        3
                    ........................    CBO estimate..............................................................................  .......  .......        1        2        3        3
                                                                                                                                                                                                
432                 P.L. 105-135              Small Business Reauthorization Act of 1997:                                                                                                       
                    S. 1139                     OMB estimate..............................................................................        3        4        4        4        4        3
                    ........................    CBO estimate..............................................................................        2        4        4        3        3        2
                                                                                                                                                                                                
433                 P.L. 105-136              Aviation Insurance Reauthorization Act:                                                                                                           
                    S. 1193                     OMB estimate..............................................................................  .......        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                

[[Page 269]]

                                                                                                                                                                                                
434                 P.L. 105-144              Acquisition of Property for the Library of Congress:                                                                                              
                    H.R. 2979                   OMB estimate..............................................................................       -2        2  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................       -2        2  .......  .......  .......  .......
                                                                                                                                                                                                
435                 P.L. 105-146              Atlantic Striped Bass Conservation Act:                                                                                                           
                    H.R. 1658                   OMB estimate..............................................................................        *        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
436                 P.L. 105-147              No Electronic Theft (NET) Act:                                                                                                                    
                    H.R. 2265                   OMB estimate..............................................................................        *        *        *        *        *        *
                    ........................    CBO estimate..............................................................................  .......  .......  .......  .......  .......  .......
                                                                                                                                                                                                
437                 P.L. 105-150              Authorization to Use Customs User Fees to Provide Inspectors in Florida:                                                                          
                    H.R. 3034                   OMB estimate..............................................................................        2  .......  .......  .......  .......  .......
                    ........................    CBO estimate..............................................................................        2  .......  .......  .......  .......  .......
                                                                                                                                                                                                
                    ........................  Subtotal, reports issued after 11/21/97:....................................................                                                      
                    ........................    OMB estimate..............................................................................     -153        5       10       11        9        9
                    ........................    CBO estimate..............................................................................     -156       27       52       56      -17      -68
                                                                                                                                                                                                
                    ........................  Total, new balances (excluding Final Sequester Report FY 1998 amount):                                                                            
                    ........................    OMB estimate..............................................................................     -153       11       16       14       10        9
                    ........................    CBO estimate..............................................................................     -156       68       95       96       22      -68
                                                                                                                                                                                                
                    ........................  MEMORANDUM                                                                                                                                        
                    ........................    OMB estimate of balances available for 1999...............................................  .......     -142  .......  .......  .......  .......
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NA = Not available.                                                                                                                                                                             
* Less than $500,000.                                                                                                                                                                           

                            Funds for America

  The budget proposes three deficit neutral Funds for America--the 
Research Fund for America, the Environmental Resources Fund for America, 
and the Transportation Fund for America--designed to ensure adequate 
funding for the high priority programs covered by the Funds. The Funds 
accommodate a total of $75.5 billion in budget authority and $69.7 
billion in outlays in 1999. Similar amounts are proposed for each of the 
outyears through 2002. The Funds include both base levels of funding 
that are currently included in the nondefense discretionary spending 
category and increases to be offset by reductions in mandatory spending 
and increases in revenue. The increase and the accompanying offset in 
1999 is $5.8 billion. Sections II and V of the Budget volume discuss the 
Funds and the programs covered by them in detail.
  Under the Administration's proposal, the increase in spending is paid 
for by the enactment of sufficient savings in the form of mandatory 
spending reductions and revenue increases. The Administration is 
proposing legislative measures--such as increased revenues from tobacco 
legislation, reduced tobacco-related spending by the Department of 
Veterans Affairs, and renewed Superfund taxes--to produce the necessary 
savings.
  These mandatory savings would offset additions to base discretionary 
spending from the Funds, consistent with the deficit neutrality 
principles underlying the Budget Enforcement Act. The use of mandatory 
offsets for discretionary spending is permissible under current 
scorekeeping rules and precedents, or could be specifically authorized 
for purposes of the Funds for America. The Administration intends to 
work with the appropriate congressional committees to determine the best 
approach.

 Transportation Obligation Limitations Defined as Discretionary Budget 
                                Authority

  The Budget Enforcement Act provides that, in the preview report, OMB 
may adjust the discretionary spending limits for changes in concepts and 
definitions after consultation with the Committees on Appropriations and 
the Budget of the House of Representatives and the Senate. The budget 
includes a redefinition of obligation limitations as budget authority 
for transportation programs. The change in concepts and definitions with 
respect to transportation obligation limitations would take effect only 
upon completion of the statutorily-required consultations.
  This change in concepts would be made only for the purposes of the 
Budget Enforcement Act. The question of whether the concept change 
should be adopted for purposes of the Congressional Budget Act would be 
a matter solely within the purview of the Congress.
  This change would not affect the legal status of the contract 
authority authorized for these programs or the obligation limitation. 
Contract authority would continue to be allocated to States as usual. 
The appropriation language limiting obligations would not be affected. 
Absent a limitation on obligations, the contract authority would be 
fully available for obligation, as it would be now. The contract 
authority that is not subject to limitation would continue to be scored 
as direct spending.
  Budget authority for highway, transit, highway safety, and airport 
improvement programs usually has been defined as the contract authority 
provided in authorizing legislation. However, the levels of contract 
authority have been, for the most part, controlled by obligation

[[Page 270]]

limitations in appropriations acts. Outlays from the obligation 
limitations have always been scored as discretionary, but in the past 
the obligation limitations were not scored as discretionary budget 
authority. As a result, there has been a large ($28 billion in 1998 
growing to $30 billion in 2002) gap between the discretionary budget 
authority cap and the discretionary outlay cap.
  A number of non-transportation, discretionary programs are also 
controlled by obligation limitations in appropriations acts. These 
programs include the administrative expenses for the Social Security, 
Medicare, unemployment, civil service, and railroad retirement trust 
funds. Over the years, OMB, in consultation with the Budget Committees 
and CBO, has redefined the obligation limitations as budget authority 
for all of these non-transportation programs. In fact, in the 1998 
Budget last year, OMB redefined $3.7 billion of obligation limitation as 
budget authority.
  The Administration did not propose to redefine obligation limitations 
as budget authority for the transportation funds in the 1998 Budget 
because it would have required a large budget authority cap adjustment 
in the midst of the balanced budget negotiations that were to take place 
that year. This left obligation limitations for the transportation trust 
funds as the only obligation limitations not redefined as discretionary 
budget authority.
  This is a conceptual change. As indicated above, OMB adjusts the 
discretionary spending caps for conceptual changes. For 1998, the budget 
authority cap would be increased by approximately $28 billion. Similar 
budget authority cap adjustments, increasing to $30 billion in 2002 
would be made for each outyear. These adjustments are reflected in Table 
14-2. The change would not affect outlays or the deficit or surplus.