[Analytical Perspectives]
[Budget Enforcement Act Preview Report]
[13. Preview Report]
[From the U.S. Government Publishing Office, www.gpo.gov]
[[Page 273]]
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BUDGET ENFORCEMENT ACT
PREVIEW REPORT
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[[Page 275]]
13. PREVIEW REPORT
The Budget Enforcement Act of 1990 (BEA of 1990) was enacted as part
of the Omnibus Budget Reconciliation Act of 1990. The BEA of 1990
established, through fiscal year 1995, annual limits, or ``caps,'' on
discretionary spending, and a pay-as-you-go 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
Budget Enforcement Act of 1997 (BEA of 1997), which was enacted as part
of the Balanced Budget Act of 1997 (BBA of 1997), extended, through
2002, BEA limits on discretionary spending and requirements for pay-as-
you-go legislation. The Transportation Equity Act for the 21st Century
(TEA-21) further modified the discretionary caps by creating new caps
for highway and mass transit outlays.
The BEA requires that OMB issue a report on the impact of each piece
of legislation seven days after enactment. 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 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 (OBRA) and the Budget Enforcement Act of 1997, identify accounts
with discretionary resources. The BEA of 1997, as modified by the
Transportation Equity Act for the 21st Century (TEA-21) limits budget
authority and outlays available for discretionary programs each year
through 2002. For 1999, there are five separate categories of
discretionary spending: defense, non-defense (excluding violent crime
reduction spending), violent crime reduction spending, and highway and
mass transit outlays.
For 2000, the law divides discretionary spending into four
categories: violent crime reduction spending, highway outlays, mass
transit outlays, and all other discretionary spending. For 2001 and
2002, the violent crime reduction category is eliminated. TEA-21
established highway and transit outlay caps through 2003. 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.
Adjustments to discretionary limits.--The BEA permits certain
adjustments to the discretionary limits--also known as caps. On December
10, 1998, the Office of Management and Budget submitted the Final
Sequestration Report for 1999 required by the BEA. That 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. Table 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
1999 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. Several 1999 authorizing bills included
provisions that modified appropriated spending levels. The caps have
been adjusted for these provisions as well.
After consultation with the Congress and the Congressional Budget
Office, OMB has reclassified several programs beginning in 2000. The net
effect of these reclassifications increase the budget authority and
outlay caps by approximately $700 million in 2000, 2001 and 2002. The
following programs were reclassified from mandatory to discretionary:
the non-basic State grant portion of Education's rehabilitation services
and disability research account, the Health and Human Services's injury
compensation program and Treasury's small airports customs fees. The
following programs were reclassified from discretionary to mandatory:
the National Oceanic and Atmospheric Administration's (NOAA) damage
assessment revolving fund for Prince William Sound restoration, NOAA's
corp officers' retirement benefits, Defense's contributions for
burdensharing account, and the receipts for the Federal Hous
[[Page 276]]
Table 13-1. HISTORICAL SUMMARY OF CHANGES TO DISCRETIONARY SPENDING LIMITS
(In billions of dollars)
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1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
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TOTAL DISCRETIONARY
Statutory Caps as set in OBRA 1990,
OBRA 1993, 1997 BBA................ BA 491.7 503.4 511.5 510.8 517.7 519.1 528.1 530.6 533.0 537.2 542.0 551.1
OL 514.4 524.9 534.0 534.8 540.8 547.3 547.3 547.9 559.3 564.3 564.4 560.8
Adjustments:
Changes in Concepts and BA ...... 7.7 8.2 8.2 8.8 -0.6 -0.4 3.1 -0.2 -0.1 0.2 0.2
Definitions.
OL ...... 1.0 2.4 2.3 3.0 -0.5 -2.6 -2.8 -0.3 0.1 -0.1 -0.2
Emergency Requirements............ BA 0.9 8.3 4.6 12.2 7.7 5.1 9.3 5.7 15.0 0.1 ...... ........
OL 1.1 1.8 5.4 9.0 10.1 6.4 8.1 7.0 14.8 3.8 1.8 0.9
Changes in Inflation.............. BA ...... -0.5 -5.1 -9.5 -11.8 3.0 2.6 0.0 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
Credit Reestimates, IRS Funding,
Debt Forgiveness, IMF, CDRs,
International Organization
Arrearages....................... BA 0.2 0.2 13.0 0.6 0.7 0.1 0.2 0.9 19.4 ...... ...... ........
OL 0.3 0.3 0.8 0.8 0.9 0.1 0.3 0.6 1.1 0.2 0.1 0.2
Adjustment pursuant to Sec. 2003 BA ...... ...... ...... ...... -15.0 -0.1 -0.1 N/A N/A N/A N/A
of P.L. 104-19 \1\.
OL ...... ...... ...... ...... -1.1 -3.5 -2.4 -1.5 N/A N/A N/A N/A
Special Allowances:
Discretionary new budget BA ...... 3.5 2.9 2.9 2.9 ...... ...... ...... N/A N/A N/A N/A
authority.
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 ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ........
OL 2.6 1.7 0.5 1.0 ...... ...... ...... 1.2 ...... ...... ...... ........
Operation Desert Shield/Desert BA 44.2 14.0 0.6 * * ...... ...... ...... N/A N/A N/A N/A
Storm.
OL 33.3 14.9 7.6 2.8 1.1 ...... ...... ...... 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
TEA-21 Adjustment (Net) \2\....... BA N/A N/A N/A N/A N/A N/A N/A N/A -0.9 -0.9 -0.9 -0.9
OL N/A N/A N/A N/A N/A N/A N/A N/A 1.1 3.2 5.1 6.0
Adjustments Pursuant to TEA-21:
\3\
Mass Transit Category Outlays... BA N/A N/A N/A 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 N/A N/A N/A -0.6 -0.3 -0.3
Highway Category Outlays........ BA N/A N/A N/A 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 N/A N/A N/A 0.1 -0.0 -0.3
-------------------------------------------------------------------------------------------------
Total, Adjustments.............. BA 45.4 33.2 24.2 14.3 -6.7 7.5 11.7 2.8 33.4 -0.9 -0.7 -0.7
OL 37.2 20.8 16.4 12.8 7.8 5.5 6.3 12.4 16.8 6.7 6.7 6.2
-------------------------------------------------------------------------------------------------
Preview Report Spending Limits \4\.. BA 537.1 536.6 535.7 525.1 511.0 526.7 539.7 533.5 566.4 536.3 541.3 550.4
OL 551.6 545.7 550.4 547.6 548.6 552.7 553.7 560.2 576.1 570.9 571.0 567.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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 estimate by the amount
of reductions in new budget authority and outlays for discretionary programs resulting from the provisions of the bill, other than emergencies
appropriations.
\2\ Sec. 8101(a) of P.L. 105-178, the Transportation Equity Act for the 21st Century (TEA-21), which was signed by the President on June 6, 1998,
established two new discretionary spending categories: Highway and Mass Transit. Sec. 810(b) of TEA-21 provided for an offsetting adjustment in the
existing discretionary spending limits.
\3\ Sec. 8101(d) of P.L. 105-178 requires OMB to make an adjustment to the Highway and Mass Transit Category caps based on actual receipts data (Highway
category only) and revised technical assumptions.
\4\ Reflects combined Defense Discretionary, Non-Defense Discretionary (Excluding Crime), Violent Crime Reduction, Highway Category, and Mass Transit
Category, and Mass Transit Category spending limits.
ing Administration's mutual mortgage insurance program.
The caps have also been adjusted upward for contingent emergency
appropriations (i.e., funding for amounts that the President designates
as ``emergency requirements'' and that Congress so designates in law)
that have been released since the transmittal of the End of Session
Sequestration Report. These included funds for the Corps of Engineers
that will help repair damage caused by Hurricane Georges, which resulted
in navigational problems in Alabama, Louisiana, Florida, Mississippi,
Puerto Rico and the Virgin Islands. Contingent emergency funds were also
released to a number of Federal agencies to support efforts to make
Federal information technology systems Year 2000 compliant and for
outreach to non-Federal entities in support of the Year 2000 Conversion
Council.
The Transportation Equity Act for the 21st Century (TEA-21) requires
two adjustments to the Highway and Transit category discretionary outlay
caps based upon changes in receipts to the Highway Trust Fund and
changing technical assumptions for outlays. The outlay cap for the
Highway category increases because of additional budgetary resources
resulting from revised Highway Trust Fund receipts. The spending limits
for both categories decrease in outlays due to revised technical
assumptions. Table 2 shows the impact upon the discretionary spending
limits of the adjustments being made in this Preview Report.
[[Page 277]]
Table 13-2. DISCRETIONARY SPENDING LIMITS
(In millions of dollars)
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1998 1999 2000 2001 2002
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NON-DEFENSE DISCRETIONARY SPENDING, EXCLUDING SPECIAL CATEGORIES
End-of-Session Report Spending Limits.................................................................. BA 256,148 284,090 N/A N/A N/A
OL 286,325 273,999 N/A N/A N/A
Adjustments:
Contingent Emergency Appropriations Released......................................................... BA .......... 443 N/A N/A N/A
OL .......... 325 N/A N/A N/A
........................... Note: Outyear outlay effect
included under ``Other
Discretionary'' below.
-----------------------------------------------------------
Subtotal, Adjustments for the Preview Report....................................................... BA .......... 443 N/A N/A N/A
OL .......... 325 N/A N/A N/A
-----------------------------------------------------------
Preview Report Spending Limits......................................................................... BA 256,148 284,533 N/A N/A N/A
OL 286,325 274,324 N/A N/A N/A
Anticipated Other Adjustments:
Contingent Emergency Releases and Other Emergencies:
Natural disasters and other emergencies............................................................ BA .......... 3,250 N/A N/A N/A
OL .......... 861 N/A N/A N/A
Expected release of contingent disaster emergency funding provided in P.L. 105-277................. BA .......... 1,007 N/A N/A N/A
OL .......... 395 N/A N/A N/A
Emergency funding for Wye River Memorandum......................................................... BA .......... 900 N/A N/A N/A
OL .......... 621 N/A N/A N/A
........................... Note: Outyear outlay effect
included under ``Other
Discretionary'' below.
-----------------------------------------------------------
Subtotal, Anticipated Other Adjustments.............................................................. BA .......... 5,157 N/A N/A N/A
OL .......... 1,877 N/A N/A N/A
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Preview Report Spending Limits, Including Anticipated Other Adjustments................................ BA 256,148 289,690 N/A N/A N/A
OL 286,325 276,201 N/A N/A N/A
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DEFENSE DISCRETIONARY SPENDING
End-of-Session Report Spending Limits.................................................................. BA 271,832 275,651 N/A N/A N/A
OL 269,079 270,206 N/A N/A N/A
Adjustments:
Contingent Emergency Appropriations Released....................................................... BA .......... 396 N/A N/A N/A
OL .......... 214 N/A N/A N/A
........................... Note: Outyear outlay effect
included under ``Other
Discretionary'' below.
-----------------------------------------------------------
Subtotal, Adjustments for the Preview Report......................................................... BA .......... 396 N/A N/A N/A
OL .......... 214 N/A N/A N/A
Preview Report Spending Limits......................................................................... BA 271,832 276,047 N/A N/A N/A
OL 269,079 270,420 N/A N/A N/A
Anticipated Other Adjustments:
Contingent Emergency Releases and Other Emergencies:
Expected release of contingent emergency funding.................................................. BA .......... 3,320 N/A N/A N/A
OL .......... 1,862 N/A N/A N/A
Expected release of contingent funding provided in P.L. 105-277 for uranium purchase and plutonium
disposition....................................................................................... BA .......... 525 N/A N/A N/A
OL .......... 345 N/A N/A N/A
........................... Note: Outyear outlay effect
included under ``Other
Discretionary'' below.
Preview Report Spending Limits, Including Further Adjustments.......................................... BA 271,832 279,892 N/A N/A N/A
OL 269,079 272,627 N/A N/A N/A
������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
VIOLENT CRIME REDUCTION SPENDING
End-of-Session Spending Limits......................................................................... BA 5,500 5,800 4,500 N/A N/A
OL 4,833 4,953 5,554 N/A N/A
Adjustments:
No Adjustments....................................................................................... BA .......... .......... .......... N/A N/A
OL .......... .......... .......... N/A N/A
[[Page 278]]
Preview Report Spending Limits......................................................................... BA 5,500 5,800 4,500 N/A N/A
OL 4,833 4,953 5,554 N/A N/A
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HIGHWAY CATEGORY
End-of-Session Report Spending Limits.................................................................. BA N/A .......... .......... .......... ..........
OL N/A 21,991 24,478 26,230 26,992
Adjustments:
Revised Technical Assumptions........................................................................ BA N/A .......... .......... .......... ..........
OL N/A .......... -297 -608 -562
Revised Trust Fund Revenue Assumptions............................................................... BA N/A .......... .......... .......... ..........
OL N/A .......... 393 597 233
Preview Report Spending Limits......................................................................... BA N/A .......... .......... .......... ..........
OL N/A 21,991 24,574 26,219 26,663
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MASS TRANSIT CATEGORY
End-of-Session Report Spending Limits.................................................................. BA N/A .......... .......... .......... ..........
OL N/A 4,401 4,761 5,190 5,709
Adjustments:
Revised Technical Assumptions........................................................................ BA N/A .......... .......... .......... ..........
OL N/A .......... -644 -302 -325
Preview Report Spending Limits........................................................................ BA N/A .......... .......... .......... ..........
OL N/A 4,401 4,117 4,888 5,384
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OTHER DISCRETIONARY SPENDING
End-of-Session Report Other Discretionary Spending Limits.............................................. BA N/A N/A 531,694 540,951 549,981
OL N/A N/A 536,073 538,970 534,081
Adjustments:
Changes in Concepts and Definitions:
Reclassification of accounts agreed to by ``scorekeepers''......................................... BA N/A N/A 677 691 706
OL N/A N/A 675 688 703
Statutory and Other Shifts Between Categories...................................................... BA N/A N/A -657 -398 -390
OL N/A N/A -281 -374 -498
Changes in appropriated spending contained in PAYGO bills.......................................... BA N/A N/A 57 80 85
OL N/A N/A 75 87 85
Contingent Emergency Appropriations Released....................................................... BA N/A N/A .......... .......... ..........
OL N/A N/A 180 50 35
Reestimate of Emergency Spending................................................................... BA N/A N/A .......... .......... ..........
OL N/A N/A -22 519 566
-----------------------------------------------------------
Subtotal, Adjustments for the Preview Report....................................................... BA N/A N/A 77 373 401
OL N/A N/A 627 970 891
-----------------------------------------------------------
Preview Report Spending Limits......................................................................... BA N/A N/A 531,771 541,324 550,382
OL N/A N/A 536,700 539,940 534,972
������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Anticipated Other Adjustments:
EITC Tax Compliance Initiative....................................................................... BA N/A N/A 144 145 146
OL N/A N/A 144 145 146
Continuing Disability Reviews (CDRs)................................................................. BA N/A N/A 405 405 405
OL N/A N/A 373 405 405
International Organizations Arrearage Payments....................................................... BA N/A N/A 409 .......... ..........
OL N/A N/A .......... 409 ..........
Adoption Incentive Payments......................................................................... BA N/A N/A 20 20 20
OL N/A N/A 2 13 20
Contingent Emergency Releases and Other Emergencies:
Natural disasters and other emergencies........................................................... BA N/A N/A .......... .......... ..........
OL N/A N/A 1,365 699 325
Expected release of contingent disaster emergency funding.......................................... BA N/A N/A .......... .......... ..........
OL N/A N/A 1,408 385 167
Emergency funding for Wye River Memorandum......................................................... BA N/A N/A .......... .......... ..........
OL N/A N/A 92 95 42
Expected release of contingent funding provided in P.L. 105-277 for uranium purchase and plutonium
disposition....................................................................................... BA N/A N/A .......... .......... ..........
OL N/A N/A 30 100 50
-----------------------------------------------------------
Subtotal, Anticipated Other Adjustments.............................................................. BA N/A N/A 978 570 571
OL N/A N/A 3,414 2,251 1,155
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[[Page 279]]
Preview Report Spending Limits, Including Anticipated Other Adjustments................................ BA N/A N/A 532,749 541,894 550,953
OL N/A N/A 540,114 542,191 536,127
������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
TOTAL DISCRETIONARY SPENDING
End-of-Session Total Discretionary Spending Limits..................................................... BA 533,480 565,541 536,194 540,951 549,981
OL 560,237 575,550 570,866 570,390 566,782
Preview Report Total Discretionary Spending Limits.................................................... BA 533,480 566,380 536,271 541,324 550,382
OL 560,237 576,089 570,945 571,047 567,019
Preview Report Total Discretionary Spending Limits, Including Anticipated Other Adjustments............ BA 533,480 575,382 537,249 541,894 550,953
OL 560,237 580,173 574,359 573,298 568,174
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Note: The Bipartisan 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 for 2001 and 2002.
The Administration has included several proposals in the budget that
would result in cap adjustments upon their enactment. They are described
below.
Adjustments to the Limits That Would be Made Under Existing Adjustment
Authority:
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 the number of erroneous EITC claims.
Adjustments are limited to the budget authority and outlay
estimates authorized in P.L. 105-33. The 1999 Treasury and
General Government Appropriations Act provided $143 million
for EITC compliance. The budget proposes $144 million in
funding for 2000.
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. The law limits adjustments to
the budget authority and outlay estimates authorized in P.L.
105-33, the Balanced Budget Act of 1997. 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 1999 Labor, Health and Human Services,
Education, and Related Agencies Appropriations Act provided
$355 million for CDRs in 1999. The budget proposes $405
million in funding for 2000 through 2002.
Allowance for International Organizations 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 $1,014
million was provided for international arrearage payments in
the 1999 appropriations acts, and $461 million was provided
prior to that. The budget proposes $446 million for U.N. and
other international organizations arrearage payments, of which
$409 million would be covered by the cap adjustment.
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 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. $20 million is requested for this program in 2000, 2001
and 2002.
Anticipated Release of Previously Enacted Contingent
Emergency Appropriations.--The budget includes allowances for
previously enacted contingent emergency appropriations that
the Administration expects will be released in 1999. This
includes funding that was previously appropriated for the
Federal Emergency Management Agency's and the Small Business
Administration's disaster relief accounts and funding
appropriated to the Department of Energy to reduce the amount
of excess weapons-grade uranium and plutonium in Russia.
Contingent Emergency Supplemental Appropriations.--The
budget contains emergency supplemental requests for
appropriations in support of the Wye River Memorandum to help
restore positive momentum to the Middle East peace process.
The $900 million requested, which is offset in budget
authority, will help meet the Palestinians' economic
development needs in the West Bank and Gaza, and strengthen
democratic institutions. The funds will also help Israel
offset some of the costs of redeploying its forces and enable
it to meet strategic defense requirements, as well as allow
Jordan to maintain the operational capabilities of its forces
and support further economic development there.
The actual adjustments to the discretionary spending caps to be
included in subsequent sequester reports cannot be determined until all
appropriations have been
[[Page 280]]
enacted. Table 3 compares the President's discretionary proposals to the
proposed caps for 1999 through 2002. The estimates for 1999 are based on
BEA scoring of enacted appropriations bills and have been adjusted for
subsequent emergency releases.
Table 13-3. BUDGET PROPOSALS
(in millions of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Defense Discretionary Spending, Excluding Special Categories
Estimated Limits......................................................................... BA 284,533 NA NA NA
OL 274,324 NA NA NA
President's Proposals.................................................................... BA 284,371 NA NA NA
OL 272,553 NA NA NA
President's Proposals Compared to the Limits............................................. BA -162 NA NA NA
OL -1,771 NA NA NA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Defense Discretionary
Estimated Limits......................................................................... BA 276,047 NA NA NA
OL 270,420 NA NA NA
President's Proposals.................................................................... BA 276,041 NA NA NA
OL 269,124 NA NA NA
President's Proposals Compared to the Limits............................................. BA -6 NA NA NA
OL -1,296 NA NA NA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Violent Crime Reduction Spending
Estimated Limits......................................................................... BA 5,800 4,500 NA NA
OL 4,953 5,554 NA NA
President's Proposals.................................................................... BA 5,797 4,500 NA NA
OL 4,946 5,554 NA NA
President's Proposals Compared to the Limits............................................. BA -3 .......... .......... ..........
OL -7 .......... .......... ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Highway Category Spending
Estimated Limits......................................................................... BA .......... .......... .......... ..........
OL 21,991 24,574 26,219 26,663
President's Proposals.................................................................... BA .......... .......... .......... ..........
OL 21,568 24,574 26,219 26,663
President's Proposals Compared to the Limits............................................. BA .......... .......... .......... ..........
OL -423 .......... .......... ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mass Transit Category Spending
Estimated Limits......................................................................... BA .......... .......... .......... ..........
OL 4,401 4,117 4,888 5,384
President's Proposals.................................................................... BA .......... .......... .......... ..........
OL 3,942 4,117 4,888 5,384
President's Proposals Compared to the Limits............................................. BA .......... .......... .......... ..........
OL -459 .......... .......... ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other Discretionary
Estimated Limits......................................................................... BA NA 532,749 541,894 550,953
OL NA 540,114 542,191 536,127
President's Proposals, Including Offsets to Discretionary Spending and Contingent
Adjustments if No Social Social Security Reform is Enacted.............................. BA NA 532,743 527,306 532,069
OL NA 539,547 542,191 536,127
President's Proposals Compared to the Limits............................................. BA NA -6 -14,588 -18,884
OL NA -567 .......... ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Discretionary Spending
Estimated Limits......................................................................... BA 566,380 537,249 541,894 550,953
OL 576,089 574,359 573,298 568,174
President's Proposals.................................................................... BA 566,209 537,243 527,306 532,069
OL 572,133 573,792 573,298 568,174
President's Proposals Compared to the Limits............................................. BA -171 -6 -14,588 -18,884
OL -3,956 -567 .......... ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
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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 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 1999 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 of OMB and CBO discretionary limits.--Section 254(d)(5) of
the BEA requires that this report explain the differences between OMB
and CBO estimates for discretionary spending limits. Table 4 compares
OMB and CBO limits for 1999 through 2002. CBO uses the discretionary
limits from OMB's Final Sequestration Report as a starting point for
adjustments in its Preview Report. This table excludes Presidential
proposals.
CBO included $570 million of contingent emergency funding that was
released on January 12, 1999 in the Defense Discretionary caps for FY
1999. Due to timing constraints, OMB included this amount under
``Anticipated Other Adjustments--Expected release of contingent
emergency funding.'' Differences in revised technical assumptions
account for the majority of the outlay difference in both the Highway
Category and the Mass Transit category. Differences in estimates of the
effects of discretionary changes to mandatory accounts and changes in
appropriated spending contained in PAYGO bills, as well as differences
in the estimates of reclassifications agreed to by the scorekeepers
account for the differences in the Overall Discretionary, Excluding
Special Categories limits.
Table 13-4. COMPARISON OF OMB AND CBO DISCRETIONARY SPENDING LIMITS
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Non-defense Discretionary, Excluding Special Categories
CBO Preview Report limits:
BA................................................................ 284,531 N/A N/A N/A
OL................................................................ 274,320 N/A N/A N/A
OMB Preview Report limits:
BA................................................................ 284,533 N/A N/A N/A
OL................................................................ 274,324 N/A N/A N/A
Difference:
BA................................................................ 2 N/A N/A N/A
OL................................................................ 4 N/A N/A N/A
Defense Discretionary
CBO Preview Report limits:
BA................................................................ 276,617 N/A N/A N/A
OL................................................................ 270,657 N/A N/A N/A
OMB Preview Report limits:
BA................................................................ 276,047 N/A N/A N/A
OL................................................................ 270,420 N/A N/A N/A
Difference:
BA................................................................ -570 N/A N/A N/A
OL................................................................ -237 N/A N/A N/A
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Violent Crime Reduction
CBO Preview Report limits:
BA................................................................ 5,800 4,500 N/A N/A
OL................................................................ 4,953 5,554 N/A N/A
OMB Preview Report limits:
BA................................................................ 5,800 4,500 N/A N/A
OL................................................................ 4,953 5,554 N/A N/A
Difference:
BA................................................................ ......... ......... N/A N/A
OL................................................................ ......... ......... N/A N/A
Highways
CBO Preview Report limits:
BA................................................................ ......... ......... ......... .........
OL................................................................ 21,991 25,325 27,176 27,448
OMB Preview Report limits:
BA................................................................ ......... ......... ......... .........
OL................................................................ 21,991 24,574 26,219 26,663
Difference:
BA................................................................ ......... ......... ......... .........
OL................................................................ ......... -751 -957 -785
Mass Transit
CBO Preview Report limits:
BA................................................................ ......... ......... ......... .........
OL................................................................ 4,401 4,633 4,965 5,542
OMB Preview Report limits:
BA................................................................ ......... ......... ......... .........
OL................................................................ 4,401 4,117 4,888 5,384
Difference:
BA................................................................ ......... ......... ......... .........
OL................................................................ ......... -516 -77 -158
Overall Discretionary, Excluding Special Categories Limits
CBO Preview Report limits:
BA................................................................ N/A 531,778 541,183 550,255
OL................................................................ N/A 536,858 539,380 534,360
OMB Preview Report limits:
BA................................................................ N/A 531,771 541,324 550,382
OL................................................................ N/A 536,700 539,940 534,972
Difference:
BA................................................................ N/A -7 141 127
OL................................................................ N/A -158 560 612
Total Discretionary Spending
CBO Preview Report limits:
BA................................................................ 566,948 536,278 541,183 550,255
OL................................................................ 576,322 572,370 571,521 567,350
OMB Preview Report limits:
BA................................................................ 566,380 536,271 541,324 550,382
OL................................................................ 576,089 570,945 571,047 567,019
Difference:
BA................................................................ -568 -7 141 127
OL................................................................ -233 -1,425 -474 -331
----------------------------------------------------------------------------------------------------------------
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 entitlement authority, the food stamp program, and
budget authority provided by law other than in appropriations acts. The
following are exempt from pay-as-you-go enforcement: Social Security,
the Postal Service, legislation specifically designated as an emergency
requirement, and legislation fully funding the Federal Government's
commitment to protect insured deposits.
The BEA requires that any legislation enacted before October 1, 2002,
affecting direct spending or receipts that increases the deficit will
trigger an offsetting sequestration.
Sequester determinations.--Within seven days after the enactment of
direct spending or receipts legislation,
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OMB is to submit a report to Congress estimating the resulting change in
outlays or receipts for the current year, the budget year, and the
following four fiscal years. The estimates, which must rely on the
economic and technical assumptions underlying the most recent
President's budget, determine whether the pay-as-you-go requirement is
met. The pay-as-you-go process requires that OMB maintain a
``scorecard'' that shows the cumulative deficit impact of such
legislation. This Report shows how these past actions affect the
upcoming fiscal year.
OMB no longer issues pay-as-you-go reports on legislation where OMB
and CBO estimate zero or negligible budget impact. Prior to this change,
roughly 65% of OMB's pay-as-you-go reports were on bills of this type.
Table 5 shows OMB estimates for legislation enacted through December
31, 1998. Pursuant to the BEA, the $872 million of FY 1999 savings as
shown in the Final Sequester Report for FY 1999 has, in effect, been
removed from the pay-as-you-go scorecard. The FY 1999 impact of
legislation enacted this year will be added to the balances of FY 2000
in the end-of-session report that OMB is to issue 15 days after the 1st
session of the 106th Congress adjourns sine die. The current pay-as-you-
go scorecard shows savings of $2.9 billion for FY 2000 and a total of
$5.0 billion for FY 2000-2003. Under current law, these savings could be
used to finance increases in mandatory programs or tax cuts without
triggering a sequester. The Administration is proposing to remove the FY
2000 balances from the scorecard and to use the savings to offset
defense spending.
The President's Budget Proposals And The Budget Enforcement Act
This budget proposes that Social Security be reformed this year, and
reserves the surplus until Social Security is reformed. Once Social
Security is reformed, additional resources would be made available for
Medicare, Universal Savings Accounts, defense and non-defense
discretionary spending. The budget request for the Department of Defense
(DOD) provides for substantial program expansion to ensure adequate
funding levels for national security. Increases in non-DOD programs
ensure continuity for critical functions of core government and provide
for the Reserve for Priority Initiatives. The Reserve would provide
resources for high priority initiatives such as increased funding for
the National Institutes of Health, investments that raise student
achievement, and protecting Americans at home and abroad. If Social
Security reform is not enacted, these additional resources would not be
available, and defense and non-defense spending levels would have to be
reduced to be consistent with the discretionary caps.
No contingent allocation of the surplus begins until 2001. This will
allow the 2000 appropriations process to proceed while Social Security
reform is being considered. In 2000, proposed spending for DOD and non-
DOD programs is offset by various specific proposals, such as new or
increased user fees. Consistent with recently enacted legislation, the
budget also includes mandatory savings as offsets for discretionary
spending. Mandatory spending initiatives and revenue initiatives are
also offset in accordance with the pay-as-you-go provisions of the
Budget Enforcement Act.
The 2001-2004 budget projections for discretionary spending, with the
exceptions of the Department of Defense and some capital intensive long-
term projects and advance appropriations, do not represent a policy
projection, but an aggregate freeze at the 2000 policy levels. The
estimates in the aggregate, including a reserve for priority
initiatives, show the discretionary program levels the Administration
will support if Social Security is reformed. However, the budget also
provides levels that would be affordable if Social Security is not
reformed, in order to reserve the surplus for Social Security
DOD discretionary spending
Fiscal year 2000. The request for the DOD assumes substantial program
expansion in 2000. Expansion is possible in part because of lower
inflation assumptions, providing full funding through advance
appropriations for some military construction programs, and proposed
rescissions of lower priority funding. In addition, the Administration
proposes two BEA related changes to make increased DOD spending
possible:
Transfer of existing PAYGO savings. The Administration
proposes to transfer previously enacted savings under the
``pay-as-you-go'' rules of the BEA to the discretionary side
of the budget. This would support an increase of $2.9 billion
in defense programs.
Table 13-5. PAY-AS-YOU-GO LEGISLATION ENACTED AS OF DECEMBER 31, 1998
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
Total
1999 \1\ 2000 2001 2002 2003 2000-2004
----------------------------------------------------------------------------------------------------------------
Total, Pay-as-you-go legislation enacted:
Revenue impact of enacted legislation................ (-98) 3,696 1,778 754 1,958 8,186
Outlay impact of enacted legislation................. (-774) 769 945 590 866 3,170
--------------------------------------------------------
Total deficit impact of enacted legislaiton.......... (-872) -2,927 -833 -164 -1,092 -5,016
----------------------------------------------------------------------------------------------------------------
\1\ Per section 252 (b)(2)(c) of the BEA, the 1999 balances as shown in the Final Sequester Report for FY 1999
are no longer available to offset future legislation.
[[Page 284]]
Scoring rule change to avoid a double count. The
Administration proposes to increase military retirement
benefits, which would be scored as PAYGO. This would also
require increases in accrued retirement benefits from DOD's
military personnel accounts to the Military Retirement Trust
fund of $5.6 billion through 2004. The additional funding for
these increases would be scored as discretionary spending
under present rules. However, the discretionary payments do
not affect the surplus, because they are offset dollar for
dollar by receipts in the trust fund. Therefore, the
Administration is proposing a new scoring rule, which would
preclude scoring increases in intrabudgetary payments as
discretionary, if they result from legislative increases in
mandatory spending that have been scored as PAYGO.
Fiscal years 2001-2004. Defense spending levels in these years
reflect the proposed policy and assume the enactment of Social Security
reform.
If Social Security Reform is enacted, the Administration
proposes to allocate additional resources to accommodate an
increase in the DOD program level of $63.8 billion over five
years, compared to the levels assumed in the 1999 budget.
If Social Security Reform is not enacted, discretionary
spending levels would be reduced to those assumed in the
Balanced Budget Act of 1997 for 2001 through 2004.
Non-DOD discretionary spending
Fiscal year 2000. The budget includes $17.8 billion of additional
spending for non-DOD discretionary programs that is offset within the
caps on discretionary spending. The offsets come from specified
mandatory spending reductions or revenue increases, reproposals of
advance appropriations, additional advanced appropriations, and Federal
tobacco revenues.
Fiscal years 2001-2004. Non-DOD spending levels in these years, like
DOD spending levels, depend on the enactment of Social Security reform.
If Social Security Reform is enacted, the Administration
proposes to allocate additional resources to maintain an
aggregate funding level that freezes spending at the 2000
policy levels and accommodates the outyear funding
requirements for the Federal Aviation Administration, the
National Aeronautics and Space Administration, and other
capital intensive long-term projects. The offsets applied to
the 2000 levels would be extended.
If Social Security Reform is not enacted, discretionary
spending levels would be reduced to those assumed in the
Balanced Budget Act of 1997 for 2001 through 2004.
Reserve for Priority Initiatives.
Fiscal years 2001-2004. The budget proposes a discretionary ``Reserve
for Priority Initiatives'' that will provide $30 billion in funding over
five years to meet goals such as increasing funding for the National
Institutes of Health by nearly 50 percent by 2003, continuing to
increase essential investments that raise student achievement, and
protecting Americans at home and abroad. This fund can be accommodated
only if Social Security is reformed.
Mandatory Initiatives. The budget proposes mandatory initiatives for
decreasing class size and providing for child care, improving health
care, reforming unemployment insurance, extending welfare to work, and
many others. These initiatives total $21.8 billion over five years. The
budget proposes to offset these increases with savings in health care
and student loan programs, and increases in revenue.
Revenue Initiatives. The budget includes several revenue initiatives,
all of which are fully offset with other revenue changes. The
President's plan targets tax relief to provide child-care assistance to
working families and to provide support to Americans with long-term care
needs. It provides several initiatives to promote education, including a
school construction and modernization proposal. In addition, the
President's plan includes initiatives to promote energy efficiency and
environmental objectives, incentives to promote retirement savings, and
extensions of certain expiring tax provisions, such as the welfare-to-
work and work-opportunity tax credits.
Budget process tools. The Administration anticipates that Congress
will continue its efforts to reform the budget process during the coming
months and urges Congress to consider two budget process tools in
particular--biennial budgeting and expedited rescission authority for
the reasons given below. The President supports these improvements and
looks forward to working with the sponsors of such legislation.
Biennial budgeting. Reaching agreement on budget priorities for two
years would provide greater predictability and planning certainty to
program administrators and beneficiaries. An arrangement that required
the President's budget and the Congressional budget resolution to lock
in (perhaps through a joint resolution) aggregate levels for each of two
fiscal years--or more--would essentially codify the current practice of
making a budget ``deal'' on the aggregates for several years and
appropriating within those amounts. This arrangement has merit even if
Congress continued to provide annual appropriations. However, making
appropriations that cover two fiscal years would increase the
predictability of funding and would also permit congressional committees
to perform their oversight functions in the off year with less
distraction.
Expedited rescission authority. The Supreme Court last year ruled the
Line Item Veto Act unconstitutional, thereby eliminating the President's
authority to cancel wasteful items in spending bills. However, under the
Impoundment Control Act, the President continues to have authority to
propose specific rescissions of spending to the Congress and to withhold
the relevant funds for 45 days while such proposed rescissions are under
[[Page 285]]
consideration. If the Congress does not act on the proposed rescissions
during the 45 day period, the funds are released. Some Members of
Congress have proposed to strengthen this rescission process by
requiring the Congress to vote on all rescission items proposed by the
President. Such ``expedited rescission'' authority would be a useful
tool for the President and Congress in their efforts to ensure the
effective use of taxpayer dollars.