[Congressional Record Volume 140, Number 76 (Thursday, June 16, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[Congressional Record: June 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
            INTRODUCTION OF ENTITLEMENT CONTROL ACT OF 1994

                                 ______


                        HON. CHARLES W. STENHOLM

                                of texas

                    in the house of representatives

                        Thursday, June 16, 1994

  Mr. STENHOLM. Mr. Speaker, I come to the floor today on behalf of Tim 
Penny, Nathan Deal, Larry LaRocco, and Bill Orton and myself to 
introduce legislation to place limits on the growth of entitlement 
spending. The legislation we are introducing draws the best provisions 
from the budget enforcement legislation developed last Congress by the 
Budget Committee and then-Chairman Leon Panetta, amendments offered by 
Senators Nunn and Domenici and the entitlement review procedure enacted 
last year.
  One clear lesson of our experiences with the Budget Enforcement Act 
[BEA] is that placing restraints on the growth of entitlement programs 
is imperative to controlling Federal spending. The discretionary caps 
of the BEA have served well to curb discretionary spending but left 
untouched entitlement spending. The failure of the BEA to deal with 
entitlements prevented it from effective controlling total spending or 
significantly reducing deficits.
  If we are to balance the budget, we must control all Government 
expenditures, including entitlement spending. Past deficit reduction 
efforts have not cut the deficit as much as they were supposed to 
because entitlements grew faster than expected and Congress did not 
respond with policy changes which would result in spending reductions. 
Experience has taught us that Congress only takes action to reduce 
entitlement spending under extraordinary circumstances.
  While these increases in entitlement spending are explained as 
technical changes over which Congress has no control, this argument 
does not hold much weight with the public. The deficit is blind: 
increases in the deficit for technical reasons are just as harmful to 
the economy and the future of our children as increases caused by 
policy changes. Congress and the President should take greater 
responsibility for entitlement spending instead of blaming ballooning 
entitlement spending on ``technical corrections.''
  Because of my concern about the continued growth of entitlement 
spending, I was extremely disappointed the budget resolution we passed 
earlier this year did not call for a reconciliation bill which would 
make additional reductions in entitlement spending. While it is true 
that the deficit is projected to take a slight downturn over the next 
few years, we remain convinced that sustained deficits of $200 billion 
a year present a great economic hazard to our Nation's future.
  I was pleased, however, that we were able to attach Sense of the 
Congress language to the resolution which called for the enactment of 
enforceable entitlement spending limits as well as other budget process 
reforms. I was also pleased that there was an agreement for the 
consideration of further budget process votes within the House of 
Representatives.
  As a result of the commitment to allow the House to debate and vote 
on legislation to control the growth of entitlement spending, I began 
to study past legislation dealing with the growth of entitlement 
spending and canvass my colleagues regarding this issue. The 
legislation we are introducing tonight is a product of this effort.
  Under the legislation we are introducing tonight, the growth of 
mandatory spending would be capped at inflation and demographics plus 
an additional cushion of 1 percent in 1996, 1 percent in 1997 and 1 
percent in 1998. There would be no cushion for 1999 and beyond, 
effectively capping the growth of entitlements at the levels to allow 
for growth based on inflation and changes in demographics from 1999 and 
beyond. This formula would require deductions of approximately $100 
billion from the CBO baseline for mandatory spending by the year 2000.
  One of the uncertainties in setting an entitlement cap that has been 
noted by its critics is the uncertainty of the increases in entitlement 
spending that would result from passage of health care reform. This 
problem would be resolved by allowing the entitlement caps to be 
adjusted to reflect any increased entitlement spending resulting from 
the reform package. This adjustment would only apply to health care 
reform legislation which is deficit neutral over 1995-99. The spending 
caps would also be adjusted for legislation increasing mandatory 
spending that was enacted under the existing pay-as-you-go 
requirements.
  Each year Congress and the President would pass legislation (a 
``spin-off bill'') allocating spending for programs under each of the 
21 budget functions in the budget (i.e. Health, Veterans Benefits and 
Services, etc.) based on the budget resolution. The sum of these 21 
caps could not exceed the total yearly cap. If a spin-off bill is 
enacted, there would be sequestration among all programs within a 
specific function if that particular functional cap is exceeded.
  If OMB projected that entitlement spending would exceed the cap, the 
President would have to propose in his budget entitlement cuts 
necessary to bring entitlement spending below the caps, or he could 
propose an increase in the entitlement targets. Congress would have to 
pass reconciliation legislation cutting entitlement spending enough to 
bring entitlement spending below the cap or vote to raise the caps.
  Congress would have the entire legislative session to take action to 
bring entitlement spending under the caps. If legislation sufficient to 
bring entitlement spending under the caps was not enacted by the end of 
the session. If legislation setting individual caps for each budget 
function for that year had been enacted by the end of the session, 
there would be a sequester to make any necessary reductions. If 
legislation setting individual caps had been enacted, there would be a 
separate sequester for any function that exceeded its cap. If 
legislation setting individual caps for each function had not been 
enacted, there would be a comprehensive sequester with across-the-board 
cuts in all entitlement programs with no exceptions if the aggregate 
entitlement cap could be exceeded.
  If a spin-off bill is not enacted and the overall cap was exceeded, 
there would be a comprehensive sequestration of spending. No programs 
would be exempt from the general entitlement sequester. By eliminating 
all exemptions to sequestration, this mechanism would give everyone a 
vested interest in reaching an agreement on budget priorities in order 
to avoid sequestration.
  Setting a maximum level on entitlement spending would force Congress 
to take corrective action if entitlement spending is projected to 
exceed the limit set in the cap. If entitlement spending was projected 
to exceed a cap for the fiscal year, each committee would be under 
pressure to report changes in permanent law necessary to reduce total 
entitlement spending for programs within that committee's jurisdiction 
below the caps in order to avoid sequestration. Thus, the current 
practice of ignoring entitlement spending as it ballooned for 
``technical'' reasons would be ended.
  Mr. Speaker, I recognize that we will face many tough choices in 
controlling the growth of entitlement spending, but we must make those 
choices for the sake of our children. I am hopeful that the Kerry-
Danforth Commission will produce constructive suggestions on steps that 
can be taken to deal with the growth of entitlement spending. That 
notwithstanding, I believe the ``hammer'' of an entitlement CPA is 
necessary to provide Congress and the President with the necessary 
incentive to make the tough choices we all know we must make. I 
encourage my colleagues to make the first step in dealing with 
entitlement spending by supporting this legislation.

     Stenholm Entitlement Cap Proposal--Section-by-Section Summary


               Section 1--Short title, table of contents

                          Section 2--Purposes

                         Section 3--Definitions

       Defines budget year, direct spending and other technical 
     definitions.


            Section 4--Establishment of Direct Spending Caps

       Thirty days after the enactment of this legislation, the 
     Director of OMB would issue an initial direct spending report 
     setting forth projected mandatory spending for fiscal year 
     1995. All mandatory spending except deposit insurance and 
     interest payments would be included in the targets. The 
     Director of OMB shall establish caps for fiscal years 1995 
     through 2000 based on the projected mandatory spending for 
     1995 and allowing for growth each year to reflect:
       a. Changes in the consumer price index;
       b. Changes in the number of beneficiaries;
       c. An additional growth allowance of 1 percent in 1996, 1 
     percent in 1997, 1 percent in 1998 and 0 percent in 1999.
       The caps would be adjusted to reflect increased direct 
     spending resulting from health care reform legislation 
     enacted by the end of 1994 which is deficit neutral over 
     1995-1999.
       Each year, the President's budget shall adjust the caps to 
     reflect:
       a. Actual inflation;
       b. Actual beneficiary changes;
       c. Direct spending legislation enacted under the PAYGO 
     requirements, i.e. paid for by increased taxes or declared as 
     emergency spending.
       d. Legislation reducing direct spending to offset the 
     deficit impact of a tax cut under PAYGO requirements.


      Section 5--Special Direct Spending Message by the President

       If OMB projects that mandatory spending will exceed the cap 
     for that year, the President's budget must include a proposal 
     to offset any projected excess of the caps for each fiscal 
     year. The President would be allowed to propose to increase 
     the levels of the caps to allow for all or part of the excess 
     if he provided a written explanation justifying an increase 
     in the caps.


               Section 6--Congressional Response Required

       If OMB projects that entitlement spending will exceed the 
     caps, Congress must pass a budget resolution that includes 
     reconciliation instructions to offset the excess of the caps 
     for each fiscal year or to increase the caps.
       A budget resolution (including conference report) that does 
     not deal with the spending above the caps would not be in 
     order in the House.
       If the House does not pass a budget resolution conference 
     report that deals with the spending above the caps, it would 
     not be in order to consider any appropriation bill in the 
     House, unless a resolution devoted solely to the subject of 
     waiving this requirement is passed on a recorded vote.
       If the Budget Committee does not report legislation dealing 
     with the excess, an expedited procedure would be established 
     to bring legislation incorporating the President's 
     recommendations for dealing with the excess directly to the 
     House floor.


                        Section 7--Spin-off law.

       Upon passage of the budget resolution conference report, 
     the Chairman of the Budget Committee would introduce spin-off 
     legislation allocating spending under the overall entitlement 
     cap for that fiscal year among the budget functions and 
     establishing individual caps for each budget function based 
     on the levels set forth in the budget resolution. That spin-
     off legislation would be considered by the House and the 
     Senate under expedited procedures. If spin-off legislation is 
     passed by the House and Senate, it would be sent to the 
     President for signature. If the President signs the spin-off 
     legislation, the individual caps would become binding in law.


                   Section 8--Targeted Sequestration

       If legislation setting individual caps for each budget 
     function for that year had been enacted, there would be a 
     separate sequester for any function that exceeded its cap.


                 Section 9--Comprehensive Sequestration

       If legislation establishing individual caps has not been 
     enacted, there would be a comprehensive sequester with 
     across-the-board cuts in all entitlement programs to 
     eliminate any breech of the aggregate cap that had not been 
     eliminated.


               Section 10--Exempt programs and activities

       Provides a limited number of technical, non-policy 
     exemptions from sequestration. Effectively eliminates all 
     policy exemptions from sequestration under current PAYGO 
     sequestration. (Taken from Panetta Balanced Budget 
     Enforcement Act, H.R. 5676 in 102d Congress)


                Section 11--Special Sequestration Rules

       Provides for the procedure for executing an across-the-
     board sequestration in all programs, with special guidelines 
     for applying sequestration to unusual programs. These rules 
     would be apply to both general and targeted sequesters. 
     Provides that all sequestrations are permanent. (Taken from 
     Panetta Balanced Budget Enforcement Act)


         Section 12--Estimating Assumptions, Reports and Orders

       CBO shall issue an estimate of the cap for the upcoming 
     fiscal year and a sequestration preview report as part of the 
     January Budget and Economic Outlook. The President's Budget 
     shall include the adjusted caps as calculated by OMB and a 
     sequestration preview report. The OMB report would be the 
     official report for the purposes of ordering sequestration. 
     OMB would be required to explain any difference between OMB 
     and CBO estimates.
       Ten days after the end of a session, CBO and OMB would be 
     required to submit a final sequestration report. The OMB 
     report would be the official report. OMB would be required to 
     explain differences between the OMB and CBO reports.
       On the day that OMB issues its final sequestration report, 
     the President would be required to issue an order 
     implementing the sequestration report without change.


                  Section 13--Current policy baseline

       Provides rules for determining current policy baseline for 
     sequestration reports. (Take from Panetta Balanced Budget 
     Enforcement Act)


               Section 14--Relationship to pay-as-you-go

       Provides that reductions in entitlements spending made to 
     comply with the caps would not be entered on the PAYGO 
     scorecard.


                      Section 15--Judicial review

       Provides for judicial review identical to the procedure 
     established for Gramm-Rudman.


                        Section 16--Application

       Provides that the House rules changes enacted as part of 
     the entitlement review process would not apply for 1995 and 
     beyond.


                      Section 17--Effective Dates

       Provides that the title will be effective for fiscal years 
     1995 and beyond.

                          ____________________