[Congressional Record Volume 140, Number 94 (Tuesday, July 19, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   SOCIAL SECURITY, THE BUDGET PROCESS AND ENTITLEMENT RECONCILIATION

                                 ______


                        HON. GERALD B.H. SOLOMON

                              of new york

                    in the house of representatives

                         Tuesday, July 19, 1994

  Mr. SOLOMON. Mr. Speaker, later this week the House will take up H.R. 
4604, the so-called Budget Control Act of 1994. That bill requires the 
President to establish entitlement spending targets for fiscal years 
1994-97, and requires Presidential recommendations and congressional 
action on special reconciliation legislation to either address any 
breach of those targets or to raise the targets.
  The question has been raised as to whether the act applies to Social 
Security, notwithstanding the current off-budget treatment of the 
Social Security trust fund receipts and outlays and prohibition on 
including any changes in Social Security through reconciliation 
legislation.
  It is our position, as expressed in the minority views on the bill 
(H. Rept. 103-602, pt. 1, pp. 13-14), that this does indeed put Social 
Security back on budget for purposes of calculating overall entitlement 
targets for each year and for addressing any target overruns through 
special direct spending reconciliation legislation. The only direct 
spending exempted from the targets under the bill are net interest and 
deposit insurance.
  While there may be some legitimate differences in statutory 
interpretation as to whether Social Security should be included in the 
mix of direct spending targets and legislation, the fact is that the 
President has already included Social Security under the targets on 
three separate occasions--in his initial targets on September 3, 1993, 
in his adjusted targets in his January, 1995 budget, and in his 
midsession economic review issued this month.
  This has all been done pursuant to the President's Executive Order 
12857 issued on August 4, 1993, which contains language identical to 
that of H.R. 4604.
  Under section 2 of the Executive order:

       The initial direct spending targets for each of fiscal 
     years 1994-1997 shall include shall equal total outlays for 
     all direct spending except net interest and deposit insurance 
     as determined by the Director of the Office of Management and 
     Budget.

  Under section 3 of the Executive order:

       As part of each budget submitted under section 1105(a) of 
     title 31, United States Code, the Director shall provide an 
     annual review of direct spending and receipts.

  Under section 6 of the Executive order of the Director of OMB shall 
adjust the direct spending targets prior to the submission of the 
President's budget for each of fiscal years 1995 to 1997. If the 
projected outlays exceed the targets, section 4 of the Executive order 
requires that the Director of OMB ``shall include in the budget a 
special direct spending message'' which includes certain information on 
direct spending together with the President's recommendations for 
addressing the target overruns.
  Mr. Speaker, the inclusion of Social Security in the President's 1995 
budget as part of the new direct spending targets it would seem to be 
at odds with section 13301 of the Budget Enforcement Act of 1990 which 
provides for the ``off-budget status of OASDI Trust Funds.'' That 
section specifically prohibits the inclusion of the Social Security 
trust fund receipts and outlays in the President's budget or in the 
congressional budget for purposes of calculating new budget authority, 
outlays, receipts or deficits or surpluses. However, it can be argued 
that this is not at odds with the President's Executive order and H.R. 
4604 since Social Security is only being counted for purposes of direct 
spending targets and not for overall budgetary aggregates.
  A larger question is whether H.R. 4604, and its special direct 
spending reconciliation process run afoul of section 310(g) of the 
Budget Act which prohibits the consideration of reconciliation 
directives or legislation which affect Social Security receipts or 
outlays.
  Section 310(g) was enacted as part of the 1985 Balanced Budget and 
Emergency Deficit Control Act. Section 7 of H.R. 4604 says that 
reductions in outlays or increases in receipts resulting from direct 
spending reconciliation legislation ``shall not be taken into account 
for purposes of any budget enforcement procedures under the Balanced 
Budget and Emergency Deficit Control Act.'' The section 310(g) point of 
order is thus one such enforcement provision and therefore it can be 
argued that it does not apply to direct spending reconciliation 
legislation.
  The bottom line, Mr. Speaker, is that Social Security has been thrown 
back into the budgetary mix by the President's Executive order and by 
H.R. 4604. It is at least back on budget for reconciliation purpose if 
not for purposes of calculating aggregate outlays, receipts, and 
deficits.
  We, therefore, urge defeat of H.R. 4604 because it violates the 
special off-budget status given to the Social Security system. By 
subjecting it to reconciliation we are compromising and possibly 
threatening the integrity and soundness of the Social Security system 
given by existing statutory provisions. Social Security, which is 
currently in surplus, should not be used to bail out other entitlement 
programs which may be in trouble.
  At the point in the Record, Mr. Speaker, I include a memorandum 
appeared by the Rules Committee minority staff, elaborating on our 
interpretation that Social Security could be used for direct spending 
reconciliation purposes under H.R. 4604. The memorandum follows:

                              [Memorandum]

     Re inclusion of Social Security in direct spending messages 
         under H.R. 4604.
     To: Rules Committee Republicans.
     From: Rules Committee minority staff.

       Introduction: The Rules Committee majority was unable to 
     refute our interpretation of H.R. 4604 that it in effect 
     brings Social Security back on-budget for special direct 
     spending reconciliation purposes. However, a case may be made 
     that it does not based on section 5(f) of the bill. The 
     purpose of this memo is to elaborate on the interpretation 
     that Social Security would indeed be fair game for 
     reconciliation under the bill.
       Current budget act prohibition on Social Security 
     reconciliation: Section 310(g) of the Budget Act 
     (``Limitation on Changes to the Social Security Act''), which 
     was enacted as part of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (Gramm-Rudman-Hollings) provides 
     that it is not in order in the House or the Senate to 
     consider any reconciliation bill or resolution, amendment 
     thereto, or conference report thereon, ``that contains 
     recommendations with respect to the old-age, survivors, and 
     disability insurance program established under title II of 
     the Social Security Act.''
       Applicable provisions of H.R. 4604: Section 2(a) of the 
     bill (``Establishment of Direct Spending Targets'') requires 
     that the initial direct spending targets for fiscal years 
     1994-97 ``shall equal total outlays for all direct spending 
     except net interest and deposit insurance. * * *''
       Section 4(b) of the bill (``Special Direct Spending Message 
     by President'') authorizes the President to make legislative 
     changes ``to reduce outlays, increase revenues, or both'' in 
     order to recoup or eliminate entitlement overages in whole or 
     in part.
       Section 4(c) (``Proposed Special Direct Spending 
     Resolution'') requires that President to submit a ``special 
     direct spending resolution'' to implement his legislative 
     recommendations through reconciliation directives to the 
     appropriate House and Senate committees.
       Section 4(e) (``Procedure if House Budget Committee Fails 
     to Report Required Resolution'') provides for the automatic 
     discharge and privileged consideration of the President's 
     direct spending reconciliation resolution if the Budget 
     Committee fails to include direct spending reconciliation 
     instructions in its budget resolution.
       Section 5(f) of H.R. 4604 (``Application of Congressional 
     Budget Act) provides that, ``To the extent that they are 
     relevant and not inconsistent with this Act, the provisions 
     of Title III of the Congressional Budget Act of 1974 shall 
     apply in the House of Representatives and the Senate to 
     special direct spending resolutions, resolutions increasing 
     targets under subsection (c), and reconciliation legislation 
     reported pursuant to directives contained in those 
     resolutions.''
       Section 7 of the bill (``Relationship to Balanced Budget 
     and Emergency Deficit Control Act'') provides that: 
     ``Reductions in outlays or increases in receipts resulting 
     from legislation reported pursuant to section 5 [``Required 
     Response by Congress''] shall not be taken into account for 
     purposes of any budget enforcement procedures under the 
     Balanced Budget and Emergency Deficit Control Act of 1985.''
       Discussion: While it might be argued that section 5(f) of 
     H.R. 4604 ensures that the prohibition on Social Security 
     reconciliation in section 310(g) of the Budget Act remains in 
     force and effect, this overlooks the caveat in section 5(f)--
     ``to the extent they are relevant and not inconsistent with 
     this Act'' the provisions of Title III of the Budget Act 
     apply to special direct spending resolutions and 
     reconciliation legislation and directives.
       The fact is that the provisions of the Act are inconsistent 
     with the section 310(g) prohibition for several reasons:
       Social Security is not exempted and must be included by OMB 
     in calculating total direct spending targets.
       The President may include any recommended legislative 
     changes in messages to address overages and may include 
     directives to implement those changes in his special direct 
     spending reconciliation directives to committees.
       The President is not and cannot be bound by budget rules 
     that apply to the Congress.
       The President's reconciliation resolution is automatically 
     discharged and privileged for consideration if the Budget 
     Committee does not include direct spending reconciliation 
     instructions in its budget resolution.
       Moreover, it can be argued that the section 310(g) Social 
     Security reconciliation prohibition does not apply to direct 
     spending reconciliation directives or legislation reported 
     pursuant to the Budget Committee's resolution because section 
     7 of H.R. 4604 provides that reductions in outlays and 
     increases in receipts reported pursuant to section 5 of the 
     bill (``Required Response by Congress'') ``shall not be taken 
     into account for purposes of any budget enforcement 
     procedures under the Balanced Budget and Emergency Deficit 
     Control Act of 1985.'' As has been pointed out, section 
     310(g) is an enforcement provision enacted under the 1985 GRH 
     Act. It would therefore follow that the point of order under 
     section 310(g) would not apply to a direct spending 
     reconciliation bill that changes the Social Security Act by 
     reducing its receipts or increasing its revenues.
       Conclusion: Whether it was intended or not, H.R. 4604 
     includes Social Security in the direct spending targets as 
     well as in the mechanisms to address any breach of those 
     targets through special direct spending reconciliation making 
     changes in laws to reduce outlays or increase revenues.

                          ____________________