[Congressional Record Volume 142, Number 5 (Tuesday, January 9, 1996)]
[House]
[Page H334]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     COMMUNICATION FROM DIRECTOR OF THE CONGRESSIONAL BUDGET OFFICE

  The SPEAKER pro tempore laid before the House the following 
communication from the Director of the Congressional Budget Office:

                                  Congressional Budget Office,

                                  Washington, DC, January 6, 1996.
     Hon. Newt Gingrich,
     Speaker, House of Representatives, Washington, DC.
       Dear Mr. Speaker: The Congressional Budget Office (CBO) has 
     prepared a preliminary analysis of the President's budgetary 
     submission of this date. The analysis is based on draft 
     legislative language or on other descriptive material 
     provided by staff. It employs CBO's updated economic and 
     technical estimating assumptions, which incorporate the 
     economic effects of balancing the federal budget by 2002 and 
     are described in the CBO memorandum ``Economic and Budget 
     Outlook: December 1995 Update.'' The analysis also assumes, 
     as specified by staff, that the projected adjustment to 
     reduce the formula bias in the consumer price index (CPI) 
     will reduce the rate of growth of the CPI by 0.3 percentage 
     points a year, which is the upper end of the range estimated 
     by the Bureau of Labor Statistics. CBO's December baseline 
     assumes a reduction near the middle of the range.
       Under these assumptions, the proposal would result in 
     deficits of $153 billion in 1996 and $167 billion in 1997 and 
     a surplus of $1 billion in 2002. Compared to the CBO 
     baseline, the proposal would reduce the deficit by $220 
     billion over the next five years and by $583 billion over the 
     1996-2002 period. Table 1 summarizes the proposed policy 
     changes. Table 2 shows the estimated savings from the changes 
     in direct spending and revenues that would result from 
     enactment of each title of the proposal.
           Sincerely,
                                                Paul Van de Water,
                                            (For June E. O'Neill).
       Attachments.

                                             TABLE 1.--DEMOCRATIC PLAN CHANGES FROM CBO'S DECEMBER BASELINE                                             
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Total 1996-
                                                             1996        1997        1998        1999        2000        2001        2002        2002   
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBO December Baseline Deficit a.........................         172         182         183         195         204         211         228         (*)
Baseline Adjustments b..................................           0           0          -2          -2          -3          -6          -6         -19
Adjusted December Baseline..............................         172         182         181         193         201         205         222  ..........
Democratic Plan Policies:                                                                                                                               
  Outlays:                                                                                                                                              
    Discretionary: c                                                                                                                                    
      Freeze d..........................................          -8          -9         -11         -32         -49         -66         -84        -258
      Savings relative to freeze........................          -4           2          -3           2           2          -9         -26         -37
                                                         -----------------------------------------------------------------------------------------------
          Subtotal......................................         -12          -7         -14         -30         -47         -75        -110        -295
    Mandatory:                                                                                                                                          
      Medicare..........................................         (e)          -3          -6         -12         -19         -26         -35        -102
      Medicaid..........................................           0           e          -2          -7         -10         -13         -19         -52
      Other.............................................          -7          -9         -12         -15         -15         -15         -22         -95
                                                         -----------------------------------------------------------------------------------------------
          Subtotal......................................          -7         -12         -21         -34         -45         -54         -76        -249
    Net Interest........................................           e          -2          -3          -5          -9         -14         -23         -56
                                                         -----------------------------------------------------------------------------------------------
          Total Outlays.................................         -20         -21         -37         -69        -100        -143        -209        -599
  Revenues f............................................           e           6           6           6          10           3         -14          17
                                                         -----------------------------------------------------------------------------------------------
          Total Policies................................         -20         -15         -32         -63         -90        -140        -223        -583
Democratic Plan Deficit                                          153         167         149         130         110          65          -1         (*)
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Notes: * = not applicable.                                                                                                                              
Numbers may not add to totals because of rounding.                                                                                                      
a Projections assume that discretionary spending is equal to the spending limits that are in effect through 1998 and will increase with inflation after 
  1998.                                                                                                                                                 
b The Democratic plan assumes that the anticipated change in the consumer price index (CPI) methodology used by the Bureau of Labor Statistics (BLS)    
  will reduce the rate of growth of the CPI by 0.3 percentage points a year, which is the upper end of the range estimated by the BLS. CBO's December   
  baseline assumes a reduction near the middle of the range.                                                                                            
c Discretionary savings specified by staff.                                                                                                             
d Savings from freezing 1996-2002 appropriations at the nominal level appropriated for 1995.                                                            
e Less than $500 million.                                                                                                                               
f Revenue increases are shown with a negative sign because they decrease the deficit. Includes Earned Income Credit outlays.                            
                                                                                                                                                        
Sources: Congressional Budget Office; Joint Committee on Taxation.                                                                                      


                   TABLE 2.--SAVINGS FROM POLICY CHANGES IN THE DEMOCRATIC PLAN BASED ON CBO'S DECEMBER BASELINE ASSUMPTIONS, BY TITLE                  
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Total 1996-
                          Title                              1996        1997        1998        1999        2000        2001        2002        2002   
--------------------------------------------------------------------------------------------------------------------------------------------------------
I--Banking and Housing: Outlays.........................        -4.3         (a)        -0.1         0.2         0.1         0.1        -0.5        -4.4
II--Spectrum Allocation: Outlays........................        -0.2        -1.8        -2.7        -3.6        -3.1        -2.7        -7.4       -21.3
III--Medicaid: Outlays..................................           0        -0.4        -2.4        -6.7       -10.3       -13.2       -18.6       -51.7
IV--Medicare: Outlays...................................         (a)        -2.7        -6.1       -12.3       -19.1       -26.0       -35.4      -101.5
V--Welfare Reform:                                                                                                                                      
    Outlays.............................................        -0.9        -4.8        -5.8        -6.3        -6.9        -6.9        -7.6       -39.1
    Revenues b..........................................        -0.1        -0.3        -0.6        -0.7        -0.8        -0.8        -0.9        -4.2
    Deficit.............................................        -1.0        -5.1        -6.4        -7.0        -7.6        -7.7        -8.5       -43.3
VI--Federal Retirement:                                                                                                                                 
    Outlays.............................................        -0.5        -1.8        -2.7        -2.7        -2.7        -2.7        -2.9       -15.9
    Revenues b..........................................        -0.2        -0.4        -0.5        -0.6        -0.6        -0.6        -0.6        -3.5
    Deficit.............................................        -0.7        -2.2        -3.2        -3.2        -3.3        -3.3        -3.5       -19.4
VII--Veterans Provisions: Outlays.......................        -0.2        -0.3        -0.4        -1.2        -1.3        -1.3        -1.4        -6.1
VIII--Asset Sales, User Fees, and other Mandatory                                                                                                       
 Provisions: Outlays....................................        -1.3        -0.5        -0.6        -1.5        -1.3        -1.3        -2.2        -8.7
IX--Revenues: Revenues b,c..............................         0.5         6.5         6.9         7.0        11.1         4.3       -12.1        24.2
X--Budget Enforcement: Outlays..........................           0           0           0           0           0           0           0           0
Total:                                                                                                                                                  
    Outlays.............................................        -7.3       -12.3       -20.7       -33.9       -44.6       -53.8       -76.0      -248.7
    Revenues b,c........................................         0.2         5.8         5.8         5.8         9.7         2.9       -13.7        16.5
    Deficit.............................................        -7.1        -6.5       -14.9       -28.2       -34.9       -50.9       -89.7      -232.2
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a Less than $50 million.                                                                                                                                
b Revenue increases are shown with a negative sign because they reduce the deficit.                                                                     
c Includes Earned Income Credit Outlays.                                                                                                                
                                                                                                                                                        
Sources: Congressional Budget Office; Joint Committee on Taxation.                                                                                      




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