[Congressional Record Volume 142, Number 94 (Monday, June 24, 1996)]
[Senate]
[Page S6751]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

                                 ______


             CBO'S ESTIMATED BUDGETARY EFFECTS OF H.R. 3286

 Mr. ROTH. Mr. President, I ask that the letter submitted to me 
by June E. O'Neill, Director of the Congressional Budget Office, 
regarding CBO's estimate of H.R. 3286, the Adoption Promoting and 
Stability Act of 1996, be printed in the Record.
  The letter follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                    Washington, DC, June 21, 1996.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance,
     U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office (CBO) 
     has estimated the budgetary effects of Titles, I, II, and IV 
     of H.R. 3286, the Adoption Promotion and Stability Act of 
     1996, as reported by the Committee on Finance on June 13, 
     1996. Because H.R. 3286 would affect revenues, the bill would 
     be subject to the pay-as-you go procedures under section 252 
     of the Balanced Budget and Emergency Deficit Control Act of 
     1985.
       The attached table displays the estimated federal budgetary 
     effects of Titles I, II, and IV of H.R. 3286. Title I would 
     establish a new tax credit for adoption expenses that would 
     reduce tax payments beginning in 1997. Title IV would repeal 
     the deduction for bad debt reserves of thrift institutions 
     and reform the income forecast method of determining 
     depreciation deductions, effective beginning with the 1996 
     tax year. The revenue estimates for Titles I and IV of the 
     bill have been provided by the Joint Committee on Taxation. 
     The bill would result in net revenue increases of $79 million 
     in 1996, $147 million in 1997, and $171 million in 2002, 
     which would be partially offset by net revenue losses in the 
     intervening years. Over the 1996-2002 period, the net revenue 
     increase would total $117 million.
       CBO estimates that the provisions of Title II that would 
     remove barriers to interethnic adoptions would have a 
     negligible effect on federal outlays in the foster care and 
     adoption assistance programs. Although state governments or 
     other entities that receive federal funds for adoption or 
     foster care placement could pay penalties for failing to 
     follow the provisions of Title II, the penalties are 
     sufficiently large that states would comply with the new 
     provisions, and the penalties collected would be negligible.
       Titles I and IV contain no intergovernmental mandates, as 
     defined in Public Law 104-4, and would impose no direct costs 
     on state, local, or tribal governments. These titles do, 
     however, contain private-sector mandates, as described in the 
     attached private sector mandate statement. Section 4 of the 
     Unfunded Mandates Reform Act of 1995 excludes from the 
     application of that act legislative provisions that establish 
     or enforce statutory rights that prohibit discrimination on 
     the basis of race, color, or national origin. CBO has 
     determined that the provisions in Title II fit within that 
     exclusion.
       Should you require additional information on this estimate, 
     we will be pleased to provide it. The staff contacts for H.R. 
     3286 are Justin Latus (for federal costs), Stephanie Weiner 
     (for federal revenues), and Karen McVey (for state, local, 
     and tribal issues).
           Sincerely,
                                                     James L. Blum
                                  (For June E. O'Neill, Director).
       Attachments.

                                    ESTIMATED BUDGETARY EFFECTS OF H.R. 3286                                    
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                                 Direct Spending                                                
                                                                                                                
Title II--Interethnic adoptions:                                                                                
    Estimated budget authority...................    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)
    Estimated outlays............................    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)
                                                                                                                
                                                    Revenues                                                    
                                                                                                                
Title I--Credit for adoption assistance..........       --      -33     -329     -351     -375     -342     -108
Title IV--Revenue offsets........................       79      180      245      293      291      288      279
Net increase or decrease (-) in revenues.........       79      147      -84      -58      -84      -54      171
                                                                                                                
                                                     Deficit                                                    
                                                                                                                
Net increase or decrease (-) in the deficit......      -79     -147       84       58       84       54     -171
----------------------------------------------------------------------------------------------------------------
Note: Revenue estimates provided by the Joint Committee on Taxation.                                            
\1\ Indicates less than $500,000.                                                                               


                      PAY-AS-YOU-GO CONSIDERATIONS                      
                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                                                 1996     1997     1998 
------------------------------------------------------------------------
Change in outlays............................        0        0        0
Change in revenues...........................       79      147      -84
------------------------------------------------------------------------

    congressional budget office estimate of costs of private sector 
                                mandates

       1. Bill number: H.R. 3286.
       2. Bill title: Adoption Promotion and Stability Act of 
     1996.
       3. Bill status: As reported by the Senate Committee on 
     Finance, on June 13, 1996.
       4. Bill purpose: The purpose of the bill is to defray 
     adoption costs and promote the adoption of minority children. 
     In addition, the bill would repeal the deduction for bad debt 
     reserves of thrift institutions and reform the income 
     forecast method of accounting.
       5. Private sector mandates contained in the bill: H.R. 3286 
     contains mandates as defined in Public Law 104-4 that would 
     affect taxes paid by private sector entities. In particular, 
     the bill would repeal the deduction for bad debt reserves of 
     thrift institutions and reform the income forecast method of 
     accounting. In addition to these mandates, the bill includes 
     a new credit for adoption expenses that would reduce tax 
     payments.
       6. Estimated direct cost to the private sector: The Joint 
     Committee on Taxation (JCT) estimates that the direct private 
     sector costs of the tax increases in H.R. 3286 would be no 
     less than the amounts that appear in the following table.

------------------------------------------------------------------------
                                   1996    1997    1998    1999    2000 
------------------------------------------------------------------------
Repeal the deduction for bad                                            
 debt reserves for thrift                                               
 institutions...................      47     111     216     280     277
Reform income forecast method of                                        
 accounting.....................      32      69      29      13      14
------------------------------------------------------------------------

       In addition to these mandates, the bill also provides for a 
     reduction in taxes. At this point, it is unclear to CBO 
     whether under Public Law 104-4 this tax reduction should be 
     viewed as an offset to the direct costs of the mandates in 
     the bill. JCT estimates that the savings associated with the 
     tax reduction in H.R. 3286 would be as displayed in the 
     following table.

----------------------------------------------------------------------------------------------------------------
                                                                       1996     1997     1998     1999     2000 
----------------------------------------------------------------------------------------------------------------
Credit for adoption expenses.......................................  .......      -33     -329     -351     -375
----------------------------------------------------------------------------------------------------------------

       7. Appropriations or other Federal financial assistance: 
     None.
       8. Previous CBO estimates: On May 2, 1996, CBO estimates 
     the private sector impact of H.R. 3286 as ordered reported by 
     the House Committee on Ways and Means on May 1, 1996. The 
     estimates differ because both the revenue increases and the 
     specific parameters of the credit for adoption expenses in 
     the Finance Committee's bill are different from those in the 
     Ways and Means Committee's bill.
       9. Estimate prepared by: Daniel Mont (non-tax items) and 
     Stephanie Weiner.
       10. Estimate approved by: Joseph R. Antos, Assistant 
     Director for Health and Human Resources.

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