[House Report 104-575]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                      HOUSE OF REPRESENTATIVES 
 2d Session                                                     104-575
_______________________________________________________________________


 
          CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1997

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 178

SETTING FORTH THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
      FOR THE FISCAL YEARS 1997, 1998, 1999, 2000, 2001, and 2002

                             together with

               ADDITIONAL, MINORITY, AND DISSENTING VIEWS

                                     


                                     

  May 14, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



          CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1997



104th Congress                                                   Report
                       HOUSE OF REPRESENTATIVES 
 2d Session                                                     104-575
_______________________________________________________________________



                      CONCURRENT RESOLUTION ON THE
                        BUDGET--FISCAL YEAR 1997

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 178

SETTING FORTH THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
      FOR THE FISCAL YEARS 1997, 1998, 1999, 2000, 2001, and 2002

                             together with

               ADDITIONAL, MINORITY, AND DISSENTING VIEWS

                                     


                                     

  May 14, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



                        COMMITTEE ON THE BUDGET

  JOHN R. KASICH, Ohio, Chairman
MARTIN OLAV SABO, Minnesota,         DAVID L. HOBSON, Ohio,
  Ranking Minority Member              Speaker's Designee
CHARLES W. STENHOLM, Texas           ROBERT S. WALKER, Pennsylvania,
LOUISE McINTOSH SLAUGHTER,             Vice Chairman
  New York                           JIM KOLBE, Arizona
WILLIAM J. COYNE, Pennsylvania       CHRISTOPHER SHAYS, Connecticut
ALAN B. MOLLOHAN, West Virginia      WALLY HERGER, California
JERRY F. COSTELLO, Illinois          JIM BUNNING, Kentucky
PATSY T. MINK, Hawaii                LAMAR S. SMITH, Texas
BILL ORTON, Utah                     WAYNE ALLARD, Colorado
EARL POMEROY, North Dakota           DAN MILLER, Florida
GLEN BROWDER, Alabama                RICK LAZIO, New York
LYNN C. WOOLSEY, California          BOB FRANKS, New Jersey
JOHN W. OLVER, Massachusetts         NICK SMITH, Michigan
LUCILLE ROYBAL-ALLARD, California    BOB INGLIS, South Carolina
CARRIE P. MEEK, Florida              MARTIN R. HOKE, Ohio
LYNN N. RIVERS, Michigan             SUSAN MOLINARI, New York
LLOYD DOGGETT, Texas                 JIM NUSSLE, Iowa
SANDER M. LEVIN, Michigan            STEVE LARGENT, Oklahoma
BENNIE G. THOMPSON, Mississippi      SUE MYRICK, North Carolina
                                     SAM BROWNBACK, Kansas
                                     JOHN SHADEGG, Arizona
                                     GEORGE P. RADANOVICH, California
                                     CHARLES F. BASS, New Hampshire
                                     MARK W. NEUMANN, Wisconsin

                           Professional Staff

  Richard E. May, Staff Director
 Eileen M. Baumgartner, Minority 
          Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Protecting the American Dream:
    Introduction to the Budget Resolution........................     3
The Clinton Crunch:
    Economic Background of the Budget Resolution.................    23
Earn More, Keep More, Do More:
    The Economic Reasons for Balancing the Budget................    27
Our Responsibility to Our Children:
    Why Current Federal Spending Trends Are Unsustainable........    31
Economic Assumptions of the Budget Resolution....................    37
Sharing the Burden:
    Attacking Corporate Subsidies................................    41
The End of Politics as Usual.....................................    43
Budget Resolution Tables.........................................    44
    Function 050: National Defense...............................    54
    Function 150: International Affairs..........................    60
    Function 250: General Science, Space, and Technology.........    64
    Function 270: Energy.........................................    67
    Function 300: Natural Resources and Environment..............    76
    Function 350: Agriculture....................................    82
    Function 370: Commerce and Housing Credit....................    84
    Function 400: Transportation.................................    90
    Function 450: Community and Regional Development.............    96
    Function 500: Education, Training, Employment, and Social 
      Services...................................................   100
    Function 550: Health.........................................   106
    Function 570: Medicare.......................................   112
    Function 600: Income Security................................   119
    Function 650: Social Security................................   131
    Function 700: Veterans' Benefits and Services................   132
    Function 750: Administration of Justice......................   137
    Function 800: General Government.............................   141
    Function 900: Net Interest...................................   145
    Function 920: Allowances.....................................   146
    Function 950: Undistributed Offsetting Receipts..............   148
    Revenues.....................................................   150
The Congressional Budget Process:
    Spending Allocations.........................................   156
    Reconciliation Directives....................................   166
Enforcing the Budget Resolution..................................   170
Statutory Controls Over the Budget...............................   171
Miscellaneous Budget Process Issues..............................   173
Oversight Findings and Related Matter............................   186
Exceptions to Federal Tax Law....................................   191
Comparison Tables................................................   197
Appendix 1: Descriptions of Additional Changes From Current 
  Policy.........................................................   200
Appendix 2: Mandate and Regulatory Reform........................   259
Appendix 3: Who's Really Working to Balance the Budget? Congress 
  Versus the Administration--a Chronology........................   275
Appendix 4: Response to the President--Rebuttals to President 
  Clinton's 82 Reasons for Vetoing the Balanced Budget Act of 
  1995...........................................................   295
Appendix 5: The Causes of Current Deficits.......................   375
Additional, Minority, and Dissenting Views.......................   386
Addendum: House Concurrent Resolution begins after page 456.
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-575
_______________________________________________________________________



        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997

                                _______


  May 14, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Kasich, from the Committee on the Budget, submitted the following

                              R E P O R T

                             together with

               MINORITY, DISSENTING AND ADDITIONAL VIEWS

                    [To accompany H. Con. Res. 178]

    The Committee on the Budget, to whom was referred the 
concurrent resolution (H. Con. Res. 178) establishing the 
congressional budget for the United States Government for 
fiscal years 1997 and setting forth appropriate budgetary 
levels for fiscal years 1998, 1999, 2000, 2001, and 2002, 
having considered the same, report favorably thereon without 
amendment and recommend that the concurrent resolution be 
agreed to.


                     Protecting the American Dream

                 introduction to the budget resolution

                              ----------                              

    A budget is more than numbers. Its real substance is 
ideas--ideas about saving the next generation, about empowering 
people to become self-reliant, about supporting, through the 
shared public enterprise of government, the pursuit of the 
American Dream.
    The underlying ideas in this year's Federal budget debate 
draw from two contrasting visions of America. One is the 
President's view, which--the administration's rhetoric 
notwithstanding--reveals an addiction to Washington spending, 
Washington regulation, and Washington control of Americans' 
lives. The other, detailed in this budget resolution, is the 
vision of the Republican majority in Congress--one that trusts 
the values and responsibility of families, neighborhoods, local 
school boards, local police officers, and local and State 
governments. The Republican vision recognizes that America is 
built community by community, each one different from its 
neighbor, comprising a vibrant diversity from which rises a 
Nation that truly is greater than the sum of its parts. The 
interaction among communities, and within the States, is 
dynamic and natural and ongoing; its inevitable value has been 
a cornerstone of the Nation since its founding, as expressed in 
this simple, constitutional assertion: ``The powers not 
delegated to the United States by the Constitution, nor 
prohibited by it to the States, are reserved to the States 
respectively, or to the people.'' (Article 10.)
    Yet for decades, Washington has sought to circumvent this 
principle, usurping--in the guise of ``compassion'' or 
``fairness'' or ``competitiveness''--the States' and the 
people's rightful authority for education, for law enforcement, 
for transportation, for health, and for addressing the needs of 
the poor. Wherever Americans found a concern in their lives, 
Washington found a reason to expand the central government. But 
the Washington-centered ``one-size-fits-all'' experiment has 
failed. The poor have been trapped in a centralized welfare 
system that only prolongs their dependency; the vitality of 
local schools has been leveled by the common-denominator 
politics of central-government standards; States have come to 
build roads and bridges they don't really want--because Federal 
funds are handed out for them; and senior citizens have been 
strapped to a bureaucratic health program that is going 
bankrupt because Washington seduced them into trusting only 
Washington.
    The way out cannot be found simply through more or less 
money poured into a system that is more or less the same. The 
way out requires a fundamentally new vision.

                 ACCOMPLISHMENTS OF THE 104TH CONGRESS

    Such a vision is at hand. It was defined, detailed, and 
adopted last year by the 104th Congress, and it culminated in 
the Balanced Budget Act [BBA] of 1995. Through the BBA this 
Congress reversed a 60-year trend in which increasing power and 
influence had collected in Washington, and then calcified 
there. This budget resolution for fiscal year 1997 is designed 
to build on the historic achievements of the first session of 
the 104th Congress, which include the following:

    Balancing the Federal Budget by 2002. Critics had said this 
could not be done. In truth, the Washington bureaucracy feared 
it could be--and it was. Equally important is that the efforts 
of the 104th Congress have permanently changed the political 
dialog about balancing the budget. A broad consensus now 
accepts this as a necessary condition for governing properly. 
No longer is the debate about how much to raise taxes for new 
spending and deficit ``reduction.'' Now the question is how 
much to cut taxes and shrink government while achieving a 
deficit of zero.

    Cutting Taxes for Working Families. Coupled with the 
balanced budget plan, Congress delivered a $500-per-child tax 
credit for working families and a package of incentives aimed 
at promoting saving, investment, and growth--all as promised in 
the House Republicans' Contract With America. The intent was to 
roll back the Clinton tax increase of 1993--the largest in the 
Nation's history.

    Reforming a Failed Welfare System. Congress twice passed 
reforms of the welfare system that showed true compassion by 
freeing recipients from the shackles of dependency and moving 
them toward self-reliance. In addition, responding to the pleas 
of the Nation's Governors, Congress recast the Federal-State 
Medicaid program in a way that truly puts State governments in 
the position of shaping and tailoring the program to the needs 
of their citizens.

    Strengthening and Improving Medicare for America's Seniors. 
There are just four basic points to be made about the Medicare 
program:

  - First, Medicare is going bankrupt. The Medicare hospital 
        trust fund will be out of cash and unable to pay 
        beneficiaries' hospital bills by 2001, if not sooner.

  - Second, to save it from bankruptcy, Medicare must be 
        reformed regardless of any other budgetary objectives. 
        Even if Congress were not trying to balance the budget 
        and roll back the 1993 tax increase, fundamental, 
        systemic reform of Medicare still would be necessary.

  - Third, the first session of the 104th Congress developed 
        and passed a plan to save Medicare without reducing 
        benefits to individual recipients. Likewise, the 
        Medicare reform assumed in this budget resolution would 
        increase spending on each Medicare beneficiary from 
        $5,200 in 1996 to $7,000 in 2002. Total program outlays 
        would increase from $196 billion in 1996 to $284 
        billion in 2002. This total spending increase would 
        amply cover inflation and the growing number of 
        Medicare recipients. The spending level in this 
        resolution also will accommodate maintaining the 
        beneficiary premium at 25 percent of part B program 
        costs, and will preclude any need to increase 
        beneficiary copayments or deductibles.

  - Finally, Congress' plan would expand health care choices 
        for the Nation's seniors. The plan, built on the 
        demonstrably successful model in the State of Arizona, 
        would allow beneficiaries to keep their current 
        Medicare coverage, while also offering new alternatives 
        for receiving health care--many of which will 
        substantially lower seniors' current out-of-pocket 
        health care expenditures.

    Shifting Power, Money, and Influence Out of Washington and 
Back Into the Hands of People in Their States and Communities. 
The 104th Congress has adopted policies that restore control 
and authority to State and local governments in critical areas 
such as law enforcement, health, education, and helping the 
needy.

    All of this and more was accomplished in the first session 
of the 104th Congress: the legislation was envisioned and 
written and passed by both the House and Senate; the promise of 
real change in Washington was, through specific legislative 
action, redeemed.

                       WHY IT MUST BE DONE AGAIN

    But Americans today have been denied the benefits of these 
achievements by one person alone: the President. The President 
vetoed all these reforms. Time after time, he adopted the 
rhetoric of the congressional majority, but rejected the policy 
reforms. He vetoed the Balanced Budget Act, vetoed family tax 
cuts, vetoed welfare reform (twice), vetoed Medicare reform, 
and on and on. He did so with zeal, publishing 82 reasons why 
he objected to Congress' initiatives. [His objections, and the 
responses from the House majority, are contained in Appendix 
4.] His persistence in rejecting reform made it clear that he 
wanted none. He is addicted to the large central government 
ensconced in Washington.
    So why should Congress pursue such reforms again?
    The answer is simple: It must be done, for the sake of the 
Nation's present, as well as its future.
    The administration's glowing pronouncements about economic 
performance reflect how little the President acknowledges the 
anxiety that haunts American families. Behind the numbers lie 
these facts of real life: every year, families are seeing their 
real income decline; tens of thousands of workers continue to 
receive pink slips because of corporate downsizing, and nearly 
a third of the Nation's companies anticipate reducing jobs; 
two-thirds of those who find new jobs after a layoff are forced 
to settle for pay cuts in the process; manufacturing jobs 
continue to disappear; and today, more Americans than ever are 
working two jobs just to make ends meet. [These facts are 
further detailed in a subsequent section of this report titled, 
``The Clinton Crunch.'']
    Coupled with all this has been the administration's tax 
policy. In his first year in office, the President increased 
taxes on gasoline, on individual incomes, on married couples, 
on Social Security benefits, and on the property left by 
parents to their children. The tax burden on the Nation's 
families now is higher than at any time in history. Meanwhile, 
as the government continues borrowing to finance its deficit 
spending, it soaks up capital that otherwise would be invested 
in new plants and equipment, which would in turn increase job 
growth, improve productivity, and push up wages.
    The economic performance projected for the next 2 years 
offers little solace. Gross domestic product [GDP] is expected 
to increase by a mere 2.0 percent in 1996 and 2.1 percent in 
1997--compared with 3.6 percent during the Reagan expansion and 
an average 3.25-percent growth rate for the United States since 
1870.
    All of this translates into a direct impact on how 
Americans live. As more of their time is swallowed up in trying 
to make ends meet, working Americans have less time for their 
families, their churches, and their communities--less time, in 
other words, for the moments of life that they value most. Thus 
the squeeze on their paychecks imposes a cost that cannot be 
measured in dollars.
    Unfortunately, the anxiety doesn't end there. Just beyond 
the horizon of this budget, past the year 2002, prospects for 
the future are even more disconcerting. One clear indication 
lies in the Medicare trust fund, which is expected to go 
bankrupt in 6 years or sooner. But that is only the first sign. 
According to the General Accounting Office [GAO], if current 
spending trends continue, the Federal debt in 2025 will be 
twice the size of the entire economy and the Federal deficit 
will be 20 percent of gross domestic product [GDP]. In such 
circumstances, the government will be unable to address the 
Nation's basic needs. At the same time, the government will 
continue to spend the investment capital that would otherwise 
finance economic growth.
    These hazards are further detailed in a subsequent section 
titled ``Our Responsibility to Our Children.'' As that section 
will point out, to truly secure the future, long-term, systemic 
reforms of government programs and government spending will be 
required. Balancing the budget is only the first step.
    But if Congress fails to take this step, the government's 
rapidly mounting debt will heap enormous burdens on future 
generations, who will face dramatically higher taxes and 
declining standards of living. They will witness, in short, the 
erosion of the American Dream.

                   A President Addicted to Washington

    In his State of the Union Address on January 23, 1996, the 
President said: ``Our responsibility begins with balancing the 
budget.'' Yet the President's actions have always indicated 
otherwise. His fiscal year 1997 budget submission squanders 
another opportunity to lay out a clear reform strategy that 
would address the concerns described above. The administration 
budget is an election-year makeover in which the President puts 
on the rhetoric of reform but fails to deliver the policies. It 
shows that he only talks, while we act.

                     FAILURE TO BALANCE THE BUDGET

    A little more than a year ago, the talk from the 
administration was totally different. At that time, as the new 
majority in Congress pushed for a balanced budget, the 
President and his top advisors were insisting that balancing 
the budget was not necessary. The President's spending plan at 
the time projected deficits of $200 billion a year or more for 
as far as the eye could see. In testimony to the Budget 
Committee, Budget Director Alice M. Rivlin said: ``I do not 
think that adhering to a firm path for balance by 2002 is a 
sensible thing to do.'' She also said: ``It is not always good 
policy to have a balanced budget.'' As the year unfolded, the 
President repeatedly resisted this goal, throwing up 
smokescreen budget ``plans'' that contained little or no detail 
and failed to get anywhere near balance anyway.
    But by January of this year, with the Congress having 
successfully crafted and passed a comprehensive, fully 
detailed, 7-year balanced budget plan, the administration's 
fiscal year 1997 submission casts the President as a born-again 
budget balancer. The document begins by grossly overstating his 
own deficit-reduction efforts, taking credit for policy 
decisions that were made before he entered office. The budget 
supplement says (on page 19): ``In dollar terms, the policies 
that we enacted with the last Congress have cut [the deficit] 
almost in half, from $290 billion in 1992 to $164 billion in 
1995.'' This familiar refrain from the administration is a 
distortion.
    The policies enacted during the last Congress amounted to 
the largest tax hike in history, which took effect in 1994. The 
fiscal year 1993 budget--the last of the Bush administration 
and a more honest starting point for the current 
administration's deficit comparisons--had a $255 billion 
deficit. The 1995 deficit of $164 billion is down 35 percent 
from 1993, the beginning of the current administration--not 50 
percent, as the President purports.
    Even that, however, gives the President more credit than he 
deserves. Most of the deficit reduction between 1993 and 1996 
was projected years before the first Clinton budget. For 
instance, 4 months before the President was elected, the 
Congressional Budget Office [CBO] projected that the deficit 
would decline 23 percent between 1993 and 1996.
    Furthermore, the deficit decline during the current fiscal 
year is chiefly the result of prudent spending by the House and 
Senate Appropriations Committees--spending that the President 
consistently sought to increase.
    But even if all the President's claims about the past were 
true, his budget submission for this year still would not 
balance. According to the testimony of June E. O'Neill, 
Director of the Congressional Budget Office [CBO]: ``* * * CBO 
estimates that the basic policies proposed in the President's 
budget would lower the deficit substantially but that the 
deficit would still total $81 billion in 2002'' [see table on 
page 9].



    The President's ``basic budget policies'' also increase 
deficit spending from $150 billion this year to $156 billion in 
1997 and $153 billion in 1998. The only way the President's 
plan can be described as achieving balance is through a 
mysterious set of ``contingent'' budget proposals. These total 
$124 billion over 6 years, with $84 billion of the ``savings'' 
in 2002. The ``contingent policies'' include $67 billion in 
unspecified discretionary cuts. These reductions are in 
addition to the $161 billion in discretionary cuts in the 
President's basic budgetary proposal. But the administration, 
which preens over spending increases for its ``priority 
investments,'' won't tell the public where the President would 
cut spending to balance the budget.
    All of this shows once again that the President employs the 
rhetoric of balancing the budget, but is not serious about 
delivering the necessary policies. He talks; we act.

                         DEFICITS RESULTING FROM THE PRESIDENT'S FISCAL YEAR 1997 BUDGET                        
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                          1996     1997     1998     1999     2000     2001     2002   1996-2002
----------------------------------------------------------------------------------------------------------------
Revenues:\1\                                                                                                    
    Child Tax Credit..................       $0      $10       $8       $9      $13      $13      $13       $64 
    Higher Education Deduction........        0        7        6        7        7        7        8        41 
    IRA's.............................        0        1        1        1        2        4        5        14 
    Other.............................        0        1        1        2        2        2        2         9 
    Extend Excise Taxes...............        0       -4       -6       -6       -6       -7       -7       -36 
    Other.............................        1       -6       -8      -10      -10      -10      -12       -54 
                                       -------------------------------------------------------------------------
      Subtotal........................        1        8        2        3        7        9        9        38 
                                       =========================================================================
Outlays:                                                                                                        
    Medicare..........................    (\1\)       -5       -8      -14      -20      -26      -31      -103 
    Medicaid..........................        0        2       -2       -6      -10      -16      -22       -54 
    Welfare...........................        0       -4       -6       -6       -7       -7       -8       -38 
    FCC Spectrum Auction..............        0    (\2\)       -2       -3       -4       -5      -16       -31 
    Proceeds from Asset Sales.........    (\2\)       -1    (\2\)    (\2\)    (\2\)    (\2\)       -2        -4 
    Discretionary Appropriations......        2       -4       -6      -26      -42      -46      -38      -161 
    Other Policy Changes..............       -1       -4        1       -1       -2       -5       -6       -18 
    Debt Service......................    (\2\)    (\2\)       -1       -3       -6      -11      -16       -35 
                                       -------------------------------------------------------------------------
      Subtotal........................        2      -17      -23      -59      -91     -116     -138      -444 
                                       =========================================================================
Total Changes.........................        2       -9      -21      -57      -84     -107     -129      -405 
                                       =========================================================================
DEFICITS UNDER THE PRESIDENT'S BUDGET.      150      156      153      125      108       87       81  .........
----------------------------------------------------------------------------------------------------------------
\1\ Plus and minus signs reflect a proposal's impact on the deficit. Hence a tax cut is shown as a plus because 
  it is projected to increase the deficit. A tax increase is shown as a minus because it presumably lowers the  
  deficit.                                                                                                      
\2\ Less than $500 million.                                                                                     
                                                                                                                
Source: Congressional Budget Office. Figures may not add due to rounding.                                       

                    SMALLER-THAN-ADVERTISED TAX CUTS

    Americans need tax relief. But the President's plan gives, 
and then takes away. With one hand he offers tax reductions of 
$129 billion through 2002; but with the other he snatches back 
$90 billion through tax increases. This yields a net total tax 
reduction of $38 billion [see table on the next page]--about 
one-third of the net tax relief provided for in this budget 
resolution.
    But the President shrinks his tax cuts even more to balance 
the budget--and here the ``contingent policies'' come into play 
once again. To balance the budget, he ``sunsets'' his tax cuts, 
thereby raising taxes $32 billion in 2001 and 2002. This takes 
back virtually all that's left of his net $38 billion tax cut, 
so that his actual tax reduction is only $6 billion over 6 
years. The sunset plan also means a net 1-year tax increase in 
2002 of $16 billion.
    But this will never be a problem for the current 
administration. The tax increase will fall to whomever is 
elected President in 2000, and will have to be part of that 
President's first budget submission after taking office.

                                        THE PRESIDENT'S TAX PROPOSALS \1\                                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                1996    1997    1998    1999    2000    2001    2002   1996-2002
----------------------------------------------------------------------------------------------------------------
Basic Budgetary Proposals:                                                                                      
    Child Tax Credit.........................      $0     $10      $8      $9     $13     $13     $13       $64 
    Higher Education Deduction...............       0       7       6       7       7       7       8        41 
    IRA's....................................       0       1       1       1       2       4       5        14 
    Other....................................       0       1       1       2       2       2       2         9 
    Extend Excise Taxes......................       0      -4      -6      -6      -6      -7      -7       -36 
    Other....................................       1      -6      -8     -10     -10     -10     -12       -54 
                                              ------------------------------------------------------------------
      Subtotal...............................       1       8       2       3       7       9       9        38 
``Contingent'' Tax Proposals Sunset Tax Cuts.   (\2\)       0   (\2\)   (\2\)   (\2\)      -7     -25       -32 
                                              ------------------------------------------------------------------
Net Tax Cuts.................................       1       8       2       3       7       2     -16         6 
----------------------------------------------------------------------------------------------------------------
\1\ Plus and minus signs reflect a proposal's impact on the deficit. Hence a tax cut is shown as a plus because 
  it is projected to increase the deficit. A tax increase is shown as a minus because it presumably lowers the  
  deficit.                                                                                                      
\2\ Less than $500 million.                                                                                     
                                                                                                                
Source: Congressional Budget Office. Figures may not add due to rounding.                                       



                       FAILURE TO REFORM WELFARE

    Though the President seeks to claim credit for declining 
welfare caseloads resulting from innovative welfare reforms 
already initiated in more than half of the States, the 
administration has in fact hindered this process of incremental 
reform by blocking crucial elements of welfare reform plans 
States sought to implement through Federal waivers. Only 
recently, the administration threw out portions of Ohio's 
sweeping welfare reform plan that would have blocked increased 
food stamp benefits for persons failing to comply with program 
rules designed to promote self sufficiency. The administration 
also blocked Ohio's efforts to expand welfare-subsidized 
private sector work experience.
    The President's budget retains the failed structure of a 
federally controlled entitlement to individuals. States would 
still have to go hat-in-hand to Washington bureaucrats begging 
for permission to implement innovative programs to combat 
dependency. His plan also fails to eliminate welfare as an 
immigration magnet. It states the President's support for 
allowing immigrants to receive food stamps and Supplemental 
Security Income benefits even though current immigration law 
makes becoming a public charge a deportable offense. As many as 
20 percent of all legal immigrants currently collect Federal 
benefits. The welfare reform plan passed by Congress would have 
significantly reduced alien participation in Federal welfare 
programs. The President vetoed the plan.
    The welfare time limits the President proposes are weaker 
than those contained in the congressional welfare reform 
legislation that he has vetoed twice. The congressional 
proposal called for a 5-year lifetime limit on welfare 
eligibility. The administration proposes a 60-month consecutive 
time limit, which would create a revolving door of dependency 
for welfare recipients. The President's plan also exempts 35 
percent of the adult welfare caseload from time limits, and 
could lead to exempting more than half the remaining caseload 
from the limit. The President's work requirements also are 
weaker than those contained in the legislation he vetoed. Under 
the vetoed welfare reform bill, States would have been required 
to have 50 percent of their single-parent welfare caseload 
working at least 35 hours per week by 2002. The President's 
proposal, on the other hand, requires between 12 percent and 25 
percent of the welfare caseload to participate in work or job 
training programs. Additionally, the President's food stamp 
work requirement is significantly weaker than that contained in 
the vetoed welfare reform bill, containing a huge loophole 
making it unlikely that anyone will lose benefits if it is 
enacted.
    The President's proposal acknowledges the abuses of Federal 
disability programs that the Congress has also sought to 
correct. Yet his request for additional funding to root out the 
abuse is contingent on Congress increasing overall 
discretionary spending limits by $800 million for fiscal year 
1997.
    Finally, the President's plan continues to make persons 
with no children eligible for the Earned Income Credit, even 
though couples and individuals without children were 
specifically excluded from the EIC when the program was 
created. Moreover, a person with no dependents who receives the 
maximum EIC credit is working only part time. The government 
should not be taxing people with children working full time or 
working at two jobs to subsidize childless people working only 
part time.



    The President's Medicaid proposal places financial limits 
on Medicaid payments to States, but does not give States the 
necessary flexibility to live within those limits. It limits 
the Federal payment to each State for each Medicaid 
beneficiary, but fails to trust Governors with the 
responsibility for deciding what's best for the citizens of 
their States. Despite the President's reform rhetoric, he would 
keep the Medicaid strings tied to Washington. The President 
would apply a ``per-capita'' spending cap, which limits the 
Federal payments to a State for each of the State's Medicaid 
recipients. Thus, the President's Medicaid proposal could 
create the largest unfunded mandate ever. This would result in 
a huge hidden tax increase on State taxpayers to sustain the 
status-quo, ``Washington-knows-best,'' health care entitlement.

   TRAPPING SENIORS IN A BUREAUCRATIC MEDICARE SYSTEM THAT IS GOING 
                                BANKRUPT

    Medicare is facing bankruptcy. On April 3, 1995, the Social 
Security and Medicare Trustees reported that the Federal 
Hospital Insurance Trust Fund (Medicare Part A)--which pays for 
hospital and institutional care for Medicare beneficiaries and 
which is funded by the Medicare payroll tax--will run out of 
money by 2002, under current law.
    Just 1 year later, the Medicare crisis is even more 
imminent. In October, a Treasury Department report revealed 
that the Hospital Insurance Trust Fund was operating in deficit 
in 1995, a year earlier than previously projected. According to 
the chief actuary at the Health Care Financing Administration 
[HCFA], this means that it is now likely that the trust fund 
will go bankrupt in 2001 instead of 2002.



    When the congressional majority began to tackle the 
Medicare crisis, many were surprised that the new majority 
would tackle an issue so politically sensitive. Significantly, 
the political risk was not forced by the Nation's seniors. 
Seniors were understandably concerned about changes in the 
Medicare program. But they listened, and they understood: 
maintaining the status quo of Medicare now would lead to its 
certain demise in the future; the only way to save Medicare was 
to reform it.
    The real problem came from the administration, which 
resorted to distortion and demagoguery. A clear example was the 
administration's claim that Congress planned to cut Medicare 
benefits. This was not true and the administration knew it. Nor 
is it true now. Under the Medicare reform assumed in this 
budget resolution, average benefits per recipient will increase 
from $5,200 in 1996 to $7,000 in 2002.
    It once was true that only Washington bureaucrats would 
call such an increase a spending cut; now, only officials in 
the current administration would do so. In the process, they 
are making reform more difficult and increasing the likelihood 
that seniors will have to remain in an unreformed system that 
will run out of money in 6 years or less.

                             OTHER FAILURES

    Education. In a poll conducted by the Gallup organization, 
two-thirds of the participants said they wanted the Federal 
Government to have less influence in determining the 
educational programs of their local public schools. But the 
President's budget expands the Federal education bureaucracy by 
increasing discretionary spending 4.4 percent over the 1995 
level. With this Federal funding comes increased Federal 
intervention in State and local education decisions. The budget 
retains more than 50 separate elementary and secondary 
education funding programs and 16 educational research 
programs. This is in sharp contrast with the congressional 
approach, which calls for improving education by reducing 
centralized bureaucracy and shifting authority and decision-
making back to parents and local school boards.
    The administration budget also supports programs the 
President once vowed to eliminate. For example, the Perkins 
loans capital contribution was eliminated in the fiscal year 
1995 budget because the administration believed it duplicated 
other programs. This year the program is fully funded at $158 
million. In the administration's 1996 budget, the President 
sought to phase out Aid to Disadvantaged Schools over 2 years. 
This year's budget continues funding at the fiscal year 1996 
level.
    The President's budget shows student loan volume increasing 
from 17.6 million in 1993 to 32.5 million in 1997, an increase 
of 85 percent. This is the same rate of growth in student loans 
that was proposed in the Balanced Budget Act. The key 
difference is how the loans are delivered. The administration 
wants a government-controlled ``direct lending'' program, 
making the Department of Education both a regulator and a 
competitor of the private-sector guaranteed lending program.

    Labor. Under the President's budget, funding for the 
Department of Labor would increase by almost 5 percent. The 
budget also would add 451 new bureaucrats to the government 
payroll, including 190 more at the Occupational Safety and 
Health Administration [OSHA] and 83 additional staff in the 
Secretary's Departmental Management Office.
    The President challenged Congress in his State of the Union 
Address to consolidate 70 overlapping job-training programs, 
yet this budget asks for increased funding for the current 
unworkable maze of programs. The President even proposes 
several new job-training programs, such as ``Jobs for 
Residents'' and an ``Incumbent Worker Demonstration.''

    Law Enforcement. The administration's budget continues to 
boast of the President's pledge to put 100,000 new police 
officers on the street by the year 2000. In fact, little of his 
``cops on the beat'' funding has gone to the cities that need 
it the most. Among the cities with the highest violent crime 
rates, many have received a disproportionately small amount of 
the ``cops on the beat'' funding.
    The President's community policing program requires a local 
match of 25 percent for communities to receive any of the 
Federal funds, and the 1994 crime bill allows the Attorney 
General to give preference to applicants that provide 
contributions exceeding the 25-percent match. Hence, a 
disproportionate share of the Federal money can go to wealthier 
communities, not those with more serious crime problems. What's 
more, the ``cops on the beat'' program includes so many 
conditions on receiving funds that many officials have chosen 
not to apply because the program is too expensive.

    Transportation. The administration is requesting $800 
million for Mass Transit New Starts, a $134-million increase 
over 1996. This represents a twist on the administration's 
``spend now, save later'' habit--this time it's ``spend now, 
spend later.'' The Mass Transit New Starts Program obligates 
the taxpayer to years of capital spending to assist States and 
localities in completing new mass transit systems, and to 
decades of operating assistance. This proposal does not reflect 
the thinking of an administration committed to balancing the 
budget in 2002.

          The Major Components of the House Budget Resolution

    As noted above, this budget resolution is designed to 
follow through on the achievements already adopted by the first 
session of the 104th Congress. Only one person has thus far 
denied American taxpayers the benefits of these 
accomplishments. That person is the President. This budget 
defines the difference between the congressional majority's 
vision and that of the President.

                       ACHIEVING BALANCE BY 2002

    In addition to reversing a 20-year pattern of chronic 
deficit spending, this year's balanced budget plan holds a 
promise relevant to individual Americans and their families--
the promise of safeguarding the American Dream for their 
children.
    One doesn't need economic statistics to understand the 
moral breakdown attached to chronic deficit spending. Every 
year that the government borrows more to finance current 
spending, it adds to the burden being heaped on future 
generations. A child born today inherits a tax bill of $187,746 
just to pay interest on the debt for spending the government 
already has done. That child has no voice in the process and 
will reap no benefits from the tax payments. Thus the 
government is spending money that belongs to future generations 
and is doing so without their consent. Americans know this is 
wrong--and they want the injustice stopped.
    Just as important, however, is the economic price of the 
deficits that Americans are paying right now. Deficit spending 
has added about 2 percentage points to the interest payments 
levied on American families. The serious pursuit of a balanced 
budget by the 104th Congress was by itself enough to drive down 
interest rates from about 8 percent in January 1995 to below 
5.8 percent in January 1996. The rates started back up again 
when balanced-budget talks with the administration ended.
    Today's artificially inflated interest rates add about 
$37,000 to the cost of a moderate-sized home, $2,200 to the 
cost of a college loan, and $900 to the cost of a car. For 
families struggling to make ends meet, removing these 
unnecessary costs would be a huge benefit.
    This budget resolution adjusts the Balanced Budget Act's 
glide path to reflect the congressional leadership's compromise 
offers to the administration during the November-through-
January budget negotiations--compromise efforts that the 
President still rejected. The resolution also makes adjustments 
to incorporate updated economic and budgetary projections 
furnished by the Congressional Budget Office in December 1995 
and March of this year. The bottom line, however, remains the 
same: This plan balances the Federal budget by 2002. Finally, 
the resolution takes into account the Congress' omnibus 
continuing appropriations bill, which was enacted on April 26.

         TAX CUTS FOR WORKING FAMILIES AND FOR ECONOMIC GROWTH

    Two facts provided by the Joint Economic Committee speak 
eloquently about today's tax burden:

  - The average American family pays more in Federal, State, 
        and local taxes (38 percent of their income) than they 
        do on food, clothing, and shelter combined (28 
        percent).

  - The average worker spends 2 hours and 47 minutes of every 
        work day just to cover his or her tax burden; 20 years 
        ago, that worker spent half that much time to cover 
        taxes.

    If Congress is going to shrink the Federal Government and 
balance the budget, American families should reap some of the 
benefits immediately.
    These are among the principle arguments for the family tax 
relief assumed in this budget resolution. The centerpiece is a 
$500 per child tax credit for working families--a $1,000-a-year 
tax reduction for the average family of four. As the President 
has said: ``Our first challenge is to cherish our children and 
strengthen America's families. Families are the foundation of 
American life. If we have stronger families, we will have a 
stronger America.'' But once again, he talked, we acted. The 
budget resolution calls for net, permanent tax relief of $122 
billion over 6 years to finance the child tax credit.
    The resolution also incorporates pending or completed House 
action on: a $5,000 adoption tax credit for 100,000 families to 
help defray the costs of adoption expenses; a rollback of the 
President's 4.3-cent hike in the gasoline tax; an enhanced 
health insurance deduction for the self-employed; medical 
savings accounts; long-term care incentives; and the 
liberalization of the Social Security earnings test. It is also 
assumed that the Committee on Ways and Means will close enough 
tax loopholes to finance a reduction in the capital gains tax 
rate to stimulate the creation of new, high-paying jobs. Taken 
together, this package would contain total tax relief of $176.2 
billion over 6 years.
    It is important to note that--contrary to the incessant 
claims of tax cut opponents--the primary beneficiaries of the 
tax cuts assumed in this budget resolution are middle-income 
families. More than 75 percent of the tax relief provided in 
the proposal focuses on building, strengthening, and restoring 
the American family. The biggest individual income tax cuts, as 
a percentage of taxes paid, would go to taxpayers earning 
$30,000 to $75,000 annually.

                      WELFARE AND MEDICAID REFORM

    The welfare reform plan incorporated in this budget poses a 
basic question: What is more compassionate--to shackle the poor 
in dependency, or to help them toward self-reliance?
    The current welfare system is a failure. It traps 
recipients in a cycle of dependency. It undermines the values 
of work and family that form the foundation of communities. It 
rends the social fabric of the Nation by breeding drug 
addiction, illegitimacy, crime, and child abuse. It contributes 
to the public's frustration with their government for siphoning 
an ever-increasing share of national wealth into a bureaucratic 
system that has failed, over the past 30 years, to 
significantly lower the proportion of those in living poverty.
    In 1994, total spending on benefits for low-income persons 
climbed to a record high of 5.1 percent of gross domestic 
product, or more than double the share of GDP of such programs 
in 1968. Federal dollars made up 71 percent of that total 
spending. Yet, despite this explosion of welfare spending, 
during the last three decades, AFDC enrollment has increased 
five-fold, illegitimacy has increased 400 percent, and violent 
crime has risen 560 percent.
    A primary cause of these failure is that the total package 
of welfare and income support programs pays more than work in 
many of America's communities. According to a Cato Institute 
study of benefits available to low-income persons in the 50 
States, welfare pays more than the average first-year salary 
for a teacher in 9 States. In 29 states, according to the Cato 
study, welfare pays more than the average salary for a 
secretary. In 40 States, welfare pays more than an $8 per-hour 
job. In the most generous States, welfare pays more than the 
entry level salary for a computer programmer. Clearly, if 
welfare reform is about work, real reform must reverse the 
current system's disincentives to work.
    This budget assumes a framework of welfare reform that 
attacks the two main causes of long-term welfare dependency--
lack of participation in work, and illegitimacy.
    The budget's recommendations go significantly farther than 
do the proposals contained in the President's fiscal year 1997 
budget submission toward achieving the goal of ``ending welfare 
as we know it.'' They would end the individual entitlement to 
cash welfare benefits, which the President's plan would not. 
They would impose tougher work requirements than suggested by 
the President, to better ensure that a significant share of the 
welfare caseload will eventually become self-sufficient. They 
would make meaningful reforms in the Food Stamp Program and 
limit spending over time without cutting benefit levels, unlike 
the President's proposal. They would end welfare as an 
immigration magnet. Persons immigrating to the United States 
should come here for the work opportunities the Nation's 
economy has to offer, not for the taxpayer-subsidized benefits 
a generous society has chosen to provide to its own less 
fortunate few.
    The budget resolution's Medicaid reform assumptions are 
similar to welfare reform in that they would shift authority to 
States, which are in the best position to tailor assistance to 
the populations within their borders.
    The Medicaid plan would achieve four goals: First, it would 
guarantee the basic health care needs of the Nation's most 
vulnerable populations. Second, it would bring Medicaid health 
care expenditures under control. Third, it would give States 
maximum flexibility in the design and implementation of cost-
effective systems of care. Fourth, it would protect the States 
from unanticipated program costs resulting from economic 
fluctuations in the business cycle, changing demographics, and 
natural disasters.
    By allowing the States to design their own programs, the 
unique needs of the various States, as they see them, would be 
served. This State flexibility is essential to improve Medicaid 
effectiveness, responsiveness, and efficiency. This approach 
recognizes that no one knows which Medicaid program will work 
best in all of the 50 States, the District of Columbia, and the 
five territories.
    The only way to find out is to avoid Federal preconditions 
that limit the discretion of local authorities.

       STRENGTHENING AND IMPROVING MEDICARE FOR AMERICA'S SENIORS

    The Medicare reform assumed in this budget resolution 
refines and improves on the Medicare Preservation Act as passed 
by the Congress last year. But its fundamental components are 
the same: increased benefits and expanded choices for Medicare 
recipients, and serious reforms to address Medicare's impending 
bankruptcy. The plan also maintains the current part B premium 
at 25 percent of program costs.

    Increasing Benefits. The Medicare reform recommended in 
this budget resolution would fully account for the increase in 
the Medicare population over the budget period. It would 
increase average Medicare spending on each beneficiary from 
$5,200 in 1996 to approximately $7,000 in 2002. Overall, the 
plan would spend approximately $1.479 trillion on Medicare over 
6 years, Medicare spending in 2002 would be an estimated $284 
billion--$107 billion more than the 1995 level of $177 billion.
    Under the proposed reform, Medicare beneficiaries would 
have the option of remaining in the traditional Medicare fee-
for-service plan. If they chose the traditional plan, they 
would have no increased copayments or deductibles, and their 
part B premium payment would remain at the current 25 percent 
of program costs. The budget resolution's spending guidelines 
also allow for additional, new preventive screening benefits in 
the traditional Medicare benefit package.

    Expanding Choices. The Medicare reform plan would modernize 
Medicare, bringing market forces and competition to the program 
all across the country, with the benefits accruing to seniors.
    Evidence for this model was recently documented in a report 
in the New York Times that described in detail the success of 
Medicare managed care in Tucson, AZ: 42 percent of all Medicare 
beneficiaries in Tucson have chosen HMO's as their preferred 
health care delivery option. A high penetration of private 
managed care companies offering Medicare coverage has created a 
climate of competition among providers. As a result, providers 
offer additional benefits and lower out-of-pocket costs to 
attract Medicare beneficiaries to their plans. The Times 
article cited ads for plans extolling no monthly premiums or 
deductibles, free mammograms, and low-cost prescriptions. On 
the other hand, seniors who choose traditional Medicare, spend 
up to $2,500 per year on their monthly Medicare premium, 
hospital and physician deductibles, supplementary insurance, 
and prescription drugs--and, they do not receive the benefits 
of preventive care coverage.
    The Medicare reform recommended in this budget would enable 
and encourage competitive markets across the country with more 
types of health coverage than are now available. Reforms are 
necessary because many barriers to successful implementation of 
private-based Medicare plans remain in the HCFA bureaucracy 
controlled system.
    The Medicare reform would increase the amount paid to 
private plans in low-cost areas to make private plans viable 
where they are not now. The plan would facilitate provider 
service organizations, repeal the law restricting the 
percentage of seniors covered by a plan, and open the way to 
more choices for efficient and high-quality options that will 
allow the double advantage of reducing costs for seniors and 
extending the life of the Medicare trust fund.

                           ADDITIONAL REFORMS

    This budget resolution also embraces reforms in several 
other significant areas, including the following:

    Ending the Era of Big Government. The budget calls for 
saving more than $34 billion over 6 years by eliminating or 
privatizing 130 Federal programs and activities and terminating 
the Department of Commerce and the Department of Energy. It 
also recommends terminating the Corporation for Public 
Broadcasting and AmeriCorps, and phasing out the National 
Endowment for the Arts. The budget also recommends 
approximately $14 billion in savings over 6 years by reducing 
overhead in select government agencies. The budget also urges 
that the committees of jurisdiction investigate moving the 
Departments of Agriculture and Interior out of Washington, DC, 
and closer to the constituencies most affected by the 
Departments' activities.

    Strengthening National Security. Spending for national 
defense assumed in this budget exceeds the President's request 
by $12.9 billion in budget authority and $4 billion in outlays. 
The budget provides for modernizing the Armed Forces, ensuring 
a decent quality of life for military personnel and their 
families, and developing a sound missile defense for the United 
States.

    Keeping Promises to the Nation's Veterans. The budget 
recommends $5.1 billion over 6 years more than the President 
for veterans' discretionary spending, which is principally 
medical care. It rejects the President's cuts in medical and 
prosthetic research. It calls for improvements in veterans' 
mandatory programs, including increased auto allowance for 
certain severely disabled veterans; improved compensation 
payments for surviving spouses; and a $500 scholarship for 
college seniors with at least a ``B'' average under the GI Bill 
or the Post Vietnam Era Education Assistance Program [VEAP].

    Boosting Local Law Enforcement. A total of $4.7 billion in 
1997 is assumed for the Violent Crime Reduction Trust Fund. The 
budget resolution incorporates the Local Law Enforcement Block 
Grant, which gives States and localities the power and 
resources to choose how they spend the money to combat violent 
crime according to their local needs and priorities, rather 
than letting Washington usurp those decisions. It incorporates 
the House's recently passed Immigration in the National 
Interest Act (H.R. 2202), providing full funding of $699 
million in 1997. It also incorporates the recently enacted 
Antiterrorism and Effective Death Penalty Act of 1995 (H.R. 
1710, S. 735), providing $229 million in 1997.

    Reforming Health Insurance. The resolution assumes the 
insurance reforms in House-passed H.R. 3103, the Health 
Coverage Availability and Affordability Act of 1996. By making 
health insurance more affordable and accessible, H.R. 3103 will 
have a significant impact on the health status of the 
approximately 20 percent of Americans who lack health insurance 
temporarily or throughout the year. These reforms also will 
have a positive effect on Federal entitlement spending and on 
the overall economy by helping address the problem of 
uncompensated care, which currently costs $35 billion to $40 
billion a year. In addition, the budget urges reform of the 
Food and Drug Administration, promoting swifter access to 
lifesaving medicines, and preserves a 5.8-percent increase in 
funding for the National Institutes of Health that was provided 
in 1996.

    Improving Education by Enhancing Local and Parental Roles. 
This budget restores the authority and responsibility for 
education to where it belongs--in the hands of parents, 
principals, and local school boards, not a growing Federal 
bureaucracy. The budget consolidates many elementary and 
secondary education programs into block grants, turning funding 
decisions back to the States and local schools. Failed 
programs--programs that do not help children--are terminated. 
The budget urges terminating Washington-knows-best programs 
such as Goals 2000. It recommends funding title I education for 
disadvantaged students at $7.2 billion, the same as provided 
for in the Omnibus Appropriations bill.
    It seeks Drug-Free Schools funding of $440 million--the 
same level provided in the Omnibus Appropriations bill. It 
assumes continued growth in student loans--volume would 
increase from $26.6 billion today to $37.4 billion in 2002. The 
number of students receiving loans would increase from 7 
million today to 8.5 million in 2002--and reduces student loan 
subsidies to banks and guaranty agencies. The budget also calls 
for terminating government-run ``direct'' lending.

    Prioritizing Basic Research and Science. The budget 
resolution recommends 4.3 percent more spending for civilian 
nonhealth basic research than the President's budget. It also 
prioritizes those programs with the greatest potential for 
scientific discovery to create new knowledge: national science 
foundation research and related activities; basic energy and 
life sciences; NASA space science, and life and microgravity 
sciences; National Oceanic and Atmospheric Administration 
climate and air quality research, coastal ocean science, sea 
grant research, and marine research; and National Institute of 
Standards and Technology scientific and technical research.

    Protecting Natural Resources and the Environment. This 
congressional plan calls for increased funding to improve the 
quality of the Nation's parks. It proposes reform of the 
Superfund program, boosting its funding to $2 billion a year, a 
$700-million increase. It recommends maintaining a strong safe 
drinking water and wastewater State revolving fund program 
funded at $2.85 billion annually.

    Attacking Corporate Subsidies. The budget resolution would 
terminate, among others, such unneeded special-interest 
corporate subsidies as: the Advanced Technology Program; 
outdated Federal airline subsidies; Federal funding for the 
national information infrastructure; the ``Dual-Use 
Applications'' programs of the Department of Defense; and the 
Department of Energy's subsidized energy research. It also 
recommends closing special-interest corporate tax loopholes, 
including section 936.

    Encouraging a Market-Based Farm Economy. The resolution 
incorporates the Federal Agricultural Improvement and Reform 
[FAIR] Act, passed by the current Congress and signed by the 
President on April 4. The legislation envisions a new direction 
in farm programs that will give farmers the freedom to plant in 
response to market demand, not government programs or what 
government bureaucrats think farmers ought to plant. It will 
give producers more flexibility, less paperwork, and a better 
opportunity to earn a living from the marketplace--all of which 
will make U.S. agriculture profitable and competitive in the 
21st century.

    Supporting Rural America. To improve the effectiveness and 
efficiency of Federal assistance to rural areas, the budget 
envisions a Rural Development Block Grant, which will eliminate 
overlapping and duplicative activities. The budget also calls 
for a Native American Block Grant, advancing the cause of self-
determination in America's tribal communities.

    Restoring State and Local Roles in Transportation. The 
budget urges a study of restoring transportation money and 
decisionmaking to States and localities. It also recommends 
examination of potentially vast improvements in air traffic 
control by privatizing the air traffic control system.

    Reforming Federal Housing. The budget resolution calls for 
reform of the Federal role in public housing, replacing the 
current failed one-size-fits-all regime with a new approach 
based on the innovative vision of America's neighborhoods and 
communities.

                               Conclusion

    As noted at the outset, this budget is about ideas, and 
this year's budget debate will reflect two fundamentally 
different ideas about America's communities and their shared 
future. The President borrows the language of change, but 
then--looking no farther than the next election--fails to 
advance the policies to sustain his rhetoric.
    The Republican vision--embraced in this budget resolution--
looks to the next generation. It recognizes that we must ease 
the burden of taxes on America's families; ease the burden of 
debt on the Nation's children; transform welfare from a 
dependency trap to a stepping stone toward self-reliance; and 
strengthen and improve Medicare for America's seniors.
    This budget declares, unabashedly, that such achievements 
are possible--and then goes on to show how. Redeeming these 
possibilities is our task. It calls for wise, courageous, and 
responsible stewardship of the Nation's resources. It requires 
conviction and it demands choices. It does this to address 
Americans' anxieties about the present and their doubts about 
the future. It does this so that our children and grandchildren 
may enjoy the opportunity, the challenge, and the hope of 
forging their own American Dream.


                           The Clinton Crunch

             americans' anxiety about their economic future

                              ----------                              

    As he ran for the White House in 1992, candidate Clinton 
declared that the economy at that time was the worst it had 
been in 30 years. He vowed that if elected he would 
aggressively pursue policies aimed at boosting economic 
performance.
    Now, however, it is clear that the effects of President 
Clinton's policies have worsened economic performance, yielding 
a projection of growth even more sluggish than before. The data 
provide further evidence that the ``Clinton crunch''--the 
product of maintaining the current size and scope of government 
and imposing the largest tax increase in history--must be 
reversed by the policies embraced in this budget resolution: 
shrinking the government; balancing the budget; cutting taxes; 
rewarding private-sector saving and investment; and shifting 
power, influence, and money out of Washington and back to 
people in their States and communities.
    Several points made in the introduction to this report 
deserve elaboration here. According to the Joint Economic 
Committee:

  - Every year, families are seeing their real income decline. 
        Last year, the average family with a single wage earner 
        saw $803 less in the family paycheck than in 1982

  - Tens of thousands of workers continue to receive pink slips 
        because of corporate downsizing. Between June 1994 and 
        June 1995, half the major corporations in the United 
        States eliminated jobs.

  - Less than a third of the workers who lost full-time jobs 
        found new work that paid as well. On average, they 
        settled for jobs that paid 8.2 percent less. Workers 
        who should be enjoying the most prosperous years of 
        their lives--those between the ages of 45 and 55--saw 
        their incomes decline by 14 percent.

  - High-paying manufacturing jobs continue to disappear. 
        Between March 1995 and March 1996, a total of 326,000 
        manufacturing jobs were lost.

  - In the past 2 years, the number of Americans working two 
        jobs just to make ends meet increased by 10.2 percent. 
        Today, more Americans are working two jobs than at any 
        other time in the Nation's history. Such 
        industriousness would be laudable if it were voluntary. 
        But these Americans are working harder just to keep up, 
        not to get ahead.

    Clearly the administration's fiscal policy has done nothing 
to improve this situation. Then comes the President's tax 
policy. In his first year in office, the President increased 
taxes on gasoline, on individual incomes, on married couples, 
on Social Security benefits, and on the property left by 
parents to their children. The tax burden on the Nation's 
families now is higher than at any time in history.
    Added to the prevailing anxiety is a growing sense among 
American families that they cannot get ahead--and the causes 
can be seen in the near-term economic projections that have 
resulted from the President's policies. Right now, the growth 
of the Nation's economy--real gross domestic product [GDP] is 
projected to increase by a meager 2.0 percent this year and in 
1997--is disturbingly slow by historical standards. Since 1870, 
real growth in the United States has averaged 3.25 percent 
annually, according to Dr. Milton Friedman. This long-term 
historical growth rate, which includes the impact of the Great 
Depression, is approximately 1 percentage point greater than 
what the President says his policies will produce. The 
economy's performance also trails by far the 3.6-percent 
average annual growth rate of the Reagan expansion (1983-1989). 
The growth of employment opportunities is about 300,000 lower 
than that of the Reagan expansion.
    These factors translate into the slow rise of wages paid to 
working Americans, which are growing at only about a third of 
the rate experienced in the 1950's and 1960's. This is 
occurring because the government, through its chronic deficit 
spending, is soaking up investment capital that would otherwise 
finance new plants and equipment, thereby increasing 
productivity and, in turn, wages.
    The lack of these tools is the result of low savings and 
investment rates. The figure below shows both the U.S. saving 
and domestic investment rates from 1950 to the present. During 
the 1950's, the savings rate exceeded 9 percent; during the 
1990's, the savings rate is 2.7 percent. Because investments 
come from savings, the investment rate follows a similar path: 
it was 8.2 percent during the 1950's but is down to 3.6 percent 
in the 1990's. Consequently, the growth of productivity also 
has lagged. Productivity grew by almost 3.5 percent in the 
1950's; during the 1990's it is growing at a mere 1.59 percent. 
All of this translates into the slow wage growth noted above.
    Meanwhile, the growth of real median family income has 
dropped from 2 percent a year during the Reagan expansion to 
one-tenth that level--0.2 percent a year--during the current 
administration.
    In the current economic climate, surveys continually 
capture the increasing economic and employment anxiety of 
American workers. Their concerns are justified: Despite the 
President's claim of having ``created'' 8 million jobs, the 
pace of job creation in the past 12 months is less than half of 
what is was only a year ago.
    At the same time, the Federal Government is taking more of 
families' income to fund spiraling entitlement programs. In 
1950, the average American family making the median income and 
raising two children sent $1 out of every $50 it earned to 
Washington. By 1994, the same family was sending $1 out of 
every $4 it earned--25 percent of its income--to the Federal 
Government.
    To put it simply, instead of allowing young working 
families to save more money in ways that could make them more 
productive, boost the economy, and lift wages, the government 
takes their money and spends it on entitlement programs that 
are spending an ever-increasing amount of resources.



    Meanwhile, the President has been the largest obstacle to 
shifting power, influence, and money out of Washington and back 
to people in their States and communities. Last year, the 
Republican majority in Congress passed legislation to balance 
the budget, reform welfare and Medicaid, preserve and protect 
Medicare, and cut taxes for working families and for economic 
growth. The President vetoed all of these initiatives. As 
detailed elsewhere in this report, his attempt at imitating 
those reforms--reflected in his fiscal year 1997 budget 
submission--falls far short of the response needed to control 
spending and restore economic security.
    Nor has the President pursued tax policies that would 
encourage savings, investment, and capital formation, which are 
critical to enhancing productivity growth and, in turn, higher 
standards of living and higher wages. In general, growth in 
productivity results from incorporating improved technology in 
both the physical capital (plant and equipment) and the 
processes and procedures used in production. Productivity 
growth is critically dependent on efforts to reduce current 
consumption, and thereby increase the rate of national saving.
    What all this amounts to is that the Federal Government 
must turn away from policies that encourage spending at the 
expense of saving. Incurring large deficits and permitting 
rapidly escalating spending on entitlements favor spending over 
saving. Deficit spending transfers an increasing share of the 
pool of national savings to the public sector and away from 
private-sector investments.
    Therefore, it is imperative to achieve a balanced Federal 
budget by 2002. This budget resolution calls for serious 
reforms in both entitlements and discretionary spending. These 
reforms are intended to reduce the size and scope of the 
Federal Government, end the drain on savings from continued 
deficit spending and government borrowing, and reduce the 
dependence on foreign savings. The net effect will be to 
strengthen the economy by rewarding an increased level of 
saving and investment needed to raise productivity growth, 
improve wages, and elevate living standards.


                     Earn More, Keep More, Do More

             the economic reasons for balancing the budget

                              ----------                              

    The economic benefits of a balanced budget would touch all 
Americans and all aspects of the economy. Specifically, it 
would secure a higher standard-of-living for current and future 
generations, help create news jobs and raise stagnant wages, 
and relieve the budgetary pressure from the explosion in 
entitlement spending that currently crowds out other budget 
priorities.

                      increase standards of living

    The most important economic reason for balancing the budget 
is to increase national saving. An increased rate of saving 
would accelerate capital accumulation, thereby providing an 
increased standard of living for current and future 
generations, in addition to reducing our borrowing of foreign 
capital.
    In the long run, the rate at which individuals save their 
money--withholding part of their current income for later use--
determines to a large extent a society's level of prosperity 
and well-being. Individuals can invest those savings in 
activities that promote economic growth such as accumulating 
more capital (plant and equipment), expanding the knowledge and 
skills base of its workers, and conducting research. An 
increased rate of saving enables an increased rate of 
investment, which, in turn, creates an increased rate of 
economic growth, leading to higher wages.
    Conversely, continued deficit spending by the government 
draws down savings and drains economic growth. Increased 
government borrowing also leads to increased interest rates for 
both families and businesses. In the short term, escalating 
interest rates increase the cost of purchases that families 
typically finance, such as houses and cars. As noted in the 
introduction to this report, deficit spending adds about 2 
percentage points to the interest rates on these purchases. 
Today's artificially inflated interest rates add about $37,000 
to the cost of a moderate-sized home, $2,200 to the cost of a 
college loan, and $900 to the cost of a car.
    In the long-term, increased interest rates discourage 
businesses from investing in plants and equipment, which slows 
business formation and expansion. Balancing the budget helps 
remove the upward pressure on borrowing that results from 
deficit spending. In short, balancing the budget helps get the 
government out of the economy's way, so that the economy can 
thrive.
    The serious pursuit of a balanced budget by the 104th 
Congress was by itself enough to drive down interest rates from 
about 8 percent in January 1995 to below 5.8 percent in January 
1996. The rates started back up again when balanced-budget 
talks with the administration ended. Alan Greenspan, Chairman 
of the Federal Reserve Board, has linked these interest rate 
patterns with Congress' development and passage of a balance 
budget plan and the President's subsequent rejection of the 
proposal. In his testimony to the Committee on the Budget, 
Chairman Greenspan said the following:

          What has happened, as it became increasingly credible 
        to the financial community, as we moved through last 
        year, that indeed the budget could conceivably be 
        balanced, long-term interest rates proceeded to fall, 
        and as you may recall, they fell quite appreciably. 
        When it became apparent that a quick agreement was * * 
        * increasingly in difficulty, rates have backed up.


        
                how lower deficits help create more jobs

    As the government borrows less from the pool of national 
savings, businesses are encouraged to increase their rate of 
capital purchases. Given more capital, especially advanced 
technology capital, workers become more productive. Increased 
productivity means that firms can produce the same level of 
output at lower cost. The lower cost of production is reflected 
in lower prices. Lower prices leads to higher sales and, as a 
consequence, more jobs and increased wages.

                    containing entitlement spending

    Balancing the budget by controlling entitlement spending 
would increase the share of the pool of national savings 
devoted to private-sector investments and reduce the share 
absorbed by deficit spending.
    When government borrowing is used to fund spending on 
entitlements, such as Medicaid and Medicare, the economic 
effects of deficits are compounded. In general, entitlement 
programs transfer resources from individuals with higher 
incomes and higher saving rates to those with lower income and 
lower saving rates. Therefore, higher-income individuals save 
less (their incentive to do so is reduced), and lower-income 
individuals consume more. Incurring large deficits and 
permitting rapidly escalating spending on entitlements favors 
consumption over saving.





                   Our Responsibility to Our Children

         why current federal spending trends are unsustainable

                              ----------                              

    Thus far, the Republican majority in the Congress has 
focused on reforms that must be made to balance the budget by 
fiscal year 2002. But just beyond the horizon of this budget, 
past 2002, prospects for Federal spending--and their potential 
impact on the economy--are even more disconcerting. In 15 short 
years the baby boom generation will begin to retire. That 
generation was born between 1946 and 1964 when the number of 
births in the United States rose dramatically. The baby boomers 
are preceeded and followed by generations with fewer people. In 
other words, the number of people receiving government benefits 
will grow rapidly relative to the number of working people 
paying for those benefits. At the same time, even under this 
balanced budget plan, the amount of benefits paid to each 
recipient in virtually every entitlement program also is 
increasing. For example, under the Medicare reform plan assumed 
in this budget resolution, average spending per beneficiary 
increases from $5,200 in 1996 to $7,000 in 2002. Likewise, per-
capita Medicaid spending would increase from $2,516 in fiscal 
year 1995 to $3,242 in fiscal year 2002.
    The General Accounting Office [GAO], the Congressional 
Budget Office [CBO], and various other commissions and experts 
in the Nation's long-term fiscal and demographic trends have 
issued warnings about these trends. According to the Interim 
Report of the Bipartisan Commission on Entitlement and Tax 
Reform:

          An aging population and sharp increases in health 
        care spending lead to unsustainable growth in Federal 
        entitlements. Without reform, this deepening problem 
        will jeopardize the Nation's long-term economic growth 
        and prosperity. This is not the legacy we want to leave 
        our children and grandchildren.

    According to the CBO:

        * * * current policy is simply unsustainable. Wide 
        agreement exists on this conclusion, whether it comes 
        from the Entitlement Commission's work, Alan Auerbach's 
        and Laurence Kotlikoff's generational accounting, the 
        General Accounting Office's [GAO's] deficit 
        projections, or the Congressional Budget Office's 
        [CBO's] own work. * * * Correcting those bugetary 
        imbalances would be a substantial task if it was 
        undertaken now but would only grow more daunting if 
        delayed.

    According to the GAO:

  - If left unchecked, the Federal debt, currently $5.2 
        trillion, will continue to grow. By 2025, the debt will 
        be twice as large as the entire economy, and future 
        generations will face enormous tax burdens just for 
        servicing this debt.

  - The budget deficit--the amount of additional money the 
        government borrows each year to keep running--will 
        reach 20 percent of gross domestic product [GDP] by 
        2025. In today's terms, that would translate to a 
        deficit of $1.48 trillion, roughly the size of the 
        entire Federal budget--and that annual borrowing would 
        be added each year to the already overwhelming debt.

  - Continued deficits would add to the declining national 
        savings rate, leading to a decline in the capital stock 
        and, ultimately, a decline in gross domestic product. 
        In other words, the economy would actually shrink, and 
        so would standards of living, according to the General 
        Accounting Office [GAO].

  - Federal spending would approach 44 percent of GDP by 2025--
        roughly twice the share of the economy consumed by the 
        Federal Government today.

    These problems are neither theoretical nor distant; they 
are real and they are imminent. A clear indication appears in 
last year's report from the Trustees of the Medicare Hospital 
Insurance Trust Fund. Medicare, the government-run health 
program for the elderly, will be bankrupt within the 6 years of 
this budget.
    The Trustees, who were appointed by the President, reported 
to the Congress in April 1995 that the program would run a 
deficit in 1996, and be bankrupt in 2002. They stated: ``The 
trustees believe that prompt, effective and decisive action is 
necessary'' to save Medicare from bankruptcy.
    Since then, the situation has deteriorated further. A 
Treasury Department report in October 1995 documented that the 
trust fund was in deficit in 1995, pointing to a potential 
bankruptcy date even earlier than previously assumed.

              the source of the government spending crisis

    The growth of a large, centralized government is a 
relatively recent phenomenon in U.S. history. For about 150 
years, spending by Washington showed little tendency to 
increase relative to the Nation's economy. Until the 1930's, 
for example, the Nation remained as its Founders had 
envisioned, a decentralized society in which State and local 
governments were the main entities. Their spending, which was 
mainly for education and highways, amounted to more than three 
times Federal spending.
    This situation changed drastically with the New Deal. Like 
a pendulum, power, money, influence, and decisionmaking began 
shifting toward Washington and away from families, small 
businesses, and communities.
    These trends accelerated in the 1960's and 1970's as a 
result of the Great Society programs launched under President 
Johnson (see Appendix 6, The Causes of Current Deficits) and 
the expansion of the regulatory state under President Nixon. 
Because of these two events, the Federal Government is taxing 
more, spending more, and regulating more than at any time in 
the Nation's history. This trend is especially true for the so-
called entitlement programs.
    In 1970, for example, the Federal Government spent $61.1 
billion on entitlement and other mandatory programs and another 
$14.4 billion on net interest. By 1980, the last year of the 
Carter administration, entitlement and other mandatory spending 
had increased fourfold, to $262.3 billion; spending for net 
interest had increased to $52.5 billion. By 1990, entitlement 
and other mandatory spending had increased to $567.9 billion; 
spending for net interest had increased to $184.2 billion. By 
1995, entitlement and other mandatory spending had reached 
$741.3 billion; spending for net interest had reached $232.2 
billion. According to the President's budget, the Federal 
Government will spend almost $1 trillion ($994.7 billion) on 
entitlements and other mandatory programs in fiscal year 2000 
and another $229.9 billion on net interest.

            shifting resources from generation to generation

    This transfer of income from families to government also 
has major implications for different generations. The Federal 
budget normally measures taxes and spending for 1 year at a 
time, and it shows estimates for taxes and spending for only a 
few years into the future. It does not show the effects of the 
budget on different generations. For that, other forms of 
accounting are required.
    Answering a request by the Budget Committee, CBO analyzed 
the transfer of income from young working families to retirees 
as a result of one program--Medicare. Specifically, CBO looked 
at the extent to which Medicare enrollees' hospital insurance 
[HI] payroll taxes (part A) and supplemental medical insurance 
[SMI] premiums cover the value of their benefits.
    CBO found that the share of Medicare benefits that comes 
from individuals' contributions is growing. For men who worked 
continuously at the average wage from 1966 until retirement as 
of 1985, contributions (through HI taxes and SMI premiums) are 
about 29 percent of the value of their expected Medicare 
benefits. For men retiring as of 1995, contributions are about 
38 percent of expected benefits. For men retiring as of 2005, 
contributions are expected to be about 42 percent of benefits.
    Contributions by women as a percent of expected benefits 
are smaller than they are for men. For women retiring as of 
1995, for example, contributions are about 32 percent of 
benefits. The lower percentage results because a woman's 
expected remaining lifetime at age 65 is 4 years longer than it 
is for a man, and the additional benefits women get because of 
longer life are only partly offset by the fewer benefits they 
use, compared with men, at any age after 65.
    Despite the increasing role of contributions to an 
individual's Medicare benefits, the amount of subsidy for each 
Medicare beneficiary is growing even more dramatically. The net 
transfer or subsidy value is an estimated $31,766 for men and 
$39,443 for women who retired as of 1985. For individuals who 
retired as of 1995, the net transfer is an estimated $49,751 
for men and $66,613 for women. Under current law, the subsidy 
will be $70,796 for men and $90,112 for women who retire in 
2005.

                         generational accounts

    Government deficits, taxes, transfer payments, and other 
expenditures also affect the distribution of wealth among 
different generations. As previously indicated, the Federal 
budget is not capable of measuring these transfers between 
generations. For this, other techniques are required, such as 
``generational accounting.''
    Generational accounts start with the premise that tax 
revenues have to pay for government spending. The government 
can borrow for a short time but eventually it has to pay the 
interest on this borrowing.
    Generational accounts indicate, in present value terms, 
what the members of each generation can expect to pay on 
average, now and in the future, in net taxes. Generational 
accounts look ahead many decades, and they classify taxes paid 
and benefits received--such as Medicare and welfare--according 
to the generation that pays or receives the money. For an 
existing generation, generational accounts estimate its taxes 
and benefits year by year over its entire remaining lifespan; 
and they summarize these amounts for that generation in terms 
of one number, the present value of its lifetime net tax rates.
    For future generations, generational accounts estimate the 
net tax payments based on the proposition that the government's 
bills that are not paid now will have to be paid by future 
generations (those not yet born). They calculate how much 
future generations will have to pay on average to the 
government, above the amounts they will receive in government 
benefits. The methodology then translates the figures into 
their amounts in present-day terms. In other words, 
generational accounts measure directly how large a tax bill is 
today being left to the Nation's children.
    The President's fiscal year 1995 budget contained an entire 
chapter on generational accounting. It stated:

        * * * the generational accounts can be illuminating 
        when considered in the light of their assumptions, as 
        has been the case for the 75-year projections made 
        every year by the Social Security Trustees. Moreover, 
        the most fundamental result holds for a wide range of 
        reasonable assumptions: the net tax payment by future 
        generations is relatively much larger than the net tax 
        payment by the generation just born or other existing 
        generations.

    The President's budget submission this year excludes the 
chapter on generational accounting, probably because the 
outlook has worsened. The work of Alan J. Auerbach, Jagadeesh 
Gokhale, and Laurence Kotlikoff indicates that the bill being 
left to the Nation's children is enormous. The figure below 
presents the lifetime net tax rates of generations born in this 
century as well as future generations. Under current policies, 
lifetime net tax rates--measured in present-day terms--increase 
from 24 percent for the generation born at the turn of the 
century to 34 percent for children who have just been born. In 
other words, the net tax rate already has increased by 33 
percent.
    The figure also shows that if the Congress fails to change 
the course of current government spending patterns, future 
generations face a dramatically higher lifetime net tax rate--
one that translates to 84 percent of their lifetime incomes 
when measured in today's terms.



                        the balanced budget act

    Clearly such a pattern is unsustainable and even immoral. 
The Balanced Budget Act of 1995--passed by the first session of 
the 104th Congress but vetoed by the President--took the first 
step toward correcting this problem. By slowing the growth of 
government spending, the measure would have lowered the net tax 
rate facing future generations from 84 percent to 71 percent. 
In other words, the budget that the President demagogically 
labeled ``extreme'' only slightly relieved the burden of 
ballooning taxes and stagnant real wages on future generations.
    In hindsight, this is somewhat understandable. Contrary to 
the erroneous claims by the President, the Balanced Budget Act 
did not cut programs such as Medicare and Medicaid. Medicare 
and Medicaid benefits would continue to grow year after year at 
roughly twice the rate of the economy. The plan also cannot 
change the demographic dilemma--the fact that the enormous 
cohort of baby boomers starts collecting Social Security 
benefits in just 12 years and Medicare benefits in 15 years.
    Again, balancing the budget is only the first step. Gaining 
real control over the massive shift of resources from 
generation to generation will require continued, determined 
effort, even if the budget is balanced by 2002. But failing to 
take that first step, the Nation risks turning a potential 
crisis into a reality.
    That is why this budget resolution maintains Congress' 
commitment to balancing the Federal budget.

                    the children's right to know act

    It is important that the American people understand the 
impact that current policies will have on both today's children 
and future generations. The Office of Management and Budget 
[OMB] has both the capability and the means to do generational 
accounting, but has been barred by the President from doing so. 
Congressman Lamar S. Smith has introduced legislation titled 
the Children's Right to Know Act, which mandates an annual 
generational accounting by the Office of Management and Budget 
[OMB]. The budget resolution strongly supports this 
legislation.


             Economic Assumptions of the Budget Resolution

                              ----------                              

    The budget resolution is based on economic assumptions 
developed by the Congressional Budget Office [CBO]. These 
figures, shown in Table 1, assume that the Federal budget will 
be balanced by 2002. The economic assumptions comprise a short-
term forecast for 1996 and 1997, which reflects the current 
state of the economy relative to the business cycle, and a 
longer-term projection for 1998 through 2002. Table 1 also 
provides a comparison of the Budget Committee's assumptions 
with those released by the administration (Office of Management 
and Budget) and the Blue Chip consensus of private forecasters. 
All of these forecasts are based on the new revisions to the 
national economic statistics. The Budget Committee believes 
that CBO's economic assumptions present a realistic and honest 
outlook for the economy over the next 6 years.

                                       COMPARISON OF ECONOMIC ASSUMPTIONS                                       
                                          [Calendar years, in percent]                                          
----------------------------------------------------------------------------------------------------------------
                                                       Forecast                       Projected                 
                                           Actual --------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Nominal GDP (percent year over year):...                                                                        
    OMB.................................      4.6      5.1      5.1      5.1      5.1      5.1      5.1      5.1
    CBO.................................      4.6      4.8      4.9      4.9      4.9      4.9      4.9         
    Blue Chip...........................      4.2      4.6      4.4      4.5      4.9      4.7      4.8         
Real GDP (percent year over year):......                                                                        
    OMB.................................      2.0      2.2      2.3      2.3      2.3      2.3      2.3      2.3
    CBO.................................      2.0      2.0      2.1      2.2      2.2      2.2      2.2         
    Blue Chip...........................      1.9      2.1      1.9      2.0      2.4      2.3      2.3         
Chained Price Index (percent year over                                                                          
 year):.................................                                                                        
    OMB.................................      2.5      2.8      2.7      2.7      2.7      2.7      2.7      2.7
    CBO.................................      2.6      2.8      2.7      2.7      2.7      2.7      2.7         
    Blue Chip...........................      2.3      2.4      2.4      2.5      2.5      2.4      2.5         
Inflation,CPI-U (percent year over                                                                              
 year):.................................                                                                        
    OMB.................................      2.8      2.8      3.0      2.8      2.8      2.8      2.8      2.8
    CBO.................................      2.8      3.1      3.0      2.9      2.9      2.9      3.0         
    Blue Chip...........................      2.7      2.8      2.9      2.8      2.9      2.8      2.8         
Unemployment Rate (annual rate):........                                                                        
    OMB.................................      5.6      5.7      5.7      5.7      5.7      5.7      5.7      5.7
    CBO.................................      5.8      6.0      6.0      6.0      6.0      6.0      6.0         
    Blue Chip...........................      6.0      6.1      6.3      6.3      6.1      6.1      6.0         
3-month Treasury Bills rate (annual                                                                             
 rate):.................................                                                                        
    OMB.................................      5.5      4.9      4.5      4.3      4.2      4.0      4.0      4.0
    CBO.................................      4.9      4.8      4.3      3.9      3.7      3.7      3.7         
    Blue Chip...........................      4.9      4.9      5.2      5.1      5.0      4.9      4.9         
10-year Treasury Note rates (annual                                                                             
 rate):.................................                                                                        
    OMB.................................      6.6      5.7      5.3      5.0      5.0      5.0      5.0      5.0
    CBO.................................      5.7      5.5      5.3      5.3      5.3      5.3      5.3         
    Blue Chip...........................      5.7      5.8      6.4      6.3      6.3      6.2      6.2         
----------------------------------------------------------------------------------------------------------------
Sources: OMB, ``Fiscal Year 1997 Budget, Analytical Perspectives,'' (March 18, 1996). CBO, ``The Economic and   
  Budget Outlook, Fiscal Years 1997-2006,'' (May, 1996).`` Blue Chip Economic Indicators,'' (April 10 and March 
  10, 1996).                                                                                                    

                Review of Economic Developments in 1995

    The growth rate of real GDP declined from an average of 3.5 
percent in 1994 to 2.1 percent in 1995. The overall 1995 growth 
rate is misleading, however, because growth in the first, 
second, and fourth quarters was less than 1 percent. An 
anomolous 3.6-percent third-quarter rate was needed to 
compensate for the prevalent economic anemia.
    Since the last recession, the main policy objective of the 
Federal Reserve Board [Fed] has been to ensure that its 
monetary policy supports a rate of economic growth that is 
consistent with low inflation (the so-called ``soft-landing''). 
In response to fairly brisk economic growth in 1994, the Fed 
raised interest rates several times. The Fed reasoned that 
``preemptive strikes'' were required because continued 
acceleration in growth would likely result in inflation. The 
financial markets responded to the Fed's monetary restraint by 
lowering long-term interest rates. The decline in long-term 
interest rates accelerated during 1995 with the election of a 
Republican Congress, which made balancing the budget a pillar 
of its economic agenda.
    During the year, a low-inflation environment and continued 
high corporate profits helped spark a stock market rise, as 
individuals shifted massively to investing in financial assets. 
(Housing is the major asset investment for consumers, yet in a 
low-inflation environment the returns to physical assets such 
as housing fall and returns to financial assets rise--as seen 
in the past 2 years with the boom in the stock market and 
stagnant housing prices.) Because of weak retail sales, excess 
inventories began to build in 1995. This caused companies to 
reduce production. Although this inventory correction 
contributed to the slowdown in economic growth during the year, 
it was expected to be temporary, because inventory building 
usually resumes when sales recover. But the slow economic 
growth continued into the first quarter of this year.

                The Short-term Outlook for 1996 and 1997

    CBO estimates the potential growth rate of real GDP to be 
2.1 percent in 1996 and 1997. The short-term forecast also 
shows that during 1996 both unemployment and inflation will 
rise slightly as the economy's available productive capacity is 
absorbed. The 1995 unemployment rate of 5.6 percent is expected 
to rise to 6.0 percent by 1997. The inflation rate will also 
rise slightly to about 3.0 percent a year. After falling below 
6 percent in the fourth quarter of 1995, long-term interest 
rates (10-year Treasury Note rates) rose approximately one-half 
percentage point in the first quarter of 1996.
    The short-term forecast of GDP growth assumes continued 
spending by consumers on durable goods such as autos and by 
businesses on capital goods. But the Budget Committee 
acknowledges the view expressed by some analysts that consumer 
spending may be inhibited by household indebtedness and that 
the pent-up demand for capital goods may have been satisfied.

                   The Long-term Outlook Through 2002

    CBO's long-term projections assume that the Fed will pursue 
a low-inflation environment that supports a rate of economic 
growth close to its long-term potential. Given a balanced 
budget, CBO projects for the period 1998 to 2002 that the 
economy will grow between 2.1 percent and 2.2 percent.
    The economy appears to have entered a sustained period of 
slow growth: 2 years ago the long-term potential growth rate of 
the economy was thought to be about 2.5 percent. Analysts 
lowered this estimate to between 2.3 percent and 2.4 percent 
just last year. Now it is being revised downward even further, 
to 2.1 percent.
    The latest downward revision in the economy's potential 
growth rate is explained by two factors. First, the shift to 
the new ``chain-weighted'' basis for measuring national 
economic statistics eliminated an upward bias in the real 
growth rate because some goods and services, such as computers, 
have declined in relative prices. By reducing the value of the 
computer's weight, the index more accurately reflects the 
declining relative prices of computers and, thus, yields a 
lower value of real GDP.
    Second, during the 1990's, growth in the labor force has 
slowed substantially. This slowing has prompted a downward 
revision in projections of future labor force growth. 
Accordingly, projections of slower labor force growth in the 
future implies a reduction in the potential growth rate. 
Combined, both factors have lowered the potential growth rate 
by an average of 0.4 percentage points annually.

                          the fiscal dividend

    CBO's economic projections assume that the Federal budget 
will be balanced by 2002. Economists believe that 
implementation of a credible deficit reduction plan will 
generate economic benefits in the form of lower interest rates, 
higher national savings, higher investment, and faster economic 
growth. These economic benefits will affect the Federal budget 
by reducing Federal interest payments and increasing revenues, 
thereby reducing projected deficits. This budgetary effect is 
referred to as the ``fiscal dividend.'' CBO assumes that a 
balanced budget will lower interest rates by 1.1 percentage 
points and cause a slight increase in productivity and real 
GDP. Including the debt-service savings due to these effects 
allows for a fiscal dividend of $253 billion over the period 
1996-2002.

                              formula bias

    The Bureau of Labor Statistics [BLS] has announced its 
plans to remove the ``formula bias'' from the Consumer Price 
Index [CPI]. This revision is scheduled to be incorporated in 
the index by June 1996. BLS estimates that this revision would 
correct the growth rate of the CPI to 0.1 percentage point 
below the previous projection. CBO had estimated earlier, based 
on incomplete information, a correction of 0.16 percentage 
points annually. The new information and estimate will be 
incorporated in the CBO August update.
    The correction for formula bias consists of two revisions. 
The first revision extends the ``sample rotation'' procedures 
originally introduced in January 1995. Beginning in June 1996, 
the sample rotation procedure as applied to the food-at-home 
component will be extended to all categories. In brief, the BLS 
replaces its sample of items and retail outlets on a 5-year 
rotation basis. Currently, there is an initiation period when 
new outlets and items are selected, followed by an overlap 
period when the prices of such items are used both as base 
period prices and to calculate subsequent price changes. This 
procedure assigns high weights to items with temporarily low 
prices, especially for items with short-term price 
fluctuations, such as food items. The new change is to extend 
the current procedures for food items to all nonshelter items 
by using a longer overlap period, from 1 month to at least 3 
months, to obtain more appropriate weights.
    The second revision attempts to improve the procedure used 
for substitute items. When CPI sample items are replaced, some 
30 percent are not comparable to the item they replace. The 
price of the new item is determined by reference to the 
original base period, implicitly changing the weight of the 
item. Starting in July 1996, the CPI will not recalculate the 
base period price for such noncomparable items, and will 
continue with the original weight.


                           Sharing the Burden



                     attacking corporate subsidies

                              ----------                              

    The Federal Government spends billions of dollars each year 
to subsidize corporate America. These subsidies are provided by 
virtually every major Cabinet Department in the Federal 
Government. This practice persists even as the Congress is 
closely scrutinizing spending for programs that furnish support 
for the poor and infirm it. Under these conditions, Congress 
cannot ignore spending in support of some of the largest 
corporations in America. The question that must be asked is 
this: Is the economic gain from these business subsidies worth 
the cost to the American taxpayer? In too many cases, the 
answer is no.
    These subsidies were originally created with laudable goals 
such as encouraging new technologies or developing needed 
services. In some cases, this view may have been naive or 
misdirected; but no one can deny that in many cases today, 
these goals are no longer being served or the programs are 
ineffective.
    The position of this Budget Resolution is that any kind of 
unnecessary subsidy should be closely scrutinized for ultimate 
repeal or reform. In fact, a bipartisan group of Senators have 
formed an independent commission to help drastically cut the 
subsidies for business that many call ``corporate welfare.''

             arguments for and against corporate subsidies

    Proponents of these corporate subsidies maintain that they 
serve the national interest in a variety of ways. They 
typically assert economic, national security, and social 
reasons in defense of the subsidies. The subsidies to 
corporations are variously justified because ``they protected 
vital industries;'' ``they subsidize research that private 
industry would not otherwise undertake;'' ``they encourage 
businesses to hire the socially disadvantaged;'' or ``they 
finance ventures too risky for private investors.''
    But witnesses testifying before the Committee on the Budget 
on March 7 of this year contended that such subsidies are 
unfair and, in fact, ineffective. Said Beau Boulter, chairman 
of CapitolWatch and the Coalition Against Corporate Welfare: 
``Corporate welfare is not fair. It's not smart. And, worst of 
all, it doesn't work.''
    Steve Moore, director of Fiscal Policy Studies at the Cato 
Institute, reported that the Federal Government now spends 
roughly $75 billion each year on more than 125 programs that 
provide direct taxpayer assistance to American businesses. In 
his testimony, Moore added:

          Cutting corporate welfare is good economics because 
        very few of the industrial policy programs run out of 
        Washington have a credible track record in terms of 
        creating jobs or wealth.

    Dr. Robert Shapiro, cofounder of the Progressive Policy 
Institute, told the Budget Committee that these subsidies, much 
like trade protections, actually weaken market incentives for 
companies to become more efficient and productive. Thus, 
corporate subsidies can actually be counterproductive to the 
goal of improving the economy.
    In an article in the Washington Post titled ``End Corporate 
Welfare,'' Dr. Shapiro also has noted:

          The purpose of fiscal discipline is not the aesthetic 
        appeal of a budget ledger in balance but the economic 
        benefits that come from increasing the resources 
        available for productive private and public investment. 
        If stronger economic growth is the goal of budget 
        reform, the process should begin with those programs 
        that tend to undermine that growth.

                                fairness

    Attacking corporate subsidies also appeals to those who 
argue for social justice. Reporting on the analysis completed 
by the Center on Budget and Policy Priorities based on a 
Congressional Budget Office report defining which government 
programs constitute business subsidies, Dr. Robert Greenstein 
emphasized the importance of the visibility of this issue by 
saying: ``I think our task should be large-scale, long-lasting 
deficit reduction done in an equitable and balanced manner.'' 
He added a statement by David Stockman, the former Director of 
the Office of Management and Budget: ``The task is to go after 
weak claims, not weak clients''.
    This budget resolution calls for the termination of the 
Advanced Technology Program; elimination of Federal funding for 
outdated subsidies; elimination of funding for the National 
Information Infrastrucuture; elimination of DOD's Dual Use 
Applications Programs; and elimination of further funding of 
the Department of Energy's subsidized energy research. The 
resolution also recommends the repeal of section 936, which 
provides a no-longer-needed tax incentive, principally used by 
pharmaceutical manufacturers, for companies to move facilities 
out of the United States and into Puerto Rico.


                      The End of Politics as Usual

                   function-by-function descriptions

                              ----------                              

    The discussions that follows describe the budget 
resolution's recommended priorities for fiscal years 1997 
through 2002. At the end of each function, additional 
provisions with budgetary effects are mentioned. These 
ancillary provisions are fully detailed in Appendix 1.
    The discussions that follow reflect the assumptions 
underlying the House Budget Committee's recommendations 
concerning the funding priorities for programs in each 
function. The actual policy changes for programs fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                                                                            FISCAL YEAR 1997 BUDGET RESOLUTION--TOTAL                                                                           
                                                                                    [In billions of dollars]                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Fiscal year--                                                       
                                                                   -----------------------------------------------------------------------------------------------------------------------------
                                                                        1995          1996          1997          1998          1999          2000          2001          2002        1997-2002 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority..................................................     1,543.291     1,576.985     1,629.863     1,692.472     1,733.954     1,786.658     1,826.964     1,886.472    10,556.383
Outlays...........................................................     1,519.133     1,574.677     1,618.059     1,675.492     1,713.667     1,762.281     1,793.820     1,842.378    10,405.697
Revenues..........................................................     1,355.213     1,424.189     1,470.373     1,532.708     1,599.656     1,674.768     1,754.153     1,845.563     9,877.221
Deficit (-)/surplus (+)...........................................      -163.920      -150.488      -147.686      -142.784      -114.011       -87.513       -39.667        +3.185      -528.476
Debt subject to limit.............................................     4,884.600     5,160.400     5,434.400     5,697.600     5,938.900     6,159.000     6,332.800     6,464.900    36,027.600
                                                                                                                                                                                                
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                
050  National defense:                                                                                                                                                                          
    Budget authority..............................................  ............       264.111       267.183       268.958       271.677       274.377       277.121       280.101     1,639.417
    Outlays.......................................................  ............       263.595       264.846       263.618       267.049       270.841       270.025       270.122     1,606.501
150  International affairs:                                                                                                                                                                     
    Budget authority..............................................  ............        15.011        13.732        11.551        10.576        11.089        10.890        11.009        68.847
    Outlays.......................................................  ............        15.896        14.963        13.484        12.467        11.025        10.584        10.281        72.804
250  General science, space, and technology:                                                                                                                                                    
    Budget authority..............................................  ............        16.787        16.537        16.428        16.313        16.159        15.934        15.602        96.973
    Outlays.......................................................  ............        16.570        16.697        16.494        16.224        16.111        15.943        15.673        97.142
270  Energy:                                                                                                                                                                                    
    Budget authority..............................................  ............         3.782         2.380         2.441         2.034         1.697         1.782         1.430        11.764
    Outlays.......................................................  ............         3.523         2.729         2.078         1.327         0.815         0.740         0.231         7.920
300  Natural resources and environment:                                                                                                                                                         
    Budget authority..............................................  ............        21.391        20.529        18.902        19.713        18.399        18.994        18.860       115.397
    Outlays.......................................................  ............        21.827        21.322        19.654        20.409        18.950        19.205        18.910       118.450
350  Agriculture:                                                                                                                                                                               
    Budget authority..............................................  ............        12.737        11.840        11.750        11.367        10.714         9.497         8.964        64.132
    Outlays.......................................................  ............        10.751        10.238         9.855         9.483         8.843         7.730         7.181        53.330
370  Commerce and housing credit:                                                                                                                                                               
    Budget authority..............................................  ............        11.884         8.957        14.188        14.103        12.850        14.662        11.598        76.358
    Outlays.......................................................  ............        -7.071        -1.599         7.333         4.377         6.841         8.395         7.218        32.565
400  Transportation:                                                                                                                                                                            
    Budget authority..............................................  ............        36.653        41.737        43.541        43.961        44.103        44.531        45.045       262.918
    Outlays.......................................................  ............        39.308        39.007        37.635        36.111        35.236        34.526        34.042       216.557
450  Community and regional development:                                                                                                                                                        
    Budget authority..............................................  ............        11.089         6.672         6.605         6.559         6.595         6.243         6.153        38.827
    Outlays.......................................................  ............        11.116        10.149         8.640         7.820         7.040         6.655         6.161        46.465
500  Education, training and social services:                                                                                                                                                   
    Budget authority..............................................  ............        47.790        46.965        47.416        48.046        48.696        49.410        50.092       290.625
    Outlays.......................................................  ............        50.558        49.504        48.112        47.817        48.209        48.704        49.335       291.681
550  Health:                                                                                                                                                                                    
    Budget authority..............................................  ............       110.577       129.918       137.726       144.995       152.961       161.114       167.926       894.640
    Outlays.......................................................  ............       122.977       130.276       138.064       145.168       152.890       160.789       167.476       894.663
570  Medicare:                                                                                                                                                                                  
    Budget authority..............................................  ............       181.254       193.165       207.183       217.250       229.309       241.641       255.121     1,343.669
    Outlays.......................................................  ............       179.109       191.481       205.458       214.978       227.560       239.907       252.720     1,332.104
600  Income security:                                                                                                                                                                           
    Budget authority..............................................  ............       219.334       232.612       241.254       244.842       262.510       262.260       281.100     1,524.578
    Outlays.......................................................  ............       228.879       240.107       244.185       251.716       263.060       265.271       277.213     1,514.552
650  Social security:                                                                                                                                                                           
    Budget authority..............................................  ............       354.584       372.450       390.941       410.440       431.006       453.307       476.614     2,534.758
    Outlays.......................................................  ............       351.311       368.139       386.144       405.059       425.100       446.769       469.455     2,500.666
700  Veterans benefits and services:                                                                                                                                                            
    Budget authority..............................................  ............        38.502        39.117        38.458        37.712        37.713        38.002        39.713       230.715
    Outlays.......................................................  ............        37.782        39.654        39.321        38.063        39.427        36.882        39.912       233.259
750  Administration of justice:                                                                                                                                                                 
    Budget authority..............................................  ............        20.969        22.125        22.302        23.186        23.235        20.746        20.740       132.334
    Outlays.......................................................  ............        17.694        19.930        21.162        22.241        22.944        20.704        20.700       127.681
800  General government:                                                                                                                                                                        
    Budget authority..............................................  ............        12.494        11.372        13.314        12.592        12.987        12.549        13.020        75.834
    Outlays.......................................................  ............        12.648        11.747        13.640        12.928        13.364        12.454        12.321        76.454
900  Net interest:                                                                                                                                                                              
    Budget authority..............................................  ............       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
    Outlays.......................................................  ............       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
920  Allowances:                                                                                                                                                                                
    Budget authority..............................................  ............        -0.214         2.671        -1.934        -2.025        -2.038        -2.026        -2.182        -7.534
    Outlays.......................................................  ............        -0.046        -1.032        -0.833        -0.183        -0.271        -1.770        -2.139        -6.228
950  Offsetting receipts:                                                                                                                                                                       
    Budget authority..............................................  ............       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
    Outlays.......................................................  ............       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                   FISCAL YEAR 1997 BUDGET RESOLUTION TOTAL ON-BUDGET                                                   
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Fiscal year--                                                
                                         ---------------------------------------------------------------------------------------------------------------
                                              1996          1997          1998          1999          2000          2001          2002        1997-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority........................     1,266.763     1,311.284     1,357.208     1,386.228     1,428.397     1,450.450     1,497.756     8,431.433
Outlays.................................     1,276.968     1,306.921     1,350.905     1,379.428     1,413.490     1,428.809     1,463.504     8,343.057
Revenues................................     1,059.022     1,085.363     1,130.426     1,176.236     1,229.666     1,288.998     1,358.219     7,268.908
Deficit (-)/surplus (+).................      -217.946      -221.558      -220.479      -203.192      -183.824      -139.811      -105.285    -1,074.149
Debt subject to limit...................     5,160.400     5,434.400     5,697.600     5,938.900     6,159.000     6,332.800     6,464.900    36,027.600
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority....................       264.111       267.183       268.958       271.677       274.377       277.121       280.101     1,639.417
    Outlays.............................       263.595       264.846       263.618       267.049       270.841       270.025       270.122     1,606.501
150  International affairs:                                                                                                                             
    Budget authority....................        15.011        13.732        11.551        10.576        11.089        10.890        11.009        68.847
    Outlays.............................        15.896        14.963        13.484        12.467        11.025        10.584        10.281        72.804
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority....................        16.787        16.537        16.428        16.313        16.159        15.934        15.602        96.973
    Outlays.............................        16.570        16.697        16.494        16.224        16.111        15.943        15.673        97.142
270  Energy:                                                                                                                                            
    Budget authority....................         3.782         2.380         2.441         2.034         1.697         1.782         1.430        11.764
    Outlays.............................         3.523         2.729         2.078         1.327         0.815         0.740         0.231         7.920
300  Natural Resources and Environment:                                                                                                                 
    Budget authority....................        21.391        20.529        18.902        19.713        18.399        18.994        18.860       115.397
    Outlays.............................        21.827        21.322        19.654        20.409        18.950        19.205        18.910       118.450
350  Agriculture:                                                                                                                                       
    Budget authority....................        12.737        11.840        11.750        11.367        10.714         9.497         8.964        64.132
    Outlays.............................        10.751        10.238         9.855         9.483         8.843         7.730         7.181        53.330
370  Commerce and Housing Credit:                                                                                                                       
    Budget authority....................         6.446         7.838         9.464        10.476        12.448        11.268        11.598        63.092
    Outlays.............................        -6.388        -2.319         5.752         6.043         7.320         7.283         7.218        31.297
400  Transportation:                                                                                                                                    
    Budget authority....................        36.653        41.737        43.541        43.961        44.103        44.531        45.045       262.918
    Outlays.............................        39.308        39.007        37.635        36.111        35.236        34.526        34.042       216.557
450  Community and Regional Development:                                                                                                                
    Budget authority....................        11.089         6.672         6.605         6.559         6.595         6.243         6.153        38.827
    Outlays.............................        11.116        10.149         8.640         7.820         7.040         6.655         6.161        46.465
500  Education, Training and Social                                                                                                                     
 Services:                                                                                                                                              
    Budget authority....................        47.790        46.965        47.416        48.046        48.696        49.410        50.092       290.625
    Outlays.............................        50.558        49.504        48.112        47.817        48.209        48.704        49.335       291.681
550  Health:                                                                                                                                            
    Budget authority....................       110.577       129.918       137.726       144.995       152.961       161.114       167.926       894.640
    Outlays.............................       122.977       130.276       138.064       145.168       152.890       160.789       167.476       894.663
570  Medicare:                                                                                                                                          
    Budget authority....................       181.254       193.165       207.183       217.250       229.309       241.641       255.121     1,343.669
    Outlays.............................       179.109       191.481       205.458       214.978       227.560       239.907       252.720     1,332.104
600  Income Security:                                                                                                                                   
    Budget authority....................       219.334       232.612       241.254       244.842       262.510       262.260       281.100     1,524.578
    Outlays.............................       228.879       240.107       244.185       251.716       263.060       265.271       277.213     1,541.552
650  Social Security:                                                                                                                                   
    Budget authority....................         6.868         7.812         8.476         9.219         9.979        10.775        11.607        57.868
    Outlays.............................         9.987        10.543        11.213        11.922        12.662        13.458        14.290        74.088
700  Veterans Benefits and Services:                                                                                                                    
    Budget authority....................        38.502        39.117        38.458        37.712        37.713        38.002        39.713       230.715
    Outlays.............................        37.782        39.654        39.321        38.063        39.427        36.882        39.912       233.259
750  Administration of Justice:                                                                                                                         
    Budget authority....................        20.969        22.125        22.302        23.186        23.235        20.746        20.740       132.334
    Outlays.............................        17.694        19.930        21.162        22.241        22.944        20.704        20.700       127.681
800  General Government:                                                                                                                                
    Budget authority....................        12.494        11.372        13.314        12.592        12.987        12.549        13.020        75.834
    Outlays.............................        12.648        11.747        13.640        12.928        13.364        12.454        12.321        67.454
900  Net Interest:                                                                                                                                      
    Budget authority....................       276.374       282.653       288.947       292.607       294.004       298.041       302.443     1,758.695
    Outlays.............................       276.374       282.653       288.947       292.607       294.004       298.041       302.443     1,758.695
920  Allowances:                                                                                                                                        
    Budget authority....................        -0.214         2.671        -1.934        -2.025        -2.038        -2.026        -2.182        -7.534
    Outlays.............................        -0.045        -1.032        -0.833        -0.183        -0.271        -1.770        -2.139        -6.228
950  Offsetting Receipts:                                                                                                                               
    Budget authority....................       -35.192       -45.574       -35.574       -34.762       -36.540       -38.322       -40.586      -231.358
    Outlays.............................       -35.192       -45.574       -35.574       -34.762       -36.540       -38.322       -40.586      -231.358
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  FISCAL YEAR 1997 BUDGET RESOLUTION--TOTAL OFF-BUDGET                                                  
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Fiscal years--                                                    
                                 -----------------------------------------------------------------------------------------------------------------------
                                       1996           1997           1998           1999           2000           2001           2002        1997-2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority................        310.222        318.579        335.264        347.616        358.261        376.514        388.716     2,1234.960
Outlays.........................        297.709        311.138        324.587        334.239        348.791        365.011        378.874      2,062.640
Revenues........................        365.167        385.010        402.282        423.420        445.102        465.155        487.344      2,608.313
Deficit (-)/Surplus (+).........        +67.458        +73.872        +77.695        +89.181        +96.311       +100.144       +108.470       +545.673
Debt subject to limit...........          0              0              0              0              0              0              0              0    
                                                                                                                                                        
                                 -----------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
150  International affairs:                                                                                                                             
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
270  Energy:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
300  Natural Resources and                                                                                                                              
 Environment:                                                                                                                                           
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
350  Agriculture:                                                                                                                                       
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
370  Commerce and Housing                                                                                                                               
 Credit:                                                                                                                                                
    Budget authority............          5.438          1.119          4.724          3.627          0.402          3.394          0             13.260
    Outlays.....................         -0.683          0.720          1.581         -1.666         -0.479          1.112          0              1.268
400  Transportation:                                                                                                                                    
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
450  Community and Regional                                                                                                                             
 Development:                                                                                                                                           
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
500  Education, Training, and                                                                                                                           
 Social Services:                                                                                                                                       
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
550  Health:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
570  Medicare:                                                                                                                                          
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
600  Income Security:                                                                                                                                   
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
650  Social Security:                                                                                                                                   
    Budget authority............        347.716        364.638        382.465        401.221        421.027        442.532        465.007      2,476.890
    Outlays.....................        341.324        357.596        374.931        393.137        412.438        433.311        455.165      2,426.578
700  Veterans Benefits and                                                                                                                              
 Services:                                                                                                                                              
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
750  Administration of Justice:                                                                                                                         
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
800  General Government:                                                                                                                                
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
900  Net Interest:                                                                                                                                      
    Budget authority............        -36.640        -40.555        -44.900        -49.690        -54.979        -60.722        -66.864       -317.710
    Outlays.....................        -36.640        -40.555        -44.900        -49.690        -54.979        -60.722        -66.864       -317.710
920  Allowances:                                                                                                                                        
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
950  Offsetting Receipts:                                                                                                                               
    Budget authority............         -6.292         -6.623         -7.025         -7.542         -8.189         -8.690         -9.427        -47.496
    Outlays.....................         -6.292         -6.623         -7.025         -7.542         -8.189         -8.690         -9.427        -47.496
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                    FISCAL YEAR 1997 BUDGET RESOLUTION--DISCRETIONARY                                                   
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year--                                                    
                                 -----------------------------------------------------------------------------------------------------------------------
                                       1996           1997           1998           1999           2000           2001           2002        1997-2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority................        495.811        494.995        492.249        488.586        496.295        488.863        499.041      2,960.029
Outlays.........................        535.974        535.139        526.421        524.319        524.462        513.713        511.352      3,135.406
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority............        264.882        267.962        269.731        272.380        275.064        277.832        280.739      1,643.708
    Outlays.....................        264.516        265.668        264.462        267.808        271.537        270.744        270.768      1,610.987
150  International affairs:                                                                                                                             
    Budget authority............         18.496         17.660         15.491         14.458         13.814         13.490         13.320         88.233
    Outlays.....................         19.846         19.311         17.843         16.540         15.264         14.415         13.854         97.227
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority............         16.748         16.497         16.387         16.270         16.115         15.889         15.556         96.714
    Outlays.....................         16.532         16.658         16.455         16.184         16.069         15.899         15.628         96.893
270  Energy:                                                                                                                                            
    Budget authority............          4.835          3.778          3.557          3.596          3.329          3.261          3.199         20.720
    Outlays.....................          5.814          5.051          4.255          4.009          3.600          3.411          3.254         23.580
300  Natural Resources and                                                                                                                              
 Environment:                                                                                                                                           
    Budget authority............         20.534         19.787         19.513         19.072         18.678         18.594         18.466        114.110
    Outlays.....................         21.323         20.701         20.289         19.830         19.334         18.915         18.647        117.716
350  Agriculture:                                                                                                                                       
    Budget authority............          3.949          2.978          2.881          2.686          2.581          2.408          2.118         15.652
    Outlays.....................          3.969          3.211          2.964          2.754          2.617          2.449          2.165         16.160
370  Commerce and Housing                                                                                                                               
 Credit:                                                                                                                                                
    Budget authority............          1.787          2.441          2.509          2.907          4.188          2.307          2.303         16.655
    Outlays.....................          1.923          2.575          2.583          2.690          3.697          2.485          2.092         16.122
400  Transportation:                                                                                                                                    
    Budget authority............         13.752         12.945         12.654         12.521         11.967         11.681         11.467         73.235
    Outlays.....................         36.480         36.443         35.494         34.276         33.579         32.941         32.480        205.213
450  Community and Regional                                                                                                                             
 Development:                                                                                                                                           
    Budget authority............         10.453          6.368          6.306          6.272          6.243          5.902          5.924         37.015
    Outlays.....................         10.748         10.161          8.804          7.996          7.077          6.689          6.294         47.021
500  Education, Training and                                                                                                                            
 Social Services:                                                                                                                                       
    Budget authority............         36.220         35.372         35.135         34.979         34.842         34.773         34.711        209.812
    Outlays.....................         38.820         37.984         35.801         35.100         34.843         34.689         34.612        213.029
550  Health:                                                                                                                                            
    Budget authority............         23.254         22.230         22.159         21.957         21.845         21.726         21.526        131.443
    Outlays.....................         23.093         22.711         22.381         22.088         21.944         21.818         21.626        132.568
570  Medicare:                                                                                                                                          
    Budget authority............          3.031          3.031          3.031          3.031          3.031          3.031          3.031         18.186
    Outlays.....................          3.026          3.031          3.031          3.031          3.031          3.031          3.031         18.186
600  Income security:                                                                                                                                   
    Budget authority............         27.517         29.780         34.445         30.298         36.531         32.336         39.227         32.336
    Outlays.....................         38.740         39.867         39.788         39.621         39.349         37.678         37.516        233.819
650  Social Security:                                                                                                                                   
    Budget authority............          0.006          0.005          0.005          0.005          0.005          0.005          0.005          0.030
    Outlays.....................          3.125          2.736          2.742          2.708          2.688          2.688          2.688         16.250
700  Veterans Benefits and                                                                                                                              
 Services:                                                                                                                                              
    Budget authority............         18.425         19.079         18.129         17.154         17.054         17.154         18.704        107.274
    Outlays.....................         19.029         19.404         18.837         17.377         17.108         17.161         18.533        108.420
750  Administration of Justice:                                                                                                                         
    Budget authority............         20.575         21.862         21.857         22.738         22.807         20.342         20.360        129.966
    Outlays.....................         17.342         19.728         20.780         21.858         22.578         20.363         20.383        125.690
800  General government:                                                                                                                                
    Budget authority............         11.561         10.508         10.361         10.259         10.211         10.130         10.540         62.009
    Outlays.....................         11.694         10.918         10.713         10.598         10.387         10.078          9.892         62.586
900  Net interest:                                                                                                                                      
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
920  Allowances:                                                                                                                                        
    Budget authority............         -0.214          2.712         -1.903         -1.997         -2.010         -1.998         -2.155         -7.351
    Outlays.....................         -0.046         -1.019         -0.801         -0.149         -0.240         -1.741         -2.111         -6.061
950  Offsetting receipts:                                                                                                                               
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      FISCAL YEAR 1997 BUDGET RESOLUTION--MANDATORY                                                     
                                                                [in billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Fiscal year--                                                
                                         ---------------------------------------------------------------------------------------------------------------
                                              1996          1997          1998          1999          2000          2001          2002        1997-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority........................     1,081.174     1,134.868     1,200.223     1,245.368     1,290.363     1,338.431     1,387.431     7,596.354
Outlays.................................     1,038.703     1,082.920     1,149.071     1,189.348     1,237.819     1,280.107     1,331.026     7,270.291
Revenues................................     1,424.189     1,470.373     1,532.708     1,599.656     1,674.768     1,754.153     1,845.153     9,877.221
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
050  National defense:                                                                                                                                  
    Budget authority....................        -0.771        -0.779        -0.773        -0.703        -0.687        -0.711        -0.638        -4.291
    Outlays.............................        -0.921        -0.822        -0.844        -0.759        -0.696        -0.719        -0.646        -4.486
150  International affairs:                                                                                                                             
    Budget authority....................        -3.485        -3.928        -3.940        -3.882        -2.725        -2.600        -2.311       -19.386
    Outlays.............................        -3.950        -4.348        -4.359        -4.073        -4.239        -3.831        -3.573       -24.423
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority....................         0.039         0.040         0.041         0.043         0.044         0.045         0.046         0.259
    Outlays.............................         0.038         0.039         0.039         0.040         0.042         0.044         0.045         0.249
270  Energy:                                                                                                                                            
    Budget authority....................        -1.053        -1.398        -1.116        -1.562        -1.632        -1.479        -1.769        -8.956
    Outlays.............................        -2.291        -2.322        -2.177        -2.682        -2.785        -2.671        -3.023       -15.660
300  Natural Resources and Environment:                                                                                                                 
    Budget authority....................         0.857         0.742        -0.611         0.641        -0.279         0.400         0.394         1.287
    Outlays.............................         0.504         0.621        -0.635         0.579        -0.384         0.290         0.263         0.734
350  Agriculture:                                                                                                                                       
    Budget authority....................         8.788         8.862         8.869         8.681         8.133         7.089         6.846        48.480
    Outlays.............................         6.782         7.027         6.891         6.729         6.226         5.281         5.016        37.170
370  Commerce and Housing Credit:                                                                                                                       
    Budget authority....................        10.097         6.516        11.679        11.196         8.662        12.355         9.295        59.703
    Outlays.............................        -8.994        -4.174         4.750         1.687         3.144         5.910         5.126        16.433
400  Transportation:                                                                                                                                    
    Budget authority....................        22.901        28.792        30.887        31.440        32.136        32.850        33.578       189.683
    Outlays.............................         2.828         2.564         2.141         1.835         1.657         1.585         1.562        11.344
450  Community and Regional Development:                                                                                                                
    Budget authority....................         0.636         0.304         0.299         0.287         0.352         0.341         0.229         1.812
    Outlays.............................         0.368        -0.012        -0.164        -0.176        -0.037        -0.034        -0.133        -0.556
500  Education, Training and Social                                                                                                                     
 Services:                                                                                                                                              
    Budget authority....................        11.570        11.593        12.281        13.067        13.854        14.637        15.381        80.813
    Outlays.............................        11.738        11.520        12.311        12.717        13.366        14.015        14.723        78.652
550  Health:                                                                                                                                            
    Budget authority....................        87.323       107.688       115.567       123.038       131.116       139.388       146.400       763.197
    Outlays.............................        99.884       107.565       115.683       123.080       130.946       138.971       145.850       762.095
570  Medicare:                                                                                                                                          
    Budget authority....................       178.223       190.134       204.152       214.219       226.278       238.610       252.090     1,325.483
    Outlays.............................       176.083       188.450       202.427       211.947       224.529       236.876       249.689     1,313.918
600  Income Security:                                                                                                                                   
    Budget authority....................       191.817       202.832       206.808       214.544       225.979       229.924       241.873     1,321.960
    Outlays.............................       190.139       200.240       204.397       212.095       223.711       227.593       239.697     1,307.733
650  Social Security:                                                                                                                                   
    Budget authority....................       354.578       372.445       390.936       410.435       431.001       453.302       476.609     2,534.728
    Outlays.............................       348.186       365.403       383.402       402.351       422.412       444.081       466.767     2,484.416
700  Veterans Benefits and Services:                                                                                                                    
    Budget authority....................        20.077        20.038        20.329        20.558        20.659        20.848        21.009       123.441
    Outlays.............................        18.753        20.250        20.484        20.686        22.319        19.721        21.379       124.839
750  Administration of Justice:                                                                                                                         
    Budget authority....................         0.394         0.263         0.445         0.448         0.428         0.404         0.380         2.368
    Outlays.............................         0.352         0.202         0.382         0.383         0.366         0.341         0.317         1.991
800  General Government:                                                                                                                                
    Budget authority....................         0.933         0.864         2.953         2.333         2.776         2.419         2.480        13.825
    Outlays.............................         0.954         0.829         2.927         2.330         2.977         2.376         2.429        13.868
900  Net Interest:                                                                                                                                      
    Budget authority....................       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
    Outlays.............................       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
920  Allowances:                                                                                                                                        
    Budget authority....................         0.000        -0.041        -0.031        -0.028        -0.028        -0.028        -0.027        -0.183
    Outlays.............................         0.000        -0.013        -0.032        -0.034        -0.031        -0.029        -0.028        -0.167
950  Offsetting Receipts:                                                                                                                               
    Budget authority....................       -41.484       -52.197       -42.599       -42.304       -42.729       -47.012       -50.013      -278.854
    Outlays.............................       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
--------------------------------------------------------------------------------------------------------------------------------------------------------



                             Function 050:



                            National Defense

                              ----------                              


                                         FUNCTION 050: NATIONAL DEFENSE                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $264,111   $267,183   $268,958   $271,677   $274,377   $277,121    280,101
Outlays............................    263,595    264,846    263,618    267,049    270,841    270,025    270,122
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    As established in the preamble to the Constitution, 
providing for the common defense of the Nation is an absolute 
requirement of the Federal Government. The budget resolution 
recognizes this priority. Planning for the Nation's defense 
requires a long-term perspective on the unpredictability of 
threats and the potentially revolutionary nature of modern 
technology applied to military systems. The next generation of 
Americans will enjoy the fruits of their work only if the 
United States remains secure from foreign threats.
    The current administration has enjoyed an almost 
unprecedented breathing space to fashion a defense strategy 
because President Reagan had already won the cold war. Lacking 
a clear vision of future national security needs, the 
administration in 1993 produced its Bottom-Up Review, which was 
supposed to clarify defense needs. The review failed on several 
counts: it offered an overly static analysis of national 
security threats; it failed to account for rapidly changing 
technology and operational concepts (including the rapid 
employment of commercial technology by potential foes); and it 
chronically underfunded the very force structure it 
established.
    Failing to recognize the need for a balance among 
diplomatic, economic, and military statecraft, the President 
has thrown American forces into several foreign conflicts of no 
vital national interest. In Somalia, the President turned a 
humanitarian operation into a nation-building exercise, with 
disastrous consequences. In Haiti, he has retained a 
substantial commitment of United States troops, despite the 
administration's ostentatious transfer of responsibilities on 
the island to the United Nations. In Bosnia, the administration 
at first supported the maintenance of an arms embargo as the 
best means of avoiding intervention by United States troops; 
then the Dayton Peace Accord made intervention by 25,000 United 
States troops a fait accompli. The safety of these United 
States service personnel is threatened by activities of 
Iranian-backed mercenaries, whose presence in Bosnia had been 
obscured by the administration during the period when it 
rhetorically backed the arms embargo. American servicemen and 
women in Bosnia are also in danger of becoming enmeshed in 
nation-building under the euphemism of ``implementing the 
civilian side of the Dayton Peace Accord.''
    Into this context falls the President's budget for fiscal 
year 1997, which once again fails to provide adequately for the 
national security needs of the Nation. The administration's 
budget submission reduces proposed spending for national 
defense by 4 percent from current spending levels. Only through 
the active intervention of the Congress in 1995 was the decade-
long decline in defense spending checked.
    Although the cold war is over, the United States remains a 
superpower with global security interests. Protecting and 
promoting these interests requires the commitment to pay for 
the forces necessary to execute the national strategy. Under 
the circumstances, the administration's defense budget path, 
which mandates near-term cuts and delays increases until the 
next century, lacks credibility.
    While the congressional budget resolution keeps defense 
roughly equal with inflation, the President's total national 
defense request of $254.3 billion in budget authority and 
$260.9 billion in outlays [as estimated by CBO] is $12.9 
billion in budget authority and $4.0 billion in outlays below 
the budget resolution. The President has requested four 
consecutive defense budgets that exacerbate the inconsistencies 
among resources, forces, and strategy endemic to the Bottom-Up 
Review. He has used cuts in defense spending as a major means 
of paying for increases in domestic discretionary spending. 
Cuts in Department of Defense civilian employees account for 
almost 75 percent of all reductions in the Federal work force 
over the past 3 years.
    In working to ensure that adequate resources are made 
available for the Nation's security, Congress will continue to 
address the areas of concern indicated below. Although these 
policy priorities reflect the recommendations of the Committee 
on the Budget, the actual policy changes for programs in this 
function fall under the authority of the authorizing and 
appropriating committees with jurisdiction over the programs. 
The committees of jurisdiction retain the authority to pursue 
alternative specific policies from those reflected in this 
report as long as they stay within the spending guidelines that 
flow from the budget resolution's spending limitations.

                             modernization

    The President's fiscal year 1997 request continues the 
administration's practice of promising defense modernization 
``next year.'' The administration's defense budget cuts weapons 
procurement from the current level of $44 billion to $38.9 
billion in budget authority, disregarding the recommendation of 
the Joint Chiefs of Staff that procurement be significantly 
increased.
    The President's proposed budget contains funding cuts of 25 
percent or more in Navy shipbuilding, Army and Air Force 
aircraft, and ammunition. According to the General Accounting 
Office [GAO], this year's Future Years Defense Plan [FYDP] 
reflects a $25.9-billion cut in procurement through 2001 when 
compared with last year's FYDP. This fall-off in modernization 
results from the administration's failure to reduce 
infrastructure (spending that is not directly related to 
warfighting capability) as a proportion of DOD spending.
    The Bottom-Up Review estimated infrastructure at 59 percent 
of the defense budget. At the time, it was expected that 
billions of dollars for modernization would come from reducing 
infrastructure overhead. But GAO has found no decrease in the 
proportion of the President's budget attributable to 
infrastructure over the period of the FYDP. As a consequence, 
funds that should have gone toward modernization of weapon 
systems have been devoured by overhead. The budget resolution 
assumes the committees of jurisdiction will reverse the 
downward trend in weapons procurement and pursue a vigorous 
program of modernization.

                       ballistic missile defense

    Ballistic-missile and weapon-of-mass-destruction 
technologies are proliferating into the hands of rogue nations 
and transnational groups despite the best efforts of the United 
States and other responsible nations. Protecting American 
citizens from the growing threat of a ballistic missile attack 
is a national security priority of the highest order--a 
priority that must be addressed before, not after, the threat 
becomes a reality.
    This problem has been highlighted by China's recent missile 
tests near Taiwan; neither of the United States carrier task 
forces sent to monitor the situation is capable of shooting 
down ballistic missiles, although the technology currently 
exists. Although the administration claims to support such 
defensive capabilities for U.S. allies, it fails to see the 
need to provide ballistic missile protection for Americans.
    This budget resolution assumes a robust effort to provide a 
cost-effective defense for the American people.

                            quality of life

    As noted by Representative Skelton in testimony to the 
Budget Committee, Congress and the administration must work 
together to ensure a decent and fair standard of living for 
military personnel and their families. In this context, 
military family housing must assume a high priority. Housing 
that is greatly inferior to what is available in the private 
sector lowers morale and diminishes retention of qualified 
individuals.
    Current high military deployment rates and consequent unit 
operational tempo are straining personnel. High-priority 
elements such as AWACS units, the Marines, and the 10th 
Mountain Division experience almost continuous deployment 
abroad and consequent separation from families. This situation 
incurs a contingency cost that cannot be measured in dollars. 
In the long run, the administration's excessive reliance on the 
military to solve its foreign policy dilemmas will destroy unit 
readiness and the retention of skilled personnel.

                defense reorganization and streamlining

    The best way to provide for the Nation's security needs 
while balancing the Federal budget is to generate significant 
savings internal to the Department of Defense. These savings 
can be shifted from overhead functions, or the administrative 
``tail,'' to actual defense programs, or the warfighting 
``tooth.''
    The 104th Congress has taken the initial steps to compel 
the Pentagon to change its antiquated bureaucracies and 
business practices. It has done so by legislating: reductions 
in the staff of the Office of the Secretary of Defense; a 25-
percent reduction in personnel assigned to acquisition 
organizations so as to reflect streamlined processes; and 
outsourcing of a range of non-warfighting support functions.
    As was emphasized in the discussion on modernization, it is 
critical for the Department to rigorously streamline its 
operations. Averting the gradual cannibalization of warfighting 
capability requires boldly reducing nonessential overhead.
    It is assumed that streamlining and consolidation will 
continue in fiscal year 1997, leading to fundamental reform in 
areas such as the U.S. Transportation Command, where 
duplication and bureaucracy seriously inhibit efficiency and 
drive up defense transportation costs.

                           acquisition reform

    The 104th Congress has passed legislation to change the way 
the Department of Defense procures goods and services. The 
reforms will eliminate unnecessary specifications and make the 
efficiencies of the commercial marketplace more widely 
available to defense customers. These reforms will conserve 
defense resources and, more important, reduce the cycle time 
necessary to acquire the weapons of the 21st century.
    But more needs to be done. The effectiveness of these 
reforms will depend on how aggressively the Pentagon implements 
them. The committees of jurisdiction must exert continual 
pressure upon the Department to drastically shorten the weapons 
development and procurement cycle.
    Although numerous technological reasons make it unlikely 
that programs such as the P-51 (concept to first flight in 91 
days) are repeatable in the current context, it is nevertheless 
astonishing that the research and development cycle of today's 
major weapon systems typically requires up to 20 years. The 
Pentagon must shorten the acquisition cycle so as to be able to 
acquire new field weapons in time to counter projected threats.

                      Other Defense Budget Issues

                   reductions in nondefense spending

    Significant progress was made last year in reducing 
nondefense spending in the defense budget.
    Congress was able to curtail spending on the expensive and 
increasingly politicized Technology Reinvestment Project 
[TRP]--a civilian/military technology development program, run 
out of the White House--which consumed defense dollars but 
returned little of value to the Department of Defense.
    The budget resolution recommends no further funding of TRP, 
Sematech, and the Strategic Environmental Research and 
Development Program. These are examples of programs with 
marginal defense utility. It is assumed that the committees of 
jurisdiction will continue with aggressive efforts to eliminate 
nondefense items from the defense budget. In particular, the 
resolution urges the rejection of the administration's proposed 
$250 million Dual Use Applications Program, a successor to TRP.
    A further concern is the lack of rigorous management of the 
services' manufacturing technology [Mantech] programs. Such 
management should focus on near-term cost reduction in 
manufacturing. GAO will report to the Budget Committee on 
Mantech program performance.
    Heavy environmental cleanup costs pose a significant threat 
of ``cannibalizing'' the budget and crowding out necessary 
investments. This situation is particularly true for the 
Department of Energy's cleanup of the Nuclear Weapons Complex. 
Both the Department of Defense and the Department of Energy 
must develop better information on cleanup costs, prioritize 
cleanups more rationally, and introduce more cost-effective 
methods, including new technology.
    Finally, the Department should enter into agreements with 
the private sector to provide the capital needed to upgrade 
energy producing and consuming facilities at no cost to the 
government. H.R. 2993, introduced by Representative Hobson, 
would help facilitate this initiative.

                         contingency operations

    Congress has had some success in establishing temporary 
finance mechanisms to alleviate the pressures on readiness by 
unbudgeted or contingency operations such as the deployment of 
United States forces to Bosnia. These initiatives were designed 
to halt the damaging practice of raiding operational readiness 
and training accounts to finance humanitarian and peacekeeping 
operations in Bosnia, Haiti, Somalia, Iraq, and elsewhere.
    The Pentagon already has projected the fiscal year 1996 
unbudgeted costs associated with the Bosnia deployment at $2 
billion, and this amount is expected to grow. The committees of 
jurisdiction must continue to ensure that critical military 
readiness does not suffer from contingency operations 
peripheral to U.S. national interests.

                               inflation

    The administration purports to save more than $45 billion 
in the defense budget through 2002 by a downward reestimation 
of inflation. Because the Department of Defense is allowed to 
retain $30 billion of this purported ``disinflation dividend,'' 
the administration argues that the military is able to buy more 
with the dollars it has.
    The administration's reasoning is weak on several counts. 
First, the reestimate assumes a level of inflation lower than 
any seen since the 1950's. Second, there is no comparable 
disinflation dividend in any domestic spending account, so the 
administration's action is inconsistent at best.
    Finally, inflation reestimates should not be a pretext for 
breaching the firewall between defense and nondefense spending 
assumed in the Budget Resolution Conference Report for Fiscal 
Year 1996. (A firewall ``breach'' would be the practical result 
of funds ``disappearing'' from defense as a result of an 
inflation reestimate and being reallocated to the 
administration's domestic spending preferences.)

                 Additional Changes From Current Policy

    The budget resolution also assumes savings in this function 
from sales from the National Defense Stockpile. These 
assumptions are described in detail in Appendix 1.


                             Function 150:



                         International Affairs

                              ----------                              


                                       FUNCTION 150: INTERNATIONAL AFFAIRS                                      
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $15,011   $13,732   $11,551   $10,576   $11,089   $10,890   $11,009
Outlays...................................    15,896    14,963    13,484    12,467    11,025    10,584    10,281
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Like national defense, the foreign policy of the Nation is 
reserved to the Federal Government. But achieving a sound 
foreign policy requires different means from those of the 
current administration, which believes that money is the main 
ingredient. This budget resolution promotes economic 
development in less-developed countries through a variety of 
alternative strategies that are consistent with Americans' 
values--strengthening free-market domestic economies, removing 
obstacles to private international trade, and fostering an 
economic climate that is favorable to private international 
investment. The budget also seeks an appropriate balance among 
diplomatic, economic, and military statecraft. This balanced 
approach envisions limiting military involvement abroad to 
those situations that affect vital national interests--a 
departure from the administration's practice of using American 
military forces to rectify its diplomatic failures. Like last 
year's budget, this resolution prudently reduces spending 
without touching Camp David-related assistance.
    Still, this budget recognizes the impossibility of ignoring 
the growing ineffectiveness of the Department of State and the 
Agency for International Development [AID]. Likewise, it views 
the United States Information Agency [USIA] and the Arms 
Control and Disarmament Agency [ACDA] as cold war relics. Once 
again, it assumes that much of the existing foreign policy 
apparatus is duplicative and should be consolidated within the 
Department of State. But the budget also recognizes the 
importance of humanitarian assistance. The American people have 
consistently demonstrated their compassion for those in 
distress abroad. This budget resolution maintains those values.
    The discussion below reflects the assumptions underlying 
the House Budget Committee's recommendations concerning the 
funding priorities for programs in this function. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

             continue to restructure development assistance

    Historically, development assistance has taken the form of 
grants or loans or technical advice provided directly to the 
government of the recipient country. This has strengthened the 
role of the government in the local economy and reduced 
pressure on the government to maintain an environment favorable 
to economic development. This model was chosen because, it was 
argued, developing countries lacked access to private capital. 
But this argument ignores a basic economic fact: capital 
becomes readily available when a country pursues the conditions 
that foster economic development--respect for private property 
and free enterprise; in the absence of these conditions, 
capital that is made available is likely to be wasted.
    Last year, the Congress took the first step to reform and 
refocus development assistance, which is largely administered 
by the Agency for International Development [AID]. Former 
Secretary of State James A. Baker noted that the two rationales 
for the existence of AID--to stave off communist aggression and 
to implement government-to-government transfers for large 
capital projects--no longer exists. The first became obsolete 
with the end of the cold war and the second has been 
discredited as a development model.
    This proposal continues to refocus assistance on more 
attainable goals and in countries that are more likely to 
benefit from U.S. development assistance. In addition, the 
proposal would eliminate the housing investment guarantee 
program. It assumes that the purposes of AID or any successor 
organization should be identical with the purposes of overall 
American foreign policy; for this reason, the Budget Committee 
again recommends that AID should be incorporated into the 
Department of State.
    The proposal also provides funds to both Eastern Europe and 
the former Soviet Union to assist their transition to 
democratic societies. Assistance to Eastern Europe has always 
been viewed as temporary in nature. This proposal recognizes 
this fact and phases out funding. It is important, however, to 
provide a degree of equity between the democracies of Eastern 
Europe and those of the former Soviet Union. Therefore, this 
proposal assumes that assistance to the former Soviet Union 
will be phased out. While funding is provided, the budget 
resolution assumes that the Ukraine and Armenia will receive an 
equitable distribution to promote free enterprise and 
democracy.

                     reform the department of state

    The Department of State promotes U.S. foreign policy 
interests abroad. Other, smaller agencies also conduct research 
and activities relating to foreign affairs. The Department of 
State's budget grew from $1.7 billion in the early 1980's to 
$2.6 billion in 1995. The increases in funding mainly reflect 
growth in salaries and related expenses, and rent and 
acquisition costs of residences and offices.
    Even the administration appears to believe that major 
changes in the Department are needed. In the President's long-
range budget submission, for example, salaries and expenses 
would be reduced to $270 million by fiscal year 2000; 
diplomatic and consular programs would be reduced to $1.3 
billion in the same year. For fiscal year 1996, the comparable 
figures are $365 million and $1.719 billion respectively. The 
budget resolution assumes the President's funding levels 
beginning in 1998.0
    This proposal recommends a complete restructuring of 
foreign policy. It assumes that the Department of State will 
absorb the Arms Control and Disarmament Agency [ACDA], the 
United States Information Agency, and the Agency for 
International Development. It also assumes the elimination of 
small agencies--such as the East-West Center and the North-
South Center, which duplicate functions in the Department of 
State--leading to a more coherent foreign policy. This is also 
true for the United States Institute for Peace. Testifying 
before the Budget Committee on March 22, 1996, Representative 
Danner noted that the Congress:

        * * * said quite explicitly that the institute, 
        following initial Federal funding, should establish a 
        private endowment and operate independently. * * * It 
        is time that the Institute--with its $11 million annual 
        budget--finds private dollars.

Finally, this proposal assumes the President's recommended 
reductions for the National Endowment for Democracy through 
fiscal year 2000.

                                 FUNCTION 150: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Continue to restructure development                                                                             
 assistance:                                                                                                    
    Budget authority......................     5,613      -422    -1,054    -1,519    -1,744    -1,869    -1,941
    Outlays...............................     6,417       -83      -383      -807    -1,125    -1,404    -1,627
Reform the Department of State:                                                                                 
    Budget authority......................     3,816      -111      -535      -717      -934      -934      -934
    Outlays...............................     3,937       -97      -500      -669      -864      -902      -915
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    Additional savings are assumed in this function from 
provisions including the following: ceasing support for the 
International Development Association [IDA] and other ``soft-
loan'' windows of the various multilateral banks; recognizing 
that the capital replenishments for several multilateral 
institutions will soon be completed; accepting the President's 
long-term proposals for peacekeeping operations, migrations and 
refugee assistance, and the Foreign Military Financing [FMF] 
loan program account; privatizing the United States Information 
Agency [USIA]; and reducing subsidies for international exports 
and investment, including Public Law 480.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 250:



                 General Science, Space, and Technology

                              ----------                              


                              FUNCTION 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $16,787   $16,537   $16,428   $16,313   $16,159   $15,934   $15,602
Outlays...................................    16,570    16,697    16,494    16,224    16,111    15,943    15,673
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    For the technological revolution to continue, a strong 
fundamental science base is needed. Therefore, the proposals in 
Function 250 prioritize basic research policies. For example, 
National Science Foundation research and related activities are 
provided 3 percent annual growth. Budget realities dictate that 
basic research be reemphasized. Much applied research can and 
should be market-driven and conducted by the private sector.
    Nevertheless, in certain areas, such as fundamental 
scientific research and collective risk endeavors, the 
government does play an important role. Space exploration is 
one example, and agencies such as the National Aeronautics and 
Space Administration have been able to make significant strides 
with public funds. Still, even in space, the budget resolution 
advocates policies that encourage faster private technology 
development as risk becomes better understood and more 
controllable. Finding ways to involve industries in space 
activities should be a major priority.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The committees 
of jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the budget resolution's spending 
limitations.

  emphasize basic science within the national science foundation [nsf]

    This proposal assumes that while science and technology 
must contribute to the immediate fiscal reality, the core 
Federal role of developing new knowledge for the future must be 
protected and enhanced. Under this proposal, basic research is 
prioritized. For instance, NSF civilian research grants are 
provided 3 percent annual growth through not more than five 
scientific directorates. No reductions are assumed to NSF basic 
research on the physical sciences. Education and Human 
Resources can be maintained, as can Academic Research 
Infrastructure. The budget resolution assumes that $25 million 
in environmental and safety work is included for the NSF South 
Pole station in Antarctica.

                     emphasize nasa's core missions

    This proposal assumes that space exploration is one example 
where the collective risks are still high, and recognizes the 
gains made with public funds by agencies such as the National 
Aeronautics and Space Administration. Still, even in space it 
advocates policies that encourage faster private technology 
development as risk becomes better understood and more 
controllable. Finding ways to involve industry in space 
activities is a major priority.
    Consequently, this proposal assumes savings by operating 
the space shuttle privately. Savings on the order of $1.8 
billion are also assumed in the Mission to Planet Earth [MTPE] 
Program by prioritizing the scientific data needed, 
incorporating commercial technology, and, most important, 
acquiring data directly from the private sector. The budget 
resolution notes that these program reforms will result in a $6 
billion MTPE effort between fiscal years 1997 and 2002. 
Finally, the proposal furnishes the full allocation of 
resources necessary from the $11 billion required to complete 
the construction and assembly of the international space 
station basic research laboratory. The NASA basic research 
disciplines, space science and life and microgravity sciences, 
are allocated 20 percent of the NASA budget (with increases 
each year), fulfilling the top recommendation of the Augustine 
Advisory Committee on the Future of the U.S. Space Program. 
[Note: The figures above reflect the portion of this provision 
that occurs in Function 250. A second portion appears in 
Function 400.]

           prioritize general science and research activities

    This account provides funds for high energy physics and 
nuclear physics. This proposal assumes that basic science is 
maintained with the inclusion of the Science User Facilities 
Initiative and appropriate decommissioning of outmoded, 
antiquated facilities. United States participation in the 
international Large Hadron Collider [LHC] experiment at the 
European Laboratory for Particle Physics [CERN] is supported 
and provided for in the outyears.

                                 FUNCTION 250: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Emphasize basic science within the                                                                              
 National Science Foundation (NFS)--                                                                            
 research and related activities:                                                                               
    Budget authority......................     2,251        67        95       165       238       312       389
    Outlays...............................     2,077        20        70       101       168       240       315
Reform other programs within the National                                                                       
 Science Foundation (NSF):                                                                                      
    Budget authority......................       905         4       -50       -76       -81       -81       -81
    Outlays...............................       829        -6        -6       -27       -63       -78       -81
Emphasize NASA's core missions:                                                                                 
    Budget authority......................    12,611      -349      -425      -586      -809    -1,109    -1,519
    Outlays...............................    11,378      -197      -393      -593      -782    -1,031    -1,374
Prioritize general science and research                                                                         
 activities:                                                                                                    
    Budget authority......................       981        27        19        19        19        19        19
    Outlays...............................     1,048        15        23        19        19        19        19
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    An additional policy is assumed that allows private 
producers to build and operate cogeneration facilities at 
Federal civilian installations. Although this provision 
reflects a recommendation and assumption of the Committee on 
the Budget, the actual policy change is the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the program involved. A further description of this 
recommended policy change is contained in Appendix 1.


                             Function 270:



                                 Energy

                              ----------                              


                                              FUNCTION 270: ENERGY                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................    $3,782    $2,380    $2,441    $2,034    $1,697    $1,782    $1,430
Outlays...................................     3,523     2,729     2,078     1,327       815       740       231
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    To determine what is good fundamental science, and to 
prioritize research and development, the budget resolution 
employs the following six criteria:

  - Federal R&D efforts should focus on long-term, 
        noncommercial R&D, with potential for scientific 
        discovery and the creation of new knowledge, leaving 
        economic feasibility and commercialization to the 
        marketplace.

  - Federal funding of R&D on specific processes and 
        technologies should not be carried out beyond 
        demonstration of technical feasibility. Significant 
        additional private investment should be required for 
        economic feasibility, commercial development and 
        demonstration, and production and marketing.

  - Revolutionary ideas and pioneering capabilities that make 
        possible the impossible--that which has never been done 
        before--should be pursued within controlled, 
        performance-based levels of funding.

  - The Federal Government should avoid funding research in 
        areas that are receiving--or should be reasonably 
        expected to obtain--funding from the private sector. 
        This principle applies to evolutionary advances or 
        incremental improvements.

  - Government-owned laboratories should confine their in-house 
        research to areas in which their technical expertise 
        and facilities have no peer and should contract out 
        other research to industry, private research 
        foundations, and universities.

  - All R&D programs should be relevant and tightly focused to 
        the agency's constitutional mission; those that are not 
        should be terminated.

    When specifically applied to the Department of Energy, 
these guidelines suggest significant further reductions in 
programs that, in turn, make much of the existing bureaucracy 
unnecessary and suggest its elimination. Because many of the 
Department of Energy's programs fund industrial product 
development, they cannot satisfy the ``screen'' of the above 
criteria. As a result, energy supply R&D, which was reduced by 
more than $500 million in fiscal year 1996, can be further 
reduced by $187 million in fiscal year 1997 on the way to a 
$2.0 billion funding level in fiscal year 2002. On the other 
hand, examples of research that ``pass'' the six-point test 
include the human genome project; an expanding hydrogen energy 
basic research program; and basic energy sciences research. 
Likewise, application of the criteria to fossil technologies, 
the product of mature industries, and conservation projects, 
which predominantly demonstrate cost-avoidance, suggest 
termination. The clean coal technology program is also 
recommended for termination and rescission.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The discussion 
below reflects the assumptions underlying the House Budget 
Committee's recommendations concerning the funding priorities 
for programs in this function.

      continue the process of terminating the department of energy

    The budget resolution reflects the conviction that the 
Nation's energy problems will be solved by the people and 
industries of this country in response to realistic Federal 
policies, not by government spending. In the past the Federal 
Government has postponed hard decisions on energy policy and 
created numerous programs that have added to the burden of the 
budget and have provided the illusion of progress without the 
reality.
    The Department of Energy was supposedly created to deal 
with the energy ``crisis'' that the country experienced in the 
1970's. The ``crisis'' began with natural gas shortages in the 
winter of 1971. There was a heating oil shortage the following 
winter. There were gasoline and diesel fuel shortages in early 
1974 and again in 1979. Many policymakers envisioned the 
prospect of inevitable energy shortages and ever increasing 
prices. In February 1981, the Congressional Budget Office even 
stated that ``the price of oil will almost certainly rise in 
real terms over the next decade * * *.''
    Not everyone shared this opinion. In a 1978 article titled 
``The Energy Crisis,'' Milton Friedman stated:

          There is no argument on economic grounds for having a 
        Department of Energy * * * [T]he energy industry is 
        effectively competitive, or would be if the government 
        got its cotton-picking hands out of it.

Furthermore, the article argues that we have ``this enormously 
expensive boondoggle [called] the Department of Energy * * * 
[because it is] politically profitable.''
    Indeed, the ``crisis'' was the direct product of federally 
imposed controls and regulations. Federal oil and price 
allocation controls made it illegal--literally a Federal 
offense--to move gasoline around the country when supplies grew 
tight. In other words, the Department of Energy--a government 
solution--was created to ``fix'' a government-generated 
problem. Gasoline lines ended after the controls were 
dismantled in 1981.
    Likewise, natural gas was in short supply because price 
controls encouraged consumption and discouraged production from 
1954 through the 1980's. Those shortages also disappeared as 
price controls were phased out.
    Meanwhile the Department of Energy spent more than $55 
billion in constant dollars for energy research alone. That is 
over and above the amounts the Synfuels Corporation spent on 
fuels that cost several times what conventional fuels cost. 
(The Synthetic Fuels Corporation was established to fund the 
production of commercial-scale plants for synthetic fuel 
production processes.)
    Last year's budget resolution questioned whether the Nation 
had received a full and fair return on its ``investment'' in 
the DOE. On December 15, 1994, the Wall Street Journal ran an 
article that asked a better question: ``So, What Do People At 
the Energy Department Do All Day Long?'' The response: 
``Meetings Are Many and Mail Is Answered: Real Work Is Quickly 
Disappearing.'' Since then, the Congress has learned about the 
Secretary's international escapades and her hiring of a private 
firm to monitor reporters, thereby producing a list of 
``friends'' and ``enemies.'' The House Committee on Commerce, 
in its Views and Estimates for the fiscal year 1997 budget, 
even cites the Department's ``extravagant travel, program 
waste, and lack of clear priorities.''
    Following the 1994 election, the President promised to 
``agressively realign'' the Department of Energy. He used 
phrases such as ``restructure,'' ``significantly reduce 
costs,'' and ``improve effectiveness and efficiencies.'' These 
steps are not sufficient.
    The budget resolution again recommends that the Department 
should be abolished; some of its functions should be 
eliminated, some should be privatized, and some should be 
transferred to other agencies. The resolution encourages the 
relevant authorizing committees to consider the Department of 
Energy Abolishment Act, introduced by Representative Tiahrt. 
Under this legislation, the terminations, transfers, and 
consolidations would be completed over a 3-year period 
commencing from the date of enactment under the direction of a 
temporary Energy Programs Resolution Agency.
    Even after the Department is terminated, several existing 
programs would remain a Federal responsibility. For example, 
managing the Nation's nuclear weapons complex and dismantling 
existing weapons to meet international obligations would remain 
a Federal responsibility. In addition, the Department's 
Environmental Management program, which has oversight of 
environmental restoration activities at the nuclear facilities, 
would still be a Federal responsibility.
    In the process of terminating the Department of Energy, the 
budget resolution assumes and recommends the provisions below. 
The actual policy changes for programs in this function fall 
under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The committees 
of jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the spending limits of the budget 
resolution.

    Corporatize the Department of Energy's [DOE] Laboratories. 
The General Accounting Office recently reported to the Budget 
Committee that 17 Federal departments and independent agencies 
have identified 515 Federal R&D laboratories that spent a total 
of $26.6 billion of an estimated $69.4 billion that Federal 
agencies obligated for R&D in fiscal year 1995. In 1995, the 
operating budgets:

        * * * of (1) 361 laboratories were less than $10 
        million, (2) 101 laboratories were at least $10 million 
        but less than $100 million, and (3) 53 laboratories 
        were at least $100 million. In addition, 65 Federal R&D 
        laboratories have a total of 221 satellite facilities.

    Consistent with the governance recommendations of the 1995 
DOE Task Force on Alternative Futures for the Department of 
Energy National Laboratories, chaired by Robert Galvin, the 
budget resolution assumes that the Congress:

        * * * should develop and implement a new modus operandi 
        of Federal support for the national laboratories, based 
        on a private sector style ``corporatized'' laboratory 
        system.

The existing DOE system of operation only purports to be 
contractor operated; due to DOE and congressional 
micromanagement, it is, in fact, grossly counterproductive. A 
new corporate-style system would:

        * * * invite enhanced pressure for competitive 
        performance, which would lower costs, force the 
        elimination of redundancies and less than world-class 
        capabilities, and achieve enhanced value for the public 
        investments involved.

    The budget resolution assumes that the Galvin Task Force 
recommendations for a new not-for-profit R&D corporation(s), 
formed with many of the basic principles and criteria of a 
conventional commercial operation, warrants immediate 
attention. Although the DOE weapons-oriented laboratories could 
be omitted from the corporation, many, if not all of the other 
DOE national labs, are candidates to be included in this 
corporation.

    Reduce Energy Supply Research and Development. This 
proposal reduces near-term industrial subsidies for solar and 
renewable energy (resulting in a $191 million funding level by 
eliminating solar building appliances, wind energy systems, 
production incentives, deployment, and in-house energy 
management), global warming planning and technology, 
environmental restoration and waste management, and 
bureaucratic environmental and safety compliance costs. 
Specifically terminated are: laboratory technology transfer, 
energy research analyses, DOE's education program, and the 
information management investment plan. The budget resolution 
assumes that the light water reactor design certification and 
first-of-a-kind engineering research program is funded in 
fiscal year 1997 for purposes of completion and that the fusion 
program can be sustained at a $200 million annual level. Basic 
research, however, is increased over the President's request in 
materials, chemical, and math sciences, and for hydrogen energy 
research ($20 million).

    Eliminate Unnecessary Bureaucracy in the Department of 
Energy. The Department of Energy should continue evaluating its 
general management activities to prepare itself for 
termination. This proposal again calls for reductions in the 
Department's administration. A second component of this 
proposal calls for reducing by 50 percent relative to its 
fiscal year 1995 level, funding for the Energy Information 
Administration [EIA]. The EIA provides information for use by 
the administration, the Congress, and the general public. Much 
of what the EIA does should be the responsibility of the 
private sector. A third component of this proposal would 
terminate Emergency Preparedness, as proposed last year in 
Report 104-173 by the House Committee on Appropriations.

    Phase Out the Department of Energy's Fossil Energy Research 
and Development. The Department of Energy has spent billions of 
dollars on research and development since the oil crises in 
1973 triggered this activity. Returns on this investment have 
not been cost-effective, particularly for applied R&D, which 
industry has ample incentive to undertake. Some of this 
activity is simply corporate welfare for the oil, gas, and 
utility industries. Much of it duplicates what industry is 
already doing. As the Congressional Budget Office [CBO] notes, 
some has gone to fund technologies in which the market has no 
interest--for example, hundreds of millions of dollars invested 
in coal-powered magnetohydrodynamics--without any subsequent 
interest in the product the investment produced. The House 
Committee on Appropriations' Report 104-173 accompanying the 
fiscal year 1996 Interior funding bill, states its firm 
commitment:

        * * * the fossil energy research and development 
        appropriation in total is consistent with the 
        recommendations of the authorizing committee of 
        jurisdiction, as adopted by the House.

On October 12, 1995, the House passed H.R. 2405, authorizing 
$221 million for fossil energy R&D in fiscal year 1997. This 
proposal, however, does not assume additional reductions for 
mining research and development, which was formerly funded by 
the Bureau of Mines. The administration has proposed 
transferring this program to the National Institute for 
Occupational Safety and Health in fiscal year 1997.

    Phase Out Energy Conservation Research. Energy conservation 
in the United States has been a clear success. In the 1980's, 
for example, the economy grew a third while energy use remained 
flat due to market-driven energy conservation. Government 
spending on energy conservation, on the other hand, has been 
less successful. Business has incentives to market, and 
customers to buy, conservation technologies that work well. DOE 
is left to fund less reliable and less promising technologies. 
According to the Congressional Budget Office, DOE may be:

        * * * crowding out private-sector firms or, 
        alternatively, conducting R&D that those private 
        sectors are likely to ignore--a common fate of the 
        technologies generated within DOE's national 
        laboratories.

    The Committee on Appropriations in its report 104-173 
accompanying the fiscal year 1996 Interior funding bill, states 
its firm commitment that for each year:

        * * * the research portion of the energy conservation 
        appropriation in total is consistent with the 
        recommendations of the authorizing committee of 
        jurisdiction as passed by the House.

On October 12, 1995, the House passed H.R. 2405, authorizing 
$230 million for energy conservation R&D in fiscal year 1997. 
No funding is provided for any new energy efficiency standards.
    The budget resolution continues to support funding of the 
combined State Energy Conservation Program/Institutional 
Conservation Program at 10 percent below the fiscal year 1995.

    Reduce Uranium Supply and Enrichment Activities, Uranium 
Enrichment Decontamination and Decommissioning, and Economic 
Regulation. The Uranium Supply and Enrichment Program has 
several objectives. For example, it is intended to increase 
confidence that the low-enriched uranium being purchased from 
Russia has been derived from highly enriched uranium removed 
from dismantled nuclear weapons. It is also intended to 
transfer ``enrichment-related technologies and form technology 
partnerships to bolster U.S. industrial competitiveness.'' The 
President has recommended reductions in this program. This 
proposal accepts the President's funding level, while 
recommending that the second objective be closely examined. The 
proposal also assumes the President's recommended reductions in 
the Uranium Enrichment Decontamination and Decommissioning 
Fund, which provides for R&D, remedial action, and other costs 
associated with environmental cleanup activities at sites 
leased and operated by the United States Enrichment 
Corporation. Finally, the resolution assumes the President's 
recommended reductions for economic regulation.

    Eliminate Further Funding for the Department of Energy's 
Subsidized Energy Research. The Clean Coal Technology Program 
[CCTP] has been overtaken by changes in the law and incentives 
in the marketplace. The program was created in the mid-1980's 
to help private industry develop commercial technologies to 
burn coal in environmentally sound ways. Since that time, 
enactment of the Clean Air Act Amendments of 1990 and the 
Energy Policy Act of 1992 have given utilities and large 
industrial coal users clear economic motives for selecting the 
lowest cost options for reducing emissions from among current 
practices and new technologies. Both the President and the 
Budget Committee have previously called for the termination of 
this program. The President's budget calls for a rescission 
from the program in fiscal year 1997; it also would prevent the 
Department from obligating other funds until fiscal year 1998. 
The budget resolution accepts the President's proposal for 
fiscal year 1997, but recommends that no funds be spent in 
fiscal year 1998.

    Privatize the Naval Petroleum and Oil Shale Reserves. The 
Department of Energy runs a commercial oil field (Elk Hills, 
near Bakersfield, CA) and a natural gas field (Naval Oil Shale 
Reserve No. 3 near Rifle, CO). As earlier budgets from the 
President indicated: ``[P]roducing oil and gas is a commercial, 
not a governmental activity, which is more appropriately 
performed by the private sector.''
    Furthermore, according to the Committee on Commerce, 
``[t]he Naval Petroleum Reserves are commercial oil fields that 
serve no national security interest.'' The Congress enacted 
legislation pursuant to the President's previous budget calling 
for the sale of Elk Hills. The President's fiscal year 1997 
budget proposes a gimmick to delay the sale until 2002. The 
budget resolution rejects this accounting gimmick and 
recommends that the sale occur as soon as possible. The budget 
resolution also assumes that the remaining petroleum and oil 
shale reserves should be sold or leased.

    Restructure the Strategic Petroleum Reserve. The Strategic 
Petroleum Reserve provides a crude oil stockpile to be used in 
the event a petroleum disruption occurs. Last year, the 
Balanced Budget Act [BBA] highlighted the fact that the Weeks 
Island reserve had experienced structural problems and needed 
to be decommissioned. The decommissioning of the Weeks Island 
reserve should reduce program maintenance and administration. 
The President's budget recommends reductions for this program; 
the budget resolution assumes the long-term funding levels 
proposed by the President.
    A debate concerning the long-term benefits of the Strategic 
Petroleum Reserve also should be undertaken. The Congressional 
Budget Office [CBO] completed a study in December 1994 titled 
``Rethinking Emergency Energy Policy,'' which said in part:

          Emergency policies to reduce or avoid economic losses 
        from severe disruptions of world oil supplies may no 
        longer be as effective as the Congress originally 
        envisioned. Since the Arab oil embargo of 1973, the 
        United States has based most of its emergency energy 
        policy on the Strategic Petroleum Reserve [SPR], a 
        government-owned stockpile of crude oil. * * * Many 
        analysts feel that the economic threat posed by severe 
        disruptions of oil supplies has decreased and that as a 
        result, the benefits from releasing SPR oil in a crisis 
        are smaller today than in the past. Moreover, the 
        experience of the Persian Gulf crisis in 1990 and 1991 
        demonstrated disturbing problems with current policy 
        guiding the use of the SPR in a crisis. Indeed, during 
        the Gulf crisis, both the process of deciding to use 
        the SPR and the mechanism for selling the oil may have 
        actually contributed to market uncertainty at the time.

    Sell the Alaska Power Administration [APA]. As provided for 
in the Balanced Budget Act [BBA], this budget resolution again 
calls for the sale of APA. The administration's National 
Performance Review stated that ``[t]he Federal Government 
should divest its interest in the Alaska Power 
Administration.'' There is no need for Federal involvement in 
this issue because it deals solely with assets situated in one 
State. This proposal sells the APA in accordance with the terms 
of the purchase agreements negotiated in 1989 between the 
Department of Energy and the proposed purchasers. [Note: 
Proceeds from the asset sale appear in Function 950.]
    The President's budget also recommends improved 
efficiencies concerning the operation and maintenance of the 
Western Area Power Administration, the Southeastern Power 
Administration, and the Southwestern Power Administration; the 
budget resolution assumes his recommendations.

                                 FUNCTION 270: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Corporatize the Department of Energy's                                                                          
 [DOE] laboratories: \1\                                                                                        
    Budget authority......................        NA         0         0         0         0         0         0
    Outlays...............................        NA         0         0         0         0         0         0
Reduce Energy Supply Research and                                                                               
 Development: \1\                                                                                               
    Budget authority......................     2,727      -187      -327      -427      -527      -627      -727
    Outlays...............................     3,077       -84      -213      -344      -452      -552      -652
Eliminate bureaucracy in the Department of                                                                      
 Energy: \1\                                                                                                    
    Budget authority......................       316       -53       -53       -53       -53       -53       -53
    Outlays...............................       326       -35       -50       -53       -53       -53       -53
Phase out the Department of Energy's                                                                            
 Fossil Energy Research and Development:                                                                        
 \1\                                                                                                            
    Budget authority......................       416      -195      -316      -366      -416      -416      -416
    Outlays...............................       436       -78      -204      -311      -375      -405      -416
Phase out Energy Conservation Research:                                                                         
 \1\                                                                                                            
    Budget authority......................       418      -188      -318      -368      -418      -418      -418
    Outlays...............................       454       -47      -183      -295      -364      -406      -416
Reduce uranium supply and enrichment                                                                            
 activities, uranium enrichment                                                                                 
 decontamination and decommissioning, and                                                                       
 economic regulation: \1\                                                                                       
    Budget authority......................       317       -46       -67       -91      -113       -84       -52
    Outlays...............................       340       -35       -61       -84      -107       -91       -60
Eliminate further funding for the                                                                               
 Department of Energy's subsidized energy                                                                       
 research: \1\                                                                                                  
    Budget authority......................       150      -500      -138      -138      -138      -138      -138
    Outlays...............................       270         0       -50      -101      -115      -129      -157
Privatize the Naval Petroleum and Oil                                                                           
 Shale Reserves: \1\                                                                                            
    Budget authority......................       140         0      -124      -124      -124      -124      -124
    Outlays...............................       175         0       -68      -105      -124      -124      -124
Restructure the Strategic Petroleum                                                                             
 Reserve: \1\                                                                                                   
    Budget authority......................       287       -66       -84      -102      -120      -120      -120
    Outlays...............................       229       -36       -69       -92      -110      -118      -120
Sell the Alaska Power Administration                                                                            
 [APA]: \1\                                                                                                     
    Budget authority......................       316       -42       -68       -89      -113      -113      -113
    Outlays...............................       323       -23       -44       -69       -91      -105     -110 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to continue the process of terminating the Department of Energy.                       


                                   FUNCTION 270: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                               1996  -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Sell the Alaska Power Administration                                                                            
 (offsetting receipts): \1\                                                                                     
    Budget authority......................   \2\ -10         0         7         7         7         7         7
    Outlays...............................   \2\ -10         0         7         7         7         7         7
Privatize the Naval Petroleum and Oil                                                                           
 Shale Reserves: \1\                                                                                            
    Budget authority......................  \2\ -435         0       350       336       323       310       298
    Outlays...............................  \2\ -435         0       350       336       323       310       298
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to continue the process of terminating the Department of Energy.                       
\2\ Negative number denotes cash in-flow to the Federal Government.                                             

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from various 
additional provisions, including accepting the President's 
recommendations for the electric and telecommunications 
portions of the Rural Utilities Service; extending Nuclear 
Regulatory Commission fees; and leasing excess capacity in the 
Strategic Petroleum Reserve. Although these provisions reflect 
the recommendations and assumptions of the Committee on the 
Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
specific recommended policy changes are contained in Appendix 
1.


                             Function 300:



                   Natural Resources and Environment

                              ----------                              


                                 FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $21,391   $20,529   $18,902   $19,713   $18,399   $18,994   $18,860
Outlays...................................    21,827    21,322    19,654    20,409    18,950    19,205    18,910
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The budget resolution assumes that Federal environmental 
policy must be guided by a set of seven fundamental principles:

  - First, Do No Harm. There are many government programs that 
        encourage or directly cause environmental harm. The 
        government should make sure its own house is in order. 
        It makes no sense for the Federal Government to 
        subsidize environmental destruction on the one hand 
        while establishing laws, regulations, and bureaucracy 
        to mitigate damage on the other hand.

  - Economic Growth Is a Vital Prerequisite for Environmental 
        Progress. It takes a healthy, growing economy to afford 
        the technological mandates of environmental law. 
        Furthermore, advances in technology, which benefit the 
        overall economy, will also benefit the environment. 
        Even advances in nonenvironmental technologies and 
        industries should indirectly result in more efficient 
        resource consumption and less pollution.

  - Federal Efforts Should Focus on Results, Not Regulations. 
        Federal environmental regulations should be less 
        prescriptive, more market-oriented, and based on the 
        ``polluter-pays'' principle. Federal environmental law 
        now tells people how products should be manufactured, 
        what technologies must be employed, and when and if 
        production changes should be allowed. Bureaucrats can 
        no more efficiently manage the environmental practices 
        of hundreds of thousands of commercial enterprises than 
        they can efficiently manage the economic activity of 
        those enterprises. Regulations are the most effective 
        when they set performance standards and allow 
        businesses to figure out the best way to meet those 
        standards. Allowing the trading of those emission 
        allowances would increase the efficiency of the 
        standards. Finally, regulations should target those 
        parties responsible for environmental harm; this 
        approach is fair and sets the correct incentives for 
        environmental behavior.

  - Preclude Regulation Without Representation. No lawmaking 
        should go into effect until it is affirmatively adopted 
        by the House and the Senate and signed into law by the 
        President. Most environmental law is written not by 
        elected representatives but by unelected executive 
        branch employees. Such individuals are not subject to 
        political accountability and are able to circumvent the 
        constitutional checks and balances designed to make 
        lawmaking a consensus-driven activity. Current attempts 
        to ``regulate the regulators'' are inevitably clumsy 
        and beg the question of why unelected officials are 
        making law.

  - Property Owners Should Be Compensated for Regulatory 
        Takings. Property owners whose property is taken or 
        regulated to achieve some public good should be 
        compensated. It is simply unfair to require a few 
        citizens to pay the full costs of providing goods 
        desired by the public. Just as those who cause direct 
        harm to others should be held fully liable and 
        responsible for damages, the procurement of goods that 
        benefit the entire public should be paid for with 
        public dollars. This principle reaffirms the plain 
        reading of the Fifth Amendment; it will also aid in the 
        protection of the environment. Property owners who face 
        not financial ruin but full compensation if their 
        property is identified as hosting some ecological 
        treasure are more likely to protect and conserve the 
        resource held so dear by many.

  - Recognize That Sometimes the Best Stewards of Environmental 
        Resources Are Private Stewards. America has a proud 
        conservation tradition that demonstrates that 
        communities and local groups can work together to 
        protect the environment. Some industries have shown 
        they are capable of sound environmental management.

  - One Size Does Not Fit All. The current approach to 
        environmental policy does not always permit State and 
        local governments to be responsive to local or regional 
        environmental problems. Environmental policy should be 
        flexible enough for communities to experiment with 
        sensible solutions.

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

               improve the quality of the national parks

    The National Park Service contains 368 areas and 80.3 
million acres of land in 49 States, the District of Columbia, 
Puerto Rico, the U.S. Virgin Islands, Guam, Samoa, and the 
Northern Marianas. Visitation to the parks has increased over 
the past few years, and it is important to preserve these 
unique cultural and natural resources. For this reason, the 
budget resolution recommends an increase in funding for the 
operation of the National Park System. In addition, the budget 
resolution recommends that a portion of the funding and 
personnel in the Washington and regional offices should be 
relocated to actual park operations. This was recently 
accomplished to provide additional funds for the Chesapeake and 
Ohio [C&O] Canal National Historical Park.
    The budget resolution also reiterates support for the 
proposal developed by the House Committee on Resources, and 
included in last year's Balanced Budget Act, to increase fees 
and permit resource managers to retain a large portion of those 
fees. This proposal was included in the President's fiscal year 
1997 budget submission. Furthermore, according to the so-called 
``Green Scissors'' report:

        * * * [T]his idea is not necessarily opposed by those 
        who might have to pay. A poll conducted by the National 
        Parks and Conservation Association indicated that 80 
        percent of those polled would support higher entrance 
        fees in national parks if the money is used to maintain 
        the parks.

    The budget resolution agrees that underpricing recreational 
visits contributes to the degradation of natural areas.
    This proposal assumes a 10-percent reduction in the 
National Recreation and Preservation Program, as recommended by 
the Committee on Resources. In addition, it assumes that 
international forestry, and the Advisory Council for Historic 
Preservation will be terminated as proposed by the Committee on 
the Budget and the Committee on Appropriations last year. Under 
international forestry, technical assistance is provided 
outside the United States. It is assumed all these funds should 
be reallocated to parks within the United States.

                      reform the superfund program

    The Superfund Program has been widely criticized for 
bureaucratic inefficiency and a tendency to litigate. In 1994, 
the House Committee on Commerce, then controlled by Democrats, 
stated: ``[T]he program's weaknesses are recognized by 
virtually all Superfund stakeholders.'' This year, the House 
Committee on Commerce has been extremely critical of the 
programs effectiveness, noting that the current program is 
``incapable of achieving its fundamental goal--cleaning up 
hazardous waste sites'' and that ``more than half of every 
Federal dollar spent on Superfund goes to something other than 
cleaning up [these] sites.'' Despite the President's stated 
concerns about the environment, however, he has been silent 
about how the program can be improved.
    Therefore, this proposal assumes that the Congress must 
take the lead in fixing this flawed program. The budget 
resolution assumes the extension of two expiring taxes: the 
corporate environmental income tax [CEIT] and the excise tax on 
petroleum products and chemical feedstocks. The Budget 
Committee also recommends that the authorizing committees will 
correct the program in a manner that will reform the high 
cleanup and legal costs, correct the unfairness of the 
liability scheme, reduce overlapping authority and 
responsibility between various levels of government, and alter 
the economic incentives to use undeveloped--or ``greenfield''--
sites to avoid potential Superfund liability.
    The budget resolution assumes that the reformed Superfund 
Program will be funded at $2 billion annually, an increase of 
$698 million over current levels.

 authorize a safe drinking water revolving fund and maintain a strong 
                        clean water srf program

    According to the House Committees on Commerce and 
Transportation and Infrastructure, the reauthorization of the 
Safe Drinking Water Act is one of their highest priorities. The 
Commerce Committee has informed the Budget Committee that 
public water systems will require:

        * * * [D]irect financial assistance in order to meet an 
        increasingly complex array of national drinking water 
        standards. Testimony and other evidence reviewed by the 
        committee indicates a clear need for a State Revolving 
        Loan Fund [SRF] in order to meet the public health 
        objectives of the [Safe Drinking Water Act].

    The budget resolution assumes that the final legislation 
will be similar to S. 1316, the Safe Drinking Water Act 
Amendments of 1995, or H.R. 2747, the Water Supply 
Infrastructure Assistance Act of 1996. The Budget Committee 
recognizes, however, that the committees of jurisdiction retain 
the authority to pursue alternative specific policies from 
those reflected in this proposal. Finally, the budget 
resolution advocates funding the Clean Water SRF Program to 
fulfill wastewater construction commitments.

  implement the conservation programs within the federal agricultural 
                   improvement and reform [fair] act

    As will be discussed further in Function 350, the Congress 
recently passed, and the President signed, historic legislation 
to overhaul the Nation's outmoded and cumbersome agricultural 
programs. That legislation included several provisions that 
will also greatly improve the quality of the environment.

    Restore the Florida Everglades. The Florida Everglades is a 
unique national treasure. Its long-term viability is vital to 
the quality of life in south Florida. The legislation provides 
funding for land acquisition in the Florida Everglades for the 
purpose of environmental restoration. In addition, funds are 
provided for the sale or swap of other federally held land in 
Florida.

    Expand the Conservation Reserve Program [CRP]. The CRP 
offers producers annual rental payments to remove highly 
erodible cropland and other environmentally sensitive land from 
production. The Department of Agriculture's enrollment 
authority expired on December 31, 1995. The legislation gives 
the Secretary of Agriculture the authority to enter into new 
contracts and extend expiring contracts. The authorized maximum 
acreage in the program is maintained at 36.4 million acres.

    Implement the Environmental Quality Incentive Program 
[EQIP]. This new initiative will assist agricultural producers 
to deal with environmental and conservation concerns. 
Assistance can be used for animal waste management facilities, 
terraces, waterways, filterstrips, or other structural and 
management practices to protect water and soil resources.

                restore salmon runs in the elwha river0

    The budget resolution recognizes the importance of 
restoring salmon runs in some rivers in the Pacific Northwest. 
The Elwha River in Washington State may represent a unique 
opportunity for salmon restoration in a fiscally responsible 
and effective manner. The resolution urges the committees of 
jurisdiction and other concerned parties to identify ways to 
restore salmon runs to the Elwha River in the most cost-
effective way, taking into consideration the concerns of local 
residents and the possibility of sharing costs with those who 
would benefit from restoration. Restoration should allow the 
Department of the Interior and other fishery managers to 
measure the success of fishery restoration and protect the 
community water supplies.

                                 FUNCTION 300: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve the quality of the national parks:                                                                      
 \1\                                                                                                            
    Budget authority......................     1,083        11        22        32        54        54        65
    Outlays...............................     1,076         8        19        29        48        52        62
Reform the Superfund Program:                                                                                   
    Budget authority......................     1,302       698       698       698       698       698       698
    Outlays...............................     1,399       180       421       558       628       662       662
Authorize a Safe Drinking Water Revolving                                                                       
 Fund [SRF] and maintain a strong Clean                                                                         
 Water SRF Program:                                                                                             
    Budget authority......................     2,813        39        39        39        39        39        39
    Outlays...............................     2,744         2        12        26        34        38        39
----------------------------------------------------------------------------------------------------------------
\1\ Additional funds are provided through the termination of lower priority accounts.                           


                                   FUNCTION 300: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve the quality of the national parks:                                                                      
    Budget authority......................   \1\ -69       -13        -6       -11        -7       -12        -7
    Outlays...............................   \1\ -71       -12        -9       -13       -11       -14        -9
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including: eliminating unneeded bureaucracy 
in the Department of the Interior, encouraging land swaps 
instead of new puchases, prioritizing conservation operations 
within the Department of Agriculture, targeting construction 
funding in the Departments of Agriculture and Interior, 
restructuring the Department of the Interior's minerals-related 
agencies, reforming the various land management agencies, 
reforming the Bureau of Reclamation [BOR], refocusing the 
National Oceanic and Atmospheric Administration [NOAA] on its 
core mission as part of terminating the Department of Commerce, 
reforming the Corps of Engineers, funding EPA science based on 
risk-based regulations, reducing the Department of Interior's 
overhead, and opening a small portion of the coastal plain of 
ANWR for exploration.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 350:



                              Agriculture

                              ----------                              


                                            FUNCTION 350: AGRICULTURE                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $12,737   $11,840   $11,750   $11,367   $10,714    $9,497    $8,964
Outlays...................................    10,751    10,238     9,855     9,483     8,843     7,730     7,181
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities0

    For more than 60 years, Washington has tried to centrally 
plan U.S. agriculture with an enormous system of commodity 
supply and price controls, acreage allotments, production 
quotas, restrictions on imports, and export subsidies. These 
outdated and cumbersome policies are preventing U.S. farmers 
from taking advantage of opportunities in the world market.
    By contrast, the new direction in farm programs envisioned 
in this budget resolution will give farmers the freedom to 
plant in response to market demand, not government programs or 
what government bureaucrats think farmers ought to be planting. 
Producers have asked for more flexibility, less paperwork, and 
a better opportunity to earn a living from the marketplace.
    The new approach, embraced in this budget resolution, 
accomplishes these goals, and does so in a manner that will 
make U.S. agriculture profitable and competitive in the 21st 
century.

       the federal agricultural improvement and reform [fair] act

    The President signed the FAIR Act into law on April 4, 
1996. The centerpiece of this historic legislation is the new 
market transition contracts. These contracts replace deficiency 
payments with fixed, albeit declining, payments that do not 
vary with market conditions. Total payments are guaranteed for 
fiscal years 1996 through 2002. The FAIR Act also eliminates 
the complex production controls, such as acreage reduction 
programs, and increases planting flexibility. Specifically, any 
commodity may be grown on contract acreage except fruits and 
vegetables.

                 Additional Changes From Current Policy

    The budget resolution assumes savings in this function from 
various additional provisions including: reforming the foreign 
agricultural service, reducing unneeded bureaucracy within the 
Department of Agriculture, refocusing Federal support for 
agricultural research and extensions, reforming the Farmers 
Home Administration, downsizing the Farm Service Agency; 
terminating State mediation grants and outreach for socially 
disadvantaged farmers; and reducing the Department of 
Agriculture's overhead.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these recommended policy 
changes are contained in Appendix 1.


                             Function 370:



                      Commerce and Housing Credit

                              ----------                              


                                    FUNCTION 370: COMMERCE AND HOUSING CREDIT                                   
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $11,884    $8,957   $14,188   $14,103   $12,850   $14,662   $11,598
Outlays...................................    -7,071    -1,599     7,333     4,377     6,841     8,395     7,218
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Continuing leadership in the development of new 
technologies is vital to the strength of a nation. 
``Competitiveness'' became the political mantra of the late 
1980's and early 1990's, and heated debates over how the United 
States could best remain competitive have raged through the 
Halls of Congress and in public policy forums across the 
country. In certain areas, such as new technology standards and 
measurement development and fundamental technical competence, 
the government does play an important role. In this regard, the 
budget resolution assumes 3 percent growth in the National 
Institute of Standards and Technology's core program funding 
(Scientific and Technical Research and Services) and research 
facility modernization.
    But the President and previous Congresses have focused on 
the small picture through micromanagement. Washington's 
tendency to micromanage undoubtedly has caused much of the 
massive regulation and bureaucratic structure that hinder the 
Nation's ability to move forward.
    Although the Federal Government has a role in basic 
research, it should not be engaged in applied research. 
Furthermore, considerable evidence exists that the Federal 
Government is not capable of choosing projects with the 
greatest potential for technological and commercial success. 
Therefore, the budget resolution recommends terminating the 
Department of Commerce's Industrial Technology Services, 
including the so-called Advanced Technology Program, and 
phasing out the manufacturing extension partnership. Instead, 
the government should focus on providing an economic 
environment that favors growth, spurs the investment of private 
capital, and encourages risk-taking.
    Rather than pursuing industrial policy, the United States 
can best enhance its competitiveness by eliminating deficit 
spending and the national debt; by modernizing outmoded 
antitrust laws to recognize global competition; by providing a 
permanent R&D tax credit; by reforming the civil justice 
system, including product and professional liability standards; 
and by reviewing new government regulations using risk 
assessment reform and cost-benefit analysis.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The discussion 
below reflects the assumptions underlying House Budget 
Committee's recommendations concerning the funding priorities 
for programs in this function.

                  terminate the department of commerce

    The Department of Commerce is an unwieldy conglomeration of 
marginally related programs, nearly all of which duplicate 
those performed elsewhere in the Federal Government. According 
to the General Accounting Office, Commerce ``shares its 
missions with at least 71 Federal departments, agencies, and 
offices.'' Its bureaucracy is bloated, its infrastructure is in 
disrepair, and more than 60 percent of its resources are 
dedicated to activities completely unrelated to its 
``mission.'' Former Commerce Department officials recently 
testified that the few unique functions contained in Commerce 
suffer under the multiple tiers of political appointees and 
bureaucracy. This proposal, which was developed by the chairmen 
of the committees of jurisdiction and coordinated by the House 
leadership, terminates Commerce programs that are either 
unnecessary or redundant; consolidates functions that belong 
elsewhere in the government; and makes independent those 
programs that should function in a more businesslike manner. 
Specific components of the termination would include the 
following:

    Terminate Administrative Functions. The Office of the 
Secretary, General Counsel, Inspector General, and other 
administrative functions are terminated.

    Terminate the United States Travel and Tourism 
Administration. The Travel and Tourism Administration was 
recently terminated in the Omnibus Appropriations Bill (H.R. 
3019). The Travel and Tourism Administration promotes the 
United States abroad as a tourism destination. It does this 
through field offices in Amsterdam, London, Frankfurt, Milan, 
Paris, Sydney, Tokyo, and Toronto. The efforts of the Travel 
and Tourism Administration are dwarfed by marketing efforts of 
the U.S. hotel, travel, and tourism industries.

    Terminate Industrial Technology Services, Including the 
Advanced Technology Program. This provision would include 
terminating the Offices of Technology Policy, Technology 
Commercialization and Technology Evaluation and Assessment, the 
Advanced Technology and Manufacturing Extension Partnerships. 
The scientific and technical research functions of the National 
Institute of Standards and Technology [NIST] would be 
transferred to an independent National Scientific, Oceanic and 
Atmospheric Administration. Although the Federal Government has 
a role in basic research, it should not be engaged in applied 
research, product development or commercialization conducted 
through the Technology Administration. See ``Prioritize the 
National Institute of Standards and Technology's Core 
Programs'' below.

    Privatize the National Technical Information Service 
[NTIS]. NTIS collects scientific, technical, engineering, and 
other business-related information from Federal and 
international sources and disseminates it to the American 
business and industrial research community. NTIS is a self-
supporting agency with operating costs paid out of revenues 
earned from the sale of information products and services. To 
enhance its businesslike operation and improve the services and 
products it provides, NTIS should be privatized.

    Terminate the National Telecommunications and Information 
Administration. This would include terminating the Information 
Infrastructure Grants, Public Telecommunications Facilities 
Grants, and the Endowment for Children's Educational Television 
(Function 500). Management of the electromagnetic spectrum is 
transferred to the reconstituted United States Trade 
Representative (see below), and scientific and technical 
research of the electromagnetic spectrum is transferred to the 
standards office in the National Scientific, Oceanographic and 
Atmospheric Administration (see below).

    Corporatize the Patent and Trademark Office. The office 
would be converted into a government-owned corporation.

    Terminate the Economics and Statistics Administration. 
Under this provision, the Bureau of the Census and the Bureau 
of Economic Analysis are transferred to the Department of Labor 
to be merged with the Bureau of Labor Statistics. This is a 
transitional step in preparation for the creation of a Federal 
statistical agency.

    Reconstitute the National Oceanic and Atmospheric 
Administration [NOAA]. NOAA is reconstituted into a 
freestanding agency, named the National Science, Oceanic and 
Atmospheric Administration [NSOAA], consisting of most of the 
programs currently within NOAA as well as the scientific and 
technical research functions of NIST and the research of the 
electromagnetic spectrum of the NTIA. The NOAA corps and fleet 
(Function 300) are terminated. [Please note: Additional 
provisions affecting NOAA appear in Function 300.]

    Transfer Functions of the International Trade 
Administration. The functions of the International Trade 
Administration are transferred to the Office of the United 
States Trade Representative [USTR]. The USTR will be removed 
from the Executive Office of the President, and the USTR will 
be restructured to include a Deputy for Negotiations and a 
Deputy for Administration.

    Restructure the Economic Development Administration [EDA]. 
The EDA is restructured and transferred to the Small Business 
Administration (see Function 450).

    Transfer Functions of the Bureau of Export Administration. 
Licensing and enforcement functions of the Bureau of Export 
Administration will be transferred to the USTR.

prioritize the national institute of standards and technology's [nist] 
                             core programs

    The fundamental scientific understanding and basic research 
of the technical aspects and standards for new processes and 
technologies is NIST's constitutional mission. The budget 
resolution recommends $281 million for these Scientific and 
Technical Research and Services in fiscal year 1997 and a 3-
percent annual increase thereafter. The resolution rejects the 
President's approach, which reduces NIST basic research by $40 
million compared with last year's request while continuing to 
push for $450 million in NIST corporate welfare grants.

restructure mortgages to prevent fha costs associated with the project-
                         based subsidy program

    Currently, millions of low-income Americans live in 
federally subsidized privately owned apartments. As long as 
they live in the subsidized units, their contributions to the 
rents are no more than 30 percent of their income; the Federal 
Government pays the rest. A majority of projects charge the 
tenants and the Federal Government more than the surrounding 
market rents. In some cases the rent is twice what an 
unassisted unit across the street might charge. According to 
the Department of Housing and Urban Development, of the 20,000 
HUD-assisted properties, 9,000 also have FHA-provided mortgage 
insurance. Hence if the owners of the projects default on their 
mortgages, the lender will look to the Federal Government for 
payment.
    Many of these FHA-insured projects have mortgages far 
higher than the real market value of the property, which 
contributes to the high subsidized rents. In most cases this 
was done by Federal design. Marginal or blighted neighborhoods 
often cannot attract investment in the form of high-quality new 
construction because the rents paid would be too low to sustain 
the costs associated with putting up the building. The Federal 
Government therefore subsidized the mortgages, sometimes 
through buying down the interest rates, and then insured the 
mortgages against default, allowing the developers to obtain 
mortgages from the lenders. In addition, to sustain the new 
building, project-based assistance was attached to many of the 
units of these projects. The owner of the building could then 
charge rents high enough to sustain the mortgage payments 
because the lower-income tenant's payments are subsidized by 
the Federal Government. Inefficient operation of the projects, 
HUD's poor management abilities, and the poor oversight of 
tenant income contribute to the high costs of these projects.
    Though some are in decent physical condition, many 
properties have declined and become dilapidated. Many need 
substantial rehabilitation before they would be able to be 
viable on the open market. A large number of tenants might 
choose to leave these projects were the assistance made 
portable. If present policies continue, HUD estimates $80 
billion in hard costs associated with these projects over the 
next 25 years. In a December 1994 report, CBO said:

          In 1989, an estimated 55 percent of FHA-insured 
        multifamily properties had insufficient funds in their 
        reserve accounts to cover the backlog of repair and 
        replacement needs they had accumulated. The amount of 
        that unfunded backlog--the total backlog minus the 
        funds available in replacement reserve accounts--
        averaged more than $1,400 per unit across the entire 
        insured inventory.

    Over the next 10 years, most of the contracts for these 
units come up for renewal. This presents the Federal Government 
with a choice. It can maintain the present system. But this 
will be costly: the Congressional Budget Office projects the 
cost of renewing project-based assistance, under present 
policies, would grow from $627 million in budget authority to 
$7.9 billion per year by 2006. Even this cost does not reflect 
the costs associated with the continuing degradation of the 
buildings and the consequent effect on the lower-income 
tenants, who are disproportionately elderly and disabled. HUD 
has listed the following repercussions of maintaining present 
policies:

          Deterioration of old assisted stock; continued 
        decline of neighborhoods and an increase in crime and 
        social costs; minimal rehabilitation of existing stock; 
        increasing overpayments to assisted owners.

    In testimony to the House Budget Committee, the General 
Accounting Office said of this situation:

          The people in leadership in HUD recognize this is an 
        intolerable situation and absolutely something must be 
        done. We commend HUD for at least recognizing that 
        something must be done and the existing situation 
        cannot continue.

    The budget resolution agrees with this assessment. The 
resolution recommends implementing a comprehensive 
restructuring plan to replace the present system of private 
project-based assistance with a system largely based on 
vouchers.
    This can be achieved by accepting the principles of an 
administration proposal to bring the mortgage levels of these 
projects down to the real market value of the property. The 
rents can then be reduced to market rates without triggering a 
mortgage default and thus avoid a cost to the FHA. This would 
be accomplished through selling the mortgage on the open 
market, with no FHA insurance and only transitional project-
based assistance.
    The sales would entail near-term losses to the Federal 
Government because it would have to cover the difference 
between the mortgage value at the present level and the value 
at the market rate. At the end of the process, however, the 
housing assistance would be transformed into a voucher-based 
program and the Federal Government's liability would be 
extinguished.

                                 FUNCTION 370: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Terminate, transfer, or privatize various                                                                       
 agencies and functions in the Department                                                                       
 of Commerce: \1\                                                                                               
    Budget authority......................     3,679       -67      -103      -110      -110      -110      -110
    Outlays...............................     3,799       -36       -85      -104      -110      -110      -110
Terminate Industrial Technology Services,                                                                       
 including Advanced Technology Program:                                                                         
 \1\                                                                                                            
    Budget authority......................       300      -291      -300      -300      -300      -300      -300
    Outlays...............................       255       -20       -88      -212      -297      -299      -299
Prioritize the National Institute of                                                                            
 Standards and Technology's [NIST] Core                                                                         
 Programs: \1\                                                                                                  
    Budget authority......................       251        30        38        47        56        65        74
    Outlays...............................       247        23        36        45        54        63        72
Construction of research facilities [NIST]                                                                      
 \1\                                                                                                            
    Budget authority......................   \2\ -15       105        60        60        60        60        60
    Outlays...............................        49        13        22        32        59        61       65 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               
\2\ Negative number denotes cash in-flow to the Federal Government.                                             


                                   FUNCTION 370: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Privatize the National Technical                                                                                
 Information Service [NTIS]: \1\                                                                                
    Budget authority......................         0         0       -13         0         0         0         0
    Outlays...............................         0         0       -13         0         0         0         0
Corporatize the Patent and Trademark                                                                            
 Office: \1\                                                                                                    
    Budget authority......................         0         0         0      -119      -119      -119      -119
    Outlays...............................         0         0         0      -119      -119      -119      -119
Restructure mortgages to prevent FHA costs                                                                      
 associated with project based subsidy                                                                          
 program:                                                                                                       
    Budget authority......................        NA       383         0         0         0         0         0
    Outlays...............................        NA       383         0         0         0         0        0 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from the 
following provisions: shifting to the Postal Service the cost 
of transition payments for workman's compensation benefits paid 
to pre-1971 postal employees; terminating fleet modernization 
at the National Oceanic and Atmospheric Administration; making 
the SBA's 7(a) loan guarantee program self-financing; 
encouraging private financing of small business development 
centers; reducing the flood insurance subsidy on pre-firm 
structures; reducing duplication in small and minority business 
programs and consolidating functions in the Small Business 
Administration; reforming the Federal Housing Administration's 
multifamily mortgage insurance program to make it self-
financing; enhancing the FHA property disposition program; 
providing for FHA assignment reform and eliminating the Federal 
Trade Commission. Partial savings also result from the Rural 
Development Block Grant described in Function 450. Although 
these provisions reflect the recommendations and assumptions of 
the Committee on the Budget, the actual policy changes are the 
discretion of the appropriations and authorizing committees 
with jurisdiction over the programs involved. Further 
descriptions of these specific recommended policy changes are 
contained in Appendix 1.


                             Function 400:



                             Transportation

                              ----------                              


                                          FUNCTION 400: TRANSPORTATION                                          
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $36,653   $41,737   $43,541   $43,961   $44,103   $44,531   $45,045
Outlays...................................    39,308    39,007    37,635    36,111    35,236    34,526    34,042
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Over the past 40 years, the Nation has witnessed a great 
expansion of the Federal Government's involvement in 
transportation. The current Federal role in highways, 
originally intended to be of limited duration to meet immediate 
post-war needs, has outlived its mandate and has become a 
barrier to sensible decisionmaking. The Nation's mass transit 
systems, which provide local transportation, are dependent on 
the U.S. Treasury to finance construction and subsidize the 
travel of almost every transit commuter in America. In 
aviation, the Federal role of ensuring the safety of the skies 
has expanded to include programs that assist in building 
runways, taxiways, and terminals. Federal involvement in 
intercity rail travel has delivered a near-bankrupt 
corporation, running on a dilapidated infrastructure and 
desperate for Federal aid every day to survive. There is even a 
Federal program for ``enhancements,'' such as bicycle paths. In 
every instance, Federal aid has brought strings and regulations 
that have increased costs. This has necessitated more Federal 
aid, and has led to greater dependence on the Federal 
Government--and needs now far exceed Federal resources in every 
mode of transportation.
    This expansion of Federal involvement in transportation has 
occurred over decades, and it cannot and should not be reversed 
overnight. As a result, the proposals that follow are not 
policy directives to the committee of jurisdiction, nor do they 
affect the spending assumptions in this resolution. But the 
policy directions outlined below merit further investigation, 
hearings, and deliberation for the long-term health of the 
Nation's transportation network.
    The budget resolution's priority for Function 400 is to 
introduce ideas that would harness the ingenuity of Governors, 
State legislatures and local governments, the 
entrepreneurialism of private industry, and the strength of the 
financial markets to enhance the Nation's transportation 
network. This is not to suggest that there is no Federal role 
in transportation. It merely recognizes that Federal 
involvement in many instances has been counterproductive and 
has precluded other, non-Federal ways of financing 
infrastructure improvements.
    Programs in this function fall under the authority of the 
authorizing and appropriating committees with jurisdiction over 
the programs. No savings targets have been assigned to the 
following provisions, and this resolution does not preclude 
spending from the trust funds at levels which the trust fund 
can support. The committees of jurisdiction retain the 
authority to pursue alternative specific policies from those 
reflected in this report as long as they remain within the 
spending limitations of the budget resolution.

   study of restoring state authority, flexibility, and control over 
                           america's highways

    The Problem. The Nation's highway financing mechanism is a 
relic of the 1950's. It was created at a time when lawmakers 
were, in part, concerned that the Nation's highways would be 
inadequate to allow populations to exit urban centers in the 
event of a nuclear attack. Construction of the interstate 
system was originally authorized to last 13 years and cost $25 
billion. It has lasted 40 years at a cost of about $130 
billion. The Federal-Aid Highways Program was also expanded 
during that time to include more than $170 billion in other 
programs and projects.
    During the creation of the Federal-Aid Highways Program in 
the 1950's, highways were still considered the province of the 
States and localities. A 1956 report on the Federal Aid to 
Highways Program by the Commission on Intergovernmental 
Relations stated:

          States and their political subdivisions have primary 
        interests in, and their residents derive substantial 
        benefits from, all highways, even those of an 
        interstate character. Fulfillment of the national 
        interest in highways does not necessarily require that 
        the National Government participate, directly or 
        through financial aids, in their provision or 
        operation.

    The report explained that a defined Federal involvement for 
a limited term was:

        [T]he most effective way to remedy the immediate 
        highway problems of the Nation as well as discharge the 
        national responsibility over the long run. The 
        Commission gave earnest consideration to complete 
        Federal financing of this limited system beyond any 
        emergency program that may be undertaken, but rejected 
        this approach * * *.

    Although it was designed to be a federally assisted State 
program, Federal-Aid Highways has evolved into a highly 
prescriptive, regulated, earmarked Washington-directed program. 
To a great extent, States and localities decide which roads are 
constructed. But, with some exceptions, the Federal Government 
prescribes how much of the Federal-Aid Highways Program can be 
spent on interstate construction, maintenance, congestion 
mitigation and air quality programs, bridge replacement, rural 
access projects, urban access and mobility projects, scenic 
byways programs, and myriad other programs.
    The highway program is financed through excise taxes, 
principally the gasoline tax. The Federal Government collects 
the gas tax, diverts funds for earmarked projects, skims off 
more to pay for the Federal highway bureaucracy, runs the 
remainder through a complex web of programs, and then returns 
the money to the States. This process is so inefficient that 
some economists estimate that the purchasing power of each 
dollar sent to Washington is degraded by at least 25 cents.
    Over time, this structure has enabled the construction of 
the Interstate Highway System. But that system is complete. Now 
States are faced with billions of dollars' worth of unmet 
highway and bridge needs, and a Federal system that hamstrings 
their efforts to rehabilitate America's infrastructure.

    Proposed Solution for Further Study. One possible solution 
to addressing future infrastructure needs would be reducing the 
Federal gasoline tax and highway trust fund outlays by an 
equivalent amount beginning in 1999. States could then raise 
their taxes a commensurate amount. The budget resolution urges 
exploration of this approach.
    Currently, the Federal-Aid Highways Program, funded through 
the highway trust fund, spends approximately $20 billion each 
year. This proposal would reduce the program eventually to 
collecting and expending approximately $6 billion a year.
    Because Federal spending and gas tax revenues would decline 
at commensurate amounts, this proposal would have no impact on 
the deficit and would not be ``scored'' as a net savings. But 
that is beside the point; the issue is one not of simply 
cutting spending, but of implementing the best possible means 
of improving the infrastructure of localities, States, and the 
Nation.
    The Federal Government should retain a role in ensuring a 
maintenance of effort to protect the quality and continuity of 
the Interstate Highway System. It should also retain a role in 
coordination among States, safety regulations, and standard 
setting.
    From the perspective of the taxpayer, the transition to 
State control would be seamless. Each State already has its own 
gas tax and could enact legislation raising gas taxes by an 
amount equivalent to the reduction in the Federal tax, 
effective when the Federal Government lowers its gas tax. From 
the perspective of the highway users, the change would be 
dramatic. Ending Federal micromanagement and earmarking would 
allow Governors and State departments of transportation to do 
more with less.
    The key to improving the Nation's infrastructure is 
reempowering the States, not further consolidating power in 
Washington. Restoring the States' control over their highways 
could be an important first step, and warrants further 
investigation.

 study of privatizing the operations of the air traffic control system

    Recently, the House passed legislation that would remove 
the Federal Aviation Administration [FAA] from the Department 
of Transportation and reform current procurement, personnel, 
and management practices. If enacted, this legislation would 
enhance the Federal Aviation Administration's ability to 
modernize the Air Traffic Control System.
    An alternative approach, however, would be to transfer the 
operations of the air traffic control system to a private 
corporation. A plan to do this is outlined below. The budget 
resolution has assumed no savings from this proposal, but 
recommends further study of this approach.

    The Problem. The Air Traffic Control [ATC] System in the 
United States is obsolete, and Washington has bungled its 
modernization for more than a decade. For example, controllers 
still use pre-1960's equipment to guide 19,000 planes a year. 
According to the FAA, vacuum tubes made obsolete by the 
transistor in 1947 are still used at hundreds of ATC sites. The 
system's truck-sized UNIVAC computers have one-tenth the power 
of today's personal computers costing less than $2,000, and 
some ATC computers could not run the $49 flight simulator 
computer games that are installed on millions of personal 
computers in homes across America.
    The Nation's Air Traffic Control System is safe. But this 
is the result of the Herculean labors of air traffic 
controllers, and the safety technology incorporated in aircraft 
design and maintenance--not because the Federal Government owns 
and manages the ATC System.
    In addition to the failure to modernize, the Federal 
Aviation Administration has been widely criticized for general 
mismanagement. In a recent letter to the FAA's Administrator, 
the inspector general of the Department of Transportation 
wrote:

          During the last 12 to 18 months, the Office of the 
        Inspector General has advised you of at least four 
        instances of significant abuses by the Federal Aviation 
        Administration * * *. While each of these abuses are 
        vastly different, there is a common thread. That thread 
        is the mindset within FAA that managers are not held 
        accountable for decisions that reflect poor judgment.

    The antiquated technology and Federal mismanagement are at 
least partly responsible for the chronic airport congestion and 
delays that cost travelers, industry, and the government nearly 
$6 billion annually. In the next few years, as many as 40 
airports will experience serious congestion affecting 80 
percent of air travelers. Clearly, the current system will not 
meet the Nation's air travel needs of the next century.
    The current condition of the Federal Aviation 
Administration in many ways illustrates what happens when a 
government bureaucracy tries to be a service provider, 
particularly in a high-volume, high-tech field such as air 
traffic control. The report to the President and Congress by 
the National Commission to Ensure a Strong, Competitive Airline 
Industry summarized the issue as follows:

          In the history of American business, there has never 
        been a major commercial industry whose minute-by-minute 
        operating efficiency was capped by the daily operating 
        efficiency of the Federal Government--except for the 
        airlines. The Commission believes there is a 
        fundamental inconsistency between the processes of 
        government and the operation of a 24-hour-a-day, high-
        technology, capital-intensive air traffic control 
        system.

    Proposed Solution for Further Study. Problems of this 
magnitude call for bold change. One alternative would be to 
transfer the operations of the Air Traffic Control System to a 
privately run corporation, while retaining a Federal role in 
setting safety standards, certification, and regulations.
    Privatizing ATC operations would remove the bureaucratic 
impediments to modernizing the system, and would enable the 
corporation to raise billions of dollars through the private 
capital markets for modernization. Further, it would end the 
current conflict of interest resulting from the same 
organization running air traffic control and monitoring its 
safety. A privately managed air traffic control corporation 
could also provide incentives for current, experienced air 
traffic controllers by implementing a flexible and fair pay 
scale. Finally, a corporation could function as a commercial 
enterprise, responsive to its users and using best business 
practices.
    In the past, variations of either privatization or 
government-owned air traffic control corporations, have been 
endorsed by the National Commission to Ensure a Strong, 
Competitive Airline Industry; the Reason Foundation; the 
Clinton administration; Representatives Solomon, Barton, and 
Goss; the Air Transport Association (1985); and the 
Transportation Review Board (1991). On April 1, 1996, Canada's 
Transport Minister signed legislation authorizing the sale of 
Canada's Air Traffic Control System to a newly created 
corporation, Nav Canada.
    As indicated above, the budget resolution assumes no 
savings from privatizing the Air Traffic Control System. 
Nevertheless, privatizing air traffic control can save the 
traveling public, the airlines, and the taxpayers billions of 
dollars while ensuring a dynamic system capable of advancing at 
a pace as rapid as the changing needs of air travel itself.

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from various 
provisions including the following: eliminating highway 
demonstration projects; making Amtrak more businesslike and 
phasing out operating and capital subsidies; completing the 
Northeast Corridor Improvement Program in 1999; reducing funds 
for the Office of the Secretary of Transportation; extending 
vessel tonnage fees; focusing NASA's aeronautics on new 
concepts; terminating wooden bridge research and demonstration 
programs; eliminating Federal corporate subsidies for 
development of ``intelligent transportation systems;'' 
deregulating ocean shipping and eliminating the Federal 
Maritime Commission; eliminating maritime corporate subsidy 
programs and the Maritime Administration; eliminating funding 
for experimental rail programs with doubtful market potential; 
eliminating outdated airline subsidies; eliminating funding for 
the Civil Aeromedical Institute and the FAA Management Training 
Institute; redefining the Federal role in transit; eliminating 
certain unnecessary transportation programs and returning 
responsibility to the States; and eliminating select functions 
and overhead for Department of Transportation Research and 
Special Programs Administration. Although these provisions 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
specific recommended policy changes are contained in Appendix 
1.


                             Function 450:



                   Community and Regional Development

                              ----------                              


                                FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $11,089    $6,672    $6,605    $6,559    $6,595    $6,243    $6,153
Outlays...................................    11,116    10,149     8,640     7,820     7,040     6,655     6,161
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Federal programs designed to spur economic and community 
development have been among the worst examples of duplicative 
Federal bureaucracy. Hundreds of different programs have 
attempted to provide greater economic opportunity to lower-
income families in distressed communities, but there is very 
little evidence of success from any of these programs. Still, 
the programs have proliferated, each with its own bureaucracy 
and constituency. Far more good will be achieved by 
consolidating those programs that show potential for success, 
targeting funds to where they are most needed, and eliminating 
the rest.
    The discussion below reflects the assumptions underlying 
House Budget Committee's recommendations concerning the funding 
priorities for programs in this function. The actual policy 
changes for programs in this function fall under the authority 
of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

 consolidate economic and development programs into flexible state and 
                locally based economic development funds

    Although the Federal Government will continue to play a 
role in providing assistance to urban areas' community 
development, the present system too often diverts resources to 
work projects having little or no benefit for lower-income 
Americans. Community development funding must be concentrated 
where it is most needed. This proposal would combine the 
Community Development Block Grant Program, the HOME Program, 
and the Community Development Financial Institutions Program 
into one flexible fund allocated to and administered by State 
housing and development agencies and local governments. These 
development funds would be concentrated on very low-income 
areas for the revitalization of declining communities, using 
homeownership and preservation of affordable housing as 
principal strategies. This mission would be implemented by 
creating partnerships with neighborhood development 
corporations. The corporations would comprise local volunteer 
boards of directors, including resident leaders; private 
business community representatives; and local public officials. 
The State-based funds would extend grants, direct loans, and 
loan guarantees to the neighborhood development organizations 
so they in turn might provide low-cost loans to those unable to 
obtain credit from conventional banks or financial 
institutions. By monitoring for quality control, and providing 
a secondary market for loans, development funds will provide 
for liquidity and continued ability to loan to these 
neighborhood development corporations. Development funds may 
issue securities backed by these loans, to be purchased by 
private investors such as banks seeking to obtain credit for 
Community Reinvestment Act purposes. Many local governments now 
use the section 108 loan guarantee program in this fashion by 
capitalizing it with other funds, such as Economic Development 
Initiative funding. This proposal would expand the application 
by proposing a network of States, local governments, and 
locally based private organizations. Through this mechanism, 
the goals of both comprehensive neighborhood development and 
cohesion with newly created State-based welfare programs can be 
obtained.
    By moving away from a direct grant program to a flexible 
program emphasizing loans and loan guarantees, significant 
savings may be achieved after State-based funds are capitalized 
in the first 2 years. [Please note: A portion of this proposal 
also appears in Function 600.]

                 create a rural development block grant

    In 1995, the administration proposed, and the House budget 
resolution endorsed, the creation of a rural development block 
grant. But the administration delayed submitting its proposal 
to the Committee on Appropriations until May, well after the 
committee heard testimony from the administration and outside 
witnesses on the fiscal year 1996 proposed budget. The 
President's fiscal year 1997 budget again contains a proposal 
to create a rural development block grant, and this budget 
resolution reiterates its support for such an approach. 
Testifying before the House Committee on Government Reform and 
Oversight concerning this proposal, the General Accounting 
Office [GAO] noted:

          Appropriate program consolidation pursuing a broad 
        strategy for economic development in rural areas 
        provides one alternative to the current system of 
        multiple, narrowly focused programs. Program 
        consolidation would provide the opportunity to 
        eliminate overlapping or duplicative activities, 
        thereby facilitating improvements in the effectiveness 
        and efficiency of overall Federal assistance to rural 
        areas.

    The block grant includes rural water and wastewater grants, 
loans, and loan guarantees; loans and loan guarantees for 
essential community facilities; loans for new construction of 
rural rental housing and the corresponding rental assistance; 
and grants, loans, and loan guarantees for the creation and 
expansion of rural businesses. The President has recommended 
reductions for the rural water and waste disposal loans program 
account, the rental assistance program, the community facility 
loans program account, and the rural housing insurance fund 
program account. The budget resolution assumes these 
recommendations.
    The private sector is significantly more effective at 
producing economic development than the government. Therefore, 
this proposal calls for a 50-percent reduction in business and 
development accounts before the creation of the block grant. 
[Note: The rental assistance portion of this proposal appears 
in Function 600; the Rural Housing Insurance Program occurs in 
Function 370.]

                create a new native american block grant

    On July 11, 1994, Investor's Business Daily carried an 
article titled: ``Gov't's Destructive Benevolence.'' The 
article stated that:

        * * * economists who study Indian development say that 
        the most important cause of Indian poverty is a century 
        of attempting to centrally plan reservations' economic 
        development from Washington without regard to local 
        conditions or tribal history and customs * * *.

This view was echoed last year by the Committee on Resources, 
which noted:

          The enormity of the social, political, and economic 
        problems which confront today's collective native 
        Americans is matched only by the number of confusing 
        and antiquated Federal statutes which guide the [Bureau 
        of Indian Affairs] in performing its duties.

    The Resources Committee endorsed efforts to:

        * * * shift Federal funds directly to the Tribes 
        through the Self-Goverance Program (Public Law 103-413) 
        and the Indian Self-Determination and Education 
        Assistance Act (Public Law 93-638).

The Resources Committee also noted the continued 
``dissatisfaction on the part of many native Americans with the 
health care services provided by the Indian Health Service 
[IHS].''
    This proposal would accelerate the trend toward self-
determination for native Americans. The budget resolution 
assumes that the reinvented Bureau of Indian Affairs [BIA] 
would provide block grants, rather than engaging in the direct 
provision of services or the direct supervision of tribal 
activities.
    The proposal would reduce the central office operations and 
area office operations of the BIA by 50 percent relative to 
fiscal year 1995. It would incorporate construction funding in 
the block grant. To address the recurrent health care problems 
endemic to native Americans, the budget resolution assumes an 
extension of the Self-Governance Program to include the Indian 
Health Service [IHS] in fiscal year 2000. Finally, this 
proposal assumes that the other major programs for native 
Americans will be incorporated into the block grant when those 
programs have achieved self-determination (meaning, under the 
Self-Determination Act of 1975, that they may directly receive 
funds.) [Note: Portions of this proposal are also contained in 
Functions 500 and 550.]

                                 FUNCTION 450: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Consolidate economic and development                                                                            
 programs into flexible State and locally                                                                       
 based economic development funds:                                                                              
    Budget authority......................     4,600    -1,326    -1,326    -1,326    -1,326    -1,326    -1,326
    Outlays...............................     4,835       -80      -533      -962    -1,286    -1,326    -1,326
Create a rural development block grant:                                                                         
    Budget authority......................       663      -116      -115      -114      -113      -113      -113
    Outlays...............................       690       -34       -69       -95      -106      -115      -114
Create a new Native American block grant:                                                                       
    Budget authority......................       852       -54       -54       -54       -54       -54       -54
    Outlays...............................       889       -38       -54       -54       -54       -54       -54
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from a 
phased-in downsizing of the Appalachian Regional Commission; 
focusing the Tennessee Valley Authority on its power-related 
activities; downsizing the Economic Development Administration; 
eliminating low-priority programs; reducing by 50 percent the 
flood insurance subsidy on pre-firm structures; accepting the 
administration's proposed funding for the Federal Emergency 
Management and Planning Assistance Program; and restoring 
equity in unemployment benefits. Although these provisions 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
recommended policy changes are contained in Appendix 1.


                             Function 500:



          Education, Training, Employment, and Social Services

                              ----------                              


                       FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $47,790   $46,965   $47,416   $48,046   $48,696   $49,410   $50,092
Outlays...................................    50,558    49,504    48,112    47,817    48,209    48,704    49,335
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities0

    Education is a top priority for the Nation. It is the means 
by which individuals develop the skills, knowledge, and sense 
of responsibility to pursue their own personal destinies and 
participate in their communities. It is the key that unlocks 
the door to higher-skilled, better-paying jobs for those 
seeking to break out of poverty. It is the source of highly 
trained workers, who are crucial to keeping the Nation 
competitive in an increasingly technical global economy. 
Improving education in America demands restoring the authority 
and responsibility to where it belongs--in the hands of 
parents, principals, and local school boards, not a growing 
Federal bureaucracy. As noted by Louis Grumet, executive 
director of the New York State School Boards Association:

          The Department of Education is far removed from the 
        classroom and has become more of a burden to local 
        school boards than a supportive partner. Using policy 
        letters and program audits, the Department has abused 
        its authority by threatening to withhold Federal 
        dollars from States and school boards unless they 
        comply with edicts devoid of regulatory, legislative, 
        or judicial authority. The Department has become a tool 
        for interest groups to place mandates on school boards 
        outside the legislative process that are unrelated to 
        the needs of children. We urge the dismantling of the 
        U.S. Education Department and the return of educational 
        governance to local school boards.

    Although some in the current administration have opposed 
limiting the Federal Government's role in education, Alice M. 
Rivlin, the administration's outgoing Budget Director, has 
strongly endorsed this course in her book ``Reviving the 
American Dream:''

          Improving education will take bottom-up reform. 
        Presidential speeches and photo opportunities, national 
        testing and assessment, federally funded experimental 
        schools, even new grants spent in accordance with 
        Federal guidelines, can make only marginal 
        contributions to fixing the schools. Education in 
        America will not improve significantly until States and 
        communities decide they want better schools. Making 
        education more effective will take parents who care, 
        committed teachers, community support, and accountable 
        school officials. An ``education President'' can help 
        focus media attention on schooling, but he risks 
        diluting State and local responsibility by implying 
        that Washington can actually produce change.

    Shifting authority back to States and localities does not 
threaten the quality or accessibility of education; indeed, it 
provides for better and more responsive education. Nor does 
this change of roles engender large additional education costs 
for State and local governments; it can be achieved by 
eliminating the overblown Federal bureaucracy and reducing 
regulatory burdens on local schools.
    There is no question that the Federal education bureaucracy 
is too large and too burdensome. The House Committee on 
Economic and Educational Opportunities has identified 760 
Federal education programs in 39 separate agencies, 
departments, commissions, and boards, with obligated funds 
totaling $120 billion. Only 6 percent of these programs' 
primary function is to teach or support mathematics, reading, 
or science. Federal Government mandates for social policy, 
political correctness, and ``new age'' educational theories 
have replaced them, with little academic benefits for students.
    The State of Ohio Legislative Office of Education 
Oversight, in its October 1990 assessment, titled ``Public 
School Reporting Requirements,'' found that Federal program 
reporting requirements are disproportionate to the amount of 
funding they provide. In a survey of required forms, the Ohio 
office discovered that Federal requirements generate over 50 
percent of the paperwork, but only 5 percent of funding for 
elementary and secondary schools.

    Another perspective was offered by columnist David S. 
Broder in the Washington Post on June 7, 1995:

          [Education Secretary] Riley has a Deputy Secretary, 
        an Undersecretary, 11 Assistant Secretaries and 14 
        Deputy Assistant Secretaries. Beyond that, there are 21 
        boards, commissions and councils, each with its own 
        hierarchy. Each of the Department's 10 regional offices 
        boasts separate representatives for the Secretary and 
        Deputy Secretary plus an array of Directors. That's a 
        lot of chiefs for very few Indians.

    The record of academic achievement also casts doubt on the 
effectiveness of Federal funding and intervention. Between 1965 
and 1994 spending for elementary and secondary education has 
grown from $1.942 billion to $34.318 billion. Over the same 
period combined verbal and mathetical Scholastic Aptitude Test 
[SAT] scores have fallen from 958 to 902.
    In the spirit of the Back to Basics Bill--introduced by a 
group of majority freshmen in June 1995--this budget resolution 
consolidates many elementary and secondary education programs 
into block grants, turning funding decisions back to the States 
and local schools. Failed programs--programs that do not help 
children--are terminated.
    To reiterate: The goal of this budget is to reduce Federal 
bureaucracy and regulations so parents and schools can get back 
to the business of educating children. The ``Washington knows 
best'' policies of the Great Society have failed. To improve 
education for this and future generations, we need to get back 
to basics by returning the responsibility of educating our 
children to parents and local communities.
    At the same time, the budget resolution continues to 
strongly support higher education funding. Under the Republican 
budget, funding for student loans will continue to increase 
rapidly over the next 7 years--from $26.6 billion today to 
$37.4 billion in 2002. The numbers of students receiving loans 
will grow from 7 million in 1996 to 8.5 million in 2002. CBO 
projects that these are the exact same levels that will occur 
under President Clinton's student loan policies.
    The discussion below reflects the assumptions underlying 
House Budget Committee's recommendations concerning the funding 
priorities for programs in this function. The actual policy 
changes for programs in this function fall under the authority 
of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

    reduce subsidies to banks and guaranty agencies, and eliminate 
                         government-run lending

    The budget saves approximately $3 billion by eliminating 
subsidies to bankers, guaranteed agencies, and secondary 
markets in the guaranteed student loan program. This is the 
same reform as incorporated in the Balanced Budget Act of 1995. 
None of these costs can be passed along to students because 
interest rates and origination fees for student loans are 
capped by law. Savings are also achieved from eliminating the 
direct loan program. Again, this change will come at no 
sacrifice to students or their parents because every student 
who would have gotten a direct loan from the government will 
have access to a guaranteed student loan from their local bank.
    Eliminating direct lending will protect taxpayers from 
excess defaults that are likely to result from Department of 
Education mismanagement. Already there are warning signs of 
serious problems in the direct lending program. Schools with 
high default rates, particularly proprietary schools, have 
flocked to the direct lending program. Almost 300 schools in 
the direct lending program had default rates of 25 percent or 
higher in at least 1 year. Another indication of serious 
management problems at the Department of Education has been the 
major delays in processing financial aid applications for 
900,000 college students. Although the Department of Education 
has blamed the problems on the partial government shutdown and 
bad weather in the District of Columbia, the reality is that 
these forms are processed by outside contractors who were 
unaffected by these events (many of the contract employees are 
outside the Washington, DC, area). It is Department of 
Education mismanagement that has left thousands of students in 
limbo and forced hundreds of colleges to push back their May 1 
admissions deadlines. Eliminating the government-run direct 
loan program will protect taxpayers from an enormous potential 
liability and assure the long vitality of the student loan 
program.

      create a block grant for elementary and secondary education

    All elementary and secondary education programs except 
Title I, Indian Education, Special Education, and Impact Aid 
would be included in this grant, but total spending for the 
block grant would not be reduced from the current levels of 
spending for these programs. The approach will achieve two 
general goals articulated by the administration: ``flexibility, 
allowing States and localities to implement * * * systems that 
respond to local needs, instead of Federal setasides and other 
requirements;'' and ``consolidation, ending program 
proliferation by merging separate formula and discretionary 
programs into a more coherent, integrated program.''

                      block grant library funding

    H.R.1617, the Consolidated and Reformed Education, 
Employment, and Rehabilitation Systems [Careers] Act and the 
President's 1997 budget consolidate library programs into a 
single block grant. Merging the State grant with a number of 
smaller programs, including the Indian and Native Hawaiian 
library program and Library Center Programs, will reduce 
bureaucracy and free up resources for libraries. The 
administration's own budget proposes savings of 23 percent from 
the 1995 level.

        privatize the corporation for public broadcasting [cpb]

    The original goal of the Public Broadcasting Act of 1967 
was to supply cultural and educational programming not 
available on the three national networks. Today, a number of 
channels--Arts and Entertainment, Bravo, the Learning Channel, 
the Discovery Channel--offer programming similar to that of the 
Public Broadcasting System [PBS] without any taxpayer 
assistance. Moreover, the annual Federal appropriation 
represents only 14 percent of the Corporation's annual budget. 
CPB could make up cuts in Federal funding by reducing waste and 
increasing corporate sponsorship and viewer support, as well as 
by being more aggressive in its licensing arrangements with 
popular PBS programs such as ``Barney'' and ``Sesame Street.'' 
Congressman Fields' bill to privatize PBS increases 
opportunities for corporate underwriting and limits the number 
of duplicative public television stations. It should also be 
noted that the threat of Federal subsidy reductions 
significantly increased PBS' fundraising last year.
    This proposal would provide $260 million for fiscal year 
1997 and $240 million for fiscal year 1998, the levels proposed 
in the House-passed appropriations bill. Federal funding would 
continue to be reduced by $60 million a year until Federal 
support is eliminated in 2002.

             enact careers job training consolidation bill

    In his State of the Union Address, the President challenged 
Congress to consolidate 70 overlapping, antiquated job training 
programs into a program offering vouchers. The Careers Act, 
which passed the House of Representatives on September 19, 
1995, by a vote of 345 to 79, consolidates job training and 
education programs into three block grants to the States. The 
bill also requires States to offer vouchers within 3 years. The 
budget resolution assumes this consolidation strategy.

                                 FUNCTION 500: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Block grant library funding:                                                                                    
    Budget authority......................       129       -26       -26       -26       -26       -26       -26
    Outlays...............................       140       -10       -19       -26       -26       -26       -26
Privatize the Corporation for Public                                                                            
 Broadcasting:                                                                                                  
    Budget authority......................       275         0       -20       -80      -140      -200      -260
    Outlays...............................       275         0       -20       -80      -140      -200      -260
Enact careers job training consolidation                                                                        
 bill:                                                                                                          
    Budget authority......................     7,241    -1,137    -1,178    -1,189    -1,200    -1,209    -1,212
    Outlays...............................     7,695       -68      -922    -1,113    -1,168    -1,208    -1,212
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 500: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reduce subsidies to banks and guaranty                                                                          
 agencies and eliminate Government run                                                                          
 lending:                                                                                                       
    Budget authority......................     1,774      -894      -424      -788      -786      -826      -866
    Outlays...............................     2,062      -840      -336      -634      -769      -822      -852
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The discussions below explain in specific terms how other 
government programs and spending levels in this function would 
change as a result of the policy priorities described above. 
Although these descriptions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.
    Most of the additional savings are assumed to come from the 
following: phasing out the National Endowment for the Arts and 
Humanities, along with several other smaller programs; 
restoring equity in unemployment assistance; eliminating funds 
for politicized activities under the name of ``community 
service;'' restoring State and local authority over education 
standards; supporting the President's program terminations; 
freeing local school districts to promote English proficiency; 
discontinuing unneeded capital subsidies, as proposed in the 
President's 1995 budget; eliminating duplicative postsecondary 
grant programs, as recommended in the President's fiscal year 
1997 budget; eliminating burdensome categorical grant programs, 
as called for in the Careers bill and the President's budget; 
accepting the President's fiscal year 1996 proposal concerning 
aid to institutions; phasing out duplicative Robert C. Byrd 
scholarships; increasing funding for Historically Black 
Colleges by eliminating Howard University's special earmarked 
program; eliminating nonperforming Job Corps Centers; and 
eliminating the obsolete Office of the American Workplace. The 
effect of three welfare reform-related provisions--replacing 
the AFDC JOBS program; establishing two child protection block 
grants; and reducing funding for the Title XX Social Services 
Block Grant--occur in Function 500 as well.


                             Function 550:



                                 Health

                              ----------                              


                                              FUNCTION 550: HEALTH                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $110,577   $129,918   $137,726   $144,995   $152,961   $161,114   $167,926
Outlays............................    122,977    130,276    138,064    145,168    152,890    160,789    167,476
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The proposals in this function carry out one of the 
fundamental goals of the budget resolution--shifting power, 
influence, and money out of Washington and back to people in 
their States and communities. That goal is expressed 
particularly regarding health insurance reform, the 
transformation of the Federal-State Medicaid program, and 
reform of Food and Drug Administration [FDA] procedures. It is 
exceptionally important in these areas because of the vital 
nature of reform for the Nation's health care.
    The discussion below reflects the assumptions underlying 
the House Budget Committee's recommendations concerning the 
funding priorities for programs in this function. But the 
actual policy changes for programs in this function fall under 
the authority of the authorizing and appropriating committees 
with jurisdiction over the programs. The committees of 
jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the spending guidelines that flow from the 
budget resolution's spending limitations.

                        health insurance reform

    The budget resolution incorporates the insurance reforms 
and spending and revenue estimates of the House-passed Health 
Coverage Availability and Affordability Act of 1996 (H.R. 
3103). The measure expands access to health insurance and helps 
make it more affordable. It also contains portability 
provisions to assure that losing a job or changing jobs will 
not cost a family their health insurance coverage.
    Although health insurance reform has been a mounting 
concern over the past several years, previous Congresses, as 
well as the current administration, have failed to bring about 
needed reform, primarily because of their insistence on a 
centralized, government-controlled bureaucratic system of one-
size-fits-all health coverage. The 104th Congress acknowledged 
the Nation's rejection in 1993 of government control of their 
health care, and in response developed this current set of 
targeted reforms that meet the real needs and address the real 
fears of Americans who face the prospect of losing their health 
insurance coverage.
    By making health insurance more affordable and accessible, 
H.R. 3103 will have a significant impact on the health status 
of the approximately 20 percent of Americans who lack health 
insurance temporarily or throughout the year. These reforms 
will also have a positive effect on Federal entitlement 
spending and on the overall economy; it is estimated that 
uncompensated health care in the United States is currently 
costing between $35 billion and $40 billion per year.
    Insurance portability provisions in the bill allow 
individuals who lose or change jobs to maintain health 
insurance coverage. These provisions will relieve job-lock 
pressures, allowing many individuals to explore other 
employment possibilities and realize their full earning 
potential.
    The bill also helps expand health care coverage to small 
companies. According to the Employee Benefit Research 
Institute, 49 percent of all uninsured workers in 1994 were 
either self-employed or working in companies with fewer than 25 
employees. Small employer insurance pooling and a higher health 
insurance tax deduction for the self-employed will help small 
companies and the self-employed to afford and maintain health 
insurance.
    The bill adjusts the tax code to make medical savings 
accounts a viable option for purchasing health care. It will 
allow individuals to control their health care dollars and to 
benefit financially by making prudent health care purchases. 
Additional provisions include medical malpractice reform to 
help lower health costs nationally; tax incentives for the 
purchase of long-term care insurance; stiffer penalties for 
fraud and abuse; and administrative simplification of 
electronic health data transfers.

                     reform of the medicaid program

    Medicaid, the Federal-State health care financing system 
for the poor, is strapped by Federal regulations and explosive 
cost increases. The reforms assumed in this budget resolution 
would transform Medicaid into a system that can be tailored to 
meet the diverse needs of diverse populations--and at the same 
time slow the unsustainably high growth rate in the system's 
costs.
    Medicaid spending has been growing at an average annual 
rate of 19.1 percent between 1990 and 1994. During 1991, 
Federal Medicaid outlays grew by 27.8 percent. They grew 
another 29.1 percent in 1992. For fiscal year 1996, CBO 
estimates that Federal payments will be $95.7 billion and State 
payments will be an additional $72.2 billion (for a total of 
$168.0 billion). The fiscal year 1996 Federal payments include 
``disproportionate share hospital'' payments of $10.7 billion. 
These supplemental payments are made to hospitals that provide 
a disproportionate share of medical care to low-income 
populations, such as Medicaid and indigent patients.
    CBO projects Federal Medicaid payments rising by 7.5 
percent in fiscal year 1996, rising to an increase of 9.9 
percent in fiscal year 2002. These rates of spending growth are 
unsustainable. But they cannot be controlled by tinkering with 
the current system. Correcting the problem requires 
fundamental, systemic reform.
    First, State flexibility is essential to improved Medicaid 
effectiveness, responsiveness, and efficiency. The approach 
assumed in the budget resolution recognizes that State and 
local officials, providers, and recipients know best how to 
structure their Medicaid programs to meet the needs of their 
own populations. By limiting Federal preconditions that 
restrict the discretion of State and local authorities, the 
reform strategy also allows for much-needed innovations to 
improve the responsiveness of the Medicaid program.

    Reform Goals. Medicaid reform, if enacted, would achieve 
four goals: First, it would guarantee the basic health care 
needs of the Nation's most vulnerable populations. Second, it 
would restrain Medicaid health care expenditures to a 
sustainable rate of growth. Third, it would give States maximum 
flexibility in the design and implementation of cost-effective 
systems of care. Fourth, it would protect the States from 
unanticipated program costs resulting from economic 
fluctuations in the business cycle, changing demographics, and 
natural disasters.

    Reform Proposal. A comprehensive Medicaid reform plan was 
anticipated in the fiscal year 1996 budget resolution, and the 
needed legislative and policy changes were incorporated in the 
subsequent Balanced Budget Act of 1995. But the President 
vetoed that legislation. Since then, the Nation's Governors 
have developed their own Medicaid reform proposal, which is 
similar in important respects to the Balanced Budget Act. The 
Governors unanimously adopted the plan on February 6, 1996.
    The budget resolution again calls for Medicaid reform, 
built on the framework of the Balanced Budget Act and the 
Governors' February 6 agreement. Such a reform will give States 
and local communities the power they need to run health care 
programs for the poor in an efficient and effective manner, and 
also will gain needed control over Medicaid spending growth.
    The reform assumed in the budget resolution calls for a 
base allocation of Federal funds. Distribution among the states 
would be determined by such factors as the number of people in 
poverty; caseloads and eligibility categories (disabled, 
elderly, etc.); cost of providing care; and inflation. This 
base allocation of Federal funds is then blended with the 
concept of an insurance umbrella. Within the constraints of the 
required Federal budget savings, the insurance umbrella would 
assure adequate Medicaid funding even during recessions. States 
would continue to add their own funds to the Federal 
contribution to provide health care for low-income residents.
    The reform will make insurance coverage available to many 
who are currently uninsured. It also will dismantle the current 
Washington-run system: States will have the flexibility to 
create innovative health care programs for their low-income 
citizens. Some of the savings achieved through increased 
efficiency can be used to expand coverage to those with incomes 
up to 275 percent of the Federal poverty level.

    Contrast With the President's Approach. The approach 
recommended by the Nation's Governors and the budget resolution 
contrasts sharply with the President's ``per capita cap'' 
proposal. The President proposes to limit Federal funding that 
States could receive for each Medicaid recipient. Under the 
President's plan, any per capita expenses that exceeded this 
limit would have to be met solely by State and local taxpayers. 
This creates an unfunded mandate. States would be required by 
Federal law to provide medical assistance services but would 
receive no Federal funding to defray the cost of meeting this 
mandate.
    The President would retain most current Federal Medicaid 
regulations, which would continue to hamstring efforts to make 
Medicaid more efficient and responsive to local needs.

    Illustrative Option. Under the Budget Committee's Medicaid 
reform plan, Federal Medicaid outlays in fiscal year 2002 would 
be $140.2 billion, compared with fiscal year 1995 outlays of 
$89.1 billion, as estimated by CBO. States would continue to 
match the Federal dollars. Federal payments to the States would 
rise each year, but the growth would be restrained.
    Over the 6-year period fiscal year 1997 through 2002, a 
total of $731.3 billion would be spent by the Federal 
Government on Medicaid. The President's fiscal year 1997 budget 
proposed Medicaid spending of $749.7 billion over the next 6 
years.
    Federal Medicaid outlays per recipient would rise from an 
average of $2,475 in fiscal year 1995 to about $3,250 in fiscal 
year 2002. In addition, a $3.5-billion fund would be 
established to pay for the cost of providing health care 
services for undocumented aliens, and a $1.5 billion fund would 
be established to pay for the cost of providing health care 
services for native Americans.
    Again, the Medicaid reform envisioned in this budget 
resolution is designed to meet four goals: to guarantee the 
basic health care needs of the Nation's most vulnerable 
populations; to restrain Medicaid health care expenditures to a 
sustainable rate of growth; to give States maximum flexibility 
in the design and implementation of cost-effective systems of 
care; and to protect States from unanticipated program costs 
resulting from economic fluctuations in the business cycle, 
changing demographics, and natural disasters. Enactment of such 
reforms would assure that health care assistance for the needy 
would continue, and would be far more compassionate and 
responsive to their particular needs.

     structurally reform the food and drug administration's review 
                               procedures

    Make Lifesaving Drugs and Devices Available to Americans 
Through Reform of the Food and Drug Administration Review 
Process. The Food and Drug Administration's [FDA's] stated goal 
is to protect the public health through the prevention of 
injury or illness due to unsafe or ineffective products. The 
FDA has come under criticism, however, because of delays in 
drug and device approval and heavy-handed regulatory 
enforcement. An October 1995 General Accounting Office report 
stated that FDA review time for medical devices has increased 
in recent years. Although GAO reported a reduction in approval 
time for new drug applications in recent years, it is still a 
lengthy and costly process. Work force is not the issue; the 
FDA has almost 3,000 evaluators, compared with 400 in the 
United Kingdom. The United Kingdom has the same safety record 
as the United States, with a comparable review process.
    Chairman Bliley of the Committee on Commerce Committee has 
brought together the work of several Members of Congress and 
introduced three FDA reform bills (H.R. 3199, H.R. 3200, and 
H.R. 3201) covering drugs, food, and medical devices.
    The FDA reform assumed in this budget resolution would 
maintain existing or equivalent government standards and 
oversight, as well as the FDA stamp of approval. The 
significant feature is the movement to nongovernmental FDA 
certified organizations for the review and approval of drugs, 
biologics, medical devices, food additives, and nutritional 
health claims, as well as the use of FDA certified 
organizations to conduct good manufacturing practice 
inspections. The FDA would be the certifier of certifiers, and 
maintain standards for the reviewing process. It would continue 
to be the primary reviewer during the transition period, until 
a sufficient number of accredited organizations are certified. 
Budgetary savings would be realized by reducing FDA's 
evaluation and investigation budgets.

    Improve Provisions Allowing Domestic Companies to Export 
Certain Food and Drugs. This provision, contained in 
legislation sponsored by Representative Upton and included in 
the Balanced Budget Act, allows pharmaceuticals and medical 
devices not approved in the United States to be exported to any 
country in the world if the product complies with the laws of 
that country and has valid marketing authorization in one of 
the following countries: Australia, Canada, Israel, Japan, New 
Zealand, Switzerland, South Africa, or the European Union. Any 
person who exports a drug or device may request the Secretary 
of Health and Human Services to certify in writing that the 
exportation is legal. A fee of up to $175 is authorized for 
each written export certification.

    Expand the Benefits of Already Approved Drugs By Permitting 
Dissemination of Off-Label Drug Use Information. The FDA 
prohibits the dissemination of information on the use of drugs 
for treatments other than the FDA-approved usage. Many drugs 
are found to be effective on other illnesses, but the FDA 
requires a new application and full clinical trials for the new 
use. This is highly expensive, and delays treatment for 
patients that would benefit from treatment. Most cancer 
treatments are off-label uses of previously approved drugs. 
This proposal would allow the dissemination of information for 
off-label use of an approved drug. The drug has already met the 
safety standard in the previous clinical trial, and appropriate 
information should be allowed to be disseminated. This will 
reduce approval costs for both the government and the private 
sector.

      maintain increases in national institutes of health funding

    The budget resolution maintains the National Institutes of 
Health [NIH] as a funding priority. Increased funding of 5.8 
percent in the 1996 appropriation is maintained in the fiscal 
year 1997 budget. The report of the Committee on Appropriations 
for H.R. 2127, the Labor, Health and Human Services, and 
Education, and Related Agencies appropriations bill of 1996, 
stated:

        * * * the committee views NIH as one of its very 
        highest priorities and has made difficult resource 
        allocations throughout the bill to preserve what it 
        believes is the minimum necessary funding level for 
        NIH.

The resolution funding for NIH represents a 15.5 percent 
increase since the fiscal year 1993 budget. [Note: Because this 
proposal causes no change in fiscal impact, it is not reflected 
in the table below.]

                                 FUNCTION 550: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Structurally reform the Food and Drug                                                                           
 Administration's review procedures:                                                                            
    Budget authority......................       820         0       -66      -139      -564      -139      -139
    Outlays...............................       821         0       -49      -414      -135      -139      -139
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 550: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                          Spending change                       
                                           1996   --------------------------------------------------------------
                                           est.      1997      1998      1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Reform of the Medicaid Program:                                                                                 
    Budget authority...................    82,999    -2,000    -4,640    -8,380    -12,580    -18,040    -26,360
    Outlays............................    95,739    -2,000    -4,640    -8,380    -12,580    -18,040    -26,360
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                           1996                                                                 
                                           est.      1997      1998      1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Recommended Medicaid levels:                                                                                    
    Budget authority...................    95,739   102,850   110,890   118,090    125,690    133,600    140,220
    Outlays............................    95,739   102,850   110,890   118,090    125,690    133,600    140,220
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings in areas 
including: Accepting the administration's funding for the 
Health Resources and Services Administration; incorporating 
Indian health care services and facilities into the new Native 
American Block Grant; consolidating data collection and 
analysis functions at the Department of Health and Human 
Services; eliminating unnecessary funding in the Office of the 
Secretary and accepting the administration's funding level for 
departmental management; and consolidating duplicative 
bureaucracy by transferring the Mine Safety and Health 
Administration to the Occupational Safety and Health 
Administration and reducing the combined agency.
    The resolution also expressly rejects the administration's 
25-percent cut in the Centers for Disease Control and 
Prevention.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 570:



                                Medicare

                              ----------                              


                                             FUNCTION 570: MEDICARE                                             
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $181,254   $193,165   $207,183   $217,250   $229,309   $241,641   $255,121
Outlays............................    179,109    191,481    205,458    214,978    227,560    239,907    252,270
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

                     the current status of medicare

    There are just four basic points to be made about the 
Medicare program:

  - First, Medicare is going bankrupt. The Medicare hospital 
        trust fund will be out of cash and unable to pay 
        beneficiaries' hospital bills by 2001, if not sooner.

  - Second, to save it from bankruptcy, Medicare must be 
        reformed regardless of any other budgetary objectives. 
        Even if Congress were not trying to balance the budget 
        and roll back the 1993 tax increase, fundamental, 
        systemic reform of Medicare still would be necessary.

  - Third, the 104th Congress developed and passed a plan to 
        save Medicare without reducing benefits to individual 
        recipients. Although the President vetoed the original 
        plan, Congress is determined to continue in its efforts 
        to save Medicare. This budget resolution would increase 
        spending on each Medicare beneficiary from $5,200 in 
        1996 to $7,000 in 2002. Total program outlays would 
        increase from $196 billion in 1996 to $284 billion in 
        2002. This total spending increase amply covers 
        inflation and the growing number of Medicare 
        recipients. The spending level in this resolution will 
        accommodate maintaining the beneficiary premium at 25 
        percent of Part B program costs, and will preclude the 
        necessity to increase beneficiary copayments or 
        deductibles, all of which have been agreed to by the 
        leadership of the committees of jurisdiction of the 
        Medicare program.

  - Finally, Congress' plan expands health care choices for the 
        Nation's seniors. The plan, built on the demonstrably 
        successful model in the State of Arizona, allows 
        beneficiaries to keep their current Medicare coverage, 
        with no increased coinsurance or deductibles, while 
        also offering new alternatives for receiving health 
        care--many of which will substantially lower seniors' 
        current out-of-pocket health care expenditures.

    The Medicare crisis was cited in last year's House budget 
resolution in the following passage:

          Medicare is facing bankruptcy. On April 3, 1995, the 
        Social Security and Medicare Trustees reported that the 
        Federal Hospital Insurance Trust Fund (Medicare Part 
        A)--which pays for hospital and institutional care for 
        Medicare beneficiaries and which is funded by the 
        Medicare payroll tax--will run out of money in 7 years, 
        or by 2002, under current law.

    Just 1 year later, the Medicare crisis is even more urgent. 
In October, a Treasury Department report revealed that the 
Hospital Insurance Trust Fund already was running an operating 
deficit in fiscal year 1995, a year earlier than previously 
projected. The March 1996 Treasury report recorded that for the 
first half of fiscal year 1996, the trust fund ran a $4.2 
billion deficit. According to Roland ``Guy'' King, former chief 
actuary of the Health Care Financing Administration [HCFA], 
this means the trust fund now will likely go bankrupt in 2000 
instead of the previously estimated 2002.
    In testimony before the Committee on Ways and Means on 
April 30, 1996, the Congressional Budget Office warned that the 
Medicare program's financial inadequacy must be addressed 
immediately:

        * * * fixing Medicare's financing problems will not be 
        easy * * *. To ensure solvency of the HI trust fund 
        just through 2006 would require an increase in the HI 
        payroll tax of 0.7 percentage points--about 25 
        percent--starting in January. Alternatively, the rate 
        of growth of HI outlays would have to be slowed by more 
        than 3 percentage points --from 8 percent to about 4.5 
        percent a year. Larger changes would be required to 
        bring the growth of SMI [supplemental medical 
        insurance] spending in line with the growth of the 
        economy. Postponing action would make the necessary 
        policy actions even more severe.

    But the Medicare crisis is not simply financial. It 
concerns the need to restore the trust of those who rely on the 
guarantee of Medicare. It is about preserving a program that is 
in danger of failing not only its future beneficiaries but also 
those who depend on Medicare for meeting their health care 
needs now. It is also about taking power and control from a 
centralized bureaucracy and returning seniors' health care 
choices to those best suited to judge their needs--the seniors 
themselves.
    Through the first half of 1995, the administration sought 
to hide the problem, then resorted to politicizing Congress' 
efforts to address it. For example, even though the 
congressional Medicare reform bill--the Medicare Preservation 
Act--would have allowed the program to grow by over $100 
billion through 2002, the administration proclaimed daily that 
Congress wanted to ``cut'' Medicare. Such commentary was 
especially cynical considering that less than 2 years ago, the 
President, in his Health Security Act, proposed reducing 
Medicare spending growth by a greater amount than was later 
recommended in the Medicare Preservation Act.
    After vetoing Congress' original Medicare reform, the 
President demonstrated an unwillingness to help develop a 
mutually agreeable plan to save Medicare, even after the 
congressional leadership offered $102 billion more spending 
than the original MPA. Instead of true reform that would ensure 
a financially sound future for the Medicare Program, the 
President proposed to shift $60 billion of part A spending for 
home health benefits to the part B trust fund. If implemented, 
this proposal would require billions more in taxpayer-financed 
payments to sustain the Medicare Part B program.
    In addition to saving the program from bankruptcy, the 
Medicare Preservation Act would have prepared Medicare for the 
retirement of the baby boom generation and modernized it to 
provide more health coverage options for beneficiaries. Some of 
these options, including expanded HMO's, provider service 
organizations, and medical savings accounts would have 
significantly reduced beneficiaries' out-of-pocket health care 
expenses. While beneficiaries could stay with the Medicare fee-
for-service system so many of them are now accustomed to, this 
bill would have allowed them, if they desired, to experiment 
and tailor their health care coverage to meet their individual 
financial, medical, and lifestyle needs.
    The 1997 budget resolution provides funding levels designed 
to address fundamental reform of the Medicare Program. Such 
reform would strengthen the Medicare Part A Trust Fund and 
provide expanded choices for health care delivery to the 
Nation's seniors. The spending anticipated in this resolution 
will accommodate maintaining the beneficiary premium at 25 
percent of part B program costs which has been agreed to by the 
leadership of the committees of jurisdiction of the Medicare 
Program.
    The resolution also calls on the President, as soon as 
possible, to release the latest findings of the Medicare 
Trustees so that Congress and the administration may have an 
up-to-date assessment of what reforms are necessary.

                 arizona's successful model for choice

    The Medicare plan assumed in this resolution would bring 
market forces and competition to the Medicare program across 
the country, with the benefits accruing to seniors. Evidence 
for this model was recently documented in a report in the New 
York Times that described in detail the success of Medicare 
managed care in Tucson, AZ: 42 percent of all Medicare 
beneficiaries in Tucson have chosen HMO's as their preferred 
health care delivery option.
    A high penetration of private managed care companies 
offering Medicare coverage has created a climate of competition 
among providers. As a result, providers offer additional 
benefits and lower out-of-pocket costs to attract Medicare 
beneficiaries to their plans. The Times article cited 
advertisements for plans extolling no monthly premiums or 
deductibles, free mammograms, and low-cost prescriptions. On 
the other hand, seniors who choose traditional Medicare spend 
up to $2,500 per year on their monthly Medicare premium, 
hospital and physician deductibles, supplementary insurance, 
and prescription drugs--and they do not receive the benefits of 
preventive care coverage. This phenomenon echoes the experience 
of private-sector companies such as Xerox, Kodak, and IBM, 
which learned--as detailed in testimony to the Committee on the 
Budget--that more choices of health coverage and innovations in 
care increase quality and lower costs.
    Only 1.2 percent of beneficiaries who sign up for managed 
care plans in Arizona return each month to the traditional 
Medicare plan. In a State poll for the Arizona Hospital and 
Health Care Organization last November, the Gallup Organization 
found that the elderly in HMO programs in Arizona were more 
satisfied than health care consumers in all other kinds of 
programs, including fee-for-service Medicare, employer-financed 
HMO's and employer-financed insurance programs permitting 
workers unrestricted choices of doctors.
    Arizona's Medicare managed care system is highly developed 
because the State was given a regulatory waiver to offer 
managed care plans to its Medicaid population. This enabled the 
health plans to develop the networks and infrastructure 
necessary for efficient health care delivery for all interested 
Arizona residents. Today, competition for beneficiaries is 
improving benefits and quality of care.
    The Medicare reforms embraced in this budget resolution 
would spread the success of the Arizona experience across the 
country to the benefit of all Medicare enrollees. Reforms are 
necessary because Medicare's current payment system and 
regulations as well as the program's very limited options for 
health care delivery create serious barriers to successful 
implementation of private-based Medicare plans. Congress' 
reforms would enable and encourage broad competitive markets 
with more types of health coverage than are now available, and 
would increase the amount paid to private plans in low-cost 
areas to make private plans viable where they are not now.
    The Medicare proposal would also include reforms to 
facilitate provider service organizations, repeal of the law 
restricting the percentage of seniors covered by a plan, and 
other measures that would open the way for more choices of 
efficient and high quality health care options.
    The specific Medicare reforms to be developed fall under 
the authority of the authorizing committees with jurisdiction 
over the program. The committees of jurisdiction retain the 
authority to pursue alternative specific policies from those 
reflected in this report as long as they stay within the 
spending guidelines that flow from the budget resolution's 
spending guidelines. The nature of the Medicare reform 
anticipated in this budget resolution would follow the 
illustrative framework described below.

                Recommendation: The Medicare Reform Plan

    The fact that the Hospital Insurance Trust Fund is going 
broke and Medicare Part B is growing at 13 percent (four times 
the rate of inflation) clearly indicates that the program must 
be reformed if it is to continue providing benefits for current 
seniors and be available to future retirees.
    The Medicare reform recommended in this budget resolution 
would fully account for the increase in the Medicare population 
over the budget period. It would increase average Medicare 
spending on each beneficiary from $5,200 in 1996 to 
approximately $7,000 in 2002. Overall, the plan would spend 
approximately $1.479 trillion on Medicare over 6 years, 
Medicare spending in 2002 would be an estimated $284 billion--
$107 billion more than the 1995 level of $177 billion.
    The Medicare reforms would expand choice of health care 
coverage for seniors, preserve the option to choose one's 
doctor, and allow beneficiaries to realize savings from prudent 
health care spending with medical savings accounts. These 
changes would help bring to Medicare the innovations and cost 
control already experienced in the private sector.

                             beneficiaries

    Under the proposed reform, Medicare beneficiaries would 
have the option of remaining in the traditional Medicare fee-
for-service plan. If they choose the traditional plan, they 
would have no increased copayments or deductibles, and their 
part B premium payment would remain at the current 25 percent 
of program costs. Alternatively, beneficiaries nationwide would 
be able to choose from a variety of new private plans according 
to their needs. For example, for beneficiaries who want 
preventive benefits--which traditional Medicare does not 
currently offer--he or she would have the option to choose a 
private plan that includes such benefits. Some plans also would 
allow beneficiaries to determine, at the point a service is 
needed, whether to receive the service from their regular plan 
or to receive it from outside the plan. The budget resolution's 
spending guidelines also allow for additional, new preventive 
screening benefits in the traditional Medicare benefit package.

                            fraud and abuse

    Estimates of the annual cost of fraud and abuse in the 
Medicare program are as high as $18 billion. This problem was 
addressed in the Medicare Preservation Act in an amendment 
offered by Representative Shays of the Budget Committee and 
Representative Schiff of the Judiciary Committee. The amendment 
established criminal statutes under which the Department of 
Justice could prosecute perpetrators of health care fraud, 
instead of continuing to rely on antiquated wire fraud and mail 
fraud statutes to counter increasingly sophisticated health 
care fraud schemes.
    A similar provision has been subsequently incorporated into 
the Health Coverage Availability and Affordability Act of 1996 
(H.R. 3103), passed by the House on March 28 and assumed in 
this budget resolution. The bill establishes mandatory 
appropriations for Medicare payment safeguards and for the 
antifraud activities of the inspector general of the Department 
of Health and Human Services and the Federal Bureau of 
Investigation. According to CBO, data indicate that an 
additional dollar devoted to the IG's enforcement activities 
would return $7 in recoveries. Data from the FBI's Health Care 
Fraud Unit indicate a 9-to-1 ratio of recoveries to cost.
    H.R. 3103 increases current civil monetary penalties for 
fraudulent claims for reimbursement under Medicare and Medicaid 
and applies these penalties to all Federal health programs. 
Penalties apply to individuals for bill-coding violations, 
prescribing services that are not medically necessary, 
kickbacks, falsifying home health services, failure by HMO's to 
fulfill their contracts. In addition, the Secretary of HHS is 
required to exclude providers from participation for 3 years 
following felony convictions for fraud, obstructing an 
investigation, and violations of controlled substance statutes. 
As in the Medicare Preservation Act, this bill would make 
certain offenses involving health care fraud Federal crimes.
    The budget resolution also recommends the adoption of H.R. 
3225, sponsored by Representative Shays, which contains an 
additional antiwaste and abuse initiative. This initiative 
would expedite implementation of new payment adjustments for 
durable medical equipment [DME], ensuring that the Medicare 
program captures savings available from the competitive DME 
marketplace. Currently, although Medicare is the largest single 
purchaser of DME with over $2 billion in annual expenditures, 
the program pays rates far above private payor rates for DME. 
The inspector general of the Department of Health and Human 
Services has called the current DME adjustment system--which 
modifies prices Medicare pays for DME--``absurd.''

                               providers

    In General. The budget recommends a variety of provider 
payment reforms and calls for incentives for providers to 
deliver services more efficiently and with the utmost attention 
to quality of care. Under the assumed framework for reform, 
hospital payments would increase each year by the rate of 
inflation minus a factor for productivity increases. The plan 
also allows for special provisions for rural and urban 
hospitals. These options could include, among others, the 
Medicare Dependent Small Rural Hospital Program, a rural 
emergency access hospital program and continued add-on payments 
for Disproportionate Share Hospitals. Payments to physicians 
for Medicare services would be made consistent across provider 
service-types. Primary care physicians in an area with a 
shortage of providers would receive an additional payment 
increase to help ensure that Medicare beneficiaries have 
accessible health care services.

    Provider-Sponsored Organizations. A major initiative to 
strengthen the Medicare program would allow Medicare payment to 
provider-sponsored organizations. The plan would enable 
hospitals, doctors, and other provider affiliations to offer 
plans, thereby competing with HMO's and other health plans for 
Medicare beneficiaries. This competition would expand market 
forces among providers and plans and enhance the opportunity 
for the Arizona Medicare experience to be replicated.

                        medical savings accounts

    Medical savings accounts would enable seniors to have 
control over their health care spending and allow them to 
realize the benefit of prudent health spending. The traditional 
Medicare plan has deductibles that must be paid out-of-pocket 
or by beneficiary-purchased MediGap plans. Under the Medicare 
reform envisioned in this budget, a beneficiary who chose a 
medical savings account would receive high-deductible 
catastrophic health insurance coverage, and Medicare would make 
contributions to a savings account that the beneficiary could 
use to pay noncatastrophic medical expenses.

                        medical liability reform

    The budget resolution also incorporates the revenue 
estimates of the medical liability reform measures contained in 
H.R. 3103. This long-needed reform will bring balance to 
medical liability cases, and lower health costs over the long 
run.

                               Conclusion

    Without enactment of the kinds of reforms outlined above, 
there is serious danger that the Medicare Program will not be 
able to serve many of the people who now depend on it. Its 
availability to future retirees also would be in serious doubt. 
As noted earlier, Medicare must be reformed regardless of any 
efforts to balance the budget or roll back the 1993 tax 
increase. Without such reform, the program will go bankrupt.
    But the Medicare reforms called for in this budget aim at 
more than extending the life of the program. They seek to 
strengthen and improve Medicare--to make it better serve 
beneficiaries through more updated and effective health care 
delivery methods, and through a more sound benefits and payment 
structure. These benefits can occur only if serious, credible 
Medicare reforms such as these are enacted.

                                   FUNCTION 570: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                         Spending change                        
                                         1996   ----------------------------------------------------------------
                                         est.      1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Strengthen and improve Medicare for                                                                             
 America's seniors:                                                                                             
    Budget authority.................   178,223    -6,800    -11,278    -20,989    -29,114    -39,320    -50,600
    Outlays..........................   176,083    -6,800    -11,278    -20,989    -29,114    -39,320    -50,600
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                         1996                                                                   
                                         est.      1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Recommended Medicare levels: \1\                                                                                
    Budget authority.................   198,191   210,746    227,579    240,249    255,081    270,096    286,655
    Outlays..........................   196,051   209,062    225,854    237,977    253,332    268,362    284,254
----------------------------------------------------------------------------------------------------------------
\1\ Includes total Medicare spending funded from trust fund revenues and premiums.                              



                             Function 600:



                            Income Security

                              ----------                              


                                          FUNCTION 600: INCOME SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $219,334   $232,612   $241,254   $244,842   $262,510   $262,260   $281,100
Outlays............................    228,879    240,107    244,185    251,716    263,060    265,271    277,213
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The budget assumes a comprehensive welfare reform plan 
designed to shift decisionmaking authority from Washington to 
States and local communities while increasing the ability of 
welfare recipients to break out of the cycle of poverty. Major 
proposals also are offered in this function as well as in 
Functions 920, 950, and Revenues, to strengthen the integrity 
of Federal retirement programs. Proposals in this function also 
seek to reassess the Federal role in assisted and public 
housing. The actual policy changes for programs in this 
function fall under the authority of the authorizing and 
appropriating committees with jurisdiction over the programs. 
The committees of jurisdiction retain the authority to pursue 
alternative specific policies from those reflected in this 
report as long as they stay within the budget resolution's 
spending limitations. The discussion below reflects the 
assumptions underlying House Budget Committee's recommendations 
concerning the funding priorities for programs in this 
function.

                             welfare reform

    The hazards of an expansive welfare state were succinctly 
expressed by President Franklin D. Roosevelt in his 1935 State 
of the Union Address:

          Continued dependence upon relief induces a spiritual 
        and moral disintegration fundamentally destructive to 
        the national fiber. To dole out relief in this way is 
        to administer a narcotic, a subtle destroyer of the 
        human spirit.

    President Roosevelt's view was prophetic. The current 
welfare system is a failure. It traps recipients in a cycle of 
dependency. It undermines the values of work and family that 
form the foundation of communities. It rends the social fabric 
of the Nation by breeding drug addiction, illegitimacy, crime, 
and child abuse. It contributes to the public's frustration 
with their government for siphoning an ever-increasing share of 
national wealth into a bureaucratic system that has failed over 
the past 30 years to significantly lower the proportion of 
those living in poverty.
    In 1994, total spending on benefits for low-income persons 
climbed to a record high of 5.1 percent of gross domestic 
product, or more than double the share of gross domestic 
product [GDP] of such programs in 1968. Federal dollars made up 
71 percent of that total spending. Yet, despite this explosion 
of welfare spending, AFDC enrollment during the past three 
decades has increased five-fold, illegitimacy has increased 400 
percent, and violent crime has risen 560 percent.
    A primary cause of this failure is that the total package 
of welfare and income support programs pays more than work in 
many of America's communities. According to a Cato Institute 
study of benefits available to low-income persons in the 50 
States, welfare pays more than the average first-year salary 
for a teacher in 9 States. The Cato study also reported: in 29 
States welfare pays more than the average salary for a 
secretary; in 40 States, welfare pays more than an $8.00 per-
hour job; and in the most generous States, welfare pays more 
than the entry level salary for a computer programmer. Clearly, 
if welfare reform is about work, real reform must reverse the 
current system's disincentives to work.
    This budget assumes the goals and overall framework of H.R. 
4, the Personal Responsibility and Work Opportunity Act of 
1995, passed by Congress but twice vetoed by the President. 
These proposals attack the two main causes of long-term welfare 
dependency--child bearing out of wedlock and lack of 
participation in work.
    The policies assumed in the budget resolution would go 
significantly farther than do the proposals contained in the 
President's fiscal year 1997 budget submission toward achieving 
the goal of ``ending welfare as we know it.'' To better ensure 
that a significant share of welfare families would eventually 
become self-sufficient, they would implement tougher work 
requirements than those suggested by the President. They would 
end the individual entitlement to cash welfare benefits, which 
the President's plan would not. They would make meaningful 
reforms in the Food Stamp Program and restrain the growth of 
spending over time without cutting individual benefit levels, 
unlike the President's proposal. They would end welfare as an 
immigration magnet: Persons immigrating to the United States 
should come for the work opportunities the Nation's economy has 
to offer, not for the taxpayer-subsidized benefits a generous 
society has chosen to provide to its own less-fortunate few.
    The descriptions below provide an illustrative framework 
for the kind of welfare reform envisioned in this budget 
resolution. Most of the items fall within Function 600; the 
Child Protection Block Grants are reflected in Function 500, as 
is the AFDC JOBS Program and the Social Services Block Grant.

    Block Grants for Temporary Assistance for Needy Families. 
This component of the reform would consolidate four Federal 
cash welfare assistance programs into a single block grant to 
the States and set a fixed funding level through fiscal year 
2000. States would be empowered to design their own basic cash 
assistance programs to encourage work and self-sufficiency. The 
plan would discourage illegitimacy by requiring beneficiaries 
to establish paternity, by allowing States to deny benefits to 
unwed teenage mothers and to deny additional benefits to 
mothers who have additional children while receiving welfare 
benefits. By 2002, States would be required to have 50 percent 
of their welfare caseloads working at least 35 hours per week. 
The plan would establish a 5-year lifetime limit on welfare 
eligibility per individual. The block grant also would replace 
the AFDC JOBS program [further discussed in Function 500].

    Supplemental Security Income [SSI] Reforms. This part of 
the plan would make several reforms to SSI, including 
increasing penalties for persons who fraudulently obtain SSI 
benefits, and denying benefits to fugitive felons and parole 
violators. Eligibility criteria for disability benefits for 
children would be tightened to ensure that children who qualify 
for benefits meet the legally defined criteria of disability. 
Current lax program rules allow children to qualify for 
disability benefits based on individual functional assessments 
[IFA's] which permit benefits of up to $450 per month to 
children who display ``age inappropriate behavior'' or other 
disciplinary problems that do not represent genuine 
disabilities. Numerous examples have come to light of parents 
coaching children to misbehave in order to qualify for 
benefits.

    Child Support. This component would improve the collection 
and dissemination of information on court-ordered child support 
to increase compliance with support orders. It also would 
include provisions to improve performance of paternity 
establishment among mothers giving birth out of wedlock.

    Restricting Welfare and Public Benefits for Aliens. This 
reform would make aliens categorically ineligible to receive 
Supplemental Security Income [SSI] and Food Stamp benefits 
until they obtain United States citizenship. Exceptions would 
be made for persons who served in the U.S. military or their 
dependents and persons who have worked in the United States and 
paid Social Security taxes for at least 40 quarters. Alien 
sponsorship agreements would be made legally enforceable and 
the ``deeming'' period--during which the sponsor's income is 
considered available to the alien when applying for means-
tested public benefits--would be extended to the aliens 
obtaining citizenship. Under current immigration laws, becoming 
a public charge is a deportable offense, although this is 
rarely enforced. By strengthening the enforceability of alien 
sponsorship agreements, this reform would require an alien's 
family or charitable agency sponsor to provide for the economic 
well-being of aliens they brought into the United States.

    Reductions in Federal Government Positions. This component 
would reduce the number of Federal positions in administrative 
agencies that currently oversee the Aid to Families with 
Dependent Children [AFDC] Program.

    Reform of Public Housing. This reform would ensure that 
persons receiving Federal housing assistance would not see 
those benefits increased if they were sanctioned for failure to 
comply with requirements of other welfare programs, such as the 
work requirements for cash welfare benefits.

    Establish Two Child Protection Block Grants. The plan would 
create a child protection program consisting of three major 
elements: open-ended entitlements to foster care maintenance 
and adoption assistance payments; a Child Protection block 
grant consolidating programs authorized under the Social 
Security Act; and a Child and Family Services block grant 
consisting of programs authorized under the Child Abuse 
Prevention and Treatment Act and other laws authorizing both 
services and funding for research and training in the area of 
child protection. Creating the block grants would permit 
consolidation of 20 separate child protection programs, 
providing States with greater flexibility to respond to 
incidences of child neglect and abuse. [Please note: The fiscal 
impact of this portion of the welfare proposal occurs in 
Function 500.]

    Child Care Block Grant. This component would consolidate 
eight current Federal child care assistance programs into a 
single administrative structure with two funding streams. With 
these funds, States would finance child care benefits for 
persons who were required to get off or remain independent of 
welfare. The reform would eliminate current requirements that 
siphon more than 25 percent of Federal child care funding for 
centralized government planning and program administration. It 
would enhance parental freedom to choose the child care 
providers they preferred.

    Child Nutrition Programs. This reform would lighten the 
Federal regulatory burden on local school lunch and breakfast 
programs and makes illegal aliens ineligible to receive free or 
reduced price meals in federally funded child nutrition 
programs. Meal reimbursement rates would be reduced for child 
care providers participating in the Family Day Care Home 
Program who live in middle- or upper-income neighborhoods. This 
step would be taken to introduce a means test in a program that 
currently provides free meals to children receiving day care in 
a home setting regardless of that child's family's income. 
Thus, the reform would better target child nutrition spending 
to low-income children.

    Food Stamp Reforms. This component would create a 
simplified Food Stamp Program under which States would link the 
administration of their food stamp benefits with their cash 
welfare programs for the 40 percent of food stamp recipients 
who also received cash welfare benefits. Additionally, persons 
between the ages of 18 and 50 would be required to work at 
least 20 hours per week after receiving food stamp benefits for 
4 months. Reforms would be made to limit the number of indexing 
provisions in the program, which expand benefits over time. 
Future benefit increases would be linked only to increases in 
the cost of food. A State could qualify to receive its food 
stamp funding as a block grant if it established a system for 
electronic benefits transfer and if it met certain program 
integrity standards. Penalties for food stamp fraud and 
trafficking would be increased.
    Miscellaneous Provisions. These provisions would include a 
10-percent reduction in funding for the Title XX Social 
Services Block Grant [reflected in Function 500], requiring the 
Secretary of HHS to develop a strategy for reducing unwed 
teenage pregnancies, and reserving $75 million in funding in 
the Maternal and Child Health block grant for educational 
programs encouraging teenagers to abstain from sexual activity.

        ensuring the soundness of the federal retirement system

    Representative John L. Mica, chairman of the Government 
Reform and Oversight Subcommittee on Civil Service, presented a 
clear warning about the Federal retirement system in testimony 
to the House Committee on the Budget on March 22, 1996:

          The Civil Service Retirement Disability Fund [CSRDF] 
        suffers from a history of fiscal practices that relied 
        on the deferral of actual costs of annuities to future 
        generations of taxpayers. We are that future 
        generation, and we can no longer defer these costs.

    The current Federal civilian retirement system is a 
composite of various components implemented between the 1920's 
and the 1980's. It reflects an evolution of ideas about the 
purpose of a pension system in the context of an overall 
employee compensation package. In the 1930's and 1940's, 
pensions served a dual purpose of providing a secure retirement 
future for Federal employees and discouraging turnover in the 
work force at a time when wages may not have been fully 
competitive with private sector compensation. The needs of 
today are changing as work force trends indicate a growing 
desire for greater pension portability.
    Equally significant, the characteristics of the system led 
to the buildup of a $540 billion unfunded liability. Although 
some of the characteristics of the system have been changed, 
the method of financing current and future benefits still poses 
substantial risk to system participants of future benefit 
reductions. In 1997, the Treasury will pay out $41.3 billion in 
pension benefits to retirees and survivors. The retirement 
system will take in approximately $10 billion in cash receipts 
from employee payroll deductions and from cash contributions 
from the U.S. Postal Service. The general fund of the Treasury 
will make up the $30 billion difference needed to finance 
benefit payouts.
    According to the Annual Report of the Office of Personnel 
Management [OPM], by the year 2002, that $30 billion difference 
will become $41.6 billion. That amount will continue to climb 
rapidly in coming decades, to $73.5 billion in 2010 and to more 
than $164 billion by the year 2030. The President's budget 
submission for fiscal year 1997 notes that taxpayers paid $408 
billion to fund Federal civilian pension benefits during the 
last 35 years; 35 years from now, that $408-billion subsidy 
will cover only 3 years of benefits promised to retirees. 
Clearly, the burden of providing current benefit levels with 
such a system of financing is unsustainable over time. Congress 
cannot assume that future taxpayers will simply acquiesce to 
the ever-increasing tax burden needed to make good on these 
benefit promises.
    The Federal civilian retirement system is primarily 
composed of two major retirement plans, the Civil Service 
Retirement System [CSRS] and the Federal Employees Retirement 
System [FERS]. CSRS was established in the 1920's as a pay-as-
you-go system, with a defined benefit paid to current retirees 
financed through retirement contributions of current employees, 
plus a government contribution representing the employer's 
share. System participants do not participate in Social 
Security. Due to the system's original design, employing 
agencies have never paid the full normal cost necessary to 
ensure sufficient reserves to pay promised benefits. Until 
1969, an amount less than necessary to finance future benefits 
was deposited in the CSRDF, causing the buildup of an unfunded 
liability which grew to $540 billion by 1984. The CSRS system 
was closed to new entrants on January 1, 1984.
    The successor system to CSRS is known as the Federal 
Employees Retirement System. FERS participants also participate 
in Social Security. They have the option of making tax-deferred 
contributions to the Thrift Savings Plan, which invests their 
contributions in marketable government and private sector bonds 
and securities. The Federal Government matches employee 
contributions to TSP of up to 5 percent. FERS participants also 
qualify for a defined benefit whose structure is similar to the 
CSRS benefit, but which provides a significantly lower salary 
replacement rate and employee contribution because of the 
availability of Social Security and the Thrift Savings Plan. 
Employing agencies bear the full brunt of the amount of the 
full normal cost of the system not paid by the employees 
themselves in their employee contributions.
    Although the development of FERS was a significant 
improvement over CSRS, the plan still contains the basic 
shortcoming of depending on a pay-as-you-go defined benefit for 
an important portion of its future promised benefits. Thus, 
rather than investing the employer and employee contributions 
in real, marketable securities that will grow in value over 
time to enable the payment of future benefits, the system 
continues to rely on ``investment'' of the contributions in 
nonmarketable government securities. These nonmarketable 
securities are simply IOU's promising future payments to plan 
participants from the taxes levied on future generations of 
American workers.
    To count on the generosity of future generations is clearly 
a risky proposition for today's Federal workers. Moreover, it 
also may offer a lower future rate of return than might be 
available through the buildup of appreciating assets in the 
marketplace. The recent history of the Thrift Savings Plan has 
shown that the longer-term performance of retirement 
contributions invested in marketable private sector and 
government securities can earn an average annual return of 
between 10 percent and 13 percent.
    The budget resolution makes assumptions in Federal 
retirement programs designed to lower the costs of the system 
to taxpayers in an effort to protect future benefits for 
retirees and for current Federal workers. Many of these 
proposals were agreed upon during budget negotiations between 
the congressional leadership and the President in December 
1995.
    Chief among these initial reforms is an increase in the 
contributions current employees make into the retirement 
system. The current distribution of the burden of financing 
Federal retirement benefits relies on taxpayers to provide 72 
percent of total funding. The increase in the employee share is 
the first since 1969, although during the first five decades of 
the Federal retirement system the employee contribution was 
increased on the average of once every 6 years. The increase 
appears in the Revenues section of the budget resolution.
    To enable employees now in CSRS who would like to take 
advantage of the full benefits of the Thrift Savings Plan by 
converting to the FERS system, the budget resolution also 
assumes an open season permitting such transfers. This will 
reduce overall long-term pension costs for agencies employing 
persons who choose this option, because the full normal cost of 
CSRS accruing benefits is 25.4 percent of payroll, while the 
full normal costs of accruing FERS benefits is only 12.4 
percent of payroll. This provision appears in Functions 920, 
950, and Revenues.
    While the budget resolution assumes no comprehensive 
overhaul of FERS, it is noted that the Government Reform and 
Oversight Subcommittee on Civil Service is exploring potential 
options for creation of a new retirement system for prospective 
Federal employees. Clearly, such an approach is the only long-
term solution to the financing problems inherent in pay-as-you-
go defined benefit retirement plans. The committee encourages 
the Subcommittee on Civil Service to develop proposals for 
creating a retirement system in which employer and employee 
contributions are invested in real marketable private sector 
and government securities. It is hoped that plans can be 
developed to increase pension portability and better shield 
future retirees from benefit changes resulting from the 
political process.
    Those portions of the retirement reforms that appear in 
Function 600 are described below:

    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. The 1993 budget reconciliation act placed a 3-month 
delay on COLA's for civilian retirees through fiscal year 1996. 
This proposal extends that delay through 2002. Federal retirees 
will still receive a COLA every 12 months, as they have since 
1994. This proposal was included in the Balanced Budget Act and 
in the President's 1997 budget submission.

    Conform Military Retirement COLA Receipt Date to Current 
Law. This proposal extends the COLA equity provisions of H.R. 
1530, the National Defense Authorization Act, through fiscal 
year 2002. These provisions ensure that military and civilian 
retirees will be treated alike by providing for a 3-month COLA 
delay for military retirees beginning in fiscal year 1998.

    Congressional Pension Reform. Currently, Members of 
Congress and their staff receive more generous Federal pension 
benefits than most other Federal employees. When Congress 
created the Congressional Pension System in 1946, it 
established a 2.5-percent benefit accrual rate for Members and 
congressional employees. That means that after 20 years of 
service, Member and staff pensions would equal 50 percent of 
the base salary, and after 30 years service, benefits would be 
75 percent of base pay. The benefit formula for most other 
Federal employees equals 36 percent of base salary after 20 
years and 56 percent of base pay after 30 years.
    This proposal conforms Member and staff accrual rates for 
those covered by the Civil Service Retirement System to the 
accrual rate of most other Federal employees, currently 2 
percent. The Civil Service Retirement System includes all 
employees who began service prior to January 1, 1984. The 
proposal also eliminates a similar favorable accrual rate for 
Members and congressional staff under FERS. Currently, Members 
and staff have an accrual rate of 1.7 percent, while all other 
Federal employees have an accrual rate of 1 percent if they 
retire before age 62 and 1.1 percent if they retire after 62. 
The proposal conforms Members of Congress and staff accrual 
rates and pension contribution amounts to those applied to most 
other Federal employees. The proposal was included in the BBA 
and in the President's budget submission.

  reassess and reform the federal role in assisted and public housing

    The current era reflects abundant examples of the failure 
of centralized government. Even so, the Department of Housing 
and Urban Development is singular in its spectacular failure to 
address the problems associated with housing the Nation's least 
fortunate families. Further, it is a living testament to the 
way the most sincere advocates of government solutions can 
actually devastate those they seek to help. The unintended 
consequences of many Federal housing policies have been 
blighted neighborhoods, crime-infested projects, and 
hopelessness among the inhabitants of the Nation's inner 
cities. This has been wrought by a Federal bureaucratic 
superstructure that imposes solutions without regard to the 
unique elements of a community. Every neighborhood is diverse 
and complex, a fact that dooms any attempt to dictate answers 
from a distant capital. But this does not have to be the case. 
The budget resolution recognizes that these neighborhoods are 
teeming with possibilities. By removing government impediments, 
Congress can enable local citizens to take back their 
neighborhoods and break the stranglehold of crime, drugs, and 
despair.
    The Federal Government's role in housing policy began in 
1934 with the creation of the Federal Housing Administration, 
followed in 1937 by the creation of the Public Housing 
Administration. The Department of Housing and Urban Development 
was created in the 1960's, presumably to coordinate efforts and 
increase the prominence of ``urban issues.'' Since its 
inception, HUD has suffered a host of well-documented problems, 
from management ineffectiveness and unclear mission to scandal 
and outright failure. The National Academy of Public 
Administration's 1994 comprehensive study of the Department 
found flaws in its very structure that created a ``prescription 
for problems.'' HUD's mission is scattered and unclear and its 
focus is on programs and policies, not problems and solutions. 
The unintended consequence of many of HUD's programs is 
intensely concentrated poverty in certain neighborhoods, which 
creates stretches of urban landscape devoid of economic 
opportunity. A recent Urban Institute report noted:

          National housing programs have tended to concentrate 
        rather than disperse the poor, which reduces their 
        social and economic opportunities and increases racial 
        and economic segregation.

    HUD has even earned the enmity of many residents of the 
inner city. In fact, recently Secretary of Housing and Urban 
Development Henry G. Cisneros toured a major American city in a 
white unmarked car. He asked one of the HUD representatives 
traveling with him why he did not put a HUD seal on the car so 
that people could see HUD's presence when they traveled to 
community meetings. The representative said:

          First, we don't go to community meetings. And second, 
        if residents knew it was a HUD vehicle, we would 
        probably be inviting them to vandalize it.

    As spending has vastly increased over the past three 
decades, and as programs have proliferated, a tangle of special 
interests has grown up around the housing bureaucracy. These 
groups are beholden not to the communities and families they 
ostensibly serve, but to the Federal authorities, both in 
Congress and at HUD, controlling access to taxpayer money. They 
have consistently smothered efforts at major reforms.
    This failure to reform Federal housing policy has led to an 
untenable budgetary situation. A massive increase in budget 
authority will be required to maintain the present structure of 
assisted housing, both tenant- and project-based. Past 
Congresses appropriated large amounts of budget authority for 
long-term assisted housing contracts. As these contracts came 
due in the early 1990's, instead of making the hard choice of 
either maintaining the budget authority spending required to 
sustain assisted households or to reform the program, Congress 
appropriated less budget authority while outlays from previous 
years continued to flow. This created a mismatch between budget 
authority and outlays. While it appropriated less than $20 
billion in budget authority in 1995, HUD spent more than $30 
billion in outlays. In the next 5 years, because of expiring 
contracts, budget authority must rise if this level of outlays 
is to be sustained.
    This is the primary cause of the exploding budget authority 
needs for the Department. With overall discretionary spending 
under tight constraints, other essential programs would have to 
be reduced to sustain this growth. At present, the Department 
consumes about 10 percent of all domestic discretionary 
spending, up from only 4 percent in 1980. If present trends 
continue, this is expected to rise to as much as 20 percent of 
domestic discretionary spending, in excess of $45 billion per 
year. Every dollar in increase would have to be taken from 
education, the environment, scientific research, and other 
essential programs. This is an unacceptable result, especially 
in light of the gross mismanagement of HUD's budget documented 
by numerous sources, including the General Accounting Office, 
the National Association of Public Administration, and the HUD 
Office of the Inspector General. A Price-Waterhouse study 
recently reported HUD's problems include: inadequate assurance 
about the propriety of $14 billion in section 8 rental 
assistance and $900 million in subsidy payments under the 
elderly and disabled rental program; and an inability to 
accurately account for $8.4 billion under its section 202 loan 
program. The report also noted that as recently as fiscal year 
1994, HUD was still using 1980 census data to allocate 
Community Development Block Grants to cities. Clearly the 
Federal Government can no longer bear the present burden of 
increasing housing costs alone. The budget resolution 
recommends the consideration of methods to more effectively use 
Federal resources to leverage private investment and to 
increase the role and funds committed to this effort by both 
State and local governments.
    Departing from the Great Society model is crucial for the 
viability of Federal assistance to neighborhoods and cities. 
Federal assistance must be marked by a clear mission, a limited 
scope, and a focused, attainable set of goals. Effective 
solutions can only come from the communities in which families 
live: The power to transform blighted neighborhoods lies among 
the storefronts, churches, houses, playgrounds, and schoolyards 
of local communities. Solutions must be found by bringing 
together leaders from small businesses, local government, civic 
organizations, and church groups to devise plans for their own 
neighborhoods. The Federal Government can support such efforts 
by providing resource grants, promoting tenant ownership, and 
increasing the use of mechanisms such as vouchers, which 
emancipate families from often wretched housing conditions.
    Concurrent with the restoration of power to communities 
must be a reduction in the stifling administrative bureaucracy. 
Almost $1 billion a year is spent simply on sustaining a vast 
clutter of bureaucrats and program administrators. These 
resources could be better used to issue vouchers or to aid 
communities through grants and loan guarantees. A total of 
13,000 staff positions administer hundreds of programs that are 
applied to many thousands of cities. They dispense billions of 
dollars to different special interest groups and issue 
thousands of pages of regulations. This consititutes an 
oppressive array of bureaucracy that has succeeded only in 
perpetuating the cycle of poverty and despair in central urban 
centers around the Nation.
    In conjunction with welfare reform, public housing projects 
must become way stations to opportunity, not warehouses for the 
poor. Currently, a jumble of grants is given to public housing 
authorities for operation, modernization, rehabilitation, 
development, security and drug elimination, and even youth 
sports. These programs should be combined into one or two 
flexible grants to provide for the operation of public housing 
in the near term. Ways of better using this funding should be 
explored in conjunction with State, local, and private 
resources to maintain and renovate the existing housing stock. 
The budget resolution recognizes this housing stock must not be 
lost, but the Federal Government should no longer support the 
construction of new public housing units. Instead, dilapidated 
public housing buildings should be demolished as a first step 
in the reinvigoration of urban neighborhoods. Vacant and 
degraded public housing units contribute to the decline of 
neighborhoods by providing havens to drug dealers, gang 
members, and others engaging in criminal activity.
    The budget resolution therefore recommends the passage of 
the United States Housing Act (H.R. 2406), sponsored by 
Representative Lazio, as a significant first step toward the 
restructuring that is required. The resolution also recommends 
that, to follow through on this initiative, the Committee on 
Banking and Financial Services bring to the floor legislation 
providing for major comprehensive housing reforms to remove the 
present structure of centralized bureaucratic control. Among 
the specific elements that might be included in a comprehensive 
restructuring of Federal housing policy are the following:

    Consolidate Native American Housing and Development 
Programs Into a Single Community Grant. Indian housing funding, 
now scattered among more than 10 different programs, should be 
consolidated into one dedicated program, directed to tribal 
governments or Indian Housing Authorities. These local 
authorities should be given the flexibility to pursue community 
development and housing strategies that reflect their own needs 
and priorities. Though general problems of unemployment, 
economic stagnation, and blighted communities are similar to 
some urban areas within the United States, the nature of Indian 
reservations differs not only from urban centers, but very 
often from each other. Currently a variety of different 
programs may provide resources to Indian tribal governments or 
Indian Housing Authorities, each with its own requirements 
dictated by a Washington-based bureaucracy. By using a formula, 
to be determined at an administrative level to best reflect the 
rapidly shifting needs and economic status of Indian tribes, a 
single fund can efficiently disperse resources to where they 
are needed. This proposal reflects legislation prepared by the 
House Banking Committee and is generally supported by the 
administration.

    Reject Administration's Reductions in Elderly and Disabled 
Funding. The administration recommends cutting funding levels 
for housing the elderly and the disabled by nearly 50 percent 
by the year 2000. The administration's proposals would slash 
housing desperately needed by the elderly and the disabled by 
$2.5 billion over 6 years and come at the same time the 
administration is recommending additional funds in community 
development programs for ``bonus pools'' to be handed out by 
the Secretary and subject to the worst possible political 
abuse. The administration itself has recently issued a report 
identifying a crisis in the housing needs of lower-income 
Americans. Even though fiscal discipline is a necessity, 
essential programs can be protected while implementing reforms 
that will streamline wasteful programs and eliminate 
duplicative ones.

                                 FUNCTION 600: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reassess and reform the Federal role in                                                                         
 assisted and public housing:                                                                                   
    Budget authority......................        NA     1,371     6,446     2,471     8,910     4,715    11,606
    Outlays...............................        NA      -802       290     3,111     4,920     4,473     4,962
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 600: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                           Spending change                      
                                            1996   -------------------------------------------------------------
                                            est.      1997      1998      1999      2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Welfare reform:                                                                                                 
    Budget authority....................    76,036      -516    -5,861    -8,073    -9,503    -10,212    -11,940
    Outlays.............................    76,098      -603    -5,821    -8,072    -9,503    -10,268    -11,984
Maintain current payment date of                                                                                
 civilian retiree cost of living                                                                                
 adjustments through 2002 as recommended                                                                        
 by the President:                                                                                              
    Budget authority....................    40,233      -289      -334      -338      -342       -359       -374
    Outlays.............................    40,154      -289      -334      -338      -342       -359       -374
Conform military retiree COLA receipt                                                                           
 dates with current law:                                                                                        
    Budget authority....................    28,787         0      -209      -209      -209       -216       -223
    Outlays.............................    28,707         0      -209      -209      -209       -216       -223
Congressional pension reform:                                                                                   
    Budget authority....................       111         0        -1        -1        -2         -2         -3
    Outlays.............................       111         0        -1        -1        -2         -2         -3
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes additional savings from 
provisions such as the following: reforming the Earned Income 
Credit [EIC]; treating persons who voluntarily leave military 
service the same as civilians with regard to unemployment 
insurance; reducing unneeded surplus funding for the Department 
of Labor's alien labor certification program; reforming the 
section 8 assisted housing programs; reducing administrative 
expenses associated with the Department of Housing and Urban 
Development; restoring equity in unemployment insurance; 
empowering public housing authorities to reform their housing 
developments; and consolidating lead-based paint abatement 
responsibilities by transferring lead programs from the 
Department of Housing and Urban Development to the 
Environmental Protection Agency.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 650:



                            Social Security

                              ----------                              


                                          FUNCTION 650: SOCIAL SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $354,584   $372,450   $390,941   $410,440   $431,006   $453,307   $476,614
Outlays............................    351,311    368,139    386,144    405,059    425,100    446,769    469,455
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

                             promises kept

    Congressional Republicans have repeatedly pledged to 
protect Social Security from any benefit cuts or tax increases. 
The promise has been kept. None of the House Republican budgets 
developed during the current administration has touched this 
highly valued program. This budget again keeps the Republican 
pledge not to affect Social Security benefits.

                           the earnings test

    Senior citizens should be able to engage in productive work 
in order to supplement their Social Security benefits. That is 
why this belief was felt so strongly that it was incorporated 
into the House Republicans' Contract With America.
    Currently, those who earn higher income levels pay more 
than a dollar in taxes for each additional dollar they earn--so 
their net income decreases if they work for pay. The 1995 
annual earnings limit for senior citizens (age 65-69) was 
$11,280. In short, the current earnings limit punishes those 
who rely on wage income, those who are engaging in productive 
work.
    The Senior Citizens Right to Work Act--which was 
incorporated into H.R. 3136, the Contract With America 
Advancement Act of 1996--allows senior citizens to work for 
wages up to $30,000 without a tax penalty. This proposal 
preserves the long-term financial integrity of the Social 
Security trust funds. It would gradually raise the earnings 
limit for those between full retirement age (65 and 70) to 
$30,000 by the year 2002.
    The increase would be phased in over 7 years as follows: 
1996 would be $12,500, 1997 would be $13,500, 1998 would be 
$14,500, 1999 would be $15,500, 2000 would be $17,000, 2001 
would be $25,000, and in 2002 it would reach the goal of 
$30,000.


                             Function 700:



                    Veterans' Benefits and Services

                              ----------                              


                                  FUNCTION 700: VETERANS' BENEFITS AND SERVICES                                 
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $38,502   $39,117   $38,458   $37,712   $37,713   $38,002   $39,713
Outlays...................................    37,782    39,654    39,321    38,063    39,427    36,882    39,912
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    ``President Clinton's budget would be devastating for the VA.''

                                               Jesse Brown,
                     Secretary of Veterans Affairs, March 29, 1996.

    The budget resolution calls for $5.1 billion more in 
discretionary spending over 6 years for veterans' affairs than 
does the President's budget. The resolution also rejects the 
President's proposed cuts in medical and prosthetic research 
and the National cemetery system, and provides for a number of 
expanded benefits, including an increased auto allowance for 
certain severely disabled veterans, improved compensation 
payments for surviving spouses, and a $500 scholarship for 
college seniors with at least a ``B'' average under the GI Bill 
or the Post-Vietnam Era Education Assistance Program [VEAP].
    These measures are intended to correct the President's 
failure to provide adequately for the needs of the Nation's 
veterans. The administration's budget submission proposes huge, 
devastating reductions in VA spending for hospitals and medical 
care, medical and prosthetic research, the National Cemetery 
System, the inspector general, and other accounts. Only through 
the active intervention of the Republican-led Congress can 
these cuts be checked.
    The contrast between the President's devastating cuts in 
discretionary spending and the adequate funding approach 
recommended in this budget is dramatic. [Please see the table 
below.]
    Two aspects are especially important. First, because 
discretionary spending is dealt with on an annual basis, what 
is the level of funding for fiscal year 1997? Second, for 
planning purposes, what is the level for fiscal years 1998 
through 2002? Compared with the President's budget, the budget 
resolution recommends much higher levels each year.

                                     PROPOSED VA TOTAL DISCRETIONARY OUTLAYS                                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Administration............................     $19.0     $19.3     $18.2     $16.3     $14.8  \1\ $16.          
                                                                                                     3  \1\ $18.
                                                                                                               4
House Republican Budget...................      19.0      19.4      18.8      17.4      17.1      17.2      18.5
----------------------------------------------------------------------------------------------------------------
\1\ Figures reflect President's budget path to an $81-billion deficit in 2002. Additional cuts would be         
  necessary to reach balance by 2002.                                                                           

                              medical care

    Although the number of veterans is projected to begin 
declining by the year 2000, the veteran population is getting 
older. The aging of the veteran population is important because 
on average, the older the veteran, the greater will be the need 
for hospital services and medical care. On balance, according 
to the Department of Veterans Affairs, the demand for medical 
care will rise because the aging factor will be more important 
than the declining population in determining the need for 
hospital and medical care services.
    The budget resolution recommends that the VA begin to 
implement policies recommended by the GAO, IG, and CBO to 
improve efficiency in the VA health care system. In additional 
to the implicit funds gained through these efficiency gains, 
discussed in more detail under eligibility reform below, the 
budget resolution recommends an increase in explicit funding 
for VA medical care for fiscal year 1997 to a level of $17.3 
billion. The President's proposed level for fiscal year 1997 
was $17.2 billion. This difference of $100 million could make 
the difference between closing hospitals and outpatient clinics 
or keeping them open.

                               PROPOSED VA OUTLAYS FOR HOSPITALS AND MEDICAL CARE                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Administration............................     $16.9     $17.2     $16.2     $14.4     $13.0  \1\ $14.          
                                                                                                     4  \1\ $16.
                                                                                                               5
House Republican Budget...................      16.9      17.3      16.8      15.4      15.2      15.3      16.7
----------------------------------------------------------------------------------------------------------------
\1\ Figures reflect President's budget path to an $81 billion-deficit in 2002. Additional cuts would be         
  necessary to reach balance by 2002.                                                                           

    The truly devastating funding cuts under the President's 
budget would occur in fiscal years 1998, 1999, and 2000. At the 
funding levels shown in the table below, outlays for VA 
hospitals and medical care would fall by about $8.4 billion 
from CBO projections but by about $3.3 billion in this budget 
resolution.

  reject the administration's proposed cuts in medical and prosthetic 
                                research

    The Nation's service men and women who have lost arms or 
legs in battle have been able to rely on restorative prosthetic 
devices and procedures developed through VA-funded research.
    In contrast with the President's budget which would cut VA 
medical and prosthetic research, the budget resolution proposes 
to fully fund this activity. For example, the President's 
budget would reduce spending from $233 million in fiscal year 
1996 to $202 million in fiscal year 2000. The budget resolution 
proposes increased funding to $255 million in fiscal year 1997, 
$257 million in fiscal year 1998, and $258 million each year 
thereafter.

  reject the administration's proposed cuts in the national cemetery 
                                 system

    The National Cemetery System is an expression of 
appreciation and respect for veterans who gave of themselves to 
protect the ideals of liberty. The President's budget would 
begin reducing funding for the Cemetery System in fiscal year 
1998 and continue cutting through 2001, reducing it by $15 
million in fiscal year 2000 alone.
    In contrast, because of the growing need for interments 
over the budget period, the budget resolution would fully fund 
the National Cemetery System, with an outlay increase of $3 
million in fiscal year 1997 and then funding the system at the 
CBO projected outlay levels of $73 million over the remainder 
of the budget years. For example, the resolution calls for 
spending of $73 million in the year 2000, instead of the $58 
million proposed by the President.

                  inspector general and other accounts

    The inspector general is a key element in efforts to 
eliminate waste, fraud, and abuse in the VA. The budget 
resolution proposes fully funding this activity at the fiscal 
year 1996 level of $32 million. In contrast, the President's 
budget proposes reductions each year, including fiscal year 
1997.
    Under the President's budget, outlays would fall to $31 
million in fiscal year 1997 and continue falling to $23 million 
in fiscal year 2000, a 28-percent cut. The budget resolution 
recommends fully funding the other VA accounts at CBO-projected 
levels without reduction. This is again in sharp contrast with 
the President's budget, which recommends deep cuts to numerous 
other appropriated accounts.

                           eligibility reform

    The budget resolution continues to support budget neutral 
eligibility simplification and reform. Such reform would allow 
the VA to treat veterans eligible for hospital or medical 
services in the most efficient manner possible, frequently 
substituting more appropriate outpatient care for inpatient 
hospital care. Eligibility reform is strongly supported by the 
veterans' service organizations.
    The VA administers a vast health care system for veterans 
who meet certain eligibility criteria. Care is provided largely 
in facilities owned and operated by the VA. For fiscal year 
1995, the VA-operated facilities included 173 hospitals, 131 
nursing homes, 375 outpatient clinics, and 39 domiciliaries. 
Eligibility rules for veterans' health care services are 
complex. In general, eligibility is based on characteristics of 
the veteran (such as having a health condition related to 
service in the Armed Forces, or level of income) and the kind 
of health care service being provided (inpatient, outpatient, 
et cetera). The VA is required to provide free hospital care to 
veterans with service-connected disabilities (and to certain 
other veterans, including those with incomes below about 
$21,000). The VA may provide hospital care to all other 
veterans but only on a space available basis and if they pay 
required deductibles and copayments. In fiscal year 1993, about 
2.8 million veterans used the VA health care system, 
representing just over 10 percent of the total veteran 
population.
    In fiscal year 1996 the veterans hospitals and medical care 
received a $400 million increase over the fiscal year 1995 
level. As part of the fiscal year 1996 operating plan, the 
Secretary is required by the appropriation to submit a plan to 
implement improvements identified by the inspector general, the 
General Accounting Office, the Congressional Budget Office, and 
the veterans' service organizations. These administrative 
savings are estimated by the Appropriations Committee as 
yielding hundreds of millions of dollars in savings. These 
potential savings, when captured by VA, will allow the VA to 
use its medical care funding more efficiently. Much of the 
emphasis must be on shifting the emphasis from VA hospitals to 
VA outpatient health care. To quote the Veterans Affairs Under 
Secretary for Health: ``We're not in the hospital business; we 
are in the health care business.''

               additional veterans benefits improvements

    Several new initiatives are recommended for veterans:

    Raise Disabled Veterans' Auto Allowance. This proposal 
would raise the one-time auto allowance for severely disabled 
veterans from $5,500 to $10,000.

    Improving Compensation for Surviving Spouses. This proposal 
would allow a surviving spouse to retain compensation or 
pension payment prorated to the day of death, instead of 
cutting off at the end of the previous month, as required by 
current law.

    Extend Back Benefit Payment Limits. This proposal would 
extend, from 1 year to 2 years, the current law limits on 
payment of back benefits to surviving spouses of those who die 
while their claim is being adjudicated.

    Provide Scholarship for College Seniors. This proposal 
calls for providing a $500 scholarship for college seniors with 
at least a ``B'' average under the GI Bill or the Post-Vietnam 
Era Education Assistance Program [VEAP].

    Convert Education Benefits. This proposal recommends 
converting those participating in VEAP education benefits 
program, which has a 2-to-1 government match for benefits, to 
the Montgomery GI Bill, which has a 9-to-1 match for benefits.

    Establish Permanent Teacher Certification. This proposal 
would make permanent the Alternative Teacher Certification 
Program, which encourages veterans to become teachers.

    Fund the Pro Bono Program. This proposal calls for funding 
the Pro Bono Program at the Court of Veterans Appeals.

                                   FUNCTION 700: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Raise disabled veterans' auto allowance:                                                                        
 \1\                                                                                                            
    Budget authority......................     1,360         6         6         6         6         6         6
    Outlays...............................     1,290         6         6         6         6         6         6
Improve compensation for Surviving                                                                              
 Spouses: \2\                                                                                                   
    Budget authority......................    14,979        11        11        12        12        12        13
    Outlays...............................    13,794        10        11        12        13        11        13
Extend back benefit payment limits: \2\                                                                         
    Budget authority......................    14,979         3         3         3         3         3         3
    Outlays...............................    13,794         2         3         3         3         3         3
Provide scholarship for college seniors:                                                                        
 \1\                                                                                                            
    Budget authority......................     1,360         8        11        11        11        11        10
    Outlays...............................     1,290         8        11        11        11        11        10
Convert education benefits: \1\                                                                                 
    Budget authority......................     1,360         5         5         5         5         5         5
    Outlays...............................     1,290         5         5         5         5         5         5
Establish permanent teacher certification:                                                                      
 \1\                                                                                                            
    Budget authority......................     1,360         1         1         1         1         1         1
    Outlays...............................     1,290         1         1         1         1         1         1
Fund the pro bono program:                                                                                      
    Budget authority......................        NA         1         1         1         1         1         1
    Outlays...............................        NA         1         1         1         1         1         1
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the readjustment benefits account.                                                    
\2\ This proposal impacts the compensation account.                                                             

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including the following: Rounding down the 
fiscal year 1997 compensation COLA to the nearest whole dollar 
amount; applying the new dependency and indemnity compensation 
COLA rate to all eligible recipients; lifting prohibitions on 
VA's use of offsets to tax refunds and Federal employee wages 
and salaries to pay VA mortgage payments; using real estate 
mortgage investment conduits; reforming VA's medical liability 
for injuries resulting from VA treatment, and restricting 
vocational rehabilitation benefits to veterans with service-
connected disabilities related to their employment handicap. 
Additional savings are assumed from permanently extending 
expiring law to authorize collection of prescription drug 
copayments and per diems, recovery of costs from health 
insurers of veterans for nonservice-related conditions, 
verification of veteran's income for medical cost recovery and 
pension eligibility determination, VA's pension limits for 
persons in Medicaid nursing homes, and the current 0.75 home 
loan fee increase and the use of the least expensive way to 
dispose of foreclosed VA property. Although these proposals 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
recommended policy changes are contained in Appendix 1.


                             Function 750:



                       Administration of Justice

                              ----------                              


                                     FUNCTION 750: ADMINISTRATION OF JUSTICE                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $20,969   $22,125   $22,302   $23,186   $23,235   $20,746   $20,740
Outlays...................................    17,694    19,930    21,162    22,241    22,944    20,704    20,700
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The threat of crime, especially violent crime, remains one 
of the most insidious conditions in modern American society; 
and one of the most important functions of government is to 
assure personal security. Federal law enforcement efforts 
should focus on areas of Federal jurisdiction. State and local 
enforcement is best handled by local agencies. The best 
assistance Washington can provide comes from activities outside 
budgetary choices--activities such as appointing judges whose 
compassion and sense of justice is focused on the victims of 
crime.
    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                   violent crime reduction trust fund

    The budget resolution provides $4.7 billion for the Violent 
Crime Reduction trust fund to support Federal law enforcement 
and State and local efforts to reduce and prevent crime. The 
congressional approach to reducing crime--the Local Law 
Enforcement Block Grant--gives States and localities the power 
and resources to choose how they spend the money to combat 
violent crime according to their local needs and priorities, 
rather than letting Washington usurp those decisions.
    The 10-percent match required under the Republican block 
grant enables more communities to hire police. The block grant 
is designed to attack high crime problem areas. It distributes 
funds to local governments based on population and their 
numbers of violent crimes compared with the number of violent 
crimes reported by other localities in their States.
    The congressional approach vastly improves on the 
administration's typically Washington-centered strategy. The 
administration's response has been more Federal spending and 
control under the guise of putting 100,000 new police officers 
on the street by the year 2000. In fact, little of the 
President's ``cops on the beat'' funding has gone to the cities 
that need it the most. Among the cities with the highest 
violent crime rates, many have received a disproportionately 
small amount of the ``cops on the beat'' funding.
    The President's community policing (``cops on the beat'') 
program requires a local match of 25 percent for communities to 
receive any of the Federal funds, and the 1994 crime bill 
allows the Attorney General to give preference to applicants 
that provide contributions exceeding the 25-percent match. 
Hence, a disproportionate share of the Federal money can go to 
wealthier communities, not those with more serious crime 
problems.
    The ``cops on the beat'' program includes so many 
conditions on receiving funds that many officials have chosen 
not to apply because the program is too expensive. Further, if 
the ``cops on the beat'' program is to result in 100,000 new 
officers, it will require $28 billion of additional local 
spending.
    Furthermore, under the administration's ``cops on the 
beat,'' funding for police is gradually phased out over the 3-
year funding period so that the States eventually assume the 
full costs of the officers. Therefore, the communities that 
hired the police officers under the President's program will, 
in the end, have to either pay their full cost or let them go.

                  full funding for immigration reform

    The budget resolution assumes the reforms contained in the 
House's recently passed Immigration in the National Interest 
Act. This legislation maintains America's generous welcome mat 
for productive, hard-working immigrants. At the same time, it 
ensures that American taxpayers are not burdened with the bill 
for illegal aliens or immigrants who come to the United States 
to retire on welfare.
    After years of congressional neglect of the issue, the 
legislation toughens the response to illegal immigration. It 
doubles the number of border patrol agents, provides border 
patrol with 21st century technology to combat those who break 
our laws, and implements border patrol initiatives that have 
proved most effective. Because illegal immigrants enter through 
airports, not just at the border, the legislation improves the 
ability of the INS to screen new arrivals. The legislation 
cracks down on smugglers of illegal aliens, increases penalties 
for those who illegally enter the United States, and creates 
State-Federal partnerships to end the problem of illegal 
immigration.
    In addition to discouraging illegal immigration, the 
legislation ensures that legal immigrants who enter the United 
States will be productive, self-reliant Americans. Consistent 
with the Nation's longstanding immigration laws and policy, 
immigrants who are likely to become public charges are denied 
admission. Sponsorship requirements are strengthened so that 
the sponsors of new immigrants--not U.S. taxpayers--will be 
responsible for their support, if they are unable to care for 
themselves.

                 full funding for the antiterrorism act

    The Antiterrorism and Effective Death Penalty Act of 1995 
provides the Federal Government significant new resources to 
fight domestic and international terrorism. The budget 
resolution fully funds law enforcement efforts to fight the 
battle against these atrocities. The funding will provide 
resources to give Federal law enforcement new tools to prevent, 
prosecute, and punish terrorists.
    The law enforcement agencies will be better prepared to 
stop terrorists before they strike and to bring them to 
justice. Prosecutors will have new tools and expanded penalties 
against those who terrorize Americans. The criminals sentenced 
to death row for terrorist acts will no longer be able to use 
legal loopholes to delay their sentences.
    The Antiterrorism Act allows the Federal Government to deny 
visas to foreigners who belong to groups designated as 
terrorist, and stops terrorists from raising money in the 
United States to finance their crimes. Furthermore, the act 
provides new laws to better control chemical and biological 
weapons.

                         the federal judiciary

    The budget resolution recognizes the judiciary's essential 
role in providing justice to all citizens. It also acknowledges 
the increasing workload and additional responsibilities thrust 
on the judicial system. The judiciary cannot control the number 
of cases filed, yet it must assure that the pursuit of swift 
justice does not overwhelm due process. The resolution 
therefore recommends that the Committee on Appropriations 
assures adequate funding to meet anticipated caseloads.

                    reform the u.s. marshals service

    This proposal eliminates the political appointment process 
for U.S. marshals and promotes the professionally trained 
deputy marshals to the U.S. marshal positions. The total number 
of employees in the Marshals Service is reduced by 70. This 
concept to reform the Marshals Service has been discussed since 
the Truman administration, and was proposed in the Vice 
President's National Performance Review.

                                 FUNCTION 750: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Violent crime reduction trust fund:                                                                             
    Budget authority......................     3,117     1,566     1,583     2,483     2,483         0         0
    Outlays...............................     1,333       514     1,314     1,174     2,173         0         0
Full funding for immigration reform:                                                                            
    Budget authority......................        NA       699       774       856       960       978       996
    Outlays...............................        NA       532       637       940       994       956       976
Full funding for the Antiterrorism Act:                                                                         
    Budget authority......................        NA       229       271       198       204       204       204
    Outlays...............................        NA       107       184       238       239       240       240
Reform the U.S. Marshals Service:                                                                               
    Budget authority......................       423        -5        -5        -5        -5        -5        -5
    Outlays...............................       421        -5        -5        -5        -5        -5        -5
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes additional savings from 
phasing out the Federal funding of the Legal Services 
Corporation; eliminating the position and Office of the 
Associate Attorney General; restoring local and State authority 
in community relations; terminating ineffective funding for the 
State Justice Institute; terminating the U.S. Parole 
Commission; and accepting several spending reductions proposed 
by the President. These proposals reflect the assumptions and 
recommendations of the Committee on the Budget, but the actual 
policy changes are the discretion of the committees of 
jurisdiction. The recommendations are detailed in Appendix 1.


                             Function 800:



                           General Government

                              ----------                              


                                        FUNCTION 800: GENERAL GOVERNMENT                                        
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $12,494   $11,372   $13,314   $12,592   $12,987   $12,549   $13,020
Outlays...................................    12,648    11,747    13,640    12,928    13,364    12,454    12,321
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The President's concern for ``reinventing government'' 
always had an appealing sound, but the administration's 
approach has been a disappointment. The disappointment stems 
mainly from the weakness of the President's strategy. His goal 
was to tinker around the edges, to make the existing bloated 
bureaucracy marginally more ``efficient.'' What is needed is 
fundamental reform of programs and operations. The proposals in 
this budget resolution--including those that fall here, in 
Function 800--seek fundamental, systemic reform.
    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

     reform operations of the general services administration [gsa]

    The GSA was established in 1946 to provide goods and 
services across the government in the most effective and cost-
efficient manner. Now 50 years later, however, the monopoly 
status of GSA is causing government agencies to in fact pay 
excessive costs for various goods and services that easily can 
be provided by the private sector at a much lower cost. Given 
the scale of the government's purchases through GSA, there is 
great opportunity for significant savings systemwide through 
competition. GSA's current budget is approximately $200 
million, but the agency controls more than $45 billion in 
annual purchases by government agencies. As the Vice 
President's National Performance Review has argued:

          It is not enough that GSA try to become a better 
        monopoly; true change will not occur until agencies are 
        free to choose where and how they spend their money.

    The budget resolution recommends the following proposals as 
part of an overall reform of the government services of the 
General Services Administration. The resolution assumes no 
savings from these proposals at this time, however, pending 
legislative action by the committees of jurisdiction.

    Improve Travel Management Governmentwide Using Private 
Sector Methods and Incentives to Reduce Both Administrative and 
Direct Costs. The Federal Government spends about $10 billion 
per year in travel costs on airfare, hotels, relocation of 
Federal employees, and various other travel expenses. This does 
not include administrative costs. There are a number of 
commonsense steps agencies can take to save millions of dollars 
per year. These steps involve creating incentives for Federal 
employees to find the best deal possible on any travel service 
and simplifying administrative procedures, which account for 
approximately 30 percent of total travel costs.

    Increase the Participation of Private Bidders in Real 
Property Disposal. This proposal involves allowing private 
bidders to exceed a proposed offering price in a sale conducted 
using restricted negotiating procedures. In recognition of the 
local government's special role in the base closure process, 
the local government would be allowed to meet the final 
purchase price offered by a bidder. This would protect the 
taxpayers' interests, and maintain the special role of the 
local government. A second element of this proposal would 
establish the responsibility of an agency that donated or gave 
away property to provide Congress with an appraisal conducted 
under established appraisal standards. Agencies should seek an 
appropriation to cover any shortfall resulting from a giveaway 
of Federal real estate.

    Reform Federal Motor Vehicle Fleet Management. The Federal 
fleet costs more than $1 billion a year for the acquisition, 
operation, maintenance, and disposal of its vehicles. Through 
its Interagency Fleet Management System [IFMS] established in 
1954, the GSA leases approximately one-third of the fleet to 
Federal agencies. The GAO has reviewed the impact of a 1985 law 
requiring that all agencies with more than 300 vehicles develop 
true cost accounting for their fleet operations and, to make 
the most cost-effective contract decisions, explicitly compare 
costs between GSA's IFMS and private-sector firms. Only the 
Internal Revenue Service has fully obeyed this law. To 
encourage long-delayed reform and the adoption of greater cost 
efficiencies throughout the government's fleet systems, the 
budget resolution recommends that the inventory and operations 
of the IFMS be transferred to a temporary government 
corporation and be sold within 3 years to a private 
organization. Private-sector firms allege that the IFMS is not 
truly cost competitive because it does not do full-cost 
accounting; a self-study by GSA, reviewed by Arthur Andersen 
but not yet made public, asserts otherwise. In either case, a 
nongovernmental IFMS would have the competitive incentives to 
make a more aggressive contribution to cost reforms.

    Reform the Public Building Service [PBS] for Leased 
Properties. Recent studies conducted by commercial brokers have 
indicated that PBS overpays for real estate at leased property. 
The studies concluded that potential, if not significant 
savings can be achieved by using private-sector tools and 
resources on PBS operations. Several private firms have 
contacted GSA, offering to provide professional private-sector 
experience to find savings in federally leased space on a 
contingent-fee basis. The resolution recommends that GSA 
continue its pilot project to explore this approach.

    Maximize Proceeds From the Sale of Federal Government 
Personal Property Surplus. Federal agencies give away to non-
Federal entities substantial amounts of personal property (such 
as computers, helicopters, and office equipment) per year. 
According to GSA figures, Federal agencies donated $865 million 
of former personal property in fiscal year 1995, and $3.41 
billion over the past 5 years. Some of this equipment has not 
been screened by other Federal agencies for possible reuse 
(which means that one agency must seek additional 
appropriations to purchase equipment being given away by 
another agency). A consistent policy should be established 
whereby Federal agencies screen all equipment prior to disposal 
as surplus. Further, agencies which seek to give away surplus 
personal property should seek an appropriation in the amount of 
the property. There may be reasons to transfer equipment to 
non-Federal entities, but agencies' extensive giveaways are 
undermining oversight by Congress, a duty assigned to Congress 
under Article IV of the Constitution.

               end the government's monopoly on printing

    This proposal requires that, 9 months after enactment, all 
government work be offered for competitive bidding. 
Approximately 20 percent is currently not sent out to private 
contractors. GPO's labor costs are 50 percent greater than 
comparable private printers' costs; GPO's paper waste averages 
40 percent more than the most lax industry standard. Although 
significant employee reductions will become possible through 
this procedure (reductions that should be identified by the 
appropriate committees of jurisdiction), this proposal assumes 
only those savings that would result from contracting out to 
the private sector. It is expected that employing the 
competitive market for government printing would save about 30 
percent of printing costs annually.

 reform the office of personnel management [opm] and transfer certain 
                   responsibilities to other agencies

    Under this proposal, OPM's Retirement and Insurance Service 
would move to the Social Security Administration; the Human 
Resources Systems Service would move to the Office of 
Management.

                                 FUNCTION 800: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
End the Government's monopoly on printing:                                                                      
    Budget authority......................        NA       -95      -190      -190      -190      -190      -190
    Outlays...............................        NA       -90      -185      -190      -190      -190      -190
Reform the Office of Personnel Management                                                                       
 and transfer certain responsibilities to                                                                       
 other agencies:                                                                                                
    Budget authority......................        88        -3        -8        -8        -8        -8        -8
    Outlays...............................        85        -3        -7        -8        -8        -8        -8
----------------------------------------------------------------------------------------------------------------


                                 FUNCTION 800: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
End the Government's monopoly on printing:                                                                      
    Budget authority......................        NA       -95      -190      -190      -190      -190      -190
    Outlays...............................        NA       -90      -185      -190      -190      -190      -190
Reform the Office of Personnel Management                                                                       
 and transfer certain responsibilities to                                                                       
 other agencies:                                                                                                
    Budget authority......................        88        -3        -8        -8        -8        -8        -8
    Outlays...............................        85        -3        -7        -8        -8        -8        -8
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including eliminating the Council of Economic 
Advisors; eliminating the Joint Committee on Printing and the 
Library; reducing funding for the Executive Office of the 
President and the General Accounting Office; accepting the 
President's proposals to reduce funding in 11 accounts; and 
repealing Title V of the McKinney Act.
    These proposals further reflect the assumptions and 
recommendations of the Committee on the Budget, but the actual 
policy changes are the discretion of the authorizing and 
appropriating committees of jurisdiction. The provisions are 
detailed in Appendix 1.


                             Function 900:



                              Net Interest

                              ----------                              


                                           FUNCTION 900: NET INTEREST                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $239,734   $242,098   $244,047   $242,917   $239,025   $237,319   $235,579
Outlays............................    239,734    242,098    244,047    242,917    239,025    237,319    235,579
----------------------------------------------------------------------------------------------------------------

    Net interest is the price the government pays for the 
spending it did yesterday. It buys no goods or services for 
current or future generations. Money spent to pay interest is 
money that is not available to pay for national defense, 
infrastructure improvements, education, law enforcement, or 
other vital programs.
    Balancing the budget and paying down the national debt are 
important steps in reducing the cost of net interest payments. 
Reducing the deficit directly reduces the growth in net 
interest costs by reducing the amount of money that is 
borrowed. Balancing the deficit also reduces the growth of 
interest costs because a balanced budget leads to lower 
interest rates. The cost of interest on our accumulated 
national debt is now larger than the annual budget deficit. In 
1995, net interest costs were $232 billion. Between 1996 and 
2002 the Congressional Budget Office projects the Federal 
Government will spend $1.7 trillion on interest payments.
    Balancing the budget will enable the government to reduce 
interest payments by $47 billion over the next 6 years from 
what would otherwise be required. This will reduce the amount 
that the government needs to borrow, thus reducing the amount 
of interest we have to pay on the money we have borrowed to pay 
the interest on the money previously borrowed.


                             Function 920:



                               Allowances

                              ----------                              


                                            FUNCTION 920: ALLOWANCES                                            
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................      -$214     $2,671    -$1,934    -$2,025    -$2,038    -$2,026    -$2,182
Outlays............................        -46     -1,032       -833       -183       -271     -1,770     -2,139
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                       repeal the davis-bacon act

    The Davis-Bacon Act requires that an inflated ``prevailing 
wage'' be paid on all federally funded or federally assisted 
construction projects. This government regulation represents a 
hidden tax on construction jobs, inflates the costs of Federal 
construction, and destroys opportunities for employment for 
minorities, small firms, and less-skilled workers. The act also 
imposes an unfunded mandate on State and local governments.

                    repeal the service contracts act

    The McNamara-O'Hara Service Contract Act of 1965 is a tax 
on jobs similar to Davis-Bacon except that it applies to 
service, rather than construction, contracts. The act requires 
covered contractors and their successors to provide inflated 
wages and benefits at least equal to the locality's prevailing 
standards or those in a collective bargaining agreement of the 
previous contractor.

                                 FUNCTION 920: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal the Davis-Bacon Act:                                                                                     
    Budget authority......................        NA      -726      -726      -725      -724      -725      -726
    Outlays...............................        NA      -166      -425      -566      -634      -675      -701
Repeal the Service Contracts Act:                                                                               
    Budget authority......................        NA      -687      -687      -687      -687      -687      -687
    Outlays...............................        NA      -652      -687      -687      -687      -687      -687
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 920: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal the Davis-Bacon Act:                                                                                     
    Budget authority......................        NA       -41       -31       -28       -28       -28       -27
    Outlays...............................        NA       -13       -32       -34       -31       -29       -28
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings in this 
function from allowing an open season for CSRS participants to 
convert to FERS; reducing the number of political appointees; 
and requiring Federal agencies to use a credit card for all 
printing purchases of less than $1,000. Although these 
provisions reflect the recommendations and assumptions of the 
Committee on the Budget, the actual policy changes are the 
discretion of the appropriations and authorizing committees 
with jurisdiction over the programs involved. Further 
descriptions of these specific recommended policy changes are 
contained in Appendix 1.


                             Function 950:



                   Undistributed Offsetting Receipts

                              ----------                              


                                 FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                              1996  est.     1997        1998        1999        2000        2001        2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority............    -$41,484    -$52,197    -$42,599    -$42,304    -$44,729    -$47,012    -$50,013
Outlays.....................     -41,484     -52,197     -42,599     -42,304     -44,729     -47,012     -50,013
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

               improve federal debt collection procedures

    Improve Federal Debt Collection Procedures. This budget 
resolution assumes amendment of the debt collection legislation 
contained in H.R. 3019, the Balanced Budget Downpayment Act, 
II. The proposal would explicitly repeal a percentage 
limitation on collection of outstanding debt from Federal 
benefit payments in excess of $9,000 annually.
    The legislation permits the use of expedited collection 
procedures, including granting the IRS continuing levy 
authority to collect outstanding tax debt. The legislation 
enhances the ability of Federal agencies to collect debts owed 
by employees, contractors, or beneficiaries of Federal 
programs. It also allows agencies to contract with private debt 
collection services to recover outstanding debts.
    The legislation also includes a provision to increase the 
use of electronic funds transfer in Federal benefit programs.

                                   FUNCTION 950. MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve Federal debt collection                                                                                 
 procedures:                                                                                                    
    Budget authority:.....................         0      -210        -5        -5        -5        -5        -5
    Outlays...............................         0      -210        -5        -5        -5        -5        -5
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes savings in this function 
from the following: allowing an open season for CSRS employees 
to convert to FERS; increasing the agency contributions to the 
Civil Service Retirement and Disability Trust Fund for active 
CSRS employees; enhancing Federal debt collection procedures; 
broadening and extending spectrum auctions; selling the Alaska 
Power Administration; privatizing the Naval Petroleum and Oil 
Shale Reserves; selling Governors Island, NY; and selling air 
rights adjacent to Union Station.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                                Revenues

                              ----------                              


                                                    REVENUES                                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
   1996  est.          1997            1998            1999            2000            2001            2002     
----------------------------------------------------------------------------------------------------------------
$1,424,189.....     $1,470,373       $1,532,708      $1,599,656      $1,674,768      $1,754,153      $1,845,563 
----------------------------------------------------------------------------------------------------------------

                     Earn More, Keep More, Do More

    In the Contract With America, Republicans promised to 
transfer power, money, and influence out of Washington and back 
to the people in their States and communities--to reverse the 
pendulum toward individual empowerment and personal 
responsibility. The tax provisions assumed in this budget 
resolution represent a key contribution to that effort. The 
21st century is not about big government and higher taxes; it's 
about the power of individuals and families. Federal tax 
burdens cannot be eliminated altogether so long as legitimate 
Federal Government functions exist. But the bias should always 
be in favor of taking less from people, especially families and 
small businesses--the real engine of economic growth and job 
creation. The goal of this budget is to allow Americans to earn 
more and keep more so they can do more.
    The House Budget Committee's revenue assumptions provide a 
permanent $500 per child tax credit for working families. The 
budget resolution calls for net tax relief of $122 billion over 
6 years. But additional tax relief--for capital gains rate 
reductions, other incentives to spur economic growth and job 
creation, and small business tax relief--can be financed 
through closing inappropriate corporate loopholes and extending 
other expired tax provisions.

                 rolling back the clinton tax increase

    In 1993, without the support of a single Republican in 
Congress, the President proposed and signed into law the 
largest tax increase in the Nation's history. It was a defining 
moment of his Presidency--clearly showing his basic philsophy 
of higher taxes and more Washington spending.
    Just as the Republican members of the Budget Committee 
argued 3 years ago, this budget resolution rejects the 
President's view. Our position is that the tax burden on 
Americans must be reduced for four reasons: taxes are too high; 
individuals, families, and businesses spend their money more 
wisely than the Federal Government does; tax reductions 
strengthen Congress' resolve to eliminate waste and restrain 
out-of-control entitlement spending; and cutting taxes will 
spur investment and job creation, thereby boosting revenue and 
aiding in deficit reduction.
    The total tax burden on families has grown considerably in 
the past half century, as demonstrated by the following 
statistics:

  - According to the Tax Foundation, Tax Freedom Day, an annual 
        snapshot of the portion of the American budget that 
        taxes claim, has progressed from March 8 in 1940 (an 
        effective tax rate nationwide of 18.3 percent) to May 6 
        in 1995 (an effective tax rate of 34.4 percent for the 
        United States).

  - Families now pay more in taxes (39 cents out of every 
        dollar of the typical two-income family's budget) than 
        they do for food, housing, and medical care combined 
        (34 cents out of every dollar).

  - The typical one-income family paid 36.2 percent of its 
        income in taxes in 1995, compared to 27.6 percent in 
        1955. Similarly, the typical two-income family now pays 
        almost 39 percent of its income in taxes, compared to 
        27.7 percent in 1955.

    As government is downsized, the American family must be a 
direct beneficiary because the best providers of health, 
education, and welfare are families, not bureaucrats. If any 
institution deserves support as the Nation approaches the 21st 
century, it is the American family. That's why the centerpiece 
of our tax relief is a $500 per child tax credit for working 
families.
    Critics contend that cutting taxes is contrary to balancing 
the budget. They argue that as expected revenue levels 
diminish, eliminating the deficit becomes that much more 
difficult. Such reasoning is typical of the narrow, Washington-
centered perspective on the nature of taxation.
    First, opponents of tax relief are not proposing faster 
deficit reduction. They simply want to spend the money rather 
than returning it to the people who earned it. The bottom line 
is that tax relief will force reductions in Federal spending 
that would not occur otherwise.
    Second, the nature of specific tax provisions creates 
incentives and disincentives that affect behavior and economic 
growth and, in turn, revenue available for deficit reduction. 
The effectiveness of tax reduction should be evaluated over the 
long-term, not based on results obtained for a short period of 
time. Over time, reducing taxes improves the efficiency of the 
economic system. This means that taxpayers have a greater 
incentive to work, save, and invest, enhancing growth in the 
multiple and diverse facets of the private-sector economy.

                    tax relief for american families

    Contrary to the incessant claims of tax-cut opponents, the 
primary beneficiaries of the tax cuts assumed in this budget 
resolution would be middle-income families. More than 75 
percent of the tax relief assumed in the proposal focuses on 
building, strengthening, and restoring the American family. The 
biggest individual income tax cuts, as a percentage of taxes 
paid, would go to taxpayers earning $30,000 to $75,000 
annually. Those earning more would receive a smaller reduction 
as a percentage of taxes paid.
    The recent rise in gasoline prices (15 percent since late 
February) highlights the need to provide tax relief to American 
families. President Clinton, in his tax plan of 1993, imposed a 
permanent 4.3 cent increase in the Federal motor fuels excise 
tax. This increase raised the total Federal excise tax on 
gasoline for automobiles and trucks to 18.3 cents. The 
President's tax increase serves to exacerbate the recent 
increase in gasoline prices. The resolution assumes repeal of 
the 4.3 cent excise tax increase through December 31, 1996. An 
analysis by the Joint Committee on Taxation shows that, because 
it is a regressive tax, the largest beneficiaries of the repeal 
would be low-income families.
    So that overtaxed middle-income families do not have to 
wait for their share of the balanced budget bonus, the 
resolution assumes a $500 per child tax credit starting on 
January 1, 1996.

                      tax relief for job creation

    An often forgotten fact of economic life is this: In good 
times, the rich get richer; in bad times, the rich get richer. 
The only time all Americans can get ahead is when the economy 
is growing, expanding opportunities. A capital gains tax 
reduction can be financed within the framework of this budget 
resolution by eliminating various inappropriate corporate tax 
loopholes and extending expiring tax provisisons.
    The capital gains tax reduction would encourage risk taking 
and help get the economy moving again. It would benefit 9 
million taxpayers, 6 million of whom will have incomes less 
than $100,000 a year.
    A capital gains tax cut increases the return on saving and 
investment, thereby promoting saving and investment. This is 
the source of capital formation, which leads to business 
expansion and, hence, faster job creation. A study by the 
American Council for Capital Formation predicts that cutting 
the capital gains rate would create hundreds of thousands of 
new jobs annually. The capital gains proposal would provide 
everyone with a lower rate on capital gains. Currently, only 
individuals in the highest income tax rate brackets get a 
percentage reduction in their overall tax liability when they 
declare capital gains.
    The resolution also assumes that additional measures to 
enhance economic growth will be adopted including reform of the 
Alternative Minimum Tax and an increase in the expensing 
deduction to help small businesses grow and hire more workers.

                    reducing corporate tax subsidies

    Corporations receive favorable tax treatment in the form of 
exclusions, credits, deductions, preferential tax rates, or 
deferrals of tax liability under the current tax structure. 
This resolution assumes a reduction in provisions in the tax 
code that can be clearly identified as inappropriately 
benefiting one industry or a limited number of corporations. 
These include the phase-in repeal of section 936 and the 
elimination of interest deductions for corporate-owned life 
insurance policy loans.

          other key provisions affecting receipts or revenues

    The budget resolution also assumes a host of additional 
provisions to strengthen American families. One of the most 
significant is H.R. 3286, which creates a $5,000 tax credit for 
adoption expenses. Qualified adoption expenses include adoption 
fees, court costs, and attorneys' fees. The bill would also 
provide a maximum $5,000 exclusion from the gross income of an 
employee for specified certain adoption expenses to be paid by 
the employer. One hundred thousand families that seek to adopt 
children will benefit from this legislation.
    In addition, the assumptions in this budget resolution 
reflect revenue effects from the following: allowing an open 
season for CSRS employees to convert to FERS; improving Federal 
debt collection procedures; increasing Federal employee 
contributions to their retirement trust funds; reforming the 
Earned Income Credit; selling the Alaska Power Administration; 
technical adjustment for railroad unemployment reforms; and 
replacing dollar bills with dollar coins. The budgetary effects 
of these proposals are reflected in Appendix 1.
    The budget resolution also rejects the President's proposed 
tax increase on undyed kerosene used for home heating fuel. 
Dyed kerosene is largely unavailable for home heating fuel. 
Even if it were available, however, the Consumer Products 
Safety Commission and the New England Fire Marshals have 
expressed concern that the change in tax treatment of kerosene 
could cause health problems for low-income families who would 
use a dyed kerosene in unvented heaters.

                           baseline revenues

    The committee's baseline revenues are based on CBO's March 
baseline. The revenue baseline has been adjusted to include the 
provisions affecting revenues contained in H.R. 3103 and H.R. 
2337.
    H.R. 3103 contains provisions to implement medical savings 
accounts [MSA's], create a deduction for long-term care 
insurance, and increase the deduction for health cost for self-
employed Americans. MSA's, by allowing tax-free treatment of 
money set aside to pay medical bills, would encourage cost-
cutting competition in health care while providing patients 
with new options. An estimated 1 million taxpayers will take 
advantage of this new program.
    H.R. 2337 contains a set of provisions, entitled the 
``Taxpayer Bill of Rights,'' that would provide greater rights 
and reforms to aid the taxpayer against the IRS. Most 
provisions create greater responsibility for the IRS in its 
actions against taxpayers such as by increasing the burden of 
proof by the IRS. Also, a few provisions increase the authority 
of the IRS to act in the best interest of the taxpayer and the 
government.
    It also should be noted that this bugdet incorporates the 
enactment of H.R. 3136, which would relax the current 
limitations on the receipt of Social Security benefits for 
those age 65 to 69 with earnings above $11,280. Above this 
threshold, Social Security benefits are reduced $1 in benefits 
for each $3 of earnings. The reduction in benefits that occurs 
for earnings above the threshold was equivalent to an increase 
in the beneficiaries' marginal tax rate of 34 percent. The 
beneficiaries' overall marginal tax rate was as high as 70 
percent. Under this bill, the earnings limitation for these 
retirees would be increased in stages during the 1996-2002 
period to $30,000 in 2002. The exempt amount would be increased 
automatically thereafter by the rate of increase in average 
wages.

                                               REVENUE PRIORITIES                                               
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                       Revenue change \1\                       
                                     1996 est. -----------------------------------------------------------------
                                                   1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Tax relief.........................     -2,500    -15,863    -19,971    -23,685    -23,389    -23,079    -16,456
Adoption Promotion and Stability                                                                                
 Act of 1996.......................         52        176        -34        -43        -53        -48        -40
Proposed motor fuel tax repeal.....     -1,655     -1,285         26          9          3          1          0
    Outlays........................  .........  .........  .........  .........  .........  .........  .........
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes revenue losses.                                                                     

                           REVENUE COMPARISONS

              Table 1.--Comparison of Total Budget Revenues


[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................  $1,054.3
    1992 actual...............................................   1,090.5
    1993 actual...............................................   1,153.5
    1994 actual...............................................   1,257.7
    1995 actual...............................................   1,355.2
Fiscal year 1996:
    Administration's request (February 1996)..................   1,426.8
    Committee level...........................................   1,424.2
Fiscal year 1997:
    Administration's request (February 1997)..................   1,495.2
    Committee level...........................................   1,470.4
Fiscal year 1998:
    Administration's request (February 1998)..................   1,577.9
    Committee level...........................................   1,532.7
Fiscal year 1999:
    Administration's request (February 1999)..................   1,652.5
    Committee level...........................................   1,599.7
Fiscal year 2000:
    Administration's request (February 2000)..................   1,733.8
    Committee level...........................................   1,674.8
Fiscal year 2001:
    Administration's request (February 2001)..................   1,819.8
    Committee level...........................................   1,754.2
Fiscal year 2002:
    Administration's request (February 2002)..................   1,912.2
    Committee level...........................................   1,845.6

               Table 2.--Comparison of On-Budget Revenues


[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................    $760.4
    1992 actual...............................................     788.0
    1993 actual...............................................     841.6
    1994 actual...............................................     922.7
    1995 actual...............................................   1,004.1
Fiscal year 1996:
    Administration's request (February 1996)..................   1,059.3
    Committee level...........................................   1,059.0
Fiscal year 1997:
    Administration's request (February 1997)..................   1,107.2
    Committee level...........................................   1,085.4
Fiscal year 1998:
    Administration's request (February 1998)..................   1,171.6
    Committee level...........................................   1,130.4
Fiscal year 1999:
    Administration's request (February 1999)..................   1,224.8
    Committee level...........................................   1,176.1
Fiscal year 2000:
    Administration's request (February 2000)..................   1,283.9
    Committee level...........................................   1,229.7
Fiscal year 2001:
    Administration's request (February 2001)..................   1,348.6
    Committee level...........................................   1,289.0
Fiscal year 2002:
    Administration's request (February 2002)..................   1,417.6
    Committee level...........................................   1,358.2

                             TABLE 3.--REVENUES BY SOURCE UNDER PAST AND CURRENT LAW                            
                    [Includes on- and off-budget revenues, fiscal years, billions of dollars]                   
----------------------------------------------------------------------------------------------------------------
                                                                        Historical                     Projected
                                                    ------------------------------------------------------------
                                                       1950      1960      1970      1980      1990       1997  
----------------------------------------------------------------------------------------------------------------
Individual income tax..............................     $15.8     $40.7     $90.4    $244.1    $466.9     $660.2
Corporate income tax...............................      10.4      21.5      32.8      64.6      93.5      174.4
Social insurance tax and contributions.............       4.3      14.7      44.4     157.8       380      531.0
Excises............................................       7.6      11.7      15.7      24.3      35.3       50.9
Estate and gift taxes..............................       0.7       1.6       3.6       6.4      11.5       17.2
Custom duties......................................       0.4       1.1       2.4       7.2      16.7       20.2
Miscellanous reciepts..............................       0.2       1.2       3.4      12.7      27.3       31.4
                                                    ------------------------------------------------------------
      Total \1\....................................      39.4      92.5     192.8     517.1   1,031.3    1,485.4
                                                    ============================================================
On-budget revenues.................................      37.3      81.9     159.3     403.9     749.7    1,100.4
Off-budget revenues \2\............................       2.1      10.6      33.5     113.2     281.7      385.0
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                Source: CBO March 1996 baseline revenues.                  


                     TABLE 4.--REVENUES SOURCE AS PERCENT OF GDP UNDER PAST AND CURRENT LAW                     
                              [Includes on- and off-budget revenues, fiscal years]                              
----------------------------------------------------------------------------------------------------------------
                                                                        Historical                     Projected
                                                    ------------------------------------------------------------
                                                       1950      1960      1970      1980      1990       1997  
----------------------------------------------------------------------------------------------------------------
Individual income tax..............................       5.9         8       9.2       9.2       8.6        8.4
Corporate income tax...............................       3.9       4.2       3.3       2.4       1.7        2.2
Social insurance tax and contributions.............       1.6       2.9       4.5         6         7        6.8
Excises............................................       2.8       2.3       1.6       0.9       0.6        0.6
Estate and gift taxes..............................       0.3       0.3       0.4       0.2       0.2        0.2
Custom duties......................................       0.1       0.2       0.3       0.5       0.5        0.3
Miscellanous reciepts..............................       0.1       0.2       0.3       0.5       0.5        0.4
                                                    ------------------------------------------------------------
      Total \1\....................................      14.9      18.3      19.6      19.6      18.9       18.9
                                                    ============================================================
On-budget revenues.................................      14.1      16.2      16.2      15.3      13.7       14.0
Off-budget revenues \2\............................       0.8       2.1       3.4       4.3       5.2        4.9
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                Source: CBO March 1996 baseline revenues.                  



                    The Congressional Budget Process

                              ----------                              

    The spending and revenue levels in the budget resolution 
are executed through two parallel, but separate, mechanisms: 
allocations to the appropriations and authorization committees, 
and reconciliation directives to the authorizing committees. 
The budget resolution includes instructions directing the 
authorizing committees to report legislation complying with the 
entitlement, revenue, and deficit reduction targets. This 
report allocates to the Appropriations Committee and 
authorization committees their respective shares of spending 
authority.

                          Spending Allocations

    As required under Sections 302(a) and 602(a) of the 
Congressional Budget Act of 1974, the spending levels 
established in the budget resolution are allocated to the 
Appropriations Committee and each of the authorization 
committees with spending authority.
    The allocations serve as a committee-level ceiling on 
subsequent spending legislation. Under Section 310001(f) of the 
Violent Crime Reduction Act of 1994 (Public Law 103-322), a 
separate allocation is provided to the Appropriations Committee 
to fund programs authorized out of the Violent Crime Reduction 
Trust Fund.

    Current Law Versus Discretionary Action. Section 302(f) of 
the Budget Act requires that the allocation be broken down into 
two categories: amounts provided under current law and amounts 
subject to discretionary action. Amounts provided under current 
law encompass programs that affect direct spending--entitlement 
and other programs that have permanent new budget authority or 
offsetting receipts. Amounts subject to discretionary action 
concern programs whose spending levels are set in annual 
appropriations bills.

                        appropriations committee

    The Appropriations Committee is allocated a lump sum of new 
budget authority and corresponding outlays. The portion of this 
sum that is of concern to the Appropriations Committee is 
listed under assumed law and represents the total amount of 
budget authority that may be appropriated for the forthcoming 
budget year.

    Term. Since most discretionary appropriations are provided 
1 year at a time in annual appropriations bills, the 
allocations cover only the budget year commencing on October 1 
of 1996.

    602(b) Allocations. Upon receiving its 602(a)/302(a) 
allocation, the Appropriations Committee is required to divide 
the 602(a) allocation among its 13 subcommittees. The amount 
that each subcommittee receives constitutes its 602(b) 
allocation. The subcommittees must stay within their respective 
602(b)'s when they mark up individual appropriations bills.

    Continuing Disability Reviews. Public Law 104-121 
established a process to provide additional funding for 
continuing disability reviews for specified disability 
programs. Under Public Law 104-121, the chairman of the Budget 
Committee will increase the 602(a) allocations and aggregate 
spending levels whenever an appropriations bill or conference 
report is filed providing additional funding for continuing 
disability reviews [CDR's], which will be reduced if the bill 
is not enacted. The Director of the Office of Management and 
Budget will make a similar adjustment in the discretionary 
spending limits upon enactment of such legislation.
    The reason for the special adjustment is that the cost of 
the CDR's is discretionary while the savings are mandatory. 
Consequently, the Appropriations Committee has little incentive 
to divert funding from other discretionary programs to CDR's 
because the savings are not credited against their allocation 
and the statutory appropriations cap.
    The House-passed CDR provisions circumvented the 
Appropriations Committee with a mandatory appropriation. The 
Budget Committee opposed this approach because of the precedent 
it would have set for funding administrative activities on an 
entitlement basis. The special adjustment was substituted for 
the mandatory appropriation in an effort to assure adequate 
funding for CDR's, while preserving the discretionary status of 
the CDR reviews.
    The Budget Committee does not view special adjustments in 
the allocations and discretionary spending limits as a panacea 
for every program in need of additional funding and will be 
reluctant to agree to similar adjustments in the future. It 
will consult with the Appropriations Committee to fashion an 
appropriate policy regarding similar issues that may arise in 
the future.

                        authorization committees

    The authorizing committees are allocated a lump sum of new 
budget authority and, in some cases, new entitlement authority 
along with the corresponding outlays. Most of this spending is 
authorized under current law. The budget authority allocated to 
these committees is categorized as subject to discretionary 
action when the resolution assumes a new or expanded 
entitlement program.

    Term. Since the spending authority for the authorization 
committees is multiyear and frequently permanent, the 
allocations are for the forthcoming budget year commencing on 
October 1 and the 5-year total for fiscal years 1997 through 
fiscal year 2001.
    The Budget Committee does not enforce the requirement that 
the authorization committees file 602(b) allocations.

    Types of Spending Authority. The authorizing committees may 
receive two types of direct spending in their allocations: new 
budget authority and new entitlement authority. New budget 
authority is defined as authority provided by law to enter into 
financial obligations that will result in immediate or future 
outlays involving Federal Government funds.
    New entitlement authority, which is a form of new budget 
authority, is defined as the authority to make payments, the 
budget authority for which is not provided by appropriations 
acts, to any person or government if, under the provisions of 
the law containing such authority, the United States is 
obligated to make such payments to persons or governments who 
meet the requirements established by such law.8
    The allocations for fiscal year 1997 and 1997 through 2001 
are as follows:

  ALLOCATION OF SPENDING RESPONSIBILITY TO HOUSE COMMITTEES PURSUANT TO 
     SEC. 602(a) OF THE CONGRESSIONAL BUDGET ACT--FISCAL YEAR: 1997     
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                      Budget                 Entitlement
                                    authority     Outlays     authority 
------------------------------------------------------------------------
     APPROPRIATIONS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    050  National defense........          196          196            0
    150  International affairs...          170          170            0
    300  Natural resources and                                          
     environment.................        1,997        2,008            0
    350  Agriculture.............        3,124        1,732            0
    370  Commerce and housing                                           
     credit......................           32         -318            0
    400  Transportation..........          605          602            0
    500  Education, training,                                           
     employment, and social                                             
     services....................       10,741       10,796            0
    550  Health..................      109,098      109,029            0
    570  Medicare................       58,309       58,309            0
    600  Income security.........       85,391       85,305            0
    650  Social Security.........           21           21            0
    700  Veterans benefits and                                          
     services....................       19,508       19,552            0
    750  Administration of                                              
     Justice.....................          414          411            0
    800  General government......        8,666        8,666            0
    900  Net interest............           10           10            0
                                  --------------------------------------
      Subtotal...................      298,282      296,489            0
                                  ======================================
Discretionary appropriations                                            
 action (assumed legislation):                                          
    050  National defense........      267,962      265,668            0
    150  International affairs...       17,660       19,311            0
    250  General, science, space,                                       
     and technology..............       16,497       16,658            0
    270  Energy..................        3,778        5,051            0
    300  Natural resources and                                          
     environment.................       19,787       20,701            0
    350  Agriculture.............        2,978        3,211            0
    370  Commerce and housing                                           
     credit......................        2,441        2,575            0
    400  Transportation..........       12,945       36,443            0
    450  Community and regional                                         
     development.................        6,368       10,161            0
    500  Education, training,                                           
     employment, and social                                             
     services....................       35,372       37,984            0
    550  Health..................       22,230       22,711            0
    570  Medicare................        3,031        3,031            0
    600  Income security.........       29,780       39,867            0
    650  Social security.........            5        2,736            0
    700  Veterans benefits and                                          
     services....................       19,079       19,404            0
    750  Administration of                                              
     justice.....................       21,862       19,728            0
    800  General government......       10,508       10,918            0
    920  Allowances..............        2,712       -1,019            0
                                  --------------------------------------
      Subtotal...................      494,995      535,139            0
                                  ======================================
Discretionary action by other                                           
 committees (assumed entitlement                                        
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................          -32          -32            0
    500  Education, training,                                           
     employment, and social                                             
     services....................         -105          -33            0
    550  Health..................       -2,001       -2,001            0
    600  Income security.........       -2,316       -2,289            0
    700  Veterans benefits and                                          
     services....................          218          219            0
                                  --------------------------------------
      Subtotal...................       -4,236       -4,136            0
                                  --------------------------------------
      Committee total............      789,041      827,492            0
                                  ======================================
      AGRICULTURE COMMITTEE                                             
                                                                        
Current level (enacted law):                                            
    150  International affairs...         -476         -476            0
    270  Energy..................            0         -972            0
    300  Natural resources and                                          
     environment.................          683          648            0
    350  Agriculture.............        7,383        5,440        7,177
    400  Transportation..........           30           30            0
    450  Community and regional                                         
     development.................          253          204            0
    600  Income security.........           67           17        1,173
    800  General government......          270          270            0
    900  Net interest............            0            0           10
                                  --------------------------------------
      Subtotal...................        8,210        5,161        8,360
                                  --------------------------------------
      Committee total............        8,210        5,161        8,360
                                  ======================================
   NATIONAL SECURITY COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    050  National defense........       11,513       11,470            0
    300  Natural resouraces and                                         
     environment.................            3            3            0
    400  Transportation..........            0          -19            0
    500  Education, training,                                           
     employment, and social                                             
     services....................            4            3            0
    600  Income security.........       29,940       29,855            0
    700  Veterans benefits and                                          
     services....................          180          180          180
                                  --------------------------------------
      Subtotal...................       41,640       41,492          180
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    050  National Defense........          -79          -79            0
    950  Undistributed offsetting                                       
     receipts....................       -1,500       -1,500            0
                                  --------------------------------------
      Subtotal...................       -1,579       -1,579            0
                                  --------------------------------------
      Committee total............       40,061       39,913          180
                                  ======================================
  BANKING AND FINANCIAL SERVICES                                        
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    150  International affairs...         -588       -2,438            0
    370  Commerce and housing                                           
     credit......................          405       -6,084            0
    450  Community and regional                                         
     development.................            6          -58            0
    600  Income security.........           50          -15            0
    900  Net interest............        3,256        3,256            0
                                  --------------------------------------
      Subtotal...................        3,129       -5,339            0
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................          175       -3,125            0
    450  Community and regional                                         
     development.................            0          -72            0
    600  Income security.........          -18         -107            0
                                  --------------------------------------
      Subtotal...................          157       -3,304            0
                                  --------------------------------------
      Committee total............        3,286       -8,643            0
                                  ======================================
     ECONOMIC AND EDUCATIONAL                                           
     OPPORTUNITIES COMMITTEE                                            
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................        3,104        2,487        4,050
    600  Income security.........          174          162        9,930
                                  --------------------------------------
      Subtotal...................        3,278        2,649       13,980
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    500  Education, training,                                           
     employment, and social                                             
     services....................         -894         -840            0
    600  Income security.........           -4           -4         -152
                                  --------------------------------------
      Subtotal...................         -898         -844         -152
                                  --------------------------------------
      Committee totals...........       -2,380       -1,805      -13,828
                                  ======================================
        COMMERCE COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    370  Commerce and Housing                                           
     Credit......................        4,700        4,700        4,700
    500  Education, training,                                           
     employment, and social                                             
     services....................            1            1            0
    500  Health..................          675          675      105,397
    800  General government......            9            9            0
                                  --------------------------------------
      Subtotal...................        5,385        5,385      110,097
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    550  Health..................            0            0       -2,000
                                  --------------------------------------
      Subtotal...................            0            0       -2,000
                                  --------------------------------------
      Committee total............        5,385        5,385      108,097
                                  ======================================
INTERNATIONAL RELATIONS COMMITTEE                                       
Current level (enacted law):                                            
    150  International affairs...       10,900       12,330            0
    400  Transportation..........            7            7            0
    600  Income security.........          523          523          511
    800  General government......            6            6            0
                                  --------------------------------------
      Subtotal...................       11,436       12,866          511
                                  --------------------------------------
      Committee total............       11,436       12,866          511
                                  ======================================
 GOVERNMENT REFORM AND OVERSIGHT                                        
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    550  Health..................            0          -54        3,914
    600  Income security.........       41,907       40,887       40,887
    750  Administration of                                              
     justice  ...................           40           40           40
    800  General government......       13,042       13,040            0
    900  Net interest............           28           28            0
    950  Undistributed offsetting                                       
     receipts....................          -20          -20            0
                                  --------------------------------------
      Subtotal...................       54,997       53,921       44,841
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    600  Income security.........         -289         -289         -289
    800  General government......           -3           -3            0
    950  Undistributed offsetting                                       
     receipts....................         -816         -816            0
                                  --------------------------------------
      Subtotal...................       -1,108       -1,108         -289
                                  --------------------------------------
      Committee total............       53,889       52,813       44,552
                                  ======================================
       OVERSIGHT COMMITTEE                                              
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................           28           22            0
    800  General government......           67            3           95
                                  --------------------------------------
      Subtotal...................           95           25           95
                                  --------------------------------------
      Committee total............           95           25           95
                                  ======================================
       RESOURCES COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    270  Energy..................            8          114            0
    300  Natural resources and                                          
     environment.................          908          807            0
    370  Commerce and housing                                           
     credit......................           75           51            0
    450  Community and regional                                         
     development.................          388          358            0
    550  Health..................            4            4            0
    800  General government......          742          766          179
    950  Undistributed offsetting                                       
     receipts....................       -1,355       -1,355            0
                                  --------------------------------------
      Subtotal...................          770          745          179
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    300  Natural resources and                                          
     environment.................          -92          -91          -12
    800  General government......           10           18            0
                                  --------------------------------------
      Subtotal...................          -82          -73          -12
                                  --------------------------------------
      Committee total............          688          672          167
                                  ======================================
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................          195          195            0
    600  Income security.........           59           21            9
    750  Administration of                                              
     justice.....................        1,556        1,538          238
    800  General government......          619          619            0
                                  --------------------------------------
      Subtotal...................        2,429        2,373          247
                                  --------------------------------------
      Committee total............        2,429        2,373          247
                                  ======================================
TRANSPORTATION AND INFRASTRUCTURE                                       
            COMMITTEE                                                   
Current level (enacted law):                                            
    270  Energy..................          280          222            0
    300  Natural resources and                                          
     environment.................          245          248            0
    400  Transportation..........       27,102        2,142          602
    450  Community and regional                                         
     development.................            5           75            0
    600  Income security.........       14,984       14,962            0
    800  General government......           -1           -1            0
                                  --------------------------------------
      Subtotal...................       42,615       17,648          602
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    400  Transportation..........        2,277           -3           -3
                                  --------------------------------------
      Subtotal...................        2,277           -3           -3
                                  --------------------------------------
      Committee total............       44,892       17,645          599
                                  ======================================
        SCIENCE COMMITTEE                                               
Current level (enacted law):                                            
    250  General science, space,                                        
     and technology..............           40           39            0
    500  Education, training,                                           
     employment and social                                              
     services....................            1            1            0
                                  --------------------------------------
      Subtotal...................           41           40            0
                                  ======================================
      Committee total............           41           40            0
                                  ======================================
     SMALL BUSINESS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................            3         -125            0
    450  Community and regional                                         
     development.................            0         -171            0
                                  --------------------------------------
      Subtotal...................            3         -296            0
      Committee total............            3         -296            0
                                  ======================================
   VETERANS' AFFAIRS COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    700  Veterans benefits and                                          
     services....................        1,437        1,604       20,869
                                  --------------------------------------
      Subtotal...................        1,437        1,604       20,869
Discretionary action (assumed                                           
 legislation):                                                          
    700  Veterans benefits and                                          
     services....................            0            0          224
                                  --------------------------------------
      Subtotal...................            0            0          224
                                  --------------------------------------
      Committee total............        1,437        1,604       21,093
  HOUSE WAYS AND MEANS COMMITTEE                                        
                                                                        
Current level (enacted law):                                            
    500   Education, training,                                          
     employment, and social                                             
     services....................            0            0        8,044
    570   Medicare...............      217,200      215,516      215,516
    600   Income security........       46,232       45,194       37,091
    650   Social Security........        7,786        7,786            0
    750   Administration of                                             
     Justice.....................          420          380            0
    800   General government.....          473          472            0
    900   Net interest...........      352,514      352,514      352,514
                                  --------------------------------------
      Subtotal...................      624,625      621,862      613,165
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    500   Education, training,                                          
     employment, and social                                             
     services....................       -1,221         -851          -33
    570   Medicare...............       -6,470       -6,470            0
    600   Income security........         -445         -559       -2,257
                                  --------------------------------------
      Subtotal...................       -8,136       -7,880       -2,290
                                  --------------------------------------
      Committee total............      616,489      613,982      610,875
                                  ======================================
            UNASSIGNED                                                  
                                                                        
Current level (enacted law):                                            
    050  National defense........      -12,392      -12,455            0
    150  International affairs...      -13,966      -13,897            0
    250  General science, space,                                        
     and technology..............          -37            3            0
    270  Energy..................       -1,666       -1,715            0
    300  Natural resources and                                          
     environment.................       -3,031       -3,024            0
    350  Agriculture.............       -1,685         -183            0
    370  Commerce and housing                                           
     credit......................         -194         -137            0
    400  Transportation..........       -1,266         -202            0
    450  Community and regional                                         
     development.................         -320         -397            0
    500  Education, training,                                           
     employment, and social                                             
     services....................          -31          -70            0
    550  Health..................         -106          -64            0
    570  Medicare................      -78,870      -78,886            0
    600  Income security.........      -13,435      -13,430            0
    650  Social security.........          -12          -43            0
    700  Veterans benefits and                                          
     services....................       -1,322       -1,259            0
    750  Administration of                                              
     justice.....................       -2,192       -2,197            0
    800  General government......      -23,008      -23,083            0
    900  Net interest............      -73,108      -73,108      -60,765
    920  Allowances..............           29           32            0
    950  Undistributed offsetting                                       
     receipts....................      -41,909      -41,909            0
                                  --------------------------------------
      Subtotal...................     -267,412     -265,949      -60,765
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    920  Allowances..............          -41          -13            0
                                  --------------------------------------
      Subtotal...................          -41          -13            0
                                  --------------------------------------
      Committee total............     -267,453     -265,962      -60,765
                                  ======================================
      Total--current level.......      830,960      790,676      752,361
                                  ======================================
      Total--discretionary action      480,240      516,124       -4,522
                                  ======================================
    Grand total..................    1,311,200    1,306,800      747,839
------------------------------------------------------------------------


       ALLOCATION OF SPENDING RESPONSIBILITY TO HOUSE COMMITTEES PURSUANT TO SECTIONS 302(a)/602(a) OF THE      
                                            CONGRESSIONAL BUDGET ACT                                            
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                       1997         1998         1999         2000         2001       1997-2001 
----------------------------------------------------------------------------------------------------------------
Appropriation Committee:                                                                                        
    Current level:                                                                                              
        Budget authority.........      298,282      297,973      320,594      348,874      370,294     1,636,017
        Outlays..................      296,489      291,204      312,952      342,279      361,183     1,604,107
    Discretionary action, general                                                                               
     purpose:                                                                                                   
        Defense:                                                                                                
        Budget authority.........      267,962      269,731      272,380      275,064      277,832     1,362,969
        Outlays..................      265,668      264,462      267,808      271,537      270,744     1,340,219
        Nondefense:                                                                                             
            Budget authority.....      222,350      217,818      210,606      215,631      211,031     1,077,436
            Outlays..............      266,398      257,831      251,600      247,632      242,969     1,266,430
    Subtotal:                                                                                                   
        Budget authority.........      490,312      487,549      482,986      490,695      488,863     2,440,405
        Outlays..................      532,066      522,293      519,408      519,169      513,713     2,606,649
        Violent Crime Reduction                                                                                 
         Trust Fund:                                                                                            
        Budget authority.........        4,683        4,700        5,600        5,600            0        20,583
        Outlays..................        3,073        4,128        4,911        5,293            0        17,405
    Total discretionary action:                                                                                 
        Budget authority.........      494,995      492,249      488,586      496,295      488,863     2,460,988
        Outlays..................      535,139      526,421      524,319      524,462      513,713     2,624,054
    Discretionary action by other                                                                               
     committees:                                                                                                
        Budget authority.........       -4,236       23,984       21,857       18,964       14,863        75,432
        Outlays..................       -4,136       22,706       21,468       18,816       14,802        73,656
    Committee total:                                                                                            
        Budget authority.........      789,041      814,206      831,037      864,133      874,020     4,172,437
        Outlays..................      827,492      840,331      858,739      885,557      889,698     4,301,817
Agriculture Committee:                                                                                          
    Current level (enacted law):                                                                                
        Budget authority.........        8,210        8,359        8,104        7,460        6,402        38,535
        Outlays..................        5,161        5,395        5,109        4,556        3,519        23,740
    New entitlement authority....            0        1,192        1,236        1,267        1,301         4,996
National Security Committee:                                                                                    
    Current level (enacted law):                                                                                
        Budget authority.........       41,640       43,186       44,769       46,343       48,017       223,955
        Outlays..................       41,492       43,001       44,595       46,221       47,899       223,208
    Discretionary action:                                                                                       
        Budget authority.........       -1,579           62           48           34          -72        -1,507
        Outlays..................       -1,579           62           48           34          -72        -1,507
    Committee total:                                                                                            
        Budget authority.........       40,061       43,248       44,817       46,377       47,945       222,448
        Outlays..................       39,913       43,063       44,643       46,255       47,827       221,701
    New entitlement authority....            0         -209         -209         -209         -216          -843
Banking and Financial Services                                                                                  
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........        3,129        4,401        4,147        4,682        4,486        20,845
        Outlays..................       -5,339       -1,679       -2,425       -2,804       -2,179       -14,426
    Discretionary action:                                                                                       
        Budget authority.........          157         -286         -347         -515         -521        -1,512
        Outlays..................       -3,304          -31         -305         -351         -343        -4,334
    Committee total:                                                                                            
        Budget authority.........        3,286        4,115        3,800        4,167        3,965        19,333
        Outlays..................       -8,643       -1,710       -2,730       -3,155       -2,522       -18,760
Economic Opportunity Committee:                                                                                 
    Current level (enacted law):                                                                                
        Budget authority.........        3,278        2,968        3,631        3,889        4,221        17,987
        Outlays..................        2,649        2,649        3,008        3,351        3,648        15,305
    Discretionary action:                                                                                       
        Budget authority.........         -898         -444         -803         -791         -832        -3,768
        Outlays..................         -844         -356         -649         -774         -817        -3,440
    Committee total:                                                                                            
        Budget authority.........        2,380        2,524        2,828        3,098        3,389        14,219
        Outlays..................        1,805        2,293        2,359        2,577        2,831        11,865
    New entitlement authority....         -152        1,270        2,016        2,211        2,279         7,624
Commerce Committee:                                                                                             
    Current level (enacted law):                                                                                
        Budget authority.........        5,385        5,893        6,684        7,380        8,080        33,422
        Outlays..................        5,385        5,895        6,701        7,398        8,098        33,477
    Discretionary action:                                                                                       
        Budget authority.........            0       -1,401       -2,909       -4,713       -5,517       -14,540
        Outlays..................            0       -1,401       -2,909       -4,713       -5,517       -14,540
    Committee total:                                                                                            
        Budget authority.........        5,385        4,492        3,775        2,667        2,563        18,882
        Outlays..................        5,385        4,494        3,792        2,685        2,581        18,937
    New entitlement authority....       -2,000       -4,640       -8,380      -12,580      -18,040       -45,640
International Relations                                                                                         
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       11,436       10,321        9,393        9,953        9,877        50,980
        Outlays..................       12,866       11,880       11,033       10,638       10,390        56,807
Government Reform and Oversight                                                                                 
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       54,997       57,320       59,793       62,342       65,094       299,546
        Outlays..................       53,921       56,383       58,742       61,132       63,670       293,848
    Discretionary action:                                                                                       
        Budget authority.........       -1,108         -919         -912         -906         -920        -4,765
        Outlays..................       -1,108         -919         -912         -906         -920        -4,765
    Committee total:                                                                                            
        Budget authority.........       53,889       56,401       58,881       61,436       64,174       294,781
        Outlays..................       52,813       55,464       57,830       60,226       62,750       289,083
    New entitlement authority....         -289         -335         -339         -344         -361        -1,668
Oversight Committee:                                                                                            
    Current level (enacted law):                                                                                
        Budget authority.........           95           97           98           99           97           486
        Outlays..................           25           25           54          264           34           402
Public Lands and Resources                                                                                      
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........          770        2,021        2,066        2,169        2,393         9,419
        Outlays..................          745        1,931        2,014        2,113        2,322         9,125
    Discretionary action:                                                                                       
        Budget authority.........          -82         -774          -26         -422          -65        -1,369
        Outlays..................          -73         -774          -27         -430          -78        -1,382
    Committee total:                                                                                            
        Budget authority.........          688        1,247        2,040        1,747        2,328         8,050
        Outlays..................          672        1,157        1,987        1,683        2,244         7,743
    New entitlement authority....          -12           -9          -13          -11          -14           -59
Judiciary Committee:                                                                                            
    Current level (enacted law):                                                                                
        Budget authority.........        2,429        3,922        4,014        4,066        4,131        18,562
        Outlays..................        2,373        3,861        3,951        4,002        4,066        18,253
    Discretionary action:                                                                                       
        Budget authority.........            0            0         -119         -119         -119          -357
        Outlays..................            0            0         -119         -119         -119          -357
    Committee total:                                                                                            
        Budget authority.........        2,429        3,922        3,895        3,947        4,012        18,205
        Outlays..................        2,373        3,861        3,832        3,883        3,947        17,896
Transportation and Infrastructure                                                                               
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       42,615       15,837       15,875       16,046       16,277       106,650
        Outlays..................       17,648       17,406       16,862       16,610       16,612        85,138
    Discretionary action:                                                                                       
        Budget authority.........        2,277       30,134       30,186       31,348       32,029       125,974
        Outlays..................           -3          115         -289          350          413          -506
    Committee total:                                                                                            
        Budget authority.........       44,892       45,971       46,061       47,394       48,306       232,624
        Outlays..................       17,645       17,521       16,573       16,960       17,025        85,644
        New entitlement authority           -3           -4           -4           -4           -4           -19
Science Committee:                                                                                              
    Current level (enacted law):                                                                                
        Budget authority.........           41           42           44           45           46           218
        Outlays..................           40           40           41           43           45           209
    Discretionary action:                                                                                       
        Budget authority.........            0          -13            0            0            0           -13
        Outlays..................            0          -13            0            0            0           -13
    Committee total:                                                                                            
        Budget authority.........           41           29           44           45           46           205
        Outlays..................           40           27           41           43           45           196
Small Business Committee:                                                                                       
    Current level [enacted law]:                                                                                
        Budget authority.........            3            2            2            2            0             9
        Outlays..................         -296         -402         -232         -181         -153        -1,264
Veterans' Affairs Committee:                                                                                    
    Current level [enacted law]:                                                                                
        Budget authority.........        1,437        1,365        1,280        1,205        1,141         6,428
        Outlays..................        1,604        1,573        1,466        1,458        1,462         7,563
    Discretionary action:                                                                                       
        Budget authority.........            0            0         -265         -276         -288          -829
        Outlays..................            0            0         -265         -276         -288          -829
    Committee total:                                                                                            
        Budget authority.........        1,437        1,365        1,015          929          853         5,599
        Outlays..................        1,604        1,573        1,201        1,182        1,174         6,734
    New entitlement authority....          224          615          542          827        1,267         3,475
Ways and Means Committee:                                                                                       
    Current level [enacted law]:                                                                                
        Budget authority.........      624,625      653,353      680,343      705,358      735,148     3,398,827
        Outlays..................      621,862      650,656      677,189      702,840      732,743     3,385,290
    Discretionary action:                                                                                       
        Budget authority.........       -8,136      -16,704      -28,409      -37,776      -48,277      -139,302
        Outlays..................       -7,880      -16,608      -28,379      -37,736      -48,346      -138,949
    Committee total:                                                                                            
        Budget authority.........      616,489      636,649      651,934      667,582      686,871     3,259,525
        Outlays..................      613,982      634,048      648,810      665,104      684,397     3,244,341
    New entitlement authority....       -2,290       -2,486       -2,200       -2,250       -2,298       -11,524
Unassigned to Committee:                                                                                        
    Current level [enacted law]:                                                                                
        Budget authority.........     -267,412     -275,617     -281,296     -292,508     -304,520    -1,421,353
        Outlays..................     -265,949     -267,614     -273,586     -284,701     -296,879    -1,388,729
    Discretionary action:                                                                                       
        Budget authority.........          -41          -31          -28          -28          -28          -156
        Outlays..................          -13          -32          -34          -31          -29          -139
    Committee total:                                                                                            
        Budget authority.........     -267,453     -275,648     -281,324     -292,536     -304,548    -1,421,509
        Outlays..................     -265,962     -267,646     -273,620     -284,732     -296,908    -1,388,868
    Total current level:                                                                                        
        Budget authority.........      830,960      831,443      879,541      927,405      971,184     4,440,533
        Outlays..................      790,676      822,204      867,474      915,219      956,480     4,352,053
    Total discretionary action:                                                                                 
        Budget authority.........      480,240      525,857      506,859      501,095      479,116     2,493,167
        Outlays..................      516,124      528,796      511,726      498,181      472,320     2,527,147
    Grand totals:                                                                                               
        Budget authority.........    1,311,200    1,357,300    1,386,400    1,428,500    1,450,300     6,933,700
        Outlays..................    1,306,800    1,351,000    1,379,200    1,413,400    1,428,800     6,879,200
    Total new entitlement                                                                                       
     authority...................       -4,522       -4,606       -7,351      -11,093      -16,086       -43,658
----------------------------------------------------------------------------------------------------------------

                       Reconciliation Directives

    As provided in Section 310(a) of the Budget Act of 1974, 
the budget resolution includes reconciliation instructions to 
the 13 authorizing committees to report changes in law 
necessary to achieve the direct spending, revenue, and deficit 
reduction targets in the budget resolution. Each of these 
committees is directed to achieve aggregate direct spending, 
aggregate revenue or deficit reduction levels. These directives 
trigger the authorizing legislation necessary to comply with 
the direct spending and revenue assumptions in the budget 
resolution.

    Separate Bills and Separate Deadlines. The budget 
resolution establishes a structure for reporting three separate 
authorization bills as follows:

  - By May 24, 1996, the Committees on Agriculture, Commerce, 
        Economic and Educational Opportunities, and Ways and 
        Means are required to submit welfare reform legislation 
        and the Committee on Commerce is required to submit 
        Medicaid reform legislation.

  - By June 14, 1996, the Committees on Commerce and Ways and 
        Means are required to submit Medicare preservation 
        legislation.

  - By July 12, 1996, the Committees on Banking and Financial 
        Services, Commerce, Economic and Educational 
        Opportunities, Government Reform and Oversight, 
        International Relations, Judiciary, National Security, 
        Resources, Science, Transportation and Infrastructure, 
        and Veterans Affairs are required to submit 
        miscellaneous direct spending and the Committee on Ways 
        & Means is required to submit both miscellaneous direct 
        spending reform and tax relief measures.

    Optional Omnibus Reconciliation Bill. To provide additional 
flexibility in the reconciliation process, the budget 
resolution also provides a contingent instruction in which the 
committees may be instructed to submit their recommendations to 
the Budget Committee for inclusion in a single, omnibus 
reconciliation bill. The date for submitting the 
recommendations would be determined by the chairman of the 
Committee on the Budget in a letter to the Speaker, which must 
be printed in the Congressional Record.
    The authority to provide a procedure for an omnibus bill in 
the resolution is set forth in section 301(b)(4) which provides 
that the budget resolution may ``set forth such other matters, 
and require such other procedures, relating to the budget, as 
may be appropriate to carry out the purposes of this act.''
    The authorizing committees would still be required to meet 
all reconciliation levels as if the bills were moved 
separately. The resulting bill would be privileged in the House 
as a reconciliation instruction under Section 310 of the 
Congressional Budget Act. Committees that previously submitted 
recommendations could revise their submissions as long as they 
met their targets in the latter bill.

    Directives. The budget resolution contains three kinds of 
directives. The 13 authorizing committees are instructed not to 
exceed a specified direct spending level. The Committee on Ways 
and Means is also reconciled to not fall below a revenue floor. 
Two committees are also directed to achieve deficit reduction 
levels which can be met through any combination of revenues and 
direct spending.
    These instructions are described below:

  - All 13 committees that received reconciliation instructions 
        are required to make changes in law to achieve direct 
        spending targets. Direct spending is defined in the 
        Balanced Budget and Emergency Deficit Control Act as 
        the combination of budget authority provided by law 
        other than appropriations acts, entitlement authority, 
        and the Food Stamp Program.

  - In the case of reconciliation instructions for direct 
        spending targets, the reconciliation instructions 
        direct the authorizing committees to report changes in 
        law such that the specified spending limits are not 
        exceeded. This contrasts with prior budget resolutions, 
        which have directed the authorizing committees to make 
        reductions from an inflated projection of future 
        spending. To determine the magnitude of required 
        changes, committees should compare the amounts these 
        programs would spend under current law with the amounts 
        set forth for their committees in the reconciliation 
        instructions.

  - The Committee on Ways and Means is directed to report 
        changes in law such that the aggregate level of revenue 
        is not less than the specified level.

  - The Committees on Banking and Financial Services and 
        Government Reform and Oversight are also directed to 
        achieve a specified level of deficit reduction. Deficit 
        reduction targets may be met through any combination of 
        changes in laws that affect direct spending or 
        revenues. Savings necessary to comply with these 
        instructions are in addition to the savings they must 
        achieve under their respective direct spending targets.

    There are no reconciliation instructions for authorization 
changes that are subject to annual appropriations. Last year 
several committees reconciled authorization changes only to see 
the provision dropped in conference under threat of the Byrd 
rule (which prohibits consideration in the Senate of extraneous 
measures in a reconciliation bill).

    Policy Assumptions. Amounts reconciled to each committee 
represent the total amount available to spend on all programs 
within its jurisdiction. Where two or more committees have 
jurisdiction over a program, funding for that program is 
reconciled to each committee. Medicare is an exception because 
parts A and B are allocated to both the Ways and Means and 
Commerce Committees, though Commerce has no jurisdiction over 
part A.

    Term. The reconciliation targets are for fiscal year 1997 
and the 6-year total for fiscal years 1997 through 2002 and 
fiscal year 2002. Committees have discretion in the levels they 
would achieve in fiscal years 1998, 1999, 2000, and 2001 as 
long as they comply with their targets for the first year, 
sixth year, and 6-year total.

    Flexibility. The authorizing committees are free to 
substitute their own policies as long as they meet their 
reconciliation target. If the authorization committees fail to 
report legislation achieving their reconciliation directives, 
then the Congressional Budget Act authorizes the Committee on 
Rules, in concert with the Budget Committee, with the authority 
to make in order a substitute that would achieve the necessary 
savings.
    Under Section 310(c) of the Budget Act, the Committee on 
Ways and Means has additional flexibility in choosing between 
changes in laws affecting taxes and entitlements. As 
interpreted by the Budget Committee, section 310(c) provides 
that the Ways and Means Committee may increase its tax 
reduction by 20 percent if it increases its spending restraints 
by the same amount. Conversely, it may decrease its spending 
reduction if it decreases the tax cuts by the same amount. In 
either case, the committee may not increase the deficit beyond 
the levels implicit in its direct spending and revenue 
instructions.
    The reconciliation instructions are summarized below:

                                        RECONCILIATION BY HOUSE COMMITTEE                                       
                                           WELFARE AND MEDICAID REFORM                                          
                                        Recommendations Due May 24, 1996                                        
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Agriculture Committee: Direct spending..................        35,117        35,604        35,597       216,199
Commerce Committee: Direct spending.....................       296,817       324,314       476,428     2,392,181
Economic and Educational Opportunities Committee: Direct                                                        
 spending...............................................        14,772        15,812        19,677       105,343
Ways and Means Committee: Direct spending...............       349,740       382,631       563,077     2,810,370
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Commerce Committee Direct spending......................       296,817       317,514       425,828     2,234,080
Ways and Means Committee: Direct spending...............       349,740       375,831       512,477     2,652,269
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Banking and Financial Services:                                                                                 
    Direct spending.....................................       -14,780       -12,249        -6,116       -42,310
    Deficit reduction \1\...............................             0             0          -115          -305
Commerce: Direct spending...............................       296,817       316,013       419,609     2,213,093
Economic and Educational Opportunities: Direct spending.        14,772        14,968        18,818       101,044
Government Reform and Oversight:                                                                                
    Direct spending.....................................        62,540        65,130        82,548       442,000
    Deficit reduction \1\...............................             0          -255          -575        -2,886
International Relations: Direct spending................        13,799        13,025        10,311        67,953
Judiciary: Direct spending..............................         2,851         2,784         4,586        24,982
National Security: Direct spending......................        39,680        39,787        49,551       270,749
Resources: Direct spending..............................         1,746         2,132         2,057        11,739
Science: Direct spending................................            39            40            46           242
Transportation and Infrastructure: Direct spending......        18,649        18,254        17,890       106,903
Veterans Affairs: Direct spending.......................        19,841        21,375        22,217       130,468
Ways and Means:                                                                                                 
    Direct spending.....................................       349,740       373,764       509,912     2,638,286
    Revenues............................................     1,028,322     1,050,476     1,319,852     7,047,865
----------------------------------------------------------------------------------------------------------------
\1\ Deficit reduction targets are in addition to and not reflected in the Committee's total direct spending     
  level.                                                                                                        



                    Enforcing the Budget Resolution

                              ----------                              

    The budget resolution for fiscal year 1997 will be enforced 
through points of order that may be raised under the 
Congressional Budget Act of 1974. The Congressional Budget Act 
limits spending and tax legislation to the aggregate and 
committee levels set forth in the budget resolution. To enforce 
the budget resolution, Members must raise the appropriate point 
of order during consideration of the bill or measure.

                            Points of Order

    The major Budget Act requirements are as follows:

    Section 302(f). Prohibits consideration of legislation that 
exceeds a committee's allocation of new budget authority or new 
entitlement authority. Section 302(f) applies to the budget 
year and the 5-year total for the authorizing committee. For 
appropriations bills, however, it applies only to the budget 
year. An exception is provided for legislation that is offset 
by savings above and beyond those required by the budget 
resolution.

    Section 303(a). Prohibits consideration of spending and tax 
legislation before the House has passed a budget resolution. 
Section 303(a) does not apply after May 15.

    Section 311(a)(1). Prohibits consideration of legislation 
that exceeds the ceiling on budget authority and outlays or 
reduces revenue below the revenue floor. Section 311(a)(1) 
applies to the budget year and 5-year total for bills 
increasing revenue, but only to the budget year for 
appropriations bills. Section 311 does not apply if legislation 
does not exceed the committee's 602(a) allocation.

    Section 401(a). Prohibits consideration of legislation that 
creates borrowing authority or contract authority that is not 
subject to appropriations.

    Section 401(b)(1). Prohibits consideration of legislation 
creating new entitlement authority in the year preceding the 
budget year.

                              Enforcement

    The budget is a planning document. To achieve its goal of 
balancing the budget, the Congress must ensure that subsequent 
legislation complies with the spending and revenue levels in 
the budget resolution.
    Sections 303(g), 308(b)(2), and 311(c) of the Budget Act 
require the Budget Committee to advise the presiding officer on 
the application of points of order against specific legislation 
pending before the House. House Budget Committee rules also 
authorize the chairman to poll the committee on recommendations 
to the Rules Committee to enforce the Budget Act by not waving 
points of order against specific legislation.
    As a matter of general policy, the committee opposes 
waivers of the Budget Act that permit the Congress to consider 
legislation that is inconsistent with the budget resolution. 
The chairman will continue to assume an aggressive role in 
enforcing the spending and revenue levels established in the 
budget resolution.

                   Statutory Controls Over the Budget

    Since 1985 a series of statutory budget controls has been 
superimposed on the congressional budget process through 
amendments to the Balanced Budget and Emergency Deficit Control 
Act. The latest generation of these controls, which were 
adopted as part of the Omnibus Budget Reconciliation Act of 
1990 [OBRA '90], consists of limits or caps on discretionary 
appropriations and a Pay-As-You-Go [PAYGO] requirement for tax 
and entitlement legislation. Both the caps and PAYGO 
requirements are enforced through sequestration. As amended by 
the Omnibus Budget Reconciliation Act of 1993 [OBRA '93], these 
controls will expire at the end of fiscal year 1998.
    The Budget Committee exercised for the first time its 
original jurisdiction over budget process last year when it 
reported two bills to extend PAYGO requirements and the 
discretionary caps. On March 16, the committee ordered reported 
H.R. 1219, a bill extending the caps and PAYGO requirements 
though fiscal year 2000. H.R. 1219 was folded into H.R. 1215 as 
part of the offsets for the tax measures in the Contract With 
America, which passed the House on April 5, 1995. The Senate 
did not act on H.R. 1215, although elements of the bill were 
included in freestanding bills.
    On October 12, 1995, the committee ordered reported H.R. 
2459, legislation further extending PAYGO requirements and the 
discretionary caps. This bill was folded into the Seven-Year 
Balanced Budget Act, H.R. 2491, which passed the House on 
October 17. The budget enforcement provisions were dropped from 
the conference report, H. Rept. 104-350, at the insistence of 
the Senate.
    The Budget Committee continues to believe that an extension 
of the caps and PAYGO requirements is necessary to enforce any 
negotiated agreement on a balanced budget.

                     discretionary spending limits

    OBRA 1990 established in Section 251 of the Balanced Budget 
and Emergency Deficit Control Act separate limits on 
appropriations for defense, international affairs, and 
domestic-discretionary appropriations through fiscal year 1993 
and a single limit on all appropriations for fiscal years 1994 
and 1995.
    OBRA 1993 extended the single limit through fiscal year 
1998. Any breach of the appropriations cap triggers an across-
the-board cut in all discretionary programs. A fairly small 
number of programs are exempt from sequestration and several 
others are protected by special rules that limit the amount of 
any sequester.
    Under existing law, the caps are automatically adjusted for 
changes in inflation not anticipated in previous projections; 
emergencies; estimating differences; and changes in concepts 
and definitions.
    As part of the Omnibus Crime Control and Prevention Act of 
1994, a separate cap was established for programs funded out of 
the Violent Crime Control Act (and discretionary spending 
limits were reduced by an equivalent amount). Any breach of 
this cap will also trigger an across-the-board sequester for 
programs authorized out of the trust fund. This cap will expire 
at the end of fiscal year 1998, although the trust fund is 
authorized through fiscal year 2000.
    H.R. 1219, as passed by the House, reduced and then 
extended both the discretionary spending limits and the Violent 
Crime Control and Prevention Trust Fund limits through fiscal 
year 2000. H.R. 2491, as passed by the House, further reduced 
and extended the discretionary spending limits through fiscal 
year 2002 and the Violent Crime Control and Prevention Trust 
Fund limits through fiscal year 2000. Both bills also 
eliminated automatic adjustments in the caps for changes in 
inflation.
    Last year, H. Con. Res. 67, the Concurrent Resolution on 
the Budget for Fiscal Year 1996, reestablished a separate limit 
on defense spending which is enforceable by a point of order 
only in the Senate. Absent a change in law, the defense limit 
is not enforced through sequestration.
    With the sharp reduction in the allocations in last year's 
budget resolution, the importance of the statutory caps has 
diminished. Because the allocations are significantly lower 
than the caps, the 602(a) allocations effectively drive the 
discretionary spending levels. In fiscal year 1996, the 
discretionary spending limits are $15 billion lower than the 
statutory levels.
    The Budget Committee continues to support extending the 
discretionary caps through fiscal year 2002 with the 
modifications reflected in both the bills it reported last 
year.

                       pay-as-you-go requirements

    OBRA 1990 established in Section 252 of the Balanced Budget 
and Emergency Deficit Control Act [GRH] a PAYGO requirement for 
tax and entitlement legislation. Under PAYGO, tax and 
entitlement legislation may not increase the net deficit in any 
fiscal year. Any net increase in the deficit attributable to 
tax or entitlement legislation triggers an automatic sequester 
in all nonexempt entitlement programs.
    Only 3 percent of all entitlement spending is subject to 
sequestration. Among the larger programs that are by statute 
exempt from sequestration are Social Security, Medicaid, 
military and civil service retirement, the refundable portion 
of the Earned Income Credit and most welfare programs. Special 
rules also limit the amount that can be sequestered from 
Medicare.
    Last year the House twice passed legislation extending 
PAYGO requirements. PAYGO would have been extended through 
fiscal year 2000 as part of H.R. 1219, and permanently extended 
as part of H.R. 2491.
    While the Budget Committee supports the permanent extension 
of PAYGO, it supports modifications that would provide 
flexibility in allocating resources between mandatory and 
discretionary components of the Federal budget. Under current 
law, discretionary spending cannot be used to pay for 
entitlement initiatives or tax cuts, nor can taxes be increased 
to pay for discretionary spending initiatives. Consequently, 
these budgetary controls prevent Congress and the President 
from making the very tradeoffs the budgetary process was 
intended to facilitate.
    The administration and Congress have both proposed ways to 
increase flexibility in budgeting while preserving the 
budgetary discipline inherent in separate controls on mandatory 
and discretionary programs. Both H.R. 1219 and H.R. 2491, as 
passed by the House, would have allowed cuts in discretionary 
spending to offset tax cuts. In its fiscal year 1996 budget 
submission, the administration suggested an interpretation of 
PAYGO requirements that would permanently score statutory 
changes in the discretionary spending limits as an offset under 
PAYGO requirements.

    OMB Circumvention of PAYGO Requirements. The Budget 
Committee is concerned about recent action taken by the Office 
of Management and Budget to circumvent a potential PAYGO 
sequester. OMB scored the recently enacted Federal Agriculture 
Improvement and Reform Act (Public Law 104-127) as reducing the 
deficit by $1.9 billion in fiscal year 1996 and $3.7 billion in 
fiscal year 1997 even though CBO estimated that the bill would 
increase the deficit for those same years by $3.2 billion and 
$1.5 billion.
    In its estimate of Public Law 104-127, OMB contends that it 
is relying on a recent Federal court decision to justify the 
differences between its cost estimate and that of CBO. But the 
court decision cited by OMB (Morris v. Glickman) is an 
unreported Federal district court order, without an 
accompanying written opinion, denying an injunction sought by 
one of the parties. This constitutes a questionable basis upon 
which to make a decision with a $5 billion impact in fiscal 
year 1997 alone.
    The immediate effect of OMB's estimate was to eliminate a 
potential sequester that otherwise would have been triggered if 
$4.7 billion in offsets were not enacted by the end of the 
session. The long-term effect may be more serious: policymakers 
may no longer be deterred from deficit spending on the 
assumption that the administration will circumvent spending 
controls.

                  Miscellaneous Budget Process Issues

                           taxpayer check-off

    Perhaps the most innovative budget process reform would be 
to give the American people who actually pay the bill for the 
Federal Government a direct voice in deficit reduction. 
Taxpayers would be given the opportunity to designate up to 10 
percent of their tax payments to paying down the national debt. 
This plan was introduced in the 104th Congress by 
Representative Walker and passed the House last year as part of 
the Seven-Year Balanced Budget Reconciliation Act.
    Amounts designated by taxpayers for debt reduction would be 
placed in a national public debt reduction fund established by 
the Department of Treasury. On May 1 of each year the Treasury 
Department would be required to provide Congress with an 
estimate of the amount designated by taxpayers. Congress and 
the President would have until the end of session to find 
sufficient spending cuts in entitlements or discretionary 
programs.
    Any shortfall in the amount of spending cuts necessary to 
offset amounts earmarked for deficit reduction would trigger an 
across-the-board sequester. The only exemptions would be for 
Social Security, deposit insurance, and net interest. Any 
reductions pursuant to a sequester would be permanent and could 
not be replaced with tax increases.
    Members of Congress would still retain their designated 
constitutional authority and responsibility to determine what 
Federal activities to fund and the amount to be spent on each 
program. But if Congress failed to cut overall spending by the 
amount called for by the taxpayers, across-the-board cuts would 
be made in all government programs. Social Security retirement 
benefits, interest on the public debt, deposit insurance, and 
other contractual obligations of the government would be exempt 
from the sequester.
    The checkoff will initially mandate, until the Federal 
budget is balanced, spending reductions and debt retirement 
only to the extent the total amount designated by the taxpayers 
exceeds the savings that Congress otherwise enacts. For 
example, if Congress passed reconciliation and appropriation 
bills that implemented savings of $50 billion in fiscal year 
1999, and the checkoff next year (for tax year 1996) totaled 
$60 billion, the $50 billion in reconciliation and 
discretionary savings would count toward the checkoff 
requirement, leaving an additional $10 billion to be cut.
    The impact of the ``public debt taxpayer buydown'' on the 
deficit and debt could be enormous depending on the year-by-
year decisions of individual taxpayers. The Congressional 
Budget Office has calculated that if taxpayers consistently 
checked off the maximum 10 percent, the deficit would decline 
from current projections for the next several years and be 
virtually eliminated by 2001. After that, the public debt would 
be rapidly reduced as well.

                       sale of government assets

    Section 5 provides that asset sales will be counted for all 
purposes under the Congressional Budget Act.
    Section 5 specifies that the proceeds from asset sales will 
be counted for purposes of determining compliance with the 
reconciliation instructions and enforcing points of order under 
the Congressional Budget Act. Both the proceeds and costs 
arising from asset sales will be reflected in committee 
allocations, in reconciliation instructions, and in estimates 
used to determine whether legislation complies with the budget 
resolution.
    Prior to the 104th Congress, budget resolutions routinely 
prohibited using asset sales to meet reconciliation targets and 
comply with other Budget Act requirements. This restriction was 
lifted last year by H.Con.Res. 67, but must be extended each 
year in the House unless it is codified by statute.
    The Budget Enforcement Act of 1990 similarly precluded 
using asset sales to meet discretionary spending limits and 
Pay-As-You-Go requirements. These restrictions will remain in 
effect unless the Balanced Budget and Emergency Deficit Control 
Act is amended.
    While the Budget Committee wants to encourage asset sales, 
it does not want to encourage committees to substitute one-time 
asset sales for policies that achieve permanent savings in 
meeting their reconciliation targets. It will work with OMB to 
fashion a rule in which only those assets that contribute to 
long-term deficit reduction will be counted under the Budget 
Act and the Emergency Balanced Budget and Deficit Control Act.

                 credit reform and direct student loans

    Section 6 conforms the treatment of direct administrative 
costs for direct student loans with that of guaranteed student 
loans. The Budget Committee will employ this scoring convention 
to correct a disparity that has arisen under the Federal Credit 
Reform Act of 1990 for the scoring of student loans.
    Currently, direct administrative costs for direct student 
loans are measured on a cash basis, with the budget reflecting 
only that year's costs of administering the loan. For 
guaranteed student loans, the direct administrative costs are 
measured on a net present value basis.
    Scoring direct administrative costs on a net present value 
basis captures the estimated long-run costs of managing a loan 
at the time a loan is made. Because many of the costs of 
administering a loan occur when the loan is in repayment, 
direct lending initially appears to be much less expensive than 
lending under the guaranteed student loan program. Both the 
Congressional Research Service and the Congressional Budget 
Office have acknowledged the bias created by this treatment of 
administrative expenses.

                     sense of congress on baselines

    Section 7 provides sense-of-Congress language relating to 
baselines. Baselines are defined as projections of future 
spending based on current law. These budgetary conventions have 
been the source of much criticism in Congress because they 
constitute the base against which the costs of public policies 
are calculated by the CBO and OMB.
    The basic problem with baselines is that they are 
inherently biased against policies that would restrain 
spending. Legislation that reduces growth in entitlements is 
scored as ``cutting'' the program--even if total spending level 
for the program would continue to rise--because automatic 
growth is incorporated into the baseline.
    Under such scoring practices, policymakers have grown 
reticent about supporting structural changes in programs that, 
no matter how reasonable, could be viewed as spending ``cuts.'' 
Opponents of Medicare and other entitlements reforms are quick 
to terrify the elderly by warning of dire entitlement cuts when 
the policies in question are essential to program solvency and 
ensuring the long-term sustainability of benefits.
    The House has recently made considerable headway in 
combating the baseline mentality. In the 104th Congress, the 
Rules of the House were amended to require CBO to display total 
funding levels in addition to changes from the baseline and to 
include comparisons of proposed funding levels to the 
corresponding levels of the prior year.
    The rules of the House Budget Committee were also amended 
to reflect, as a matter of general policy, that the starting 
point for deliberations on the budget should be the prior year 
and to require that the report accompanying the budget 
resolution compare aggregates and function totals to the 
corresponding levels from the prior year. The Budget Committee 
has further broken with the baseline concept by reconciling 
aggregate funding levels instead of changes from a baseline.

                    sense of congress on emergencies

    Section 8 provides sense-of-Congress language that Congress 
should consider alternative approaches on the budgetary 
treatment of funding for emergencies.
    Under current law, funding emergencies are exempt from both 
the discretionary spending limits and the PAYGO requirements. 
``Emergencies'' is not a defined term with respect to the 
discretionary spending limits and PAYGO requirements. To take 
advantage of the emergency exemption, Congress and the 
President need only agree to designate funding as an emergency. 
The designations are usually enacted as part of the legislation 
providing the spending authority.
    Since 1990, Congress and the President have enacted 29 
separate bills which designated a total of $91.9 billion as 
emergencies. Of this amount, $45.9 billion was for Desert 
Storm, which was ultimately offset by contributions from allied 
countries. Only $4 billion of the total was for direct spending 
programs.
    The budgetary treatment of emergencies has led to a number 
of abuses, including piggybacking onto dire emergency relief 
bills appropriations for items that would not pass on their own 
merits, and designating as emergencies funding requests that 
are not genuine emergencies for the sole purpose of 
circumventing the discretionary spending limits and PAYGO 
requirements.
    Among the alternative approaches to emergencies are 
codifying the definition of an emergency, establishing 
contingency funds, and requiring offsetting spending cuts to 
accommodate emergency funding requirements.

                    sense of congress on loan sales

    Section 9 consists of sense-of-Congress language directing 
committees to report legislation selling portfolios of loans to 
achieve budgetary savings when such action is appropriate. 
During both the 103d and 104th Congresses, committees of the 
House and Senate recommended that agencies should investigate 
the possibility of privatizing loan servicing or selling 
appropriate loan portfolios. The Department of Housing and 
Urban Development has already initiated the sale of some loan 
portfolios. The Office of Management and Budget is conducting a 
study, required by the Treasury Postal Service Appropriations 
Act, comparing government loan servicing with private loan 
servicing. Evidence gathered to date indicates that savings 
from privatizing loan servicing or selling appropriate 
portfolios can generate significant budgetary savings.

                  sense of congress on medicaid reform

    Section 10 provides sense-of-Congress language that 
Congress should provide various protections in Medicaid reform. 
Medicaid coverage would be guaranteed for pregnant women with 
incomes below 133 percent of the poverty line; children under 
age 6 in families with income below 133 percent of poverty; 
children age 6 through 12 in families with incomes below 100 
percent of the poverty line; the elderly who meet Supplemental 
Security Income [SSI] income and resource standards; and 
persons with disabilities as defined by the State in their 
State plan. To qualify for Federal matching funds under both 
the base allotment and the umbrella insurance policy, States 
must match at the rates applicable for their State. Use of 
illusory financing schemes by States to raise State matching 
funds is disallowed.
    Federal minimum standards for nursing homes, including 
those established under the Omnibus Budget Reconciliation Act 
of 1987, will be retained in the reformed Medicaid. The 
Medicare Catastrophic Coverage Act of 1988 established new 
rules for the treatment of income and resources of married 
couples when one of the spouses requires nursing home care and 
the other remains in the community. These Federal protections, 
which prevent wives or husbands from being required to 
impoverish themselves to obtain and keep Medicaid benefits for 
their spouses requiring nursing home care, are retained in the 
reformed Medicaid. Last, Medicaid coverage remains guaranteed 
for Medicare cost sharing (premiums and cost-sharing payments) 
for low-income Medicare beneficiaries.

     sense of congress on domestic violence and federal assistance

    Section 11 provides sense-of-Congress legislation opposing 
the enactment of welfare reform legislation that would increase 
violence against women and children. It further provides that 
Congress should require that State-implemented welfare, 
education, and jobs programs address the impact of domestic 
violence on welfare recipients.

         sense of congress on impact of legislation on children

    Section 12 provides sense-of-Congress language that 
Congress should not adopt legislation that has an adverse 
effect on children. It further provides that if any legislation 
is enacted that harms this population, then remedial action 
should be taken through subsequent legislation.

                  sense of congress on debt repayment

    Section 13 provides sense-of-Congress language that a 
procedure for paying off the national debt should be developed 
once the budget is balanced.

  sense of congress on commitment to a balanced budget by fiscal year 
                                  2002

    Section 14 reaffirms the commitment of the Congress to 
balance the Federal budget by fiscal year 2002 using the 
economic assumptions of the Congressional Budget Office.
    On November 20, 1995, the President signed legislation 
(Public Law 104-56) committing Congress and the President to 
``enact legislation in the first session of the 104th Congress 
to achieve a balanced budget not later than fiscal year 2002 as 
estimated by the Congressional Budget Office.''
    Reaching a balanced budget in 2002 as estimated by the 
nonpartisan Congressional Budget Office has been the underlying 
goal of the congressional leadership since the very beginning 
of the 104th Congress. The statutory commitment mentioned above 
was the first time that the President agreed with that goal, 
after several prior changes of position.
    As a candidate, the President pledged that, if elected, he 
would balance the budget in 5 years. As President, he made no 
attempt to balance the budget until last summer. Upon assuming 
office in 1992, the President's first major legislative 
initiative was a $16.3 billion supplemental appropriations 
bill. The President's first budget submission would have 
resulted in deficits of $229 billion by fiscal year 1998. The 
President's health care initiative, which was presented as a 
means of reducing the deficit, was projected by CBO to increase 
the deficit by $70 billion over 6 years.
    The President continued to argue through early 1995 that it 
was not necessary to balance the budget. Finally, last summer, 
the President started making a string of promises regarding the 
budget. Initially, he said he could balance the budget in 10 
years using his own numbers. Then it was 9 years. Then it was 7 
years (by 2002), but again using the partisan estimates of his 
own Office of Management and Budget.
    Even after the November 20 agreement, the President tried 
to back away from it and did not provide any details until 
January on how he would achieve a balanced budget by 2002 as 
scored by CBO. Congress provided detailed plans for a balanced 
budget by 2002 as scored by CBO as early as May 1995, and 
actual legislation meeting that goal as early as October 1995. 
The President vetoed that legislation.
    Because the November 20 agreement sets forth the first 
session of the 104th Congress (1995) as the timeframe for 
enacting legislation to meet the goal of a balanced budget by 
2002 as estimated by CBO, the Budget Committee believes that it 
is important to reiterate Congress' commitment to achieving 
that plain and unambiguous goal this year.

                            Committee Votes

    Clause 2(l)(2)(B) of House rule XI requires each committee 
report accompanying any measure or matter of a public character 
to include the total number of votes cast for and against on 
each rollcall vote on a motion to report and any amendment 
offered to the measure or matter, together with the names of 
those voting for and against.
    On May 9, 1996, the committee met in open session, a quorum 
being present. The committee ordered reported the House 
Concurrent Resolution on the Budget for Fiscal Year 1997, with 
the recommendation that the resolution be agreed to and that 
the resolution do pass.
    The following votes were taken by the committee:
    1. Mr. Sabo offered an amendment to instruct the Committee 
on Economic and Educational Opportunities to report legislation 
to the House of Representatives increasing the minimum wage by 
at least $0.90 per hour over a 2-year period. The amendment was 
defeated by a rollcall vote of 15 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  ....  X   
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  ....  ....
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  ....  ....
Mr. Hoke.....................  .....  .....  Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    2. Messrs. Olver and Pomeroy offered an amendment to add a 
sense of the Congress regarding changes in Medicaid. The 
amendment was defeated by a rollcall vote of 18 ayes and 23 
noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    3. Ms. Woolsey offered an amendment to reduce spending in 
Function 050 (National Defense) and increase spending in 
Functions 500 (Education, Training, Employment, and Social 
Services), 550 (Health), and 600 (Income Security). The 
amendment was defeated by a rollcall vote of 15 ayes and 24 
noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  ....  X   
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  ....      
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  .....  Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  ....  X   
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    4. Mr. Orton offered an amendment to require CBO to certify 
that reconciliation legislation would balance the total budget 
by the year 2002. The amendment was withdrawn.
    5. Mr. Orton offered an amendment to require the chairman 
of the Committee on the Budget to certify, based upon CBO 
estimates, that reconciliation legislation would balance the 
total budget by the year 2002. The amendment was defeated by a 
rollcall vote of 18 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  .....  Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    6. Messrs. Olver and Stenholm offered an amendment to 
increase spending in Function 270 for solar and renewable 
energy programs, energy conservation research and development, 
and fossil energy research and development. The amendment was 
defeated by a rollcall vote of 18 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  .....  Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    7. Mrs. Mink offered an amendment to add sense-of-the-
Congress language regarding the impact of legislation on 
children. The amendment was agreed to by voice vote.
    8. Mrs. Meek offered an amendment to remove any reform of 
the Earned Income Tax Credit and to offset any deficit increase 
resulting from the elimination of the EITC reform by reducing 
tax relief. The amendment was defeated by a rollcall vote of 18 
ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    9. Ms. Roybal-Allard offered an amendment to add sense-of-
the-Congress language regarding domestic violence and Federal 
assistance. The amendment was agreed to by voice vote.
    10. Mr. Mollohan offered an amendment to increase spending 
in Function 750 (Administration of Justice) for the Community 
Policing Program. The amendment was defeated by a rollcall vote 
of 18 ayes and 23 noes.


------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------


    11. Mr. Doggett offered an amendment regarding tax 
treatment of wealthy Americans who renounce their U.S. 
citizenship to avoid taxes. The amendment was defeated by a 
rollcall vote of 18 ayes and 22 noes.


------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  .....  Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    12. Mr. Olver offered an amendment regarding level funding 
of transit programs. The amendment was defeated by a rollcall 
vote of 18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    13. Ms. Rivers offered an amendment to add report language 
regarding the Coastal Zone Management Act. The amendment was 
accepted by unanimous consent.
    14. Mr. Stenholm offered an amendment to increase spending 
in Function 550 (Health) to continue funding for the Office of 
Rural Health Policy and Rural Outreach Grants. The amendment 
was defeated by a rollcall vote of 18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    15. Mr. Doggett offered an amendment to increase the level 
of revenue to reflect the elimination of corporate tax 
expenditures. The amendment was defeated by a rollcall vote of 
18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    16. Mr. Sabo offered an amendment to adjust the resolution 
to reflect the House vote on H.R. 842, which would move 
transportation trust funds off-budget. The amendment was 
defeated by a rollcall vote of 19 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  X                                        
------------------------------------------------------------------------

    17. Mr. Shays offered an amendment to add a sense of the 
Congress regarding changes in Medicaid. The amendment was 
agreed to by voice vote.
    18. Mr. Hobson moved that the committee adopt the 
aggregates, function totals, and other appropriate matters (the 
Chairman's Mark). The Chairman's Mark was adopted by voice 
vote.
    19. Mr. Hobson moved that the committee adopt the 
Concurrent Resolution on the Budget for Fiscal Year 1997. The 
Concurrent Resolution was adopted by a rollcall vote of 23 ayes 
and 18 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  X      .....  Mr. Sabo.......  ....  X   
Mr. Hobson...................  X      .....  Mr. Stenholm...  ....  X   
Mr. Walker...................  X      .....  Ms. Slaughter..  ....  X   
Mr. Kolbe....................  X      .....  Mr. Coyne......  ....  X   
Mr. Shays....................  X      .....  Mr. Mollohan...  ....  X   
Mr. Herger...................  X      .....  Mr. Costello...  ....  X   
Mr. Bunning..................  X      .....  Mrs. Mink......  ....  X   
Mr. Smith (TX)...............  X      .....  Mr. Orton......  ....  X   
Mr. Allard...................  X      .....  Mr. Pomeroy....  ....  X   
Mr. Miller...................  X      .....  Mr. Browder....  ....  X   
Mr. Lazio....................  X      .....  Ms. Woolsey....  ....  X   
Mr. Franks...................  X      .....  Mr. Olver......  ....  X   
Mr. Smith (MI)...............  X      .....  Ms. Roybal-      ....  X   
                                              Allard.                   
Mr. Inglis...................  X      .....  Mrs. Meek......  ....  X   
Mr. Hoke.....................  X      .....  Ms. Rivers.....  ....  X   
Ms. Molinari.................  .....  .....  Mr. Doggett....  ....  X   
Mr. Nussle...................  X      .....  Mr. Levin......  ....  X   
Mr. Largent..................  X      .....  Mr. Thompson...  ....  X   
Mrs. Myrick..................  X      .....                             
Mr. Brownback................  X      .....                             
Mr. Shadegg..................  X      .....                             
Mr. Radanovich...............  X      .....                             
Mr. Bass.....................  X      .....                             
Mr. Neumann..................  X      .....                             
------------------------------------------------------------------------

    20. Mr. Hobson moved that the committee report the 
resolution to the House with the recommendation that the 
resolution be agreed to and that the resolution do pass. The 
motion was agreed to by a voice vote.


                 Oversight Findings and Related Matter

                              ----------                              


                  Budget Committee Oversight Findings

    Clause 2(1)(3)(A) of rule XI requires each committee report 
to include oversight findings and recommendations required 
pursuant to clause 2(b)(1) of rule X. The oversight findings of 
the Budget Committee are as follows:
    The Budget Committee has held several hearings since the 
Fiscal Year 1996 Budget Resolution was reported by the 
committee in May 1995. These hearings have touched upon a wide 
variety of topics relating to the Federal budget, and the 
testimony has been invaluable in assisting the committee in 
preparing the Fiscal Year 1997 Budget Resolution.
    Perhaps the most important hearings held by the Budget 
Committee have been the committee's field hearings. At the 
field hearings held on February 3, 1996, in Concord, NH, and on 
April 26, 1996, at Villanova University, citizens asked 
questions and offered suggestions on balancing the budget. The 
overwhelming sentiment expressed at the field hearings was the 
importance of balancing the Federal budget in a timely manner 
so as to not unfairly burden our children and generations to 
come.
    Most of the participants argued that the budget should not 
be balanced by increasing taxes. Indeed, speaker after speaker 
testified about the heavy burden of taxation on the average 
taxpayer and the need for a tax cut to help working families. 
Citizens were also concerned about the impending bankruptcy of 
the Medicare program, and appreciated the fact that the Budget 
Committee has a plan to address the long-term solvency of the 
program while continuing to increase benefits.
    Members of Congress have also had an opportunity to make 
their views on the Federal budget known. On March 22, 1996, the 
Budget Committee held a Members' Day hearing, at which 29 
Republican, Democrat, and Independent Members of Congress gave 
testimony and offered proposals for the fiscal year 1997 
budget. In addition, several Members who were unable to be 
present at the hearing offered written testimony for the 
record.
    Testimony offered at Members' Day touched on such subjects 
as: a plan by Representative Goss to reduce discretionary 
spending by $300 billion over 5 years; a proposal by 
Representative Johnson of Texas to privatize public 
broadcasting; the Democratic Coalition (``Blue Dog'') budget, 
presented by Representatives Hoyer, Tanner, and Peterson of 
Minnesota; a plan by Representative Gekas to increase funding 
for the National Institutes of Health; budget process reforms 
offered by Representatives Gutknecht and Barton; and 
legislation introduced by Representative Evans that reduces 
corporate subsidies.
    One of the most important goals of the 104th Congress has 
been the desire to shift power and influence from Washington 
back to the people in the States and localities. To that end, 
the Budget Committee held a hearing on March 5, 1996, on 
federalism, and heard testimony from witnesses on the benefits 
of a more limited role for the Federal Government.
    Some of the issues discussed in connection with federalism 
included: the threat of tyranny when too much power is 
concentrated in a strong central government; the oppressive 
burden of unfunded Federal mandates, both in terms of financial 
cost and their incongruity to local conditions; the need for 
Federal legislators to remember that the Constitution provides 
for a Federal Government with limited, enumerated powers; and 
the need for local legislators to have the flexibility to deal 
with local issues.
    The Budget Committee is also concerned about the 
consequences for future generations of chronic deficits and the 
failure to control growth in entitlement spending. Accordingly, 
hearings were held on March 13, 1996, on the effects the 
unsustainability of current government spending and the need 
for policymakers to consider generational accounting principles 
to reflect the costs of current policies on future generations.
    Testimony centered on the deleterious future effects of 
current policies including: the issue of sharply higher Federal 
spending on entitlements when the baby boomers begin to retire 
in 15 years; the possibility of future generations facing a net 
tax burden of 84 percent to pay for benefits for future 
retirees; the effects of a rise in the national debt on the 
performance of the economy and the stagnation of personal 
incomes; the possibility of entitlement spending and interest 
consuming more than three-quarters of all Federal spending in 
the future; and the need to base fiscal policies on 
generational accounting principles.
    The Budget Committee is convinced that everyone should 
contribute their fair share to achieving a balanced budget. 
Consequently, a hearing was held on March 7, 1996, on the issue 
of identifying and eliminating unnecessary corporate subsidies. 
Robert Shapiro with the Progressive Policy Institute identified 
specific cuts and reforms that would produce $265 billion in 
savings over 5 years and about $400 billion in savings over 7 
years from unproductive Federal corporate subsidies. Stephen 
Moore of the Cato Institute argued that stronger efforts should 
be made to cut unneeded corporate subsidies. Robert Greenstein 
of the Center on Budget and Policy Priorities advocated 
attacking corporate subsidies in both spending and in tax 
policies. Former Representative Beau Boulter of CapitolWatch 
noted that corporate subsidies represent an unwarranted 
intrusion of the government into private sector economic 
activity.
    The hearing on March 28, 1996, regarding the implications 
of taking the transportation trust funds off-budget was an 
important demonstration of bipartisan cooperation by the 
members of the Budget Committee. Committee members of both 
parties were overwhelmingly opposed to taking the trust funds 
off-budget, as were most of the witnesses testifying before the 
committee.
    Members of the Appropriations Committee who testified 
(Representatives Livingston, Wolf, and Coleman) emphasized the 
loss of control over the budget process that would result from 
removing the trust funds from the unified budget. Dr. Allen 
Schick, the foremost expert on budget process reforms, stated 
that exempting off-budget trust funds from spending constraints 
would pressure Congress to raise taxes and make deeper cuts in 
discretionary spending. David Luberoff of Harvard University 
noted that:

          Sound budgeting principles require a unified budget, 
        particularly in an era when deficit reduction clearly 
        is the primary challenge facing the Congress and the 
        executive branch. As Congress and the executive branch 
        make the difficult decisions required to balance the 
        budget, all sources of spending and revenue should be 
        on the table.

    Other hearings held by the Budget Committee included: The 
Administration's Budget Proposals on August 3, 1995; 
Longstanding Government Performance Issues on September 13, 
1995; Effects of Potential Government Shutdown on September 19, 
1995; President Clinton's Fiscal Year 1997 Budget on March 21, 
1996; Prospects for Economic Growth on March 27, 1996; and the 
Economic and Budget Outlook on April 17, 1996.

 Oversight Findings and Recommendations of the Committee on Government 
                          Reform and Oversight

    Clause 2(1)(3)(D) of rule XI requires each committee report 
to contain a summary of oversight findings and recommendations 
made by the Government Reform and Oversight Committee pursuant 
to clause 4(c)(2) of rule X, whenever such findings have been 
timely submitted. The Committee on Budget has received no such 
findings or recommendations from the Committee on Government 
Reform and Oversight.

           Federal Assistance to State and Local Governments

    Section 301(e)(7) of the Congressional Budget and 
Impoundment Control Act of 1974 requires that the report 
accompanying the concurrent resolution on the budget include a 
statement of any significant changes in the proposed levels of 
Federal assistance to State and local governments.
    The following proposed changes may affect the levels of 
Federal assistance to State and local governments:

                             transportation

  - Eliminate Federal funding for outdated airline subsidies.

  - Phase out Federal mass transit operating subsidies by 2002.

  - Make the following changes in mass transit capital 
        expenditures: no new starts in fixed guideway mass 
        transit capital grants; phase in a reduction in the 
        matching rate for remaining capital expenditures to 50 
        percent.

  - Eliminate the following programs and return responsibility 
        to the States: the International Highway Transportation 
        Outreach Program; the Congestion Pricing Program; the 
        Applied Research Program; the National Highway and 
        Transit Institutes; and the On-The-Job Training 
        Program.

                   community and regional development

  - Combine the Community Development Block Grant Program, the 
        HOME Program, and the Community Development Financial 
        Institutions Program into one flexible fund allocated 
        to and administered by State housing and development 
        agencies and local governments.

  - Create a new Rural Development block grant.

  - Create a new Native American block grant.

          education, training, employment, and social services

  - Create a block grant for elementary and secondary education 
        without reducing total funding from the levels of the 
        programs collectively.

  - Consolidate library programs into a single block grant.

                                 health

  - Eliminate unauthorized Rural Outreach grants that duplicate 
        other federally supported services.

  - Eliminate funding intended to establish State offices of 
        rural health.

  - Eliminate duplicative grants to State bureaucracies for 
        administering state trauma care systems.

  - Eliminate special funding for Native Hawaiian Health Care 
        made obsolete by employer and State insurance reforms.

  - Eliminate funding for the Pacific Basin Initiative that 
        duplicates other Federal funding sources.

  - Incorporate Indian health care facilities into the new 
        Native American block grant.

  - Consolidate and target funding for the Substance Abuse and 
        Mental Health Service Administration.

  - Reduce Federal funding for Community Support 
        Demonstrations.

  - Transform Medicaid to provide greater flexibility and 
        authority to the States.

                            income security

  - Consolidate four Federal cash welfare assistance programs 
        into a single block grant for temporary assistance for 
        needy families.

  - Restrict welfare and public benefits for aliens.

  - Consolidate eight current Federal child care assistance 
        programs into a single block grant.

  - Consolidate native American housing and development 
        programs into a single block grant.

                       administration of justice

  - Fund a Local Law Enforcement block grant.

          establishment of statutory limit on the public debt

    Clause 2 of House rule XLIX requires the report of the 
Committee on the Budget of the House accompanying any current 
resolution on the budget to include a clear statement of the 
effect of adoption of the current resolution upon the statutory 
limit on the debt. House Rule XLIX provides for the automatic 
engrossment of a bill raising the statutory limit upon the 
adoption of a conference report on the concurrent resolution on 
the budget.
    The adoption of this budget resolution will have no effect 
on the statutory limit on the debt if, as expected, the rule 
providing for the consideration of the Concurrent Resolution on 
the Budget for Fiscal Year 1997 waives the applicability of 
House Rule XLIX. House Resolution 149 waived the applicability 
of House XLIX during the consideration of the conference report 
accompanying H.Con.Res. 67, the Concurrent Resolution on the 
Budget for Fiscal Year 1996. The statutory limit on the debt 
was last raised by Public Law 104-121 on March 29, 1996, and a 
further increase will not be necessary until at least October 
1997.


                         Exceptions to Tax Law

                              ----------                              

    The Congressional Budget Act of 1974 requires a listing of 
items called ``tax expenditures'' in the President's budget 
submission and in reports accompanying congressional budget 
resolutions. These items are defined in the act as:

        * * * revenue losses attributable to provisions of the 
        Federal tax law which allow a special exclusion, 
        exemption, or deduction from gross income or which 
        provides a special credit, a preferential rate of tax, 
        or a deferral of tax liability.

Under this definition, the concept of a expenditures refers to 
revenue losses attributable exclusively to provisions in the 
corporation and individual income taxes.
    This terminology should be changed because its line of 
reasoning is faulty. It assumes, first, that the government can 
``lose'' money that did not belong to the government in the 
first place. The funds in fact belong to taxpayers; the 
government cannot lose what it never had. Second, in the 
transaction involved, no money really changes hands. Taxpayers 
simply keep more of their own funds.
    Nearly all these tax provisions are intended either to 
encourage certain economic activities or to reduce income tax 
liabilities for taxpayers in special circumstances. The use of 
a tax provision, rather than a direct expenditure, often is 
more efficient. The use of a tax provision also keeps the 
behavior voluntary. Estimates of individual tax benefits are 
prepared by the Treasury Department and the Joint Committee on 
Taxation. The estimates normally presented here are those of 
the Joint Committee on Taxation and in this case are based on 
that committee's most recent report of September 1995. The 
Joint Committee on Taxation has estimated the revenue 
``losses'' rather than outlay equivalent amounts of tax 
expenditures.
    Table 1 shows the revenues involved in targeted tax 
benefits for fiscal years 1996 through 2000. The economic 
assumptions upon which these calculations are based were the 
most recent Congressional Budget Office assumptions available 
to the Joint Committee in August 1995. Because of the 
interaction among the provisions, the revenue effect from two 
or more repeals would not necessarily equal the exact sum of 
the revenue losses for each item. Furthermore, because tax 
legislation seldom applies retroactively to taxpayer decisions 
made earlier, the added revenues available for the initial 
years from legislation to eliminate such a tax provision may be 
substantially less than shown in the following table.

                                     TABLE 1.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 1996-2000                                     
                                                                  [Billions of dollars]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Corporations                             Individuals                        
                           Function                           --------------------------------------------------------------------------------   Total  
                                                                1996    1997    1998    1999    2000    1996    1997    1998    1999    2000   1996-2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
National defense                                                                                                                                        
    Exclusion of benefits and allowances to Armed Forces                                                                                                
     personnel...............................................  ......  ......  ......  ......  ......     2.0     2.0     2.1     2.1     2.2       10.4
    Exclusion of military disability benefits................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
International affairs                                                                                                                                   
    Exclusion of income earned abroad by U.S. citizens.......  ......  ......  ......  ......  ......     1.6     1.7     1.8     1.9     1.9        8.9
    Exclusion of certain allowances for Federal employees                                                                                               
     abroad..................................................  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusion of income of foreign sales corporations (FSCs).     1.5     1.5     1.5     1.6     1.6  ......  ......  ......  ......  ......        7.7
    Deferral of income of controlled foreign corporations....     1.1     1.1     1.2     1.2     1.2  ......  ......  ......  ......  ......        5.8
    Inventory property sales source rule exception...........     3.6     3.7     3.7     3.8     3.8  ......  ......  ......  ......  ......       18.6
    Interest allocation rules exception for certain                                                                                                     
     nonfinancial institutions...............................     0.2     0.2     0.2     0.2     0.2  ......  ......  ......  ......  ......        1.0
General science, space, and technology                                                                                                                  
    Expensing of research and development expenditures.......     2.5     2.7     2.9     3.1     3.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       14.5
Energy                                                                                                                                                  
    Expensing of exploration and development costs:                                                                                                     
        Oil and gas..........................................     0.1     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
        Other fuels..........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Excess of percentage over cost depletion:                                                                                                           
        Oil and gas..........................................     0.3     0.4     0.4     0.4     0.4     0.1     0.1     0.1     0.1     0.1        2.4
        Other fuels..........................................   (\1\)     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Credit for enhanced oil recovery costs...................   (\1\)     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Credit for non-conventional fuels production.............     0.9     0.8     0.8     0.8     0.7     0.1     0.1     0.1     0.1     0.1        4.5
    Credits for alcohol fuels \2\............................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......        0.1
    Exclusion of interest on State and local government                                                                                                 
     industrial development bonds for energy production                                                                                                 
     facilities..............................................     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2     0.2     0.2        1.1
    Expensing of tertiary injectants.........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of energy conservation subsidies provided by                                                                                              
     public utilities........................................     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Credit for investments in solar and geothermal energy                                                                                               
     facilities..............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Credits for electricity production from wind and biomass.   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Deductions and credits for clean-fuel vehicles and                                                                                                  
     refueling property......................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
Natural resources and environment                                                                                                                       
    Expensing of exploration and development costs, nonfuel                                                                                             
     minerals................................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Excess of percentage over cost depletion, nonfuel                                                                                                   
     minerals................................................     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
    Investment credit and 7-year amortization for                                                                                                       
     reforestation expenditures..............................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Expensing of multiperiod timber-growing costs............     0.4     0.5     0.5     0.5     0.5   (\1\)   (\1\)     0.1     0.1     0.1        2.8
    Exclusion of interest on State and local government                                                                                                 
     sewage, water, and hazardous waste facilities bonds.....     0.2     0.2     0.2     0.2     0.2     0.5     0.5     0.5     0.5     0.5        3.8
    Investment credit for rehabilitation of historic                                                                                                    
     structures..............................................     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Special rules for mining reclamation reserves............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
Agriculture                                                                                                                                             
    Expensing of soil and water conservation expenditures....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Expensing of fertilizer and soil conditioner costs.......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Expensing of the costs of raising dairy and breeding                                                                                                
     cattle..................................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.2        0.8
    Exclusion of cost-sharing payments.......................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of cancellation of indebtedness income of                                                                                                 
     farmers.................................................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.3
    Cash accounting for agriculture..........................     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2     0.2     0.2        1.1
Commerce and housing                                                                                                                                    
    Financial institutions:                                                                                                                             
        Bad-debt  reserves  of  financial institutions.......     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
        Exemption of credit union income.....................     08.     0.8     0.9     0.9     0.9  ......  ......  ......  ......  ......        4.3
    Insurance companies:                                                                                                                                
        Exclusion of investment income on life insurance and                                                                                            
         annuity contracts...................................     0.5     0.8     1.0     1.4     1.6     8.7    13.1    18.1    23.7    28.3       97.3
        Exclusion of investment income from structured                                                                                                  
         settlement amounts..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Small life insurance company taxable income                                                                                                     
         adjustment..........................................     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.3
        Special treatment of life insurance company reserves.     2.2     2.5     2.8     3.1     3.4  ......  ......  ......  ......  ......       14.0
        Deduction of unpaid property loss reserves for                                                                                                  
         property and casualty insurance companies...........     1.8     1.9     2.1     2.3     2.5  ......  ......  ......  ......  ......       10.6
        Special alternative tax on small property and                                                                                                   
         casualty insurance companies........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Tax exemption for certain insurance companies........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Special deduction for Blue Cross and Blue Shield                                                                                                
         companies...........................................     0.3     0.4     0.4     0.3     0.2  ......  ......  ......  ......  ......        1.7
    Housing:                                                                                                                                            
        Deductibility of mortgage interest on owner-occupied                                                                                            
         residences..........................................  ......  ......  ......  ......  ......    59.2    62.7    66.4    70.3    74.5      333.1
        Deductibility of property tax on owner-occupied homes  ......  ......  ......  ......  ......    14.4    15.1    15.9    16.6    17.4       79.5
        Deferral of capital gains on sales of principal                                                                                                 
         residences..........................................  ......  ......  ......  ......  ......    15.3    15.9    16.4    17.0    17.6       82.2
        Exclusion of capital gains on sales of principal                                                                                                
         residences for persons age 55 and over ($125,000                                                                                               
         exclusion)..........................................  ......  ......  ......  ......  ......     5.1     5.3     5.5     5.7     5.9       27.5
        Exclusion of interest on State and local government                                                                                             
         bonds for owner-occupied housing....................     0.6     0.6     0.6     0.6     0.7     1.5     1.5     1.5     1.5     1.5       10.8
        Exclusion of interest on State and local government                                                                                             
         bonds for rental housing............................     0.4     0.3     0.3     0.3     0.3     0.8     0.8     0.7     0.7     0.7        5.3
        Depreciation of rental housing in excess of                                                                                                     
         alternative depreciation system.....................     1.2     1.2     1.1     1.0     1.0     0.8     0.8     0.8     0.7     0.7        9.3
        Low-income housing tax credit........................     0.9     1.0     1.1     1.2     1.4     1.7     1.9     2.2     2.4     2.5       16.3
    Other business and commerce:                                                                                                                        
        Maximum 28% tax rate on long-term capital gains......  ......  ......  ......  ......  ......     9.1    10.2    11.4    12.7    14.3       57.6
        Depreciation of buildings other than rental housing                                                                                             
         in excess of alternative depreciation system........     3.7     3.2     2.6     1.9     1.5     1.5     1.4     1.1     0.9     0.7       18.5
        Depreciation of equipment in excess of alternative                                                                                              
         depreciation system.................................    22.5    22.2    21.6    21.4    21.1     5.6     5.8     5.8     5.8     5.8      137.6
        Expensing of up to $17,500 of depreciable business                                                                                              
         property............................................     0.8     0.5     0.3     0.2     0.2     0.5     0.3     0.2     0.1     0.1        3.2
        Exclusion of capital gains at death..................  ......  ......  ......  ......  ......    14.0    15.4    17.1    18.3    19.5       84.3
        Deferral of capital gains on gifts...................  ......  ......  ......  ......  ......     1.5     1.5     1.6     1.7     1.7        8.0
        Amortization of business startup costs...............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Reduced rates on first $10,000,000 of corporate                                                                                                 
         taxable income......................................     4.1     4.3     4.4     4.6     4.7  ......  ......  ......  ......  ......       22.1
        Permanent exemption from imputed interest rules......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Expensing of magazine circulation expenditures.......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
        Special rules for magazine, paperback book, and                                                                                                 
         record returns......................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Deferral of gain on non-dealer installment sales.....     0.4     0.4     0.5     0.5     0.5     0.3     0.3     0.4     0.4     0.4        4.1
        Completed contract rules.............................     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.1
        Cash accounting, other than agriculture..............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1        0.5
        Exclusion of interest on State and local government                                                                                             
         small-issue industrial development bonds............     0.3     0.2     0.2     0.2     0.2     0.6     0.5     0.4     0.4     0.4        3.3
        Deferral of gain on like-kind exchanges..............     0.5     0.5     0.5     0.6     0.6     0.3     0.3     0.3     0.4     0.4        4.5
        Exception from net operating loss limitations for                                                                                               
         corporations in bankruptcy proceedings..............     0.4     0.5     0.5     0.5     0.5  ......  ......  ......  ......  ......        2.4
Transportation                                                                                                                                          
    Deferral of tax on capital construction funds of shipping                                                                                           
     companies...............................................     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
    Exclusion of employer-paid transportation benefits.......  ......  ......  ......  ......  ......     2.1     2.2     2.3     2.4     2.5       11.5
    Exclusion of interest on State and local government bonds                                                                                           
     for high-speed rail.....................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Community and regional development                                                                                                                      
    Investment credit for rehabilitation of structure, other                                                                                            
     than historic structures................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Exclusion of interest on State and local government bonds                                                                                           
     for private airports, docks, and mass-commuting                                                                                                    
     facilities..............................................     0.3     0.3     0.3     0.3     0.4     0.7     0.7     0.7     0.8     0.9        5.4
    Regional economic development tax incentives: empowerment                                                                                           
     zones, enterprise communities, and Indian investment                                                                                               
     incentives..............................................     0.2     0.2     0.3     0.3     0.4     0.2     0.2     0.3     0.3     0.4        2.8
Education, training, employment, and social services                                                                                                    
    Education and training:                                                                                                                             
        Exclusion of scholarship and fellowship income.......  ......  ......  ......  ......  ......     0.8     0.9     0.9     1.0     1.1        4.6
        Parental personal exemption for students age 19 to 23  ......  ......  ......  ......  ......     0.8     0.8     0.8     0.8     0.8        4.1
        Exclusion of interest on State and local government                                                                                             
         student loan bonds..................................     0.1     0.1     0.1     0.1     0.1     0.3     0.2     0.2     0.2     0.1        1.4
        Exclusion of interest on State and local government                                                                                             
         bonds for private nonprofit educational facilities..     0.3     0.3     0.3     0.3     0.3     0.6     0.6     0.7     0.7     0.7        4.8
        Deductibility of charitable contributions for                                                                                                   
         educational institutions............................     0.5     0.5     0.5     0.5     0.5     2.0     2.1     2.1     2.2     2.3       13.5
        Exclusion of interest on educational savings bonds...  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Employment:                                                                                                                                         
        Exclusion of employee meals and lodging (other than                                                                                             
         military)...........................................  ......  ......  ......  ......  ......     0.6     0.6     0.6     0.7     0.7        3.2
        Special tax provisions for employee stock ownership                                                                                             
         plans (ESOPs).......................................     0.9     1.0     1.1     1.2     1.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        5.4
        Exclusion of benefits provided under cafeteria plans                                                                                            
         \3\.................................................  ......  ......  ......  ......  ......     4.4     5.0     5.7     6.5     7.2       28.8
        Exclusion of rental allowances for ministers' homes..  ......  ......  ......  ......  ......     0.3     0.3     0.3     0.3     0.3        1.5
        Exclusion of miscellaneous fringe benefits...........  ......  ......  ......  ......  ......     5.2     5.5     5.8     6.2     6.5       29.1
        Exclusion of employee awards.........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.6
        Exclusion of income earned by voluntary employees'                                                                                              
         beneficiary associations............................  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.6        2.7
        Targeted jobs tax credit.............................     0.1   (\1\)   (\1\)  ......  ......   (\1\)  ......  ......  ......  ......        0.1
    Social services:                                                                                                                                    
        Deductibility of charitable contributions, other than                                                                                           
         for education and health............................     0.5     0.5     0.5     0.5     0.5    14.0    14.7    15.3    16.0    16.7       79.3
        Credit for child and dependent care expenses.........  ......  ......  ......  ......  ......     2.7     2.8     2.8     2.9     3.0       14.2
        Exclusion of employer-provided child care \4\........  ......  ......  ......  ......  ......     0.7     0.8     0.9     1.0     1.2        4.6
        Exclusion of certain foster care payments............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Expensing of costs for removing architectural                                                                                                   
         barriers............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Credit for disabled access expenditures..............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Health                                                                                                                                                  
    Exclusion of employer contributions for medical insurance                                                                                           
     premiums and medical care \5\...........................  ......  ......  ......  ......  ......    48.4    52.0    55.7    59.8    64.0      279.8
    Exclusion of medical care and CHAMPUS medical insurance                                                                                             
     for military dependents, retirees, and retiree                                                                                                     
     dependents..............................................  ......  ......  ......  ......  ......     0.5     0.6     0.6     0.6     0.6        2.9
    Deductibility of medical insurance premiums by the self-                                                                                            
     employed................................................  ......  ......  ......  ......  ......     05.     0.6     0.6     0.7     0.7        3.1
    Deductibility of medical expenses........................  ......  ......  ......  ......  ......     3.5     3.8     4.1     4.4     4.8       20.7
    Exclusion of interest on State and local government bonds                                                                                           
     for private nonprofit hospital facilities...............     0.6     0.6     0.6     0.6     0.7     1.3     1.3     1.4     1.5     1.6       10.2
    Deductibility of charitable contributions to health                                                                                                 
     organizations...........................................     0.4     0.4     0.4     0.4     0.4     1.4     1.5     1.6     1.6     1.7        9.8
Medicare                                                                                                                                                
    Exclusion of untaxed medicare benefits:                                                                                                             
        Hospital insurance...................................  ......  ......  ......  ......  ......     9.0    10.0    11.0    12.1    13.3       55.3
        Supplementary medical insurance......................  ......  ......  ......  ......  ......     4.2     4.9     5.7     6.5     7.5       28.7
Income security                                                                                                                                         
    Exclusion of workers' compensation benefits..............  ......  ......  ......  ......  ......     3.9     4.0     4.1     4.2     4.3       20.5
    Exclusion of special benefits for disabled coal miners...  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of cash public assistance benefits.............  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.7        3.0
    Net exclusion of pension contributions and earnings:                                                                                                
        Employer plans.......................................  ......  ......  ......  ......  ......    69.6    70.5    73.5    76.7    80.0      370.3
        Individual retirement plans..........................  ......  ......  ......  ......  ......     8.8     9.3     9.8    10.3    10.9       49.1
        Keogh plans..........................................  ......  ......  ......  ......  ......     3.5     3.7     3.9     4.2     4.4       19.7
    Exclusion of other employee benefits:                                                                                                               
        Premiums on group term life insurance................  ......  ......  ......  ......  ......     2.0     2.0     2.1     2.1     2.2       10.5
        Premiums on accident and disability insurance........  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusion of employer-provided death benefits............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Additional standard deduction for the blind and the                                                                                                 
     elderly.................................................  ......  ......  ......  ......  ......     1.7     1.9     2.0     2.1     2.3       10.0
    Tax credit for the elderly and disabled..................  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Deductibility of casualty and theft losses...............  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.4
    Earned income tax credit (EITC) \6\......................  ......  ......  ......  ......  ......     3.6     4.0     4.1     4.3     4.6       20.6
Social Security and railroad retirement                                                                                                                 
    Exclusion of untaxed Social Security and railroad                                                                                                   
     retirement benefits.....................................  ......  ......  ......  ......  ......    23.1    24.2    25.2    26.4    27.5      126.4
Veterans' benefits and services                                                                                                                         
    Exclusion of veterans' disability compensation...........  ......  ......  ......  ......  ......     1.7     1.8     1.8     1.9     1.9        9.1
    Exclusion of veterans' pensions..........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of GI bill benefits............................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.6
    Exclusion of interest on State and local government bonds                                                                                           
     for veterans' housing...................................     [1]     [1]     [1]     [1]     [1]     0.1     0.1     0.1     0.1     0.1        0.5
General purpose fiscal assistance                                                                                                                       
    Exclusion of interest on public purpose State and local                                                                                             
     government debt.........................................     4.4     4.4     4.6     4.9     5.4    10.3    10.3    10.8    11.5    12.5       79.1
    Deduction of nonbusiness State and local government                                                                                                 
     income and personal property taxes......................  ......  ......  ......  ......  ......    27.5    29.0    30.5    32.1    33.8      152.8
    Tax credit for section 936 income........................     3.4     3.5     3.8     4.1     4.4  ......  ......  ......  ......  ......       19.3
Interest                                                                                                                                                
    Deferral of interest on savings bonds....................  ......  ......  ......  ......  ......     1.5     1.5     1.6     1.6     1.7        7.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $50 million.                                                                                                                              
\2\ In addition, the 5.4-cents-per-gallon exemption from excise tax for alcohol fuels results in a reduction in excise tax receipts, net of income tax  
  effects of $0.6 billion per year in fiscal years 1996 and 1997, and $0.5 billion per year in fiscal years 1998 through 2000.                          
\3\ Estimate includes amounts of employer-provided health insurance purchased through cafeteria plans and employer-provided child care purchased through
  dependent flexible spending accounts. These amounts are also included in other line items in this table.                                              
\4\ Estimate includes employer-provided child care purchased through dependent care flexible spending accounts.                                         
\5\ Estimate includes employer-provided health insurance purchased through cafeteria plans.                                                             
\6\ The figures in the table show the effect of the EITC on receipts. The increase in outlays is: $19.9 billion in 1996, $21.9 billion in 1997, $22.9   
  billion in 1998, $23.9 billion in 1999, and $24.9 billion in 2000.                                                                                    
                                                                                                                                                        
Note.--Details may not add to totals due to rounding.                                                                                                   
                                                                                                                                                        
Source: Joint Committee on Taxation.                                                                                                                    


                                                         COMPARISON TO PRESIDENT'S BUDGET--TOTAL                                                        
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Fiscal year--                                           
                                                                -----------------------------------------------------------------------------  1997-2002
                                                                    1996       1997       1998       1999       2000       2001       2002              
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority...............................................     -6.361    -13.690    -17.386    -26.652    -25.170    -43.687    -27.495    -154.080
Outlays........................................................      0.869    -14.046    -24.756    -28.519    -32.542    -35.069    -31.813    -166.745
Revenues.......................................................     -3.537     -7.059    -15.009    -19.444    -15.017    -20.359    -31.681    -108.569
Deficit (-)/Surplus (+)........................................     -4.406      6.987      9.747      9.075     17.525     14.710      0.132      58.176
Debt subject to limit..........................................      4.400     -7.100    -16.100    -26.000    -45.600    -62.500    -78.000    -235.300
050 National Defense:                                                                                                                                   
    Budget authority...........................................      0.395     12.843     10.420      7.876      4.089     -2.231     -7.663      25.334
    Outlays....................................................      0.271      4.069      7.299      9.255      7.583      3.446     -8.097      23.555
150 International Affairs:                                                                                                                              
    Budget authority...........................................     -0.216     -1.614     -2.997     -3.311     -3.181     -4.733     -6.106     -21.942
    Outlays....................................................     -0.148     -0.717     -1.396     -2.076     -2.570     -3.519     -4.642     -14.920
250 General Science, Space, and Technology:                                                                                                             
    Budget authority...........................................      0.071     -1.381      0.341      0.980      1.587      0.138     -1.566       0.099
    Outlays....................................................      0.033     -0.158     -0.138      0.254      1.007      0.482     -0.917       0.530
270 Energy:                                                                                                                                             
    Budget authority...........................................     -0.109     -0.855     -1.282     -1.000     -1.031     -1.551     -2.197      -7.916
    Outlays....................................................     -0.039     -0.402     -0.668     -0.997     -1.050     -1.322     -1.894      -6.333
300 Natural Resources and Environment:                                                                                                                  
    Budget authority...........................................      0.325     -1.420     -2.714     -1.711     -2.532     -2.767     -4.104     -15.248
    Outlays....................................................      0.214     -0.880     -2.627     -1.664     -2.549     -2.555     -3.677     -13.952
350 Agriculture:                                                                                                                                        
    Budget authority...........................................      0.010     -1.121     -0.861     -0.717     -0.485     -1.087     -1.861      -6.132
    Outlays....................................................     -0.001     -0.885     -0.885     -0.760     -0.563     -0.965     -1.687      -5.745
370 Commerce and Housing Credit:                                                                                                                        
    Budget authority...........................................      0.213     -0.792     -0.812     -0.681     -0.501     -0.841     -1.231      -4.858
    Outlays....................................................      0.317     -0.388     -0.711     -0.801     -0.730     -0.955     -1.306      -4.891
400 Transportation:                                                                                                                                     
    Budget authority...........................................     -0.450     -0.481      7.361     10.748     13.223     10.343      7.108      48.302
    Outlays....................................................      0.009     -0.565     -1.006     -0.759      0.621      0.873     -1.244      -2.080
450 Community and Regional Development:                                                                                                                 
    Budget authority...........................................     -1.003     -2.536     -2.154     -1.699     -1.243     -2.409     -3.242     -13.283
    Outlays....................................................     -0.035     -0.453     -1.675     -2.068     -2.274     -2.020     -2.165     -10.655
500 Education, Training & Social Services:                                                                                                              
    Budget authority...........................................     -2.938     -6.299     -7.070     -8.267     -9.344    -11.313    -13.307     -55.600
    Outlays....................................................     -0.044     -1.758     -5.566     -7.224     -8.455    -10.202    -12.111     -45.316
550 Health:                                                                                                                                             
    Budget authority...........................................     -0.003     -6.968     -6.626     -6.186     -5.885     -3.814     -8.180     -37.659
    Outlays....................................................      0.310     -5.996     -6.714     -6.539     -6.259     -3.153     -7.141     -35.802
570 Medicare:                                                                                                                                           
    Budget authority...........................................     -0.091      0.045     -2.101     -5.317     -7.243    -11.032    -17.170     -42.818
    Outlays....................................................     -0.257      0.059     -2.101     -5.317     -7.243    -11.025    -17.161     -42.788
600 Income Security:                                                                                                                                    
    Budget authority...........................................     -1.601      1.057     -2.874    -10.617     -7.617    -15.660    -12.700     -48.411
    Outlays....................................................      0.490      1.098     -2.899     -4.745     -6.511    -10.472    -12.918     -36.447
650 Social Security:                                                                                                                                    
    Budget authority...........................................     -0.250     -0.001     -0.001     -0.001     -0.001     -0.001     -0.001      -0.006
    Outlays....................................................      0.288     -0.340     -0.363     -0.349     -0.369     -0.446     -0.532      -2.399
700 Veterans Benefits and Services:                                                                                                                     
    Budget authority...........................................     -0.278      0.104      0.595      1.123      2.501      0.729      0.303       5.082
    Outlays....................................................     -0.182      0.097      0.581      1.073      2.347      0.881      0.161       5.140
750 Administration of Justice:                                                                                                                          
    Budget authority...........................................      0.090     -1.385     -2.225     -2.267     -2.305     -4.037     -3.406     -15.624
    Outlays....................................................      0.002     -1.307     -3.194     -2.585     -2.536     -5.008     -4.281     -18.911
800 General Government:                                                                                                                                 
    Budget authority...........................................      0.021     -4.119     -1.844     -2.559     -2.263     -3.270     -3.291     -17.346
    Outlays....................................................      0.020     -3.050     -1.242     -2.013     -1.819     -2.801     -3.636     -14.571
900 Net Interest:                                                                                                                                       
    Budget authority...........................................      0.234      0.308     -0.405     -1.333     -2.580     -3.722     -4.816     -12.548
    Outlays....................................................      0.234      0.308     -0.405     -1.333     -2.580     -3.722     -4.816     -12.548
920 Allowances:                                                                                                                                         
    Budget authority...........................................     -0.214      3.161     -1.914     -2.015     -2.018     10.908     34.601      42.723
    Outlays....................................................     -0.046     -0.542     -0.813     -0.173     -0.251     14.751     34.644      47.616
950 Offsetting Receipts:                                                                                                                                
    Budget authority...........................................     -0.567     -2.236     -0.223      0.302      1.659      2.663     21.607      23.772
    Outlays....................................................     -0.567     -2.236     -0.223      0.302      1.659      2.663     21.607      23.772
--------------------------------------------------------------------------------------------------------------------------------------------------------


                        COMPARISON OF THE FY 1997 BUDGET WITH THE FY 1996 SPENDING LEVELS                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                            Fiscal year--                                       
                               ----------------------------------------------------------------------  1997-2002
                                  1996      1997      1998      1999      2000      2001      2002              
----------------------------------------------------------------------------------------------------------------
Spending......................   1,574.7      43.4     100.8     139.0     187.6     219.1     267.7     2,532.3
Percent.......................        NA       2.8       6.4       8.8      11.9      13.9      17.0        60.8
    National Defense:                                                                                           
        Spending..............     263.6       1.3       0.0       3.5       7.2       6.4       6.5        24.9
        Percent...............        NA       0.5      0.0.       1.3       2.7       2.4       2.5         9.5
150 Internation Affairs:                                                                                        
    Spending..................      15.9      -0.9      -2.4      -3.4      -4.9      -5.3      -5.6       -22.6
    Percent...................        NA      -5.9     -15.2     -21.6     -30.6     -33.4     -35.3      -142.0
250 General Science, Space,                                                                                     
 and Technology:                                                                                                
    Spending..................      16.6       0.1      -0.1      -0.3      -0.5      -0.6      -0.9        -2.3
    Percent...................        NA       0.8      -0.5      -2.1      -2.8      -3.8      -5.4       -13.7
270 Energy:                                                                                                     
    Spending..................       3.5      -0.8      -1.4      -2.2      -2.7      -2.8      -3.3        13.2
    Percent...................        NA     -22.5     -41.0     -62.3     -76.9     -79.0     -93.4      -375.2
300 Natural Resources and                                                                                       
 Environment:                                                                                                   
    Spending..................      21.8      -0.5      -2.2      -1.4      -2.9      -2.6      -2.9       -12.5
    Percent...................        NA      -2.3     -10.0      -6.5     -13.2     -12.0     -13.4       -57.3
350 Agriculture:                                                                                                
    Spending..................      10.8      -0.5      -0.9      -1.3      -1.9      -3.0      -3.6       -11.2
    Percent...................        NA      -4.8      -8.3     -11.8     -17.7     -28.1     -33.2      -104.0
370 Commerce and Housing                                                                                        
 Credit:                                                                                                        
    Spending..................      -7.1       5.5      14.4      11.4      13.9      15.5      14.3        75.0
    Percent...................        NA     -77.4    -203.7    -161.9    -196.7     218.7     202.1     -1060.5
400 Transportation:                                                                                             
    Spending..................      39.3      -0.3      -1.7      -3.2      -4.1      -4.8      -5.3       -19.3
    Percent...................        NA      -0.8      -4.3      -8.1     -10.4     -12.2     -13.4       -49.1
450 Community and Regional                                                                                      
 Development:                                                                                                   
    Spending..................      11.1      -1.0      -2.5      -3.3      -4.1      -4.5      -5.0       -20.2
    Percent...................        NA      -8.7     -22.3     -29.7     -36.7     -40.1     -44.6      -182.0
500 Education, Training &                                                                                       
 Social Services:                                                                                               
    Spending..................      50.6      -1.1      -2.4      -2.7      -2.3      -1.9      -1.2       -11.7
    Percent...................        NA      -2.1      -4.8      -5.4      -4.6      -3.7      -2.4       -23.1
550 Health:                                                                                                     
    Spending..................     123.0       7.3      15.1      22.2      29.9      37.8      44.5       156.8
    Percent...................        NA       5.9      12.3      18.0      24.3      30.7      36.2       127.5
570 Medicare:                                                                                                   
    Spending..................     179.1      12.4      26.3      35.9      48.5      60.8      73.6       257.5
    Percent...................        NA       6.9      14.7      20.0      27.1      33.9      41.1       143.7
600 Income Security:                                                                                            
    Spending..................     228.9      11.2      15.3      22.8      34.2      36.4      48.3       168.3
    Percent...................        NA       4.9       6.7      10.0      14.9      15.9      21.1        73.5
650 Social Security:                                                                                            
    Spending..................     351.3      16.8      34.8      53.7      73.8      95.5     118.1       392.8
    Percent...................        NA       4.8       9.9      15.3      21.0      27.2      33.6       111.8
700 Veterans Benefits and                                                                                       
 Services:                                                                                                      
    Spending..................      37.8       1.9       1.5       0.3       1.6      -0.9       2.1         6.6
    Percent...................        NA       5.0       4.1       0.7       4.4      -2.4       5.6        17.4
750 Administration of Justice:                                                                                  
    Spending..................      17.7       2.2       3.5       4.5       5.3       3.0       3.0        21.5
    Percent...................        NA      12.6      19.6      25.7      29.7      17.0      17.0       121.6
800 General Government:                                                                                         
    Spending..................      12.6      -0.9       1.0       0.3       0.7      -0,2      -0.3         0.6
    Percent...................        NA      -7.1       7.8       2.2       5.7      -1.5      -2.6         4.5
900 Net Interest:                                                                                               
    Spending..................     239.7       2.4       4.3       3.2      -0.7      -2.4      -4.2         2.6
    Percent...................        NA       1.0       1.8       1.3      -0.3      -1.0      -1.7         1.1
920 Allowances:                                                                                                 
    Spending..................       0.0      -1.0      -0.8      -0.1      -0.2      -1.7      -2.1        -6.0
    Percent...................        NA   2,143.5   1,710.9     297.8     489.1   3,747.8   4,550.0    12,939.1
950 Offsetting Receipts:                                                                                        
    Spending..................     -41.5     -10.7      -1.1      -0.8      -3.2      -5.5      -8.5       -30.0
    Percent...................        NA      25.8       2.7       2.0       7.8      13.3      20.6        72.2
----------------------------------------------------------------------------------------------------------------



                               appendix 1



         Descriptions of Additional Changes From Current Policy

                              by function

                              ----------                              

    The discussion below provides explanations of various 
additional policy changes--those apart from the priority policy 
reforms--that complete the assumptions underlying this budget. 
The actual policy changes are the discretion of the authorizing 
and appropriating committees with jurisdiction over these 
programs. These proposals, however, reflect the recommendations 
and assumptions of the Committee on the Budget.

                     Function 050: National Defense

    Sell Commodities From the National Defense Stockpile. The 
Department of Defense has identified large amounts of materials 
in the National Defense Stockpile as obsolescent and excess to 
anticipated national defense requirements. This proposal would 
sell selected items from the stockpile in quantities that would 
have minimal or no impact on domestic producers and users. 
Proceeds from the sales would be directed to the Treasury for 
purposes of deficit reduction. Commodities to be sold include 
cobalt, aluminum, columbium, germanium, palladium, platinum, 
and rubber.

                         FUNCTION 050: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Sell commodities from the national defense                                                                      
 stockpile:                                                                                                     
    Budget authority......................  \1\ -150       -79       -79       -79       -80      -166      -166
    Outlays...............................  \1\ -150       -79       -79       -79       -80      -166      -166
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                  Function 150: International Affairs

    Cease Supporting the International Development Association 
[IDA] and Other ``Soft-Loan'' Windows of the Various 
Multilateral Banks. IDA, an affiliate of the World Bank, is 
supposed to make low-interest loans--known as soft loans--to 
the world's poorest nations. Recently, the two largest 
recipients of IDA funds have been the People's Republic of 
China and India.
    In 1946, the Truman administration resolved that 
concessionary loans to foreign governments had no place among 
the techniques of American statecraft. Soft loans vitiate the 
need for hard choices. There is little evidence they have 
special merit in promoting development. Rather, they have 
become a magnet for those proposals that were least justified 
and most likely to waste money. Indeed, soft loans tend to 
promote and maintain economically unsound policies that deter 
private capital investments. If a project is economically 
sound, it should be just as workable under ordinary (near-
market) World Bank lending.
    Opponents of this proposal will argue that underdeveloped 
countries are too poor to save or attract capital. But 
currently developed countries--like the United States--were 
once poor. Where did their capital come from? The real problem 
involves incentives and proper use. Domestic capital can be 
augmented by foreign capital if the economic conditions are 
right. Many low-income countries cannot attract foreign 
capital; in many of these, locally owned capital is invested 
abroad, and for the same reason--there is not a favorable 
economic environment. Under this proposal the United States 
would not replenish IDA funds or the other ``soft'' lending 
programs after 1997. The budget resolution notes that World 
Bank loans increase the fungible funds available to China, 
India, Pakistan, and other countries intent on spending their 
own taxpayers' funds on aggressive nuclear weapons programs.

    Recognize That the Capital Replenishments for Several 
Multilateral Lending Institutions Will Soon Be Completed. The 
International Bank for Reconstruction and Development [IBRD] 
finances development projects in less-developed countries. 
According to the President's budget, full funding of capital 
subscriptions for the U.S. share of a $74.8 billion general 
capital increase was provided by 1989-1996 appropriations. 
Likewise, the outstanding commitments for the International 
Finance Corporation [IFC], the North American Development Bank 
and the Enterprise for the Americas Multilateral Investment 
Fund [MIF] will soon be completed. The banks would continue to 
operate from their reflows, as officials with the European Bank 
for Reconstruction and Development [EBRD] indicated they plan 
to do. Funds, however, are assumed for the proposed Bank for 
Economic Cooperation and Development in the Middle East. 
Finally, despite the election of a new president in August 
1995, the Budget Committee remains concerned about the 
performance of the African Development Bank.

    Accept the Administration's Long-Term Proposals for 
Peacekeeping Operations, Migration and Refugee Assistance, and 
Foreign Military Financing [FMF] Loans. The President has 
recommended reductions in each of these accounts. This proposal 
assumes the President's recommendations for FMF loans in 1997 
and for the other programs beginning in 1998.

    Privatize or Eliminate the United States Information Agency 
[USIA] Educational and Cultural Exchanges, and Significantly 
Reduce Overseas Nonmilitary Broadcasting. USIA was created in 
1953 during the cold war to explain and advocate U.S. policies. 
The USIA oversees television broadcasting services similar to 
the radio broadcasts of Voice of America. Today, USIA also 
administers educational and cultural exchange programs. Funding 
for these exchange programs grew by about 35 percent in real 
terms between 1991 and 1995.
    The recommendation recognizes that the cold war is over, 
and countries such as those in Eastern Europe and the former 
Soviet Union have ready access to world news [for example, 
CNN]. This increased communication and private travel has 
decreased the need for exchange programs. This proposal 
privatizes or eliminates funding for USIA exchange programs by 
1999. Likewise, this proposal would privatize or eliminate most 
radio broadcasts and overseas construction by fiscal year 2000. 
Overseas broadcasting played an important role during the cold 
war, but has become an expensive anachronism with the advent of 
global satellite television broadcasting. Funding is available, 
however, for Radio and TV Marti. As stated previously, it is 
assumed that USIA will be consolidated within the Department of 
State.
    The President's budget recommends a one-time increase in 
funding for USIA's salaries and expenses, broadcasting, and 
educational and cultural exchanges program. Such increases 
would be followed by subsequent reductions. It makes little 
sense to increase funding this year only to reduce it next 
year.

    Reduce Subsidies for International Exports and Investment, 
Including Public Law 480. This proposal assumes major changes 
in the Public Law 480 program. According to the Congressional 
Budget Office:

        * * * [c]hanges in the world over the past 40 years may 
        have rendered the program obsolete. * * * The market 
        development aspect of Public Law 480 is relatively 
        insignificant for two reasons: exports under titles I 
        and III are a small portion of total U.S. agricultural 
        exports, and the countries currently receiving Public 
        Law 480 commodities are unlikely to become commercial 
        customers.

The General Accounting Office was even more critical of the 
program; in a recent report they stated:

          Title I's importance to helping develop long-term 
        U.S. agricultural markets has not been demonstrated. * 
        * * [N]one of the many studies GAO reviewed was able to 
        establish a link between title I assistance and the 
        establishment of a long-term commercial market share 
        for U.S. agricultural products over the 40-year history 
        of the title I program.

This proposal assumes the termination of title III after 1997 
and phases out title I. The budget resolution assumes adequate 
funding for title II, which is used to feed starving people.
    This function also contains three international export/
investment agencies: the Export-Import Bank, the Overseas 
Private Investment Corporation [OPIC], and the U.S. Trade and 
Development Agency. The Export-Import Bank promotes U.S. 
exports by providing subsidized financing to foreign buyers of 
U.S. goods. The bank makes direct loans with below-market 
interest rates and provides guarantees of private lending 
without receiving full compensation for the contingent 
liabilities. Last year, the Committee on Appropriations stated: 
``[T]he Committee will be hard pressed to sustain 
appropriations for the Eximbank at current levels in future 
years.'' The Budget Committee encourages the Bank to continue 
to examine risk-related fees and the concept of ``graduating'' 
companies that are receiving assistance. The budget resolution 
also encourages the committees of jurisdiction to seek ways to 
privatize portions of the bank.
    OPIC is a government corporation that provides financing 
and political risk insurance to U.S. companies investing in 
developing regions. OPIC's new insurance and finance 
commitments have recently increased rapidly. The Budget 
Committee is concerned about these trends. The services OPIC 
offers would be better suited to the private sector than the 
public sector and that a transitional plan providing for 
complete privatization is warranted. Under this proposal, 
OPIC's finance commitments would be phased out. The notion of 
``graduation'' would also be applied to its insurance 
commitments. Finally, the U.S. Trade and Development Agency 
[TDA] provides grants for feasibility studies for major 
development projects in the developing world. The House 
Committee on Appropriations has encouraged TA to cooperate with 
the Congress in developing a method of recouping a portion of 
its costs from American companies that benefit from its 
financial support, thereby reducing TA's future appropriation 
requirements. The budget resolution accepts this recommendation 
and notes that TDA is moving in this direction.

                       FUNCTION 150: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Cease supporting the International                                                                              
 Development Association [IDA] and other                                                                        
 ``soft-loan'' windows of the various                                                                           
 multilateral banks:                                                                                            
    Budget authority......................       800         0      -800      -800      -800      -800      -800
    Outlays...............................     1,380         0       -66      -204      -347      -478      -594
Recognize that the capital relinquishments                                                                      
 for several multilateral lending                                                                               
 institutions will soon be complete:                                                                            
    Budget authority......................       308         3       -37       -95      -173      -256      -308
    Outlays...............................       342        45        23       -57      -150      -172      -240
Accept the administration's long-term                                                                           
 proposals for peacekeeping operations,                                                                         
 migration and refugee assistance and                                                                           
 foreign military financing loans:                                                                              
    Budget authority......................       805       -24       -54       -63       -72       -72       -72
    Outlays...............................       823        -1       -31       -47       -63       -67       -70
Privatize or eliminate the United States                                                                        
 Information Agency [USIA] education and                                                                        
 cultural exchanges, and significantly                                                                          
 reduce overseas non-military                                                                                   
 broadcasting:                                                                                                  
    Budget authority......................     1,059      -175      -303      -452      -582      -682      -712
    Outlays...............................     1,092      -122      -245      -389      -546      -659      -703
Reduce subsidies for international exports                                                                      
 and investment, including public law 480:                                                                      
    Budget authority......................     2,044         0      -161      -398      -405      -411      -418
    Outlays...............................     1,693         0       -67      -238      -351      -389      -404
----------------------------------------------------------------------------------------------------------------

          Function 250: General Science, Space, and Technology

    Allow Private Producers to Build and Operate Cogeneration 
Facilities at Federal Civilian Installations. The Department of 
Defense has entered into agreements with private power 
producers wherein the private investors provide the capital 
needed to upgrade heating and power producing facilities on 
Federal installations at no cost to the Federal Government in 
return for the right to sell excess power and heat off the 
installation commercially in the civilian market. That reduces 
the government's cost of energy and the need for the government 
to upgrade aging power and heating plants. The National 
Aeronautics and Space Administration, the Department of 
Veterans Affairs, and other civilian departments could make 
similar cost-saving arrangements if an amendment were made to 
Title VIII of the Shared Savings Amendment of the National 
Energy Conservation Policy Act of 1978. That title currently 
prohibits this activity at civilian agencies.

                          Function 270: Energy

    Accept the Administration's Funding Levels for the Rural 
Utilities Service. There are potential long-term financial 
problems at the electric and telecommunications portion of the 
Rural Utilities Service [RUS], formerly the Rural 
Electrification Administration. The agency's financial 
statements for the year ended September 30, 1994 stated:

          Economic weakness in the rural electric and telephone 
        market segments, and the effect on REA borrowers of 
        adverse market conditions, may result in certain 
        borrowers experiencing difficulties in meeting their 
        obligations to REA. As a consequence, REA may require 
        additional provisions for loan losses in the future.

    The President has recommended reductions in these programs. 
Given the uncertainty of the RUS's financial needs, the budget 
resolution assumes the President's recommendations.

    Extend Nuclear Regulatory Commission [NRC] Fees. This 
proposal, which was contained in the Balanced Budget Act that 
the President vetoed, would extend the Nuclear Regulatory 
Commission's [NRC] authority to charge fees to offset 100 
percent of its appropriation. Under current law, after 1998, 
the NRC would only be authorized to set fees equal to 33 
percent of the budget.

    Lease Excess Capacity in the Strategic Petroleum Reserve. 
The Balanced Budget Act authorized the Secretary to lease 
unused capacity within the Strategic Petroleum Reserve. The 
Budget Committee again reiterates its support for this 
provision.

                       FUNCTION 270: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Accept the Administration's Fund Levels                                                                         
 for Rural Utilities Service:                                                                                   
    Budget authority......................       125       -54       -57       -61       -64       -61       -55
    Outlays...............................       122        -5       -16       -31       -46       -56       -59
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 270: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Extend Nuclear Regulatory Commission [NRC]                                                                      
 fees:                                                                                                          
    Budget authority......................  \1\ -462         0         0      -306      -306      -306      -306
    Outlays...............................  \1\ -462         0         0      -306      -306      -306      -306
Lease excess capacity in the Strategic                                                                          
 Petroleum Reserve:                                                                                             
    Budget authority......................         0         0        -1        -3        -7       -11       -17
    Outlays...............................         0         0        -1        -3        -7       -11       -17
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

            Function 300: Natural Resources and Environment

    Eliminate Unneeded Bureaucracy in the Department of the 
Interior. This proposal recommends significant changes in the 
Office of the Secretary and construction management. It assumes 
that the layer of management associated with the Assistant 
Secretaries will be eliminated. It calls for significant 
reductions in the Office of the Secretary and a 10-percent 
reduction in construction management. The budget resolution 
recommends that all travel budgets should be closely examined 
and that positions involving congressional liaison and public 
affairs be reduced. The budget resolution also recommends a 15-
percent reduction in the Office of the Solicitor.
    The administration's lack of commitment to consolidating 
the management of adjacent Federal lands is disappointing. In 
1993, the Vice President's National Performance Review 
criticized the existence of ``uncoordinated land actions.'' 
Lands managed by the Department of the Interior and the 
Department of Agriculture often lie ``side by side.'' It noted:

          This dispersed ownership pattern prevents efficient 
        operations and results in fragmented assistance to 
        customers. In many cases, the land administered by the 
        two agencies share the same users, resources, and 
        management problems. The agencies maintain two separate 
        staffs in more than 70 communities, resulting in 
        inefficient use of Federal resources and overall 
        confusion to land users.

    Last year, the General Accounting Office indicated that:

        * * * efficiencies could be derived through a 
        collaborative Federal approach to land management. * * 
        * Savings could be achieved from closing or combining 
        offices and duties with corresponding reductions in 
        overhead and staff. While estimated cost savings would 
        depend on the specific restructuring plan, the 
        potential savings from the elimination of duplication 
        and increased efficiencies is a compelling reason to 
        consider consolidation.

The budget resolution recommends that the House Committee on 
Resources examine the efficiencies that could be achieved 
through consolidation.
    Last year, the budget resolution noted that the Department 
of Interior is the accumulation of 200 years of public land 
history. Many features of the Department no longer make sense. 
This is still true. Like the House Committee on Appropriations, 
the budget resolution recognizes ``the growing concern that 
some of [the BLM] lands can and should be administered 
differently'' and endorses the development of new and 
innovative management techniques that are being considered. But 
the development of management techniques should be reviewed 
before any specific recommendations are made.
    Finally, a consistent theme of this budget resolution is 
that power, influence, and money should be shifted out of 
Washington and closer to the people who use government 
services. This is particularly true for the Department of the 
Interior. The vast majority of the services and functions of 
the Department are located far from the District of Columbia. 
The U.S. Government, for example, owns fully one-third of the 
Nation's land mass, most of that west of the Mississippi.
    There is no reason why, in an age of advanced 
telecommunications, the bureaucracy that administers these 
programs must be located in Washington. Faxes and 
teleconferencing have already become the most common means of 
communications between Washington and the various field 
offices.
    In an attempt to better serve the users of government 
services, the budget resolution recommends that the committee 
of jurisdiction investigate moving the primary operations of 
the Department of the Interior closer to the users of those 
services. The budget resolution assumes this move will 
ultimately improve the efficiency of the Department and save 
taxpayers substantial money over time, while increasing the 
level and quality of service to those most directly affected by 
their decisions.

    Encourage Land Swaps Instead of New Purchases. The budget 
resolution encourages greater use of land swaps when it is 
environmentally appropriate. Most Federal lands are managed by 
the National Park Service, the Forest Service, or the Bureau of 
Land Management. The General Accounting Office recently 
reported that the Federal Government has increased its land 
ownership significantly in the lower 48 States over the last 30 
years. Partly as a result of this, those agencies are finding 
it difficult to maintain and finance operations on their 
existing landholding. Land management agencies should improve 
their stewardship of lands they already own before facing added 
management responsibilities. The budget resolution recognizes, 
however, that emergency and hardship cases do arise annually 
and funds are assumed for this purpose.

    Prioritize Conservation Operations Within the Department of 
Agriculture. Conservation programs are conducted through a 
number of accounts in the Department of Agriculture. Three 
accounts, however, were subsumed in the new mandatory EQUIP 
program--the Agricultural Conservation Program, the Colorado 
River Basin Salinity Control Program, and the Great Plains 
Conservation Program. Within the Natural Resources Conservation 
Service, technical assistance is provided for conservation 
operations through 2,955 conservation districts to land users. 
In addition, the Department of Agriculture cooperates with 
other Federal, State, and local agencies to develop coordinated 
water and land resources programs and in conducting surveys and 
investigations of watersheds. This proposal would terminate the 
watershed surveys and planning program. The President's long-
term funding recommendations significantly reduce funding for 
conservation operations and resource conservation and 
development. This proposal reduces resource conservation and 
development by no more than 10-percent. The budget resolution, 
however, generally accepts the administration's reductions for 
conservation operations. Finally, because the Department is no 
longer engaged in large public works projects, the resolution 
assumes a 50-percent reduction in watershed and flood 
prevention operations.

    Target Funding for Facilities Construction on Projects 
Needed to Protect Life or Safety or Critical or Historic 
Resources. Construction funding in the Departments of 
Agriculture and the Interior has two budgetary effects. The 
first involves the initial cost of the project; the second 
involves the long-term maintenance of any new facility. In the 
case of a new visitor center, for example, new construction 
sometimes increases operational costs if the new facility must 
be staffed. The budget resolution assumes that all new 
construction of facilities would be limited to projects 
required to protect life or safety or the protection of 
critical or historical resources.

    Restructure the Department of the Interior's Minerals-
Related Agencies. For fiscal year 1996, the Congress provided 
$64 million for ``the orderly closure of the Bureau of Mines.'' 
This proposal assumes that no additional funds are required to 
close the Bureau. It also calls for the discontinuation of 
helium production, and assumes that reforms will be enacted 
concerning the collection of royalties associated with mining 
on public lands. It also assumes that the ``royalty fairness'' 
proposal in the Balanced Budget Act will be enacted. This 
proposal would devolve royalty collections, inspections, and 
enforcement to the States. The initiative was first proposed in 
the Vice President's National Performance Review [NPR]. In 
addition to creating a more efficient collection process, this 
proposal will decrease the costs to administer the Minerals 
Management Service [MMS]. The President has proposed a 
reduction in his budget for the MMS, which the budget 
resolution assumes. The President has also proposed reductions 
for regulation and technology and the abandoned mine 
reclamation fund, which the budget resolution generally 
accepts. The U.S. Geological Survey conducts research and 
provides basic scientific information concerning natural 
hazards and environmental issues. Concerning the National 
Mapping Division [NMD], the budget resolution again calls for 
the NMD to aggressively price its products, contract out 
services, and consolidate overlapping mapping efforts. 
Concerning the Water Resources Division [WRD], which performs 
water resources investigations under both Federal programs and 
Federal/State cooperative programs, the budget resolution 
continues to believe that the cooperative program provides 
broader benefits to the taxpayer. Since cost sharing is 
involved, State and local governments must be convinced of the 
need for a particular study. The President has proposed much 
greater reductions in this account starting in fiscal year 
1998.

    Reform the Various Land Management Agencies.

  - Bureau of Land Management. The Bureau of Land Management 
        [BLM] is responsible for carrying out a variety of 
        programs for the conservation, management, development, 
        and protection of both surface and subsurface mineral 
        resources on approximately 270 million acres of public 
        lands in 28 States. This land makes up 13 percent of 
        the total land surface of the United States. The BLM 
        also administers mineral leasing and supervises mineral 
        operations on an additional 300 million acres of 
        Federal mineral estate underlying other Federal, State, 
        and private lands. The President has recommended a 
        reduction in funding for the Automated Land & Mineral 
        Records System [ALMRS]; the budget resolution assumes 
        this recommendation. The budget resolution suggests 
        that the agency undertake steps to reduce its 
        bureauwide fixed costs and administrative support.

  - U.S. Forest Service. The Forest Service manages 156 
        national forests, 20 national grasslands, and 9 land 
        utilization projects located in 44 States, Puerto Rico, 
        and the Virgin Islands. The Service must improve the 
        efficiency of forest management. Studies have shown 
        that State-managed forests adjacent to federally 
        managed forests are managed at a profit, while Federal 
        forests are not. This occurs because the Federal 
        Government's costs exceed those of the States. The 
        Budget Committee has requested a complete and detailed 
        analysis of the Forest Service's revenues and costs by 
        the General Accounting Office [GAO]. This investigation 
        will also examine options for managing the program in a 
        more cost-effective manner. In addition, the budget 
        resolution recommends that all funding for trails be 
        eliminated and urges that the authorizing committees 
        evaluate mechanisms to inject market-based 
        decisionmaking into public land management in the area 
        of multiple use activities, including the timber road 
        programs. In the area of multiple use and recreation 
        use, the budget resolution recommends to the 
        authorizing committees that direct involvement by user 
        groups in management activities could achieve cost 
        reductions while maintaining all existing environmental 
        and natural resource protection standards. Pilot 
        programs could be created to test market-based 
        approaches for such activities. Finally, the President 
        has proposed reductions for both forest research and 
        State and private forestry. This proposal assumes those 
        recommendations.

    Reform the Bureau of Reclamation [BOR]. The BOR is the 
largest supplier and manager of water in the 17 Western States, 
delivering approximately 30-million-acre feet of water annually 
to 28 million people for agricultural, municipal, industrial, 
and domestic uses. The BOR is also the sixth largest producer 
of electric power in the Western States, generating over half-
a-billion dollars in annual power revenues. Its multipurpose 
projects also provide flood control, recreation, and fish and 
wildlife benefits. The Vice President's 1993 National 
Performance Review [NPR] indicated the BOR:

        * * * should develop legislation to sell or transfer 
        title of all distribution and drainage facilities to 
        State or local water organizational entities (such as 
        irrigation districts).

The budget resolution agrees with this proposal, but questions 
why the administration has not implemented it aggressively. The 
Budget Committee is also concerned about the BOR's lack of 
efficiency. The NPR stated:

          The original mission of the Bureau of Reclamation 
        [BOR], to develop water resources and provide for 
        economic development in the West, is almost complete. 
        BOR has completed currently planned capital 
        construction on all major water projects except the 
        central Arizona and Utah projects. It is anticipated 
        that all ongoing construction projects will be 
        completed in the next 5 to 8 years.

    It appears that this is not the case. The budget resolution 
encourages the Committee on Resources to investigate this 
problem. The President has proposed small changes for the BOR's 
construction, loan program account, upper Colorado River Basin 
fund, operations and maintenance, general administrative 
expenses, Central Valley project restoration fund, the Central 
Utah project completion account, and the Utah reclamation 
mitigation and conservation account. The budget resolution 
generally assumes these recommendations. The resolution 
recognizes, however, that the House and Senate Committees on 
Appropriations will ultimately allocate these funds between 
projects.

    Refocus the National Oceanic and Atmospheric Administration 
[NOAA] on Its Core Mission as Part of Terminating the 
Department of Commerce. NOAA, which is in the Department of 
Commerce, consists of the National Ocean Service; the National 
Marine Fisheries Service; the Office of Oceanic and Atmospheric 
Research; the National Weather Service; and the National 
Environmental Satellite, Data, and Information Service.
    In this Function, NOAA also has a construction account that 
funds the construction of new facilities and repairs, 
modifications, and additions to existing facilities. [NOAA also 
has an account for fleet modernization, shipbuilding, and 
conversion in Function 370.] Funding for NOAA continues to 
include congressional add-ons, grant programs for selected 
States and regions, industry assistance, and inefficient 
weather service operations.
    A $55 million reduction from the fiscal year 1996 funding 
level can be achieved by limiting NOAA activities, services, 
and research to its relevant, tightly focused constitutional 
missions of public safety, basic research, and commercial 
regulation. Programs not critical to these missions should be 
terminated including: the National Undersea Research Program 
[NURP]; the VENTS (volcanic ocean heating) program; Global 
Learning and Observation to Benefit the Environment [GLOBE]; 
Southeastern U.S./Caribbean Fisheries Oceanographic Coordinated 
Investigations [FOCI]; National Coastal R&D Research Institute; 
specialized weather specific constituent groups such as 
agriculture which can be privatized; Chesapeake Bay buoys; the 
374 FTE NOAA Corps by the end of fiscal year 1997; unjustified 
or unnecessary State and industry fisheries management 
assistance; and various construction and maintenance projects. 
Priority funding support is given to Weather Service 
modernization and NOAA's basic research programs (climate and 
air quality research at the current level, marine prediction 
research at the President's request, and increases in actual 
sea grant research and the coastal ocean program).
    In light of the enormous growth of coastal populations, the 
committee acknowledges the continued importance of the Coastal 
Zone Management Act in helping States plan for development in 
coastal areas and to reduce conflicts among competing uses of 
the coastal zone. Consequently, the committee assumes funding 
for Coastal Zone Management Act activities consistent with H.R. 
1965, the Coastal Zone Management Reauthorization Act of 1996, 
which recently passed the House by a vote of 407-0.

    Reform the Corps of Engineers. The Corps of Engineers 
currently performs nine missions related to civil works. This 
proposal recognizes the fact that a continued Federal role in 
several of the functions related to these missions may no 
longer be justified, and the termination, transfer, 
privatization, or streamlining of certain functions may be 
necessary.

    Fund EPA Research on Risk-Based Regulation. The EPA Science 
and Technology account should support and justify EPA's 
regulatory mission and decisions with good, objective science 
and best estimated risk; programs not relevent to that mission 
should be terminated, including the Environmental Technologies 
Initiative (corporate welfare), climate change research (not 
regulatory) and indoor air research (an OSHA responsibility).

    Open a Small Portion of the Coastal Plain of ANWR for 
Exploration. This proposal assumes that a small portion of the 
Arctic National Wildlife Refuge [ANWR] in Alaska will be leased 
for oil and gas exploration, development, and production. ANWR 
is the most prospective oil and gas province in North America, 
and is adjacent to the hugely successful Prudhoe Bay field, 
currently supplying 20 percent of domestic oil. Leasing is 
overwhelmingly supported by residents of the State of Alaska 
and the Native people who live in the area proposed for 
leasing. Leasing could provide enormous revenues to the 
Treasury, jobs to the U.S. economy, and a valuable domestic 
energy resource to offset the current transfer of wealth to 
other nations.
    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. This is the Function 300 component of this 
provision, which is principally contained in Function 600. This 
portion applies to NOAA retiree COLA's.

    Reduce Department of Interior Overhead. This proposal calls 
for efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the Department. Reductions have not been assumed 
in those costs that are closely related to the Department's 
central function. The budget resolution recommends that the 
Department head should decide on how to distribute these 
assumed savings among the categories identified above, as well 
as other overhead costs.

    Prepay the Central Utah Water Conservancy District 
Contracts. The Balanced Budget Act amended the existing 
authority of the Secretary to accept prepayment from the 
Central Utah Water Conservancy District. This provision 
reiterates support for that proposal.

                       FUNCTION 300: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate unneeded bureaucracy in the                                                                           
 Department of the Interior:                                                                                    
    Budget authority......................        90       -33       -33       -33       -33       -33       -33
    Outlays...............................        95       -30       -33       -33       -33       -33       -33
Encourage land swaps instead of new                                                                             
 purchases:                                                                                                     
    Budget authority......................       137       -77       -77       -77       -77       -77       -77
    Outlays...............................       183       -17       -50       -71       -76       -76       -76
Prioritize conservation operations within                                                                       
 the Department of Agriculture:                                                                                 
    Budget authority......................       848      -139      -157      -201      -246      -246      -246
    Outlays...............................       995       -80      -138      -199      -239      -243      -243
Target funding of facilities construction                                                                       
 on projects needed to protect life or                                                                          
 safety or crucial historic resources:                                                                          
    Budget authority......................       352      -121      -121      -121      -121      -121      -121
    Outlays...............................       507       -36       -67       -96      -110      -121      -121
Reform the Department of the Interior's                                                                         
 Minerals-Related Agencies:                                                                                     
    Budget authority......................     1,234       -84      -108      -146      -185      -185      -185
    Outlays...............................     1,259       -72       -97      -124      -157      -174      -179
Reform the various land management                                                                              
 agencies:                                                                                                      
    Budget authority......................     1,082       -56       -66       -77       -95       -95       -95
    Outlays...............................     1,145       -43       -60       -74       -89       -95       -95
Reform the Bureau of Reclamation:                                                                               
    Budget authority......................       722       -20       -51      -109      -166      -166      -166
    Outlays...............................       748       -18       -46       -96      -153      -164      -166
Refocus the National Oceanic and                                                                                
 Atmospheric Administration [NOAA] on its                                                                       
 core mission as part of terminating the                                                                        
 Department of Commerce:                                                                                        
    Budget authority......................     1,917       -75      -146      -201      -251      -251      -251
    Outlays...............................     1,921       -38       -98      -168      -222      -242      -248
Reform the Corps Engineers:                                                                                     
    Budget authority......................     2,956       -24      -154      -347      -554      -554      -554
    Outlays...............................     3,161         7      -127      -293      -490      -550      -554
Fund EPA's research on risk-based                                                                               
 regulation:                                                                                                    
    Budget authority......................       525       -38       -38       -38       -38       -38       -38
    Outlays...............................       263       -19       -34       -38       -38       -38       -38
Reduce the Department of Interior                                                                               
 overhead:                                                                                                      
    Budget authority......................        NA      -279      -279      -335      -335      -419      -558
    Outlays...............................        NA      -237      -279      -327      -335      -406      -537
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 300: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reform the department of the interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority.....................  \1\ -1,43                                                            
                                                   8        -7        -7       -41       -41       -39       -38
    Outlays..............................  \1\ -1,48                                                            
                                                   2        -7       -12       -46       -48       -47       -47
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority.....................  \1\ -1,05                                                            
                                                   8         0    -1,150        -1      -800        -1        -1
    Outlays..............................  \1\ -1,05                                                            
                                                   8         0    -1,150        -1      -800        -1        -1
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority.....................          0         0         5         5         5         5         5
    Outlays..............................          0         0         0         2         4         5         5
Maintain current payment date of civilian                                                                       
 retiree cost-of-living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority.....................      1,867     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
    Outlays..............................      1,851     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
Prepayment of central Utah water                                                                                
 conservancy district contracts:                                                                                
    Budget authority.....................          2       -72      -134        13        13       -26        13
    Outlays..............................          4       -72      -134        13        13       -26        13
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow into the Federal Government.                                           
\2\ Less than $1 million.                                                                                       

                       Function 350: Agriculture

    Reform the Foreign Agricultural Service. The Foreign 
Agricultural Service maintains attaches at 63 foreign posts to 
assist overseas development of markets for U.S. farm 
commodities. Annually, the Service files about 5,000 reports. 
This proposal calls for a 30-percent reduction in such attaches 
and a 10-percent reduction in all other activities, except the 
general sales manager.

    Reduce Unnecessary Bureaucracy in the Department of 
Agriculture. This proposal reduces funding to administer the 
Department of Agriculture. It would eliminate all funds for the 
InfoShare program, which has been abandoned by the Office of 
the Secretary. It would fund the Chief Economist at the fiscal 
year 1995 level; it would reduce funding for the National 
Appeals Division and budget and program analysis. Funding for 
the Chief Financial Officer and Departmental Administration 
would be reduced, and all funding for the strategic space plan 
would be eliminated. The Office of Public Affairs would be 
reduced by 80 percent; the Economic Research Service would be 
reduced by 50 percent; the National Agricultural Statistics 
Service would be reduced by 20 percent. Finally, reductions are 
assumed in the Office of the General Counsel.

    Refocus Federal Support for Agricultural Research and 
Extensions. The Department of Agriculture conducts and supports 
agricultural research and education. According to the 
Congressional Budget Office, research undertaken by the 
Agricultural Research Service [ARS] may be replacing funding 
from the private sector. A subsequent analysis by the General 
Accounting Office [GAO] has indicated that a significant 
portion of the budget supports either applied or low priority 
research areas. Requiring the government to refocus this 
research would permit the private sector to finance more of its 
own research. The Budget Committee is also concerned about the 
number of the Department's laboratories. According to the GAO:

        * * * 17 Federal departments and independent agencies 
        identified 515 Federal R&D laboratories that spent a 
        total of $26.6 billion of an estimated $69.4 billion 
        that Federal agencies obligated for R&D in fiscal year 
        1995. * * * In addition, 65 Federal R&D laboratories 
        have a total of 221 satellite facilities. Overall, the 
        Department of Agriculture's 185 R&D laboratories were 
        the most reported by an agency. However, these 
        laboratories were among the smallest in size, with a 
        median operating budget of $2.1 million in fiscal year 
        1995.

    Within the Cooperative State Research, Education, and 
Extension Service [CSREES], this proposal would eliminate all 
special research grants, thereby requiring all grants to be 
awarded competitively. For CSREES Building and Facilities, 
funding would be terminated after fiscal year 1997, as 
discussed in the conference report that accompanied H.R. 1976. 
Finally, this proposal calls for major reforms in the Extension 
Service. No cuts, however, are assumed for the 4-H program.

    Reform Farmers Home Administration. The Farmers Home 
Administration lends money directly to new farmers or farmers 
with limited means who cannot obtain loans elsewhere for 
purchasing land or materials to operate a farm. Nearly 70 
percent of the money spent on direct loans, however, is for 
loans to so-called limited resource borrowers. According to a 
GAO report from 1995, about 47 percent of the direct loan 
program is held by delinquent borrowers; about 4 percent of the 
guaranteed loan program is held by delinquent borrowers. As 
such, the GAO concluded that ``[g]uaranteed loans have 
performed better than direct loans.'' This proposal would 
convert all direct loans to loan guarantees through the private 
sector and reduce personnel costs consistent with this 
conversion. In addition, there is the issue of graduation. 
According to the Congressional Budget Office, Congress and the 
FmHA:

        * * * intended direct loans to be available only 
        temporarily--until those farmers could improve their 
        operations and qualify for commercial credit. But 
        evidence reported by the General Accounting Office 
        suggests that the ``graduation rate'' of current 
        borrowers from direct to graduated loans is low, in 
        part because incentives are lacking to encourage 
        borrowers of FmHA money to shift from below-cost to 
        guaranteed loans.

    Downsize the Farm Service Agency. The Farm Service Agency 
currently administers the various production programs conducted 
by the Department of Agriculture, including the system of 
commodity supply and price controls, acreage allotments, 
production quotas, restrictions on imports, and export 
subsidies. The new direction in farm programs envisioned by the 
Freedom to Farm Act will give farmers the freedom to plant in 
response to market demand, not government programs or what 
government bureaucrats think farmers ought to be planting. 
According to the General Accounting Office [GAO], the adoption 
of the Freedom to Farm provisions could reduce the Department's 
staffing requirements by more than 1,600 staff years between 
fiscal year 1997 and fiscal year 2002, because fewer people 
would be required to ``manage'' the programs. These changes are 
in addition to efforts that are currently under way in the 
Department to reorganize and streamline their administrative 
and delivery functions. The President has recommended 
significant reductions in this account for future years. The 
budget resolution assumes those funding levels.
    Finally, a consistent theme of this budget resolution is 
that power, influence, and money should be shifted out of 
Washington and closer to the people who use government 
services. This is particularly true for the Department of 
Agriculture. The vast majority of the services and functions of 
these departments are located far from the District of 
Columbia.
    There is no reason why, in an age of advanced 
telecommunications the bureaucracy that administers these 
programs must be located in Washington. Faxes and 
teleconferencing have already become the most common means of 
communications between Washington and the various field 
offices.
    In an attempt to better serve the users of government 
services, the budget resolution recommends that the committee 
of jurisdiction investigate moving the primary operations of 
the Department of Agriculture closer to the users of those 
services.
    In order to serve farmers more efficiently and effectively, 
the Farm Service Agency [FSA] and the Natural Resources 
Conservation Service [NRCS] operations in Washington should be 
relocated and headquartered in the Central United States. 
Moving farm support agencies closer to America's farms will 
enhance service to farmers and further promote efforts to 
conserve, improve, and sustain natural resources on private 
lands within the United States. Melding the headquarters of FSA 
and NRCS into preexisting Commodity Credit Corporation [CCC] 
locations in the Heartland will facilitate further 
consolidations of personnel and will provide for long-term 
budget savings. This will allow USDA to consolidate Washington, 
DC, personnel to existing permanent USDA office space.

    Terminate Low-Priority Programs in the Department of 
Agriculture. The Department of Agriculture provides annual 
funding for State mediation grants, outreach for socially 
disadvantaged farmers, and compensation for construction 
defects [Function 370]. State mediation grants are made to 
States that have been certified by the Farm Service Agency. 
Concerning compensation for construction defects, the Secretary 
of Agriculture is currently authorized to pay claims to owners 
arising from defects on newly constructed dwellings purchased 
with Rural Housing Service financial assistance. Given the size 
of the Federal deficit and the need to balance the budget, it 
is essential that Congress reduce or eliminate low-priority 
programs.

    Reduce the Department of Agriculture Overhead. This 
proposal calls for efficiency savings in indirect overhead 
expenses, such as spending on travel and transportation of 
persons and things; shipping; printing and reproduction; and 
operation and maintenance of facilities. These savings will 
result from improved performance, not from any changes to the 
programmatic activities of the Department. Reductions have not 
been assumed in those costs that are closely related to the 
Department's central function. The budget resolution recommends 
that the Department head should decide on how to distribute 
these assumed savings among the categories identified above, as 
well as other overhead costs.

                       FUNCTION 350: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reform the Foreign Agricultural Service:                                                                        
    Budget authority......................       116       -20       -20       -20       -20       -20       -20
    Outlays...............................       119       -13       -18       -20       -20       -20       -20
Reduce unnecessary bureaucracy in the                                                                           
 Department of Agriculture:                                                                                     
    Budget authority......................       442      -116      -126      -129      -129      -129      -129
    Outlays...............................       434       -76      -120      -128      -129      -129      -129
Refocus Federal support for Agricultural                                                                        
 Research and Extensions:                                                                                       
    Budget authority......................     1,618      -215      -273      -273      -273      -273      -273
    Outlays...............................     1,637      -136      -204      -232      -247      -261      -273
Reform the Farmers Home Administration:                                                                         
    Budget authority......................       399       -38       -67       -97      -127      -127      -127
    Outlays...............................       392       -27       -53       -83      -113      -116      -116
Downsize the Farm Service Agency:                                                                               
    Budget authority......................       795         0         0       -46      -121      -121      -121
    Outlays...............................       815         0         0       -43      -117      -121      -121
Terminate low priority programs in the                                                                          
 Department of Agriculture:                                                                                     
    Budget authority......................         3        -3        -3        -3        -3        -3        -3
    Outlays...............................         5        -3        -3        -3        -3        -3        -3
Reduce the Department of Agriculture                                                                            
 overhead:                                                                                                      
    Budget authority......................        NA      -579      -579      -695      -695      -868    -1,158
    Outlays...............................        NA      -492      -579      -677      -695      -842    -1,114
----------------------------------------------------------------------------------------------------------------

               Function 370: Commerce and Housing Credit

    Provide Funding for the Decennial Census. This provision 
allocates the funds necessary to conduct the 2000 Decennial 
Census.

    Shift to the Postal Service the Cost of Transition Payments 
for Workman's Compensation Benefits Paid to Pre-1971 Postal 
Employees. Currently, the Treasury reimburses the Postal 
Service for workman's compensation benefits paid to employees 
of the old U.S. Post Office Department. This proposal would 
shift the cost of those benefits to the Postal Service, where 
they appropriately belong. The proposal was included in the BBA 
and in the President's 1997 budget submission. [Note: In the 
table below, this proposal is reflected in two components.]

    Terminate Fleet Modernization. Rather than building and 
buying new government ships or maintaining existing vessels at 
great cost, the budget resolution assumes that the National 
Oceanic and Atmospheric Administration [NOAA] should sell its 
assets and contract out for the use of vessels to conduct its 
oceanographic research and fisheries management missions. This 
makes a uniformed NOAA Corps unnecessary. Other provisions 
applying to NOAA are described in Function 300.

    Encourage Private Financing of Small Business Development 
Centers. Small Business Development Centers are intended to 
provide management counseling and training to existing and 
prospective small business owners. Current Federal funding 
accounts for 25 to 50 percent of SBDC funding. By contracting 
out, tying funding to locally funded economic development 
programs, leveraging all available resources, and charging the 
clients a small fee, SBDC's can thrive without Federal 
assistance. This proposal would eliminate the Federal share of 
the program, but allow State and private capital to fund 
existing SBDC's.

    Make Multifamily Mortgage Insurance Program Self-Financing. 
Costs of the program should be entirely financed through 
premium income derived from extending the mortgage insurance as 
is the FHA Single Family Mortgage Insurance Program.

    Reform FHA Multifamily Property Disposition. The Federal 
Government can achieve savings by reforming the rules under 
which HUD may sell the property that has come into its 
possession through mortgage default.
    At present, a foreclosed property may stay in the FHA 
inventory for years. During the time it is vacant, the property 
may be vandalized, or used for drug dealing or other criminal 
activities, or it may otherwise contribute to the degradation 
of urban neighborhoods. By giving the FHA more authority and 
flexibility in the way they dispose of these properties, the 
Federal Government can achieve budget savings and protect 
surrounding neighborhoods from deleterious effects generated by 
longstanding vacant houses.

    Consolidate Federal Regulation of Business and Eliminate 
the Federal Trade Commission. The Federal Trade Commission is 
an independent agency that regulates business practices that 
affect competition and consumer information. Its functions may 
be duplicative and may be carried out by other Federal 
agencies. This proposal is intended to reduce overhead. Nothing 
in this proposal is intended to diminish Federal oversight of 
antitrust or consumer protection issues.

    Reform the Federal Housing Administration Assignment 
Program. The budget resolution recommends implementing a reform 
of the FHA Assignment Program to allow the FHA the flexibility 
to pay partial mortgage insurance claims, preventing properties 
from coming into the FHA inventory as the borrower resumes 
mortgage payments to the lender.

    Accept the Administration's Recommendation on the General 
and Special Risk Program Account. The administration projects 
greater activity in the program account for FHA mortgage 
insurance and certain administrative cost reductions. The 
budget resolution accepts these projections and reforms.

    Accept the Administration's Recommendation on the Mutual 
Mortgage Insurance Accounts. The administration recommends 
different projects for activity in the mutual mortgage 
insurance accounts and provides for some administrative 
savings. The budget resolution accepts these recommendations.

    Reform Deposit Insurance to Provide for the Long-Term 
Stability of the Savings Association Insurance Fund. The budget 
resolution recommends a one-time assessment on savings 
associations to provide for the capitalization of the Savings 
Association Insurance Fund. In addition, to provide for the 
long-term stability of financial institutions and deposit 
insurance funds, the resolution recommends the adoption of 
reforms associated with spreading the obligations associated 
with bonds issued by the Finance Corporation to all 
institutions insured by the Federal Deposit Insurance 
Corporation.

    Create a Rural Development Block Grant. This line reflects 
the savings in Function 370 from the block grant, most of which 
is contained in Function 450. This function, however, contains 
the Rural Housing Insurance Fund. The budget resolution assumes 
the reduction for salaries and expenses, as recommended by the 
President, and the elimination of certain direct loan 
subsidies.

    Terminate Low-Priority Programs in the Department of 
Agriculture. This is the Function 370 component of this 
proposal, which is fully described under Function 350. The 
Secretary of Agriculture is currently authorized to pay claims 
to owners arising from defects on newly constructed dwellings 
purchased with Rural Housing Service financial assistance. 
Given the size of the Federal deficit and the need to balance 
the budget, it is essential that Congress reduce or eliminate 
low-priority programs.

    Reduce Department of Housing and Urban Development and 
Small Business Administration Overhead. This proposal calls for 
efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the agencies. Reductions have not been assumed in 
those costs that are closely related to the agencies' central 
function. The budget resolution recommends that each agency's 
head should decide on how to distribute these assumed savings 
among the categories identified above, as well as other 
overhead costs.

                       FUNCTION 370: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Provide funding for Decennial Census:                                                                           
    Budget authority.....................        150        99       208       658     1,979        99        99
    Outlays..............................        144        80       184       562     1,701       493        98
Terminate fleet modernization:                                                                                  
    Budget authority.....................          8        -8        -8        -8        -8        -8        -8
    Outlays..............................         33        -1        -3        -5        -6        -7        -8
Encourage private financing of Small                                                                            
 Business Development Centers:                                                                                  
    Budget authority.....................        219       -66       -73       -73       -73       -73       -73
    Outlays..............................        238       -48       -67       -73       -73       -73       -73
Make Multifamily Mortgage Insurance                                                                             
 Program self-financing:                                                                                        
    Budget authority.....................         85       -85       -85       -85       -85       -85       -85
    Outlays..............................        101       -85       -85       -85       -85       -85       -85
Eliminate redundancies in Federal                                                                               
 regulation of businesses and eliminate                                                                         
 the Federal Trade Commission:                                                                                  
    Budget authority.....................         31       -23       -31       -31       -31       -31       -31
    Outlays..............................         34       -21       -30       -31       -31       -31       -31
Accept the administration's                                                                                     
 recommendation on the general and                                                                              
 special risk program account:                                                                                  
    Budget authority.....................        173      -130       -26       -48       -67       -71       -75
    Outlays..............................        189      -135       -21       -47       -66       -70       -74
Accept the administration's                                                                                     
 recommendation on the Mutual Mortgage                                                                          
 Insurance accounts:                                                                                            
    Budget authority.....................  \1\ -1,06                                                            
                                                   6         0       -28       -57       -87       -87       -87
    Outlays..............................  \1\ -1,06                                                            
                                                   6         0       -28       -57       -87       -87       -87
Create a Rural Development Block Grant                                                                          
 (single-family home loans and S&E):                                                                            
    Budget authority.....................        640      -166      -186      -186      -186      -186      -186
    Outlays..............................        712      -138      -181      -181      -181      -181      -181
Terminate low-priority programs in the                                                                          
 Department of Agriculture:                                                                                     
    Budget authority.....................      (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
    Outlays..............................      (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
Reduce the Department of Housing and                                                                            
 Urban Development and Small Business                                                                           
 Administration Overhead:                                                                                       
    Budget authority.....................         NA       -18       -18       -21       -21       -27       -36
    Outlays..............................         NA       -16       -18       -21       -21       -26       -34
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             
\2\ Less than $1 million.                                                                                       


                         FUNCTION 370: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Shift to the Postal Service the cost of                                                                         
 transition payments for workman's                                                                              
 compensation benefits paid to pre-1971                                                                         
 postal employees (off-budget);                                                                                 
    Budget authority.....................          0        32        31         7         0         0         0
    Outlays..............................          0        32        31         7         0         0         0
Shift to the Postal Service the cost of                                                                         
 transition payments for workman's                                                                              
 compensation benefits paid to pre-1971                                                                         
 postal employees (on-budget):                                                                                  
    Budget authority.....................         34       -32       -31       -29       -28       -26       -24
    Outlays..............................         34       -32       -31       -29       -28       -26       -24
Reform FHA multifamily property                                                                                 
 disposition:                                                                                                   
    Budget authority.....................         41       -80         0         0         0         0         0
    Outlays..............................   \1\ -197       -80         0         0         0         0         0
Reform the Federal Housing Administration                                                                       
 Assignment Program:                                                                                            
    Budget authority.....................         NA      -128      -127      -138      -157      -161      -161
    Outlays..............................   \1\ -920      -128      -127      -138      -157      -161      -161
Reform deposit insurance to provide for                                                                         
 the long-term stability of the Savings                                                                         
 Association Insurance Fund:                                                                                    
    Budget authority.....................         NA         0         0         0         0         0         0
    Outlays..............................  \1\ -3,40                                                            
                                                   0    -3,300       600       500       600       700      100 
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                      Function 400: Transportation

    Eliminate Highway Demonstration Projects. Approximately 95 
percent of highway funds are allocated to the States using 
formulas which, in conjunction with a comprehensive planning 
process outlined in ISTEA, are designed to reconcile the 
competing transportation needs of States. The remainder of the 
funds are allocated by earmarks, also known as demonstration 
projects, in which Members of Congress designate specific 
highway projects in authorizing and appropriations bills. 
Earmarking circumvents the planning process by allocating funds 
on a political, not economic basis, and ignores the process 
that seeks a balance between needs and limited resources. In 
its 1995 Transportation Policy Book, the American Association 
of State Highway and Transportation Officials [AASHTO] stated 
that ``special demonstration projects outside the normal 
authorization should be eliminated.'' According to the General 
Accounting Office:

          In addition to worsening the financial status of the 
        highway account, demonstration projects often provide 
        limited benefits. One reason is that these projects 
        frequently are not aligned with key transportation 
        priorities. For example, in 1991, we found that a 
        majority of the demonstration projects we reviewed did 
        not appear on State or regional transportation plans 
        before they were authorized. Thus, these projects did 
        not receive the same degree of scrutiny as do projects 
        undertaken through established Federal-aid highway 
        plans and programs.
          A second reason why the payoff from demonstration 
        projects is limited is that they often have problems 
        causing them to languish in an early project 
        development stage long after authorization * * *. For 
        example, one proposed highway construction project we 
        reviewed would have cut through a low-income housing 
        project undergoing renovation with Federal funds.

    Make Amtrak More Businesslike: Provide Labor Relief, Phase 
Out Operating and Capital Subsidies Between 1999 and 2002. 
Amtrak was established in 1970 as a for-profit corporation to 
take over the Nation's ailing passenger rail system. But Amtrak 
has been burdened by costly Federal laws and highly subsidized 
to insulate it from market forces.
    The cumulative cost to the taxpayer of this Amtrak 
experiment has been in excess of $17 billion. Recently, Amtrak 
has undertaken an aggressive plan for reducing expenses, 
adjusting routes, retiring its oldest cars, and setting itself 
on a more businesslike footing. Amtrak has also been 
successful, preliminarily, in negotiating to obtain subsidies 
from States where it operates routes at a loss.
    But Amtrak's ability to operate like a commercial 
enterprise remains hamstrung by excessive labor concessions. 
For example, Appendix C-2 of the Rail Passenger Service Act 
requires that Amtrak pay 6 years severance to any employee laid 
off due to a termination of a route. Because of the ``30-mile 
rule,'' an employee can invoke full severance benefits if 
Amtrak seeks to move his work location 30 miles or more. Amtrak 
is also prohibited from contracting out if contracting results 
in the termination of any employees. With relief from these 
provisions (and others), Amtrak will be in a better position to 
continue reducing costs, improving service, and become self-
financing
    This proposal calls for Amtrak to continue its plan of 
strategic downsizing and negotiating with States where it 
operates at a loss. This proposal further calls for a 
significant revision of the laws governing passenger rail labor 
protection, and phasing out Federal subsidies between 1999 and 
2002. Additionally, the proposal calls for a new temporary 
Board of Directors to be appointed by the President in 
consultation with the congressional leadership. Board members 
will be required to have expertise and professional standing in 
the areas of intercity common carrier transportation and 
corporate management.

    Complete Northeast Corridor Improvement Program in 1999. 
According to the Northeast Corridor Transportation Plan, by the 
Department of Transportation, the infrastructure will be ready 
for 3-hour Boston to New York City service on selected trains 
by 1999. This proposal would terminate funding for the 
Northeast Corridor Improvement Program in 1999 to coincide with 
this milestone.

    Reduce Funds for the Office of the Secretary of 
Transportation. This reduction could be achieved by eliminating 
funding for transportation planning, research, and development. 
This account finances systems development and those research 
activities and studies concerned with planning and analysis and 
information development. This function is duplicated in the 
modal agencies within the DOT.

    Extend Vessel Tonnage Fees. The proposal extends vessel 
tonnage charges imposed on users of U.S. ports. Recipients of 
government services such as Coast Guard harbor maintenance 
should share the cost of providing these services rather than 
the general public.

    Focus NASA's Aeronautics on Revolutionary New Concepts. In 
certain areas, such as fundamental scientific research and 
collective risk endeavors, the government does play an 
important role. This proposal assumes that certain aeronautical 
research, especially high-speed research, is an area where the 
collective risks are still high, and where agencies such as the 
National Aeronautics and Space Administration have been able to 
make great technical strides with public funds that have 
resulted in great scientific discovery and new knowledge. 
Indeed, DOD's and NASA's national security and space 
transportation mission-required efforts in aeronautical 
research have resulted in American preeminence in the aerospace 
field. Still, even in aeronautics, policies are advocated that 
encourage faster private technology development as risk becomes 
better understood and more controllable. Finding ways to 
involve industry in space activities should be a major 
priority. Finally, the budget resolution assumes that funding 
for a National Aeronautics Facility is rescinded. [Note: The 
figures above reflect the portion of this provision that occurs 
in Function 400. Another portion appears in Function 250. In 
the table below, this proposal is reflected in two components.]

    Terminate Wooden Bridge Research and Demonstration 
Projects. This program provides funding for research and 
development of bridges constructed out of wood. This proposal 
would terminate that program. This proposal was included in the 
Clinton administration's fiscal year 1997 budget.

    Eliminate Federal Corporate Subsidies for Development of 
``Intelligent Transportation Systems.'' The Intelligent Vehicle 
Highway System Act of 1991 established a Federal program to 
research, develop, and operationally test so-called 
``intelligent'' transportation systems and to promote their 
implementation. The system encompasses technologies, ranging 
from electronic toll collection to fully automated futuristic 
highways. Its Federal advisory committee to the Department of 
Transportation estimates that about $6 billion ($4.7 from 
Federal, State, and local governments) will be needed through 
2011 to complete all research and development projects and 
operational tests and develop a system architecture. This 
architecture is expected to include a massive government-owned 
and operated telecommunication infrastructure. The public 
sector is expected to contribute about 80 percent of the needed 
development funding. Implementing the system once developed is 
estimated to cost an additional $8.5 to $26 billion. In short, 
development costs are high and widespread commercial success is 
uncertain: Federal involvement would be long-term and costly.

    Deregulate Ocean Shipping and Eliminate the Federal 
Maritime Commission. The Federal Maritime Commission is charged 
with regulating a system of steamship conferences that 
establish and publish ocean transportation rates. This proposal 
would deregulate Federal maritime policy, terminate the 
Commission, and transfer critical function to the Department of 
Transportation. On May 1, 1996, the House passed H.R. 2149, the 
Ocean Shipping Reform Act. Enactment of this legislation would 
achieve the goals outlined in this proposal.

    Eliminate Maritime Corporate Subsidy Programs and Terminate 
the Maritime Administration. The Maritime Administration 
[MARAD] was established in 1950 to promote a strong U.S. 
merchant marine. MARAD emphasizes promoting maritime industries 
and ensuring seafaring manpower for peacetime and national 
emergencies. But rather than bolstering the U.S. shipping 
industry, these programs have undermined the competitiveness of 
U.S. shipping and shipbuilding.
    Today, only about 4 percent of waterborne cargoes imported 
and exported from the United States are carried on U.S. flag 
carriers. According to GAO, between 1982 and 1992 the number of 
U.S. privately owned ships decreased by 31 percent. The 
inspector general of the Department of Transportation has 
stated: ``Overall, most of MARAD's mission can readily be 
transferred or eliminated with little, if any, noticeable 
impact to the tax-paying public.''
    This proposal calls for transferring the Maritime Academy 
to the Department of Defense and requiring DOD to charge 
tuition to offset Academy costs, eliminating subsidy programs 
for operation of U.S.-flag operators, selling off the National 
Defense Reserve Fleet, and eliminating loan guarantees.

    Eliminate Funding for Experimental Rail Programs With 
Doubtful Market Potential. The high-speed rail program invests 
in the development of train systems capable of traveling at 150 
mph or faster. The program is intended to ``focus on next 
generation rail service compatible with existing 
infrastructure.'' But according to GAO, existing U.S. rights-
of-way have many curves and carry slow traffic, precluding 
travel at speeds in excess of 150 mph. To accommodate faster 
traffic, new tracks or magnetic guideways would need to be 
installed, at an estimated cost of at least $20 million per 
mile. In short, implementing high-speed rail will require an 
extremely costly, long-term investment by the Federal 
Government, while conventional passenger rail service already 
requires exorbitant Federal, State, and local subsidies. 
According to GAO, ``private investors have avoided [high speed 
rail] projects, considering them unlikely to be profitable.'' 
This proposal would terminate that program.

    Provide Funding for Advanced Train Control Safety Research. 
This proposal would provide $8 million per year to fund 
continued research of advanced train control systems. These 
systems will produce substantial safety benefits for freight 
and passenger operations. This proposal would fund two research 
projects: One for dense urban areas, the other for flexible 
block operations.

    Eliminate Outdated Airline Subsidy Program. The Essential 
Air Service Program was created by the Airline Deregulation Act 
of 1978 to continue air service to communities that had 
received Federally mandated air service prior to deregulation. 
The program provides subsidies to air carriers serving small 
communities that meet certain criteria. The subsidy per 
passenger ranges from $5 to nearly $320. This program was 
established to provide a smooth phaseout of Federal subsidies 
to airlines that service small airports. This proposal would 
end the program.

    Eliminate Funding for the Civil Aeromedical Institute and 
the FAA Management Training Institute. These eliminations were 
recommended by the inspector general of the Department of 
Transportation. These services could be obtained through 
private providers.

    Redefine the Federal Role in Transit. This proposal calls 
for a dramatic downsizing in the Federal role in mass transit. 
The Federal Transit Administration itself has been criticized 
for ineffective oversight and for allowing misuse of millions 
of dollars of Federal funds. Remaining functions not eliminated 
below should be transferred elsewhere in the Department of 
Transportation.

  - Phase Out Federal Mass Transit Operating Subsidies by 2002; 
        Provide Regulatory Relief and Flexibility. Since 1965, 
        the Federal Government has spent over $50 billion on 
        urban mass transit. Yet, during that time, transit's 
        work trip market share has declined by 30 percent. The 
        Federal Government's involvement in transit has led to 
        unwise State and local decisions, while precluding the 
        adoption of cost-effective operating methods. Federal 
        operating subsidies are barely 5 percent of total 
        operating costs. But the Federal ``baggage'' raises 
        transit costs two or three times the amount received by 
        transit agencies from the Federal Government. This is 
        largely the result of expensive Federal mandates. For 
        example, Federal transit labor projections require 
        transit agencies to pay 6 years of severance payments 
        for transit employees dismissed because of efficiency 
        gaining measures. Phasing out operating subsidies and 
        allowing States and localities more flexibility in 
        transportation spending would encourage local 
        authorities to lower operating costs, privatize and 
        contract out, and generally improve local investment 
        choices. In addition, providing relief from Federal 
        regulations such as section 13c labor projections of 
        the 1964 Transit Act and select Clean Air Act 
        provisions, extending bus life requirements and 
        extending ADA compliance deadlines will enable local 
        transit authorities to do more with less.

  - Mass Transit Capital Expenditures. No new starts in fixed 
        guideway mass transit capital grants; phased-in change 
        in matching rate for remaining capital expenditures to 
        50 percent. New urban mass transit systems are not 
        economically justified for at least three reasons: 
        First, urban areas have ``suburbanized'' and sources of 
        employment have spread beyond the traditional downtown 
        area. This limits the customer market for traditional 
        high-capacity transit rail services. Second, transit 
        has experienced cost escalation so extreme that the 
        same services can be provided by the competitive market 
        for savings of up to 50 percent. Finally, a DOT study 
        by Harvard economists indicated that busways can be 
        built and operated for one-fifth the cost of new rail 
        systems. Additionally, according to Census Bureau 
        statistics, no U.S. metropolitan area that built or 
        expanded urban rail systems in the 1980's experienced 
        an increase in transit's market share. Furthermore, 
        there is no evidence from anywhere in the world that 
        building new urban rail systems reduces traffic 
        congestion. Yet by subsidizing 80 percent of transit 
        construction projects, the Federal Government has 
        encouraged expansion of economically unjustifiable mass 
        transit rail systems. Rail systems have become a 
        federally financed mechanism to enhance local civic 
        pride. This proposal would terminate funding for new 
        mass transit systems and phase in over 3 years a 
        reduction in the Federal matching share of remaining 
        capital expenditures to 50 percent. This would 
        encourage local authorities to invest in new transit 
        systems which are likely to be economically viable and 
        could attract private capital.

  - Complete Washington Metro in 1999. This proposal would 
        fully fund the Federal Government's current 
        authorization for development of the final 13.5 miles 
        of the 103 mile system. Current policy assumes that 
        Federal funding would be available indefinitely.

  - Eliminate Transit Planning and Research. This program 
        allows the Federal Government to serve as a catalyst 
        for research and development of transit technologies. 
        It is significant, however, that Federal subsidization 
        and participation in transit planning and research have 
        failed to stem the decline in transit market share and 
        lower transit per-unit operating costs.

    Reduce Duplication in Small and Minority Business Programs 
and Consolidate Functions Within the Small Business 
Administration. This proposal calls for eliminating funding for 
the Department of Transportation's Minority Business Resource 
Center Program, and the Department of Commerce's Minority 
Business Development Administration, and recommends that 
clients of these services utilize Small Business Administration 
programs. Both of these programs duplicate functions already 
performed by the Small Business Administration.

    Eliminate Select Functions and Overhead for Department of 
Transportation Research and Special Programs Administration 
[RSPA]. RSPA serves as a research, analytical, and technical 
development arm of the Department for multimodal research and 
development, as well as special programs. According to the 
inspector general of the Department of Transportation:

          Collection of data [by RSPA] poses significant cost 
        to the airline industry and requires DOT staff 
        resources. In an unregulated environment, much of the 
        data collected is not needed and should be eliminated. 
        For the remaining data that meets essential Federal 
        needs * * * consolidation of the collection process in 
        the Bureau of Transportation statistics or by a private 
        contractor may be more efficient than the current RSPA 
        operations.

Safety and hazardous materials functions should be transferred 
to the FHWA or elsewhere in DOT, the Volpe National 
Transportation Systems Center should be privatized, and 
remaining functions should be closed.

    Encourage Efficient Management of the Federal Aviation 
Administration. The facilities and equipment account is the 
primary source of funding for the modernization of the Air 
Traffic Control system. The research, engineering and 
development account funds longer range scientific efforts. 
These two accounts previously were managed separately at the 
FAA, but they recently were brought under the auspices of a 
single executive--the Associate Administrator for Research and 
Acquisitions. This is projected to result in increased 
efficiencies, coordination, and elimination of duplication. 
This proposal reflects a reduction in outyear funding in the 
Research, Engineering, and Development Account based on these 
projected efficiencies. The proposal is not intended to change 
which committees have jurisdiction over each of these accounts.

    Eliminate the Interstate Commerce Commission From Outyear 
Deficit Projections. This year legislation was enacted 
eliminating the Interstate Commerce Commission and transferring 
remaining functions to a Surface Transportation Board within 
the Department of Transportation. This proposal would correct 
outyear deficit projections to reflect the enactment of this 
legislation.

    Rescind Funds for Discretionary Demonstration Projects Not 
Under Contract. Beginning last year, the Appropriations 
Subcommittee on Transportation discontinued the practice of 
earmarking highway projects in appropriations bills. This 
proposal rescinds funds for demonstration projects that were 
funded prior to 1996 but were never constructed.

    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. This is the Function 400 component of this 
provision, which sets the COLA payment date for retirees of the 
U.S. Coast Guard. The bulk of policies affecting COLA payment 
dates appear in Function 600.

                       FUNCTION 400: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Make Amtrak more businesslike: provide                                                                          
 labor relief, phase out operating and                                                                          
 capital subsidies between 1999 and 2002:                                                                       
    Budget authority......................       635         0         0      -130      -261      -390      -520
    Outlays...............................       608         0         0      -108      -231      -361      -490
Complete Northeast Corridor Improvement                                                                         
 Program in 1999:                                                                                               
    Budget authority......................       115         0         0         0      -115      -115      -115
    Outlays...............................       163         0         0         0       -23       -81      -115
Reduce funds for the Office of the                                                                              
 Secretary of Transportation:                                                                                   
    Budget authority......................         8        -6        -8        -8        -8        -8        -8
    Outlays...............................         8        -5        -7        -8        -8        -8        -8
Focus NASA's aeronautics on revolutionary                                                                       
 new concepts:                                                                                                  
    Budget authority......................     1,293       -60       -83      -111      -184      -206      -219
    Outlays...............................     1,087       -17       -62      -100      -155      -192      -214
Rescind funding for NASA's national                                                                             
 aeronautics facility:                                                                                          
    Budget authority......................         0      -365      -365      -365      -365      -365      -365
    Outlays...............................         1        -7      -135      -568      -405      -365      -365
Terminate wooden bridge research and                                                                            
 demonstration projects:                                                                                        
    Budget authority......................         0         0         0         0         0         0         0
    Outlays...............................         8        -1        -6        -7        -8        -8        -8
Eliminate corporate subsidies for                                                                               
 development of ``intelligent                                                                                   
 transportation systems'':                                                                                      
    Budget authority......................         0         0         0         0         0         0         0
    Outlays...............................    17,297       -35      -141      -171      -181      -188      -194
Deregulate ocean shipping and eliminate                                                                         
 the Federal Maritime Commission:                                                                               
    Budget authority......................        15       -10       -15       -15       -15       -15       -15
    Outlays...............................        16        -9       -14       -15       -15       -15       -15
Eliminate the maritime corporate subsidy                                                                        
 programs and terminate the Maritime                                                                            
 Administration:                                                                                                
    Budget authority......................       111       -79       -88       -95      -102      -109      -111
    Outlays...............................       124       -63       -60       -76       -88       -99      -105
Eliminate funding for experimental rail                                                                         
 programs with doubtful market potential:                                                                       
    Budget authority......................        23       -19       -19       -19       -19       -19       -19
    Outlays...............................        22       -10       -19       -24       -24       -27       -24
Provide funding for advanced train control                                                                      
 safety research:                                                                                               
    Budget authority......................         8         8         8         8         8         8         8
    Outlays...............................         8         3         6         8         8         8         8
Eliminate outdated airline subsidy                                                                              
 program:                                                                                                       
    Budget authority......................        23       -39       -39       -40       -41       -42       -43
    Outlays...............................        25       -18       -23       -23       -23       -23       -23
Eliminate Civil Aeromedical Institute and                                                                       
 FAA Management Training Institute:                                                                             
    Budget authority......................        21       -17       -21       -21       -21       -21       -21
    Outlays...............................        21       -14       -21       -21       -21       -21       -21
Phase out Federal mass transit operating                                                                        
 subsidies by 2002: \1\                                                                                         
    Budget authority......................       942       -78      -158      -235      -313      -391      -460
    Outlays...............................       812       -41      -107      -182      -259      -338      -411
Mass transit capital expenditures: Phased                                                                       
 in change in matching rate: \1\                                                                                
    Budget authority......................       972       -60      -120      -181      -181      -181      -181
    Outlays...............................     2,755       -22      -114      -292      -510      -714      -847
Mass transit capital expenditures: no mass                                                                      
 transit new starts \1\                                                                                         
    Budget authority......................     1,665         0         0         0         0         0         0
    Outlays...............................     1,943       -33      -180      -326      -460      -566      -600
Complete Washington Metro in 1999: \1\                                                                          
    Budget authority......................       200         0         0         0      -150      -200      -200
    Outlays...............................       181         0         0         0        -3       -19       -54
Eliminate transit planning and research:                                                                        
 \1\                                                                                                            
    Budget authority......................        86       -86       -86       -86       -86       -86       -86
    Outlays...............................        95        -8       -46       -76       -84       -86       -86
Reduce duplication in small and minority                                                                        
 business programs and consolidate                                                                              
 functions within the Small Business                                                                            
 Administration:                                                                                                
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................         5        -4         5        -5        -5        -5        -5
Eliminate select functions and overhead                                                                         
 for Department of Transportation Research                                                                      
 and Special Programs Administration                                                                            
 [RSPA]:                                                                                                        
    Budget authority......................        24       -18       -24       -24       -24       -24       -24
    Outlays...............................        21       -14       -22       -24       -24       -24       -24
Encourage efficient management of the                                                                           
 Federal Aviation Administration:                                                                               
    Budget authority......................       186         0        -6       -26       -26       -26       -26
    Outlays...............................       253         0        -4       -18       -25       -27       -27
Eliminate Interstate Commerce Commission                                                                        
 from outyear deficit projections:                                                                              
    Budget authority......................         6        -6        -6        -6        -6        -6        -6
    Outlays...............................         9        -5        -6        -6        -6        -6        -6
Rescind funds for discretionary                                                                                 
 demonstration projects not under                                                                               
 contract:                                                                                                      
    Budget authority......................        NA       -95      -190         0         0         0         0
    Outlays...............................        NA       -16       -82      -113       -33       -12        -9
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to redefine the Federal role in transit.                                               


                         FUNCTION 400: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate highway demonstration projects:                                                                       
    Budget authority......................     1,605    -1,109         0         0         0         0         0
    Outlays...............................     2,357       -75      -274      -221      -145       -99       -74
Extend vessel tonnage fees:                                                                                     
    Budget authority......................   \1\ -49         0         0       -49       -49       -49       -49
    Outlays...............................   \1\ -49         0         0       -49       -49       -49       -49
Maintain current payment date of civilian                                                                       
 retiree cost-of-living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority......................       520        -3        -4        -4        -4        -4        -4
    Outlays...............................       499        -3        -4        -4        -4        -4        -4
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

            Function 450: Community and Regional Development

    Phased-In Downsizing of the Appalachian Regional Commission 
[ARC]. The Federal Government provides annual funding to the 
ARC for activities that promote economic growth in the 
Appalachian counties. Yet there is little evidence that the ARC 
can be credited with improvements in the economic health of 
Appalachia.
    The programs supported by the ARC duplicate activities 
funded by other Federal agencies, such as the Department of 
Transportation's Federal Highways Program and the Department of 
Housing and Community Development Block Grant Program. ARC 
resources go to poor rural communities that areas are no worse 
off than many others outside the Appalachian region and, 
therefore, no more deserving of special Federal attention.
    This proposal would gradually reduce the size of the 
Appalachian Regional Commission from a $170 million program 
currently to a $100 million program by 2001.

    Focus the Tennessee Valley Authority on Its Power-Related 
Activities. The Tennessee Valley Authority [TVA] is the 
Nation's largest electric utility. It also is responsible for a 
variety of natural resource maintenance and development, 
recreational, community development, and environmental 
activities. In 1995 Congress appropriated $143 million for 
these activities.
    This proposal would end this annual subsidy for TVA. Other 
equally deserving regions of the country fund these activities 
either through higher rates for electric power, local tax 
revenues, or user fees.

    Downsize the Economic Development Administration. This 
proposal, included as part of the elimination of the Department 
of Commerce, includes reforming the criteria for projects and 
reducing the number of communities eligible for Economic 
Development Administration funding, streamlining the agency, 
and transferring the functions to the Small Business 
Administration.

    Reduce by 50 Percent the Flood Insurance Subsidy on Pre-
FIRM Structures. The National Flood Insurance Program [NFIP] 
offers insurance at heavily subsidized rates for buildings 
constructed before January 1, 1975, or the completion of a 
participating community's ``Flood Insurance Rate Map'' [FIRM]. 
Owners of post-FIRM construction pay actuarial rates for their 
insurance. Currently, 18 percent of total flood insurance 
coverage is subsidized. The Federal Emergency Management Agency 
[FEMA], which administers the Flood Insurance Program, reported 
in 1994 that 41 percent of policyholders were paying subsidized 
rates for some or all of their coverage. The program subsidizes 
only the first $45,000 of coverage for a single-family or two- 
to four-family dwelling, and the first $130,000 of a larger 
residential, nonresidential, or small business building. 
Coverage in the subsidized tier is currently priced at about 
one-third of its actuarial value. Under this proposal, the 
subsidy would be reduced by 50 percent.

    Accept Administration's Proposed Funding for the Federal 
Emergency Management and Planning Assistance Program. The 
administration recommends savings in the FEMA Management and 
Planning Assistance account. The budget resolution accepts 
these recommendations.

    Restore Equity in Unemployment Benefits. This is the 
Function 450 component of this proposal, which applies to 
technical assistance to firms affected by foreign competition. 
The remaining portion of the proposal is contained in Function 
600.

                       FUNCTION 450: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase in downsizing of the Appalachian                                                                          
 Regional Commission [ARC]:                                                                                     
    Budget authority......................       170         0       -15       -35       -50       -70       -70
    Outlays...............................       180         0        -1        -6       -16       -29       -41
Focus the Tennessee Valley Authority on                                                                         
 its power-related activities:                                                                                  
    Budget authority......................       109       -89      -109      -109      -109      -109      -109
    Outlays...............................       112       -24      -104      -109      -109      -109      -109
Downsize the Economic Development                                                                               
 Administration: \1\                                                                                            
    Budget authority......................       367       -14       -27       -27       -27      -367      -367
    Outlays...............................       414       -11       -26       -29       -30       -45      -120
Accept Administration's proposed funding                                                                        
 for the Federal Emergency Management and                                                                       
 Planning Assistance Program:                                                                                   
    Budget authority......................       179         5       -10       -25       -40       -21         1
    Outlays...............................       190         3        -4       -15       -29       -26       -10
Restore equity in unemployment assistance:                                                                      
    Budget authority......................         9        -9        -9        -9        -9        -9        -9
    Outlays...............................        10         0        -2        -4        -7        -9        -9
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               


                         FUNCTION 450: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                            1996 est -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reduce by 50 percent the flood insurance                                                                        
 subsidy on prefirm structures:                                                                                 
    Budget authority......................       331         0         0         0         0         0         0
    Outlays...............................       398       -72      -192      -193      -199      -205      -209
----------------------------------------------------------------------------------------------------------------

   Function 500: Education, Training, Employment, and Social Services

    Maintain Current Level of Funding for Head Start. The 
budget resolution recommends that Head Start be funded at the 
current level and the appropriate investigation and evaluation 
on long-term effects be carried out. [Note: Because this 
proposal has no fiscal impact compared with current 
projections, it is not reflected in the table below.]

    Phase Out the National Endowment for the Arts and 
Humanities Along With Several Other Smaller Programs. Under 
this proposal, funding for the National Capital Arts and 
Cultural Affairs would be terminated. Funding for the National 
Endowment for the Arts would be terminated after fiscal year 
1997 and funding for the National Endowment for the Humanities 
would be terminated after fiscal year 1998. In addition, 
funding for National Telecommunications and Information 
Administration's [NTIA] information infrastructure grants would 
be terminated. With the user explosion of the Internet and 
other information technologies and networks, there is more than 
sufficient economic incentive for the private sector to 
develop, demonstrate, and offer virtually every conceivable 
telecommunications service. The Federal Government does not 
need to subsidize these technology application demonstrations. 
As noted in their Views and Estimates, the Committees on 
Commerce and Science have approved actions to terminate all of 
NTIA's grantmaking programs, including the assistance programs 
for public telecommunications facilities, Endowment for 
Children's Educational Television, and Information 
Infrastructure Grants.

    Restore Equity in Unemployment Assistance. Trade Adjustment 
Assistance provides additional unemployment benefits and 
training assistance to workers who lose their jobs as a result 
of foreign competition, including workers affected by NAFTA. 
There is no justification, however, for providing more 
assistance to an unemployed worker who lost a job because of 
foreign competition than for a worker whose unemployment 
resulted from domestic competition. Trade Adjustment Assistance 
provides 78 weeks of unemployment benefits while the majority 
of other Americans qualify for only 26 weeks of unemployment 
benefits. Moreover, a 1993 evaluation of the training 
components of the program by the Department of Labor inspector 
general determined that neither the Department nor the States 
could demonstrate that the program was effective helping 
unemployed workers find suitable employment. The inspector 
general's audit found that only 1 in 10 of former program 
participants surveyed found new training-related employment 
that paid suitable wages. The IG also noted that although the 
program requires participants to enroll in approved training 
courses, participants who did not wish to attend training were 
almost always granted waivers to continue receiving the income 
support allowance. (Please note: other components of this 
proposal appear in Function 450 and 600.)

    Eliminate Funds for Politicized Activities Under the Name 
of ``Community Service.'' The Corporation for National and 
Community Service was supposed to be an example of ``reinvented 
government'' and a model enterprise, not only for government, 
but also for private industry. The Corporation has failed to 
live up to any reasonable standard of accountability. Based on 
the reports of two independent accounting firms, six areas of 
accounting and financial irregularities have been identified. 
Because the budget resolution seeks to ensure the integrity and 
accountability in all expenditures of taxpayers' funds, it 
calls for correcting these irregularities.
    In 1993-94, AmeriCorps employed about 20,000 ``volunteers'' 
all over America. A significant number of these paid volunteers 
worked in Federal or State bureaucracies, government-funded 
programs, or political action organizations. Ignoring the 
Corporation's mission statement to address the Nation's 
problems through direct community service, several AmeriCorps 
programs have actively engaged in direct partisan politics and 
advocacy activities at the expense of the taxpayers. The 
President declared AmeriCorps to be America at its best. Like 
many other government programs, however, AmeriCorps has failed 
to live up to its promises.

    Restore State and Local Authority Over Education Standards 
(Goals 2000). Education reform will be achieved by encouraging 
innovation and rewarding results. Goals 2000 increases funding 
for bureaucracy and imposes new regulations on States and 
localities--exactly the wrong approach. To receive Goals 2000 
funding, States must complete an education reform plan in 
compliance with Goals 2000 Federal mandates. This represents a 
new and unwarranted intrusion into State and local education 
decisionmaking. Goals 2000 should be eliminated.

    Support the President's Program Terminations. The 
President's 1997 budget eliminates funding for Migrant 
Education, College Assistance Migrant Program, Innovative 
Education Program Strategies State Grants, Instruction in 
Civics, Dropout Prevention Demonstrations, Ellender 
Fellowships, Telecommunications Demo for Math, National 
Diffusion Network, 21st Century Community Learning Centers, and 
National Writing Project.

    Free Local School Districts to Promote English Proficiency. 
The Bilingual Instructional Services Program requires that 
schools spend 75 percent of their Federal funding on 
transitional bilingual education instructional methods, where 
students are taught both in English and their native language. 
Numerous studies have shown that heavy reliance on the pupil's 
native language can delay English proficiency. Eliminating 
Federal funding for bilingual education could free local school 
districts to offer the most effective programs for their 
students. Usage of title 1 funds for English immersion or 
English as a second language instruction could be increased. 
Currently, 34.7 percent of all limited English language 
proficient students are served by title 1, while only 9.6 
percent are served by bilingual education. The largest number 
of limited English students--72 percent--are served by special 
State funds.

    Maintain Funding for Pell Grants. The Omnibus 
Appropriations bill carried forward Pell grant funding from 
previous years, offsetting $1.3 billion in new spending. The 
budget resolution does not assume this one-time savings in 
future years, thus allowing Pell grants to be continued at the 
program level assumed in the Omnibus Appropriations bill. 
[Note: Because this proposal has no fiscal impact compared with 
current projections, it is not reflected in the table below.]

    Discontinue Unneeded Capital Subsidies, as Proposed in the 
President's 1995 Budget. The President's fiscal year 1995 
budget recommended discontinuing funding for Capital 
contributions for Perkins loans, saying:

          Federal direct student loans and Federal family 
        education loans, together with new Perkins loans funded 
        from $6 billion in existing institutional revolving 
        funds, will provide adequate sources of capital for new 
        student borrowing.

This proposal would not affect the two other campus-based 
programs, the work-study program and supplemental education 
opportunity grants. This proposal also would not reduce the 
Perkins loan cancellation payments, nor would it eliminate the 
$6 billion loan revolving fund.

    Eliminate Duplicative Postsecondary Education Grant 
Programs, as Recommended in the President's Fiscal Year 1997 
Budget. The State Incentive Grant Program was set up in 1972 to 
encourage States to offer scholarships to postsecondary 
students in financial need. Today, all 50 States and the 
District of Columbia offer this kind of assistance. For this 
reason, the National Performance Review and the President have 
recommended terminating this program. The State Postsecondary 
Review [SPRE] Program reimburses States for activities that 
supplement existing institutional licensing and review 
functions conducted by States to enable institutions to 
participate in the student loan program. Critics have argued 
that the program is poorly focused and overly burdensome. This 
proposal would eliminate funding for the program.

    Eliminate Burdensome Categorical Grant Programs, as Called 
for in the Careers Bill and the President's Budget. The 
President proposed eliminating 15 postsecondary scholarship and 
fellowship programs, explaining that he intended to eliminate 
``a number of smaller, categorical programs that are 
administratively burdensome and duplicative of the broader 
student financial aid programs.'' In addition, this budget 
resolution notes that numerous merit scholarships already are 
provided by private groups, State governments, and 
universities.

    Accept the President's Fiscal Year 1996 Proposal Concerning 
Aid to Institutions. The purpose of these programs is to help 
institutions of higher education with limited financial 
resources become financially self-sufficient. Although the goal 
is worthy, the resolution concurs with the administration's 
view that the best way to support these institutions is through 
investing in student financial assistance. According to the 
administration:

          Tuition revenues from a student receiving financial 
        aid may be used for ``developmental'' purposes, such as 
        those currently supported by part A, as well as the 
        endowment-building activities currently supported by 
        part C.

    Phase Out Duplicative Robert C. Byrd Scholarships. This 
proposal would eliminate new awards from the Robert C. Byrd 
Scholarship Program. This program duplicates the numerous merit 
scholarships available from private groups, State governments, 
and universities.

    Increase Funding for Historically Black and Hispanic 
Colleges by Eliminating Earmarked Funding for Howard 
University. Howard University funds 55 percent of its education 
and general expenses through its Federal appropriation. At the 
same time, Howard's privately raised funds trail those of its 
peer institutions. Howard's alumni response rate of 8 percent 
is far below that of other institutions. It is difficult to 
justify continuing a Federal subsidy of more than $15,000 per 
enrolled Howard University student when the funding needs at 
other Historically Black Colleges are so great. This proposal 
would eliminate Howard University's earmarked funding and 
redirect half the savings to the Strengthening Historically 
Black Colleges Fund.

    Eliminate Nonperforming Job Corps Centers. The Senate Job 
Training Consolidation bill would close 10 Job Corps centers 
that are not effectively training participants. The 
administration supports this provision, but only if a review 
indicates that such closings are warranted.

    Eliminate the Obsolete Office of the American Workplace. 
The primary function of the Office of the American Workplace is 
to promote ``progressive'' labor-management relationships. 
Under current budgetary pressures, this is clearly a service 
the Department of Labor can no longer afford to provide. The 
Office also administers and enforces provisions of the Labor-
Management Reporting and Disclosure Act. These duties have been 
transferred to the Employment Standards Administration.

    Maintain Funding for Title 1 and Drug-Free Schools at 
Current level. This budget assumes Title 1, Aid to 
Disadvantaged Children, and the Drug-Free Schools will be 
funded at the level in the 1996 Omnibus Appropriations bill. As 
the Budget Committee noted in last year's report, the title 1 
program has done little to help the education performance of 
disadvantaged children. The recent reauthorization of 
elementary and secondary education programs, Improving 
America's Schools Act, contained a number of reforms to title 
1. The budget resolution hopes that the program will be 
reexamined to see if the reforms have improved the program. If 
not, funding for the program should be redirected toward 
education programs with a proven track record of helping 
children. [Note: Because this proposal has no fiscal impact 
compared with current projections, it is not reflected in the 
table below.]

    Reduce Department of Education Administration Account. As 
funding and responsibility for education is returned to local 
communities, the size and scope of the Washington education 
bureaucracy should be reduced.

    Fund the Employment Standards Administration at a Level 
That Reflects the Repeal of Davis-Bacon. Funding for the 
Employment Standards Administration can be reduced since this 
budget repeals Davis-Bacon and the Service Contract Act.

    Reduce Department of Labor Management Account. As the size 
and scope of the Department of Labor is reduced through 
consolidation and program elimination, the costs of running the 
Department can be significantly decreased. Within this account, 
several programs that duplicate existing activities or are 
simply unneeded could be eliminated. Possible targets for 
elimination include the Bureau of International Affairs and the 
Women's Bureau.

    Maintain Funding for National Labor Relations Board at 
Level in House-Passed Labor/HHS Appropriations Bill. This 
agency receives, investigates, and prosecutes unfair labor 
practice charges filed by labor unions, individuals, and 
businesses. [Note: Because this proposal has no fiscal impact 
compared with current projections, it is not reflected in the 
table below.]

    Provide Funding Increase to Bureau of Labor Statistics for 
the Consumer Price Index Revision. The budget resolution 
provides $5 million to the Bureau of Labor Statistics in fiscal 
years 1997 and 1998 to update the measurement of the Consumer 
Price Index [CPI]. The CPI update includes new market baskets 
of goods and services, as well as improvements in collecting 
and processing data for the CPI and for surveys that support 
the CPI. This revision is critical to the Nation's economy and 
to the Federal budget. The Bureau is expected to give this 
matter the highest priority.

    Create a New Native American Block Grant. The education 
portion of the new Native American Block Grant appears in this 
Function; portions also appear in Function 450 and Function 
550. It is assumed that this portion will be included in the 
block grant in fiscal year 2000.

    Welfare Reform-Related Provisions. The following three 
provisions of the welfare reform plan have their spending 
impact in Function 500:

  - Replace the AFDC JOBS Program Under Welfare Reform's Block 
        Grant to the States. The welfare reform framework 
        envisioned in this budget would establish a single cash 
        welfare block grant to the States. The Aid to Families 
        With Dependent Children [AFDC] Programs are terminated, 
        including AFDC JOBS, which falls within Function 500. 
        Savings from these terminations are channeled to the 
        Temporary Assistance to Needy Families block grant 
        which appears under Function 600.

  - Establish Two Child Protection Block Grants. The welfare 
        reform framework envisioned in this budget would create 
        a child protection program consisting of three major 
        elements: open-ended entitlements to foster care 
        maintenance and adoption assistance payments, a Child 
        Protection block grant consolidating programs 
        authorized under the Social Security Act, and a Child 
        and Family Services block grant consisting of programs 
        authorized under the Child Abuse Prevention and 
        Treatment Act and other laws authorizing both services 
        and funding for research and training in the area of 
        child protection. Creation of the block grants permits 
        consolidation of 20 separate child protection programs, 
        providing States with greater flexibility to respond to 
        incidences of child neglect and abuse.

  - Reduce Funding for the Title XX Social Services Block 
        Grant.

    Reform the Federal Employees Compensation Act. This is the 
Function 500 component of this provision, which principally 
appears in Function 600. This portion represents the cost of 
employing caseworkers to conduct roll management.

    Reduce Unneeded Surplus Funding for the Department of 
Labor's Alien Labor Certification Program. Funding for the 
Alien Labor Certification Program within the Department of 
Labor would be reduced by 50 percent. The program funds efforts 
by State Unemployment Insurance offices to research claims by 
companies seeking authority from the Department of Labor to 
bring foreign workers into the United States on the grounds 
that no qualified American workers are available to fill job 
openings. State UI offices report that the money they receive 
for this dedicated activity is more than sufficient for their 
needs, and as a result balances are building up in their trust 
funds.

    Eliminate Social Services Research Funding at 
Administration for Children and Families. The budget resolution 
assumes discontinuation of earmarked social services research 
funding within the Administration for Children and Families at 
the Department of Health and Human Services. As noted in the 
committee report accompanying H.R. 2127, the Labor/HHS 
appropriations bill for fiscal year 1996, research and 
demonstration activities can be centralized at HHS in the 
Secretary's office under the Assistant Secretary for Planning 
and Evaluation. That office has an extensive research program, 
and thus providing additional funding for research elsewhere in 
the Department is unnecessary and duplicative.

    Accept the Administration's Fiscal Year 1998 Proposal for 
Smithsonian Institution Salaries and Expenses. The budget 
resolution maintains 1997 costs for salaries and expenses at 
the Smithsonian at the 1996 level and accepts the 
administration's proposed levels for fiscal years 1998 and 
1999, then maintains the administration's proposed fiscal year 
2000 level through 2002.

    Accept the Administration's Fiscal Year 1997 Proposal for 
Construction. The budget resolution accepts the 
administration's proposed funding levels for construction 
through 1999, and then maintains level funding starting in 
2000.

    Accept the Administration's Fiscal Year 1998 Proposed 
Funding Level for Salaries and Expenses for the National 
Gallery of Art. The budget resolution maintains 1997 costs for 
salaries and expenses at the 1996 level, then accepts the 
administration's funding levels for fiscal years 1998 and 1999, 
and then maintains the administration's proposed fiscal year 
2000 level through 2002.

    Accept the Administration's Fiscal Year 1998 Proposed 
Funding Level for the John F. Kennedy Center for the Performing 
Arts. The budget resolution maintains 1997 funding for the 
center at the 1996 level, funds the center at the 
administration's proposed levels for 1998 and 1999, and then 
maintains the administration's proposed fiscal year 2000 level 
through 2002.

    Accept the Administration's Proposed Funding Level 
Beginning in 1998 for the Institute of Museum Services. The 
budget resolution maintains 1997 funding at the 1996 level, 
then accepts the administration's proposes level for fiscal 
years 1998 through 1999, and maintains the administration's 
proposed 2000 level through 2002.

                       FUNCTION 500: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase out the National Endowment for the                                                                        
 Arts and Humanities along with several                                                                         
 other smaller programs:                                                                                        
    Budget authority......................       260       -62      -210      -260      -260      -260      -260
    Outlays...............................       359       -19       -94      -195      -238      -258      -260
Eliminate funds for politicized activities                                                                      
 under the name of ``community service'':                                                                       
    Budget authority......................       353      -353      -353      -353      -353      -353      -353
    Outlays...............................       380       -34      -208      -300      -331      -340      -344
Restore local and State authority over                                                                          
 education standards (Goals 2000):                                                                              
    Budget authority......................       530      -350      -350      -350      -350      -350      -350
    Outlays...............................       432       -42      -280      -343      -350      -350      -350
Support the President's program                                                                                 
 terminations:                                                                                                  
    Budget authority......................     7,566      -299      -299      -299      -299      -299      -299
    Outlays...............................     8,658       -36      -238      -292      -297      -299      -299
Free local school districts to promote                                                                          
 English proficiency:                                                                                           
    Budget authority......................       178      -178      -178      -178      -178      -178      -178
    Outlays...............................       209       -21      -142      -174      -177      -178      -178
Discontinue unneeded capital subsidies, as                                                                      
 proposed in the President's 1995 budget:                                                                       
 \1\                                                                                                            
    Budget authority......................     7,065      -119      -119      -119      -119      -119      -119
    Outlays...............................     6,943       -12      -115      -119      -119      -119      -119
Eliminate duplicative post-secondary                                                                            
 education grant programs, as recommended                                                                       
 in the President's 1997 budget: \1\                                                                            
    Budget authority......................     7,065       -31       -31       -31       -31       -31       -31
    Outlays...............................     6,943        -6       -31       -31       -31       -31       -31
Eliminate burdensome categorical grant                                                                          
 programs, as called for in the careers                                                                         
 bill and the President's budget: \2\                                                                           
    Budget authority......................       842       -39       -39       -39       -39       -39       -39
    Outlays...............................       905        -5       -31       -38       -38       -39       -39
Accept the President's fiscal year 1996                                                                         
 proposal concerning aid to institutions:                                                                       
 \2\                                                                                                            
    Budget authority......................       842       -46       -46       -46       -46       -46       -46
    Outlays...............................       905        -6       -37       -45       -46       -46       -46
Phase-out duplicative Robert C. Byrd                                                                            
 scholarships: \2\                                                                                              
    Budget authority......................       842        -9       -19       -22       -22       -22       -21
    Outlays...............................       905        -1        -9       -17       -21       -21       -22
Increase funding for Historically Black                                                                         
 and Hispanic Colleges by eliminating the                                                                       
 earmarked funding for Howard University                                                                        
    Budget authority......................     1,022       -90       -90       -90       -90       -90       -90
    Outlays...............................     1,081      -158      -108       -92       -90       -90       -90
Eliminate nonperforming Job Corps centers:                                                                      
    Budget authority......................       972       -88       -88       -88       -88       -88       -88
    Outlays...............................       958       -11       -87       -88       -88       -88       -88
Eliminate the obsolete Office of the                                                                            
 American Workplace:                                                                                            
    Budget authority......................        23       -23       -23       -23       -23       -23       -23
    Outlays...............................        24       -20       -22       -22       -23       -23       -23
Reduce Department of Education                                                                                  
 administration account:                                                                                        
    Budget authority......................       327       -78       -78       -78       -78       -78       -78
    Outlays...............................       336       -52       -74       -78       -78       -78       -78
Fund the Employment Standards                                                                                   
 Administration at a level that reflects                                                                        
 the repeal of Davis-Bacon:                                                                                     
    Budget authority......................       225       -20       -20       -20       -20       -20       -20
    Outlays...............................       230       -17       -20       -20       -20       -20       -20
Reduce Department of Labor management                                                                           
 account:                                                                                                       
    Budget authority......................       134       -11       -11       -11       -11       -11       -11
    Outlays...............................       137        -9       -10       -10       -11       -11       -11
Provide funding increase to Bureau of                                                                           
 Labor Statistics for consumer price index                                                                      
 revision:                                                                                                      
    Budget authority......................       297         5         5         0         0         0         0
    Outlays...............................       297         4         5         1         0         0         0
Create a new native American block grant:                                                                       
    Budget authority......................       569         0         0         0       -31       -31       -31
    Outlays...............................       584         0         0         0        -5       -26       -31
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................       225         4         4         4         4         4         4
    Outlays...............................       230         3         4         4         4         4         4
Reduce unneeded surplus funding for the                                                                         
 Department of Labor's Alien Labor                                                                              
 Certification Program:                                                                                         
    Budget authority......................     1,167       -23       -23       -23       -23       -23       -23
    Outlays...............................     1,128       -23       -23       -23       -23       -23       -23
Eliminate social services research funding                                                                      
 at Administration for Children and                                                                             
 Families:                                                                                                      
    Budget authority......................     4,571       -11       -11       -11       -11       -11       -11
    Outlays...............................     4,740        -2       -10       -11       -11       -11       -11
Accept the administration's fiscal year                                                                         
 1998 proposal for Smithsonian Institution                                                                      
 salaries and expenses:                                                                                         
    Budget authority......................       308         0        -5       -33       -60       -60       -60
    Outlays...............................       309         0        -4       -30       -57       -60       -60
Accept the administration's fiscal year                                                                         
 1997 proposal for construction:                                                                                
    Budget authority......................        13         0        -1        -2        -3        -3        -3
    Outlays...............................        15         0         0        -1        -2        -3        -3
Accept the administration's fiscal year                                                                         
 1998 proposal for salaries and expenses                                                                        
 for the National Gallery of Art:                                                                               
    Budget authority......................        51         0        -1        -6       -10       -10       -10
    Outlays...............................        52         0        -1        -5       -10       -10       -10
Accept the administration's fiscal year                                                                         
 1998 proposal for the John F. Kennedy                                                                          
 Center for the Performing Arts:                                                                                
    Budget authority......................        10         0         0        -1        -2        -2        -2
    Outlays...............................        10         0         0        -1        -2        -2        -2
Accept the administration's fiscal year                                                                         
 1998 proposal for the Institute of Museum                                                                      
 Services:                                                                                                      
    Budget authority......................        22         0        -1        -3        -5        -5        -5
    Outlays...............................        26         0        -1        -3        -5        -5        -5
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the Student Financial Assistance account.                                             
\2\ This proposal impacts the Higher Education account.                                                         


                         FUNCTION 500: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Restore equity in unemployment assistance:                                                                      
    Budget authority......................       126      -105      -121       -97       -97       -97       -97
    Outlays...............................       118       -33       -92      -112      -101       -97       -97
Welfare reform:                                                                                                 
    Budget authority......................     7,221    -1,221    -1,215    -1,204    -1,194    -1,233    -1,207
    Outlays...............................     7,159      -851    -1,113    -1,169    -1,149    -1,236    -1,231
----------------------------------------------------------------------------------------------------------------

                         Function 550: Health0

    Accept Administration's Funding for the Health Resources 
and Services Administration [HRSA]. For HRSA, the budget 
resolution assumes the policy reforms detailed below and 
accepts the administration's spending levels for fiscal year 
1999, and maintains that level through 2002. The resolution 
does not assume the additional $156 million HRSA spending cut 
in the President's budget for fiscal year 2000.

  - Continue Funding for Community Health Centers. The budget 
        resolution recommends continued support for community 
        health centers. Funding should be prioritized according 
        to needs in both rural and urban areas.

  - Eliminate Unauthorized Rural Outreach Grants that Duplicate 
        Other Federally Supported Services. Reforms contained 
        in H.R. 3160, the Health Coverage Availability and 
        Affordability Act of 1996, and Medicare and Medicaid 
        reform will drive the private sector to develop rural 
        health networks. The Rural Outreach Grants funded by 
        the Health Resources and Services Administration fund 
        local consortia of rural health care providers to 
        coordinate and enhance the availability of health 
        services. But the administration's justification 
        correctly states:

          Locally developed health care plans are more likely 
        to succeed over a period of years in providing 
        appropriate, cost-effective health care in rural 
        communities.

The program has never been specifically authorized, and the 
funds were terminated in the fiscal year 1995 rescission bill. 
Services can be supported through community health centers, the 
Maternal and Child Health Block Grant, Medicaid, and other 
programs.

  - Eliminate Funding Intended to Establish State Offices of 
        Rural Health. All 50 States have received grants to 
        establish State Offices of Rural Health, thus the 
        purpose of the program has been accomplished. The 
        program was intended to help States establish, not 
        maintain, offices. None of the funding goes for the 
        direct provision of care to patients. Therefore States 
        can continue these offices if they believe they are 
        useful. These funds were terminated in the fiscal year 
        1995 rescission bill.

  - Eliminate Duplicative Grants to State Bureaucracies for 
        Administering State Trauma Care Systems. This program 
        provides grants to States to develop statewide trauma 
        care and emergency medical service systems, but none of 
        the funding goes for the direct care of patients; 
        rather it funds State bureaucracies. Services are 
        duplicative of those provided through the Preventive 
        Health Services Block Grants. These funds were 
        terminated in the fiscal year 1995 rescission bill.

  - Eliminate Special Funding for Native Hawaiian Health Care 
        Made Obsolete by Employer and State Insurance Reforms. 
        This program was created to provide primary care 
        services and disease prevention services for Native 
        Hawaiians. Hawaii has a highly developed employer-based 
        health service system which provides coverage to 
        residents not insured through the employer mandate. 
        These funds were terminated in the fiscal year 1995 
        rescission bill.

  - Eliminate Funding for Pacific Basin Initiative That 
        Duplicates Other Federal Funding Sources. This program 
        provides funds to build health preventive services 
        capacity in Pacific territories and to train health 
        professionals. The territories receive funding under 
        the Preventive Health Services Block Grant. These funds 
        were terminated in the fiscal year 1995 rescission 
        bill.

  - Reprioritize Ineffective Funding for the National Health 
        Services Corps. The NHSC attempts to alleviate the 
        shortage of health care professionals by recruiting 
        physicians and other health care professionals to 
        provide primary care services in what are designated as 
        ``Health Professional Shortage Areas.'' The NHSC is 
        fraught with waste and abuse. The program spends 
        $41,290 per health professional recruited with no 
        discernible affect on staffing rural areas with 
        physicians. GAO testified that the Department of HHS 
        has no long-term retention data to judge the impact of 
        the program. These funds were terminated in the fiscal 
        year 1995 rescission bill. This proposal would reduce 
        the funds by 50 percent.

  - Terminate Narrowly Targeted Chiropractic Demonstration 
        Grants. The Chiropractic Demonstration Grants funds the 
        Palmer Chiropractic School to conduct chiropractic 
        demonstrations. This is not a national priority.

  - Remove Duplicative Funding for Centers of Excellence. This 
        program was established to fund institutions that train 
        minority health professionals. The administration has 
        called for consolidating the program with other health 
        professions programs and reducing funding in response 
        to the Gore task force concerns over reducing the 
        number of title VII programs. Institutional aid for 
        postsecondary study is available under several other 
        programs in HHS and the Department of Education.

  - Consolidate Bureaucracy by Ending Department of Health and 
        Human Services' Funding for the Office of Rural Health 
        Policy. HHS's Office of Rural Health Policy was 
        established to improve the delivery of health services 
        to rural communities and populations. The 
        administration request is $42,000 below last year's 
        spending and $1.5 million below fiscal year 1995. The 
        funds, terminated in the fiscal year 1995 rescission 
        bill, support State bureaucracies. Similar research is 
        conducted at HCFA, and market reforms continue to 
        improve rural health services delivery.

  - Eliminate Federal Funding for Nonessential Health 
        Facilities Construction. The 1995 appropriation 
        provided funding for two projects, one in Pennsylvania 
        and one in West Virginia. It is not appropriate to 
        award special funding for these localities, and the 
        funds were terminated in the fiscal year 1995 
        rescission bill.

  - Eliminate Subsidies to Health Professions Education 
        Institutions That Do Not Go Directly to Students. This 
        proposal eliminates subsidies for various health 
        professions education. Subsidies go mainly to 
        institutions and do not go directly to students. Also, 
        market forces with high and rising wages provide strong 
        incentives for individuals to seek training and jobs in 
        health professions.

  - Streamline Administrative Costs for Health Resources and 
        Services Administration. Salaries and expense accounts 
        should be reduced as programs and functions are 
        consolidated and reformed. This proposal reduces S&E 
        expenditures 5 percent for HRSA.

    Incorporate Indian Health Care Services and Facilities Into 
New Native American Block Grant. Savings from this provision 
are in conjunction with the Native American Block Grant 
described in Function 450. In the year 2000, Indian health care 
services and facilities will be covered under self-
determination and will be incorporated in the new Native 
American Block Grant.

    Reject the Administration's Proposed 25-Percent Cut in 
Centers for Disease Control and Prevention. The budget 
resolution rejects the administration's 25-percent cut in 
Centers for Disease Control and Prevention, which funds 
childhood immunizations, breast and cervical cancer screening, 
HIV prevention programs, among other efforts to control the 
spread of infectious diseases and reduce chronic diseases. The 
cuts proposed in the President's budget display questionable 
priorities in light of increased instances of cancer in women 
and unrelenting spread of sexually transmitted diseases. The 
resolution recommends maintaining sufficient funding for CDC, 
reprioritizing spending for increased disease-prevention 
efforts, and the policy recommendation below. [Note: Because 
this proposal has no fiscal impact compared with current 
projections, it is not reflected in the table below.]

    Terminate the National Institute for Occupational Safety 
and Health [NIOSH]. The Institute is responsible for 
``conducting research and making recommendations for the 
prevention of work related illnesses and injuries.'' It is 
questionable whether this constitutes a ``disease'' and hence 
its CDC location. The program duplicates stated functions of 
the Occupational Safety and Health Administration [OSHA].

    Consolidate Health Data Collection and Analysis Functions 
in HHS. The budget resolution recommends consolidation of 
health data collection and analysis activities, and elimination 
of duplicative and unnecessary functions. The committee does 
not support funding for the Agency for Health Care Policy and 
Research [AHCPR] outcomes guidelines research and distribution. 
The budget resolution recognizes, however, a certain limited 
role for AHCPR data analysis. These functions, along with all 
data collection activities should be consolidated and 
streamlined across the Department, including those in CDC, NIH, 
and HCFA.

    Eliminate Unnecessary Funding in the Office of the 
Secretary and Accept Administration's Funding for Departmental 
Management. The budget resolution recommendation includes the 
policy reforms detailed below, accepts the administration's 
spending levels for fiscal year 1999, and maintains that level 
through 2002. The resolution does not accept the additional $14 
million spending cut in the President's budget for fiscal year 
2000.

  - Reduce Bureaucracy and Unnecessary Spending by Eliminating 
        the Office of the Surgeon General. The administration 
        has not nominated a new appointee, and the office's 
        function is not essential to the Nation's health.

  - Terminate Ineffectual Federal Funding for Physical Fitness 
        and Sports. The council has demonstrated no notable 
        impact on the Nation's health. The Appropriations 
        Committee eliminated funding in the fiscal year 1996 
        House-passed bill.

  - Eliminate Data Analysis Funding for the President's Failed 
        Health Plan. These are funds appropriated to assist the 
        President with the failed Health Security Act, which 
        the administration has abandoned. The act was not 
        passed, and the funds are no longer needed. These funds 
        were cut in the fiscal year 1995 rescission bill.

  - Streamline Administrative Costs for the Office of the 
        Secretary. Salaries and expense accounts should be 
        reduced as programs and functions are consolidated and 
        reformed. This proposal reduces S&E expenditures for 
        the Office of the Assistant Secretary for Health.

    Consolidate Duplicative Bureaucracy by Transferring the 
Mine Safety and Health Administration to the Occupational 
Safety and Health Administration, and Reduce the Combined 
Agency. The Mine Safety and Health Administration protects the 
safety and health of miners. The Occupational Safety and Health 
Administration performs much the same role in promulgating 
health and safety standards for nonmining industries. According 
to a recent report by the Heritage Foundation, this separate 
treatment is unnecessary. ``Of the 6,271 job-related 
fatalities, only 80, or 1.3 percent, occurred in the coal/
metal-nonmetal mining industry,'' the report said. ``In 
contrast, 15 percent of the fatalities took place in 
construction, 14 percent in agriculture, and 12 percent in 
manufacturing.'' Yet none of these industries has a separate 
agency to oversee safety and health.

    Maintain Current Payment Date for Civilian Retiree Cost-of-
Living Adjustment Through 2002. As recommended by the 
President, this is the Function 550 component of this provision 
setting COLA receipt dates for Public Health Service retirees. 
The primary portion of the policy setting COLA receipt dates is 
contained in Function 600.

    Reduce Department of Health and Human Services Overhead. 
This proposal calls for efficiency savings in indirect overhead 
expenses, such as spending on travel and transportation of 
persons and things; shipping; printing and reproduction; and 
operation and maintenance of facilities. These savings will 
result from improved performance, not from any changes to the 
programmatic activities of the Department. Reductions have not 
been assumed in those costs that are closely related to the 
Department's central function. The budget resolution recommends 
that the Department head should decide on how to distribute 
these assumed savings among the categories identified above, as 
well as other overhead costs.

                       FUNCTION 550: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Accept the administration's funding for                                                                         
 the Health Resources and Services                                                                              
 Administration:                                                                                                
    Budget authority......................     3,087      -215      -215      -250      -250      -250      -250
    Outlays...............................     3,054       -32      -114      -226      -238      -249      -249
Incorporate Indian health care services                                                                         
 and facilities into a new native American                                                                      
 block grant:                                                                                                   
    Budget authority......................     1,987         0         0         0      -112      -112      -112
    Outlays...............................     2,032         0         0         0       -96      -104      -109
Terminate the National Institute for                                                                            
 Occupational Safety and Health:                                                                                
    Budget authority......................       129      -169      -169      -169      -169      -169      -169
    Outlays...............................       117       -49      -101      -126      -126      -126      -126
Consolidate health data collection and                                                                          
 analysis function in the department of                                                                         
 Health and Human Services:                                                                                     
    Budget authority......................        65       -68       -68       -68       -68       -68       -68
    Outlays...............................       123       -12       -51       -68       -68       -68       -68
Eliminate unnecessary funding in Office of                                                                      
 the Secretary, accept administration's                                                                         
 funding level for departmental                                                                                 
 management:                                                                                                    
    Budget authority......................       160        -3        -8       -22       -22       -22       -22
    Outlays...............................       121        -2        -6       -17       -20       -22       -22
Consolidate duplicative bureaucracy by                                                                          
 transferring the Mine Safety and Health                                                                        
 Administration to the Occupational Safety                                                                      
 and Health Administration, and reduce the                                                                      
 combined agency:                                                                                               
    Budget authority......................       449       -90       -90       -90       -90       -90       -90
    Outlays...............................       455       -81       -90       -90       -90       -90       -90
Reduce Department of Health and Human                                                                           
 Services overhead:                                                                                             
    Budget authority......................        NA      -398      -398      -478      -478      -597      -797
    Outlays...............................        NA      -339      -398      -466      -478      -580      -767
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 550: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Maintain the current date of civilian                                                                           
 retiree cost of living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority......................       167        -1        -1        -1        -1        -1        -1
    Outlays...............................       167        -1        -1        -1        -1        -1        -1
----------------------------------------------------------------------------------------------------------------

                     Function 600: Income Security

    Treat Persons Who Voluntarily Leave Military Service the 
Same as Civilians With Regard to Unemployment Insurance 
Benefits. Currently, only members of the Armed Forces can file 
for and receive unemployment insurance benefits when they 
voluntarily leave their jobs. Providing these benefits to 
persons who have chosen to quit their jobs can lead to 
prolonging their period of unemployment. All persons who choose 
to leave their current jobs should be treated equally under 
unemployment insurance.

    Reform the Earned Income Credit. President Clinton has 
proposed several reforms to the Earned Income Credit [EIC] to 
reduce fraud and limit payment of the credit to persons with 
substantial sources of unearned income. The budget assumes 
adoption of these recommendations, including requiring a valid 
taxpayer identification number on all returns seeking EIC 
payments and limiting the amount of investment income persons 
can receive while qualifying for the EIC. In addition to these 
proposals from the President, the budget assumes eliminating 
EIC eligibility to persons with no qualifying children. The 
expansion of the EIC to childless workers in 1993 included a 
class of part-time workers who were specifically excluded from 
EIC eligibility when the credit was created in the 1970's. Only 
persons who work part time qualify for the maximum EIC 
childless workers benefit, and persons who work full time year-
round at the minimum wage qualify for a benefit worth about $40 
in 1996. This represents less than 2 cents per hour of earned 
income. We should not increase taxes on families with children 
whose breadwinners work full time or on two jobs to provide a 
wage subsidy for childless part-time workers. The budget also 
assumes a faster phaseout of EIC benefits to take into account 
the effect of the $500 per-child family tax credit policy 
contained in the revenues section.

    Reform the Federal Employees Compensation Act [FECA]. 
Currently, there is no permanent system for reviewing workers 
compensation claims from Federal employees periodically to 
ensure that they remain disabled and eligible for benefits. 
FECA beneficiaries currently receive a nontaxable benefit worth 
up to 80 percent of their salary for as long as they remain 
disabled. This proposal establishes a permanent system of roll 
management for FECA beneficiaries, which reviews the status of 
persons whose conditions are likely to improve every 3 years.

    Fund Commodity Assistance Program at President's Level 
Through 2000. The budget resolution assumes adoption of the 
President's recommended outyear policy change for this program 
through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Fund Food Program Administration at President's Level 
Through 2000. The budget resolution assumes adoption of the 
President's recommended outyear policy change for this program 
through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Accept President's Reduction in Outyear Funding for the 
Child Care and Development Block Grant. The budget resolution 
assumes adoption of the President's recommended outyear policy 
change for this program through fiscal year 2000, with funding 
frozen at the President's recommended level for that year 
through fiscal year 2002.

    Accept President's Proposal for Railroad Retirement 
Windfall Benefits. The budget resolution assumes adoption of 
the President's recommended outyear policy change for this 
program through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Restore Equity in Unemployment Assistance. This is the 
Function 600 component of the provision affecting benefit 
payments. The remainder of the proposal appears in Function 
500.

    Create a Rural Development Block Grant. The rental 
assistance portion of the rural development block grant appears 
in this Function; other portions of the grant also appear in 
Functions 300, 370, and 450. The President has recommended 
reductions in this program; the budget resolution assumes his 
recommendation.

    Technical Adjustment for Railroad Unemployment Reforms. 
This represents the Function 600 portion of this adjustment. 
See ``Revenues'' for the revenue associated with these reforms. 
These reforms are intended to be deficit neutral over time and 
will allow the Railroad Unemployment System to mirror State 
unemployment systems.

    Accept the Administration's Proposal for Refugee 
Assistance. The budget resolution accepts the administration's 
proposed levels for refugee assistance through 2000, then 
maintains that level through 2002.

                       FUNCTION 600: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Fund Commodity Assistance Program at                                                                            
 President's level through 2000:                                                                                
    Budget authority......................       166         0        -8       -22       -37       -37       -37
    Outlays...............................       168         0        -7       -21       -36       -37       -37
Fund Food Program Administration at                                                                             
 President's level through 2000:                                                                                
    Budget authority......................       108         0        -6       -15       -23       -23       -23
    Outlays...............................       107         0        -5       -14       -22       -23       -23
Accept President's reduction in out year                                                                        
 funding for child care and development                                                                         
 block grant:                                                                                                   
    Budget authority......................       935         0         0       -57      -145      -145      -145
    Outlays...............................     1,030         0         0       -37      -111      -141      -145
Accept President's proposal for railroad                                                                        
 retirement windfall benefits:                                                                                  
    Budget authority......................     4,558        -8       -29       -46       -64       -64       -64
    Outlays...............................     4,536        -8       -29       -46       -64       -64       -64
Create a rural development block grant:                                                                         
    Budget authority......................       541         0       -43       -88      -133      -133      -133
    Outlays...............................       489         0       -11       -26       -45       -64       -83
Reduce refugee assistance:                                                                                      
    Budget authority......................       405       -23       -54       -85      -117      -117      -117
    Outlays...............................       405       -13       -37       -67       -98      -111      -116
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 600: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Treat persons who voluntarily leave                                                                             
 military service the same as civilians                                                                         
 with regard to unemployment insurance                                                                          
 benefits:                                                                                                      
    Budget authority......................       317      -210      -201      -203      -207      -213      -221
    Outlays...............................       317      -210      -201      -203      -207      -213      -221
Reform the earned income credit:                                                                                
    Budget authority......................    20,397    -1,712    -1,752    -1,779    -1,847    -1,901    -2,009
    Outlays...............................    20,397    -1,712    -1,752    -1,779    -1,847    -1,901    -2,009
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................       163        -4       -20       -15        -5        -6        -7
    Outlays...............................       163        -4       -20       -15        -5        -6        -7
Restore equity in unemployment benefits:                                                                        
    Budget authority......................       214      -112      -208      -185      -184      -187      -190
    Outlays...............................       214      -112      -208      -185      -184      -187      -190
Technical adjustment for railroad                                                                               
 unemployment reforms:                                                                                          
    Budget authority......................        NA        12        12        10        12        10        12
    Outlays...............................        NA        12        12        10        12        10        12
Reduce annual adjustment factors to cover                                                                       
 operating costs only: \1\                                                                                      
    Budget authority......................    10,156         0         0         0         0         0         0
    Outlays...............................    19,642       -26       -83      -124      -147      -151      -153
Reduction of section 8 annual adjustment                                                                        
 factors (AAF) for units without tenant                                                                         
 turnover: \1\                                                                                                  
    Budget authority......................    10,156       -18      -159      -209      -358      -360      -545
    Outlays...............................    19,642       -81      -229      -350      -448      -526      -589
----------------------------------------------------------------------------------------------------------------
\1\ These two components are part of the overall reform of assisted housing.                                    

             Function 700: Veterans' Benefits and Services

    Round Down Fiscal Year 1997 Compensation COLA. The VA pays 
monthly cash benefits to veterans who have service-connected 
disabilities. The basic amounts of compensation paid are based 
on percentage-of-disability ratings (multiples of 10 percentage 
points) assigned to the veteran. A veteran whose disability is 
rated 30 percent or more disability also receives additional 
compensation for a spouse, children, and dependents. OBRA 1993 
provided that the COLA would be rounded down to the next lower 
whole percentage point. This proposal would permanently extend 
this provision.

    Apply New DIC COLA Rate to all DIC Recipients. The VA pays 
dependency and indemnity compensation [DIC] to the survivors of 
service members or veterans who died from a disease or injury 
incurred or aggravated during military service. For deaths on 
or after January 1, 1993, surviving spouses are paid $810 per 
month and, if the deceased veteran was totally disabled for a 
continuous period of at least 8 years immediately prior to 
death, an additional $177 per month. For deaths prior to 
January 1, 1993, surviving spouses may receive the higher of 
DIC under the new system or the old system determined by the 
pay grade of the deceased veteran. OBRA 1993 limited the fiscal 
year 1994 COLA for DIC paid under the older determination 
process to one-half the COLA applying to DIC paid for deaths 
after January 1, 1993.

    Lift Prohibition on Home Loan Debt Collections. This 
proposal authorizes the VA to refer a veteran's home loan debt 
to the Internal Revenue Service for offset against income tax 
refunds or, in the case of debtors who are Federal employees, 
to the debtor's employing agency for offset against salary or 
wages.

    Extend Real Estate Mortgage Investment Conduits. This 
recommendation authorizes the VA to guarantee the timely 
payment of principal and interest to purchasers of real estate 
mortgage investment conduits [REMIC's]. REMIC's are used to 
bundle and market home loan mortgages.

    Repeal the Davenport Decision. This proposal would restrict 
vocational rehabilitation benefits to only those veterans who 
have service-connected disabilities that are substantially 
linked to their employment handicaps. Since 1917, when the 
first vocational rehabilitation law was passed, a causal nexus 
between a veteran's service-connected disability and an 
employment handicap has been included in the authorizing 
legislation as a precondition to entitlement to vocational 
rehabilitation benefits for service-disabled veterans. When 
this legislation was rewritten in 1980 this express language 
was omitted, inadvertently the VA believes. In March 1995, the 
Court of Veterans Appeals invalidated VA regulations that based 
a veteran's entitlement to vocational rehabilitation services 
under chapter 31 on a requirement that the veteran's service-
connected disability materially contributed to employment 
handicap (Davenport v. Brown). As a result, Mr. Davenport, who 
has a 10-percent disability rating based on a fungus infection 
on one of his toes, was eligible for the considerable VA 
rehabilitation benefits. Indeed, as a result of the Court of 
Veterans Appeals ruling in Davenport, almost any veteran who 
has at least a service-connected disability of 10 percent is 
eligible for vocational rehabilitation benefits as long as that 
veteran also has a disabling condition, service-connected or 
nonservice-connected, that causes an impairment to employment 
which has not been overcome by prior developed skills.

    Permanently Extend Authority to Collect Copayments for 
Prescription Medications. The VA is currently authorized to 
collect a $2 copayment for each 30-day supply of outpatient 
prescription drugs prescribed for conditions which are not 
related to the treatment of a service-connected disability. 
(Veterans with a service-connected condition rated 50 percent 
or more and low-income veterans are exempted.) This proposal 
would permanently extend this authority, which has already been 
approved by Congress on a temporary basis on three separate 
times.

    Permanently Extend Authority to Recover Costs From Health 
Insurers of Veterans for Nonservice-Related Conditions. The VA 
has permanent authority to collect payment from private health 
insurance companies for medical care given to veterans with no 
service-related disabilities. The VA also has temporary 
authority, through fiscal year 1998, to recover from private 
health insurance companies the medical costs of veterans who do 
have service-related disabilities, when such veterans receive 
care for conditions not related to their service-related 
disabilities. This OBRA-1993 provision would be made permanent 
under this proposal.

    Permanently Extend Income Verification for Medical Care 
Cost Recovery. This recommendation would extend permanently 
VA's authority to check the income of veterans using Social 
Security numbers/internal revenue service records to determine 
eligibility of veterans for means-tested medical care.

    Permanently Extend Income Verification for Pension 
Eligibility. The VA currently is able to access IRS data to 
verify incomes reported by beneficiaries for establishing 
eligibility for pensions. This OBRA-1990 provision, extended 
through fiscal year 1998 by OBRA 1993, would be made permanent 
under this proposal.

    Permanently Extend Pension Limit to Persons in Medicaid 
Nursing Home. OBRA 1990 placed a $90 monthly limit on VA needs-
based pension benefits paid to veterans or survivors without 
dependents receiving care in a Medicaid-approved nursing home. 
This limit of $90 is effective through fiscal year 1998. This 
proposal would permanently extend the limit.

    Permanently Extend 0.75-Percent Loan Fee for Housing Loans 
and Extend Authority for Higher No-Bid Rate in Housing 
Programs. The VA's mortgage guarantee program makes it possible 
for veterans to buy homes with little or no downpayment, and at 
favorable rates. The primary cost of the program comes from 
defaults and subsequent property foreclosures. The VA charges 
veterans who do not have a service-connected disability a basic 
fee to use the VA Home Loan Guarantee Program. OBRA 1993 
increased these fees by 0.75 percent of the loan amount for 
loans closed between October 1, 1993 and September 30, 1998. 
This proposal would permanently extend this 0.75-percent 
addition to the basic fees.
    The VA uses a ``no-bid'' formula to determine the least 
expensive alternative to dispose of foreclosed property. This 
proposal would make permanent a modification to the no-bid 
formula which requires VA to consider its ``losses sustained on 
the resale of the property'' when establishing the rate.
    OBRA 1993 established a fee of 3 percent of the amount of 
the loan, with less than 5-percent downpayment, for a veteran 
who previously obtained a VA-guaranteed home loan. The 
increased fee applies in the case of second and subsequent 
loans closed between October 1, 1993 and September 30, 1998. 
This provision would make this higher rate permanent.

    Repeal the Gardner Decision. In 1994, the Supreme Court 
issued the Gardner decision which extended disability 
compensation to veterans in cases where no liability was found 
on the part of the VA hospital. This provision clarifies 
statutory intent that compensation is only available when VA is 
found at fault.

                         FUNCTION 700: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Round down fiscal year 1997 compensation                                                                        
 COLA: \1\                                                                                                      
    Budget authority......................    14,979       -17       -38       -58       -77      -105      -139
    Outlays...............................    13,794       -16       -36       -56       -81       -98      -136
Apply new DIC COLA rate to all DIC                                                                              
 recipients: \1\                                                                                                
    Budget authority......................    14,979        -7       -14       -22       -31       -38       -44
    Outlays...............................    13,794        -6       -14       -22       -33       -34       -43
Lift prohibition on home loan debt                                                                              
 collections:                                                                                                   
    Budget authority......................        61       -90         0         0         0         0         0
    Outlays...............................        61       -90         0         0         0         0         0
Extend real estate mortgage investment                                                                          
 conduits:                                                                                                      
    Budget authority......................        89        -5        -5        -5        -5        -5        -5
    Outlays...............................        89        -5        -5        -5        -5        -5        -5
Repeal the Davenport Decision:                                                                                  
    Budget authority......................     1,360       -20       -39       -56       -56       -56       -57
    Outlays...............................     1,360       -20       -39       -56       -56       -56       -57
Permanently extend authority to collect co-                                                                     
 payments for prescription medications:                                                                         
    Budget authority......................   \2\ -32         0         0       -38       -40       -42       -44
    Outlays...............................   \2\ -32         0         0       -38       -40       -42       -44
Permanently extend authority to recover                                                                         
 costs from health insurers of veterans                                                                         
 for non-service related conditions:                                                                            
    Budget authority......................  \2\ -196         0         0      -220      -229      -238      -247
    Outlays...............................  \2\ -196         0         0      -220      -229      -238      -247
Permanently extend income verficaition for                                                                      
 medical care cost recovery:                                                                                    
    Budget authority......................    \2\ -6         0         0        -7        -7        -8        -8
    Outlays...............................    \2\ -6         0         0        -7        -7        -8        -8
Permanently extend income verification for                                                                      
 pension eligibility:                                                                                           
    Budget authority......................     3,012         0         0       -10       -20       -30       -40
    Outlays...............................     2,771         0         0       -10       -20       -30       -40
Permanently extend pensino limit to                                                                             
 persons in medicaid nursing homes:                                                                             
    Budget authority......................     3,012         0         0      -462      -513      -452      -504
    Outlays...............................     2,771         0         0      -462      -513      -452      -504
Permanently extend 0.75-percent loan fee                                                                        
 for housing loans and etend authority for                                                                      
 higher no-bid rate in housing programs:                                                                        
    Budget authority......................        89         0         0      -164      -160      -156      -153
    Outlays...............................        89         0         0      -164      -160      -156      -153
Repeal the Gardner Decisison: \1\                                                                               
    Budget authority......................    14,979       -24       -63      -103      -144      -187      -223
    Outlays...............................    13,794       -22       -60      -100      -152      -173      -220
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the compensation account.                                                             
\2\ Negative number denotes cash in-flow to the federal government.                                             

                Function 750: Administration of Justice

    Phase Out Federal Funding for the Legal Services 
Corporation. The Legal Services Corporation [LSC] is one of 
several organizations intended to provide the poor with access 
to free legal aid in civil matters. Too often, however, lawyers 
funded through Federal LSC grants have focused on political 
causes and class action lawsuits rather than helping poor 
Americans solve their legal problems. Lawyers have used the LSC 
grants to file lawsuits against welfare reform. A phaseout of 
Federal funding for the LSC will not eliminate free legal aid 
to the poor. State and local governments, bar associations, and 
other organizations already provide substantial legal aid to 
the poor. The phaseout of Federal funding would just end the 
most controversial and counterproductive legal representations. 
This proposal continues the 3-year Federal funding phaseout 
proposed in the fiscal year 1996 budget resolution.

    Eliminate the Associate Attorney General Position and 
Office. The Presidentially appointed Associate Attorney General 
position is an unneeded level of bureaucracy, which should be 
eliminated. This position is not part of the formal Department 
of Justice structure and is unnecessary to implement 
Departmental policies. Instead, this position has been used to 
reward politically connected friends of the President.

    Restore Local and State Authority in Community Relations. 
The Federal Community Relations Service [CRS] provides 
assistance to communities in preventing and resolving disputes 
and difficulties between ethnic and racial groups. These 
laudable goals, however, can be far better addressed by local, 
State, and nongovernmental institutions ``on the ground,'' 
where potential problems exist, than by a centralized, ``one-
size-fits-all'' approach.

    Terminate Ineffective Funding for the State Justice 
Institute [SJI]. The State Justice Institute funds research and 
demonstration projects and distributes information about ways 
to administer justice. The Institute provides no actual 
services and has not improved the administration of justice at 
the Federal or State level, and should be eliminated.

    Terminate the U.S. Parole Commission. The Comprehensive 
Crime Control Act of 1984 abolished the U.S. Parole Commission 
and instituted mandatory sentencing for all offenders whose 
crimes were committed after November 1, 1987. Although the 
Commission is to be abolished on November 1, 1997, 10 years 
after the implementation of the U.S. Sentencing Guidelines, 
there is a proposal to extend its life. This proposal opposes 
the extension of the U.S. Parole Commission. Abolishing the 
Commission and distributing its current workload to other 
offices will have little or no effect on pending cases.

    Accept Administration Savings Proposals. This proposal 
adopts the President's funding reduction in such programs as 
the Department of Justice--general administration; U.S. Secret 
Service--salaries and expenses; Equal Employment Opportunity 
Commission--salaries and expenses; and HUD, Management and 
Administration--salaries and expenses.

                       FUNCTION 750: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase out Federal funding for the legal                                                                         
 Services Corporation:                                                                                          
    Budget authority......................       278      -183      -278      -278      -278      -278      -278
    Outlays...............................       293      -161      -267      -278      -278      -278      -278
Eliminate the Associate Attorney General                                                                        
 position and office:                                                                                           
    Budget authority......................         2        -2        -2        -2        -2        -2        -2
    Outlays...............................         2        -2        -2        -2        -2        -2        -2
Restore local and State authority in                                                                            
 community relations:                                                                                           
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................         8        -3        -5        -5        -5        -5        -5
Terminate ineffective funding for the                                                                           
 State Justice Institute:                                                                                       
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................        11        -1        -3        -4        -5        -5        -5
Terminate the U.S. Parole Commission:                                                                           
    Budget authority......................         5        -3        -5        -5        -5        -5        -5
    Outlays...............................         6        -3        -5        -5        -5        -5        -5
Accept the Administration's savings                                                                             
 proposals:                                                                                                     
    Budget authority......................       892       -16       -56       -84      -125      -125      -125
    Outlays...............................       797       -14       -51       -81      -120      -125      -125
----------------------------------------------------------------------------------------------------------------

                    Function 800: General Government

    Repeal Title V of the McKinney Act. This proposal repeals a 
provision of the McKinney Homeless Assistance Act that gives 
right of first refusal in the disposal of surplus Federal 
properties to groups providing aid to the homeless. These 
groups would retain eligibility to obtain these properties, but 
would lose preferential treatment. The proposal saves funds 
primarily by limiting the Federal Government's exposure to 
litigation and increasing the appraisal value of surplus 
Federal property.

    Eliminate the Council of Economic Advisers. The Council of 
Economic Advisers was established to advise the President on 
the economy and policies for economic growth. The is a 
duplicative program since the President already has at his 
disposal numerous experts on economic matters located 
throughout the administration.

    Eliminate the Joint Committees on Printing and Library. 
With reduced responsibilities for the Government Printing 
Office [GPO], Congress can eliminate the Joint Committees on 
Printing and the Joint Committee on the Library of Congress. 
Oversight of a smaller GPO would be performed by the Senate 
Committee on Rules and Administration and the House Committee 
on Oversight.

    Reduce Funding for the Executive Office of the President by 
15 Percent. When he took office, the President promised major 
reductions in executive branch staff, especially in the White 
House. This proposal would carry out the President's pledge.

    Reduce Funding for the General Accounting Office. The 
General Accounting Office is undergoing a 25-percent staff 
reduction that started in 1992. This reduction would absorb 
savings that should result from these reductions.

    Restructure the Department of the Interior's Territorial 
and International Affairs. The Department of the Interior is 
responsible for promoting the economic and political 
development of insular areas under the jurisdiction of the 
United States. The Secretary originates and implements Federal 
policy for the territories; coordinates certain operating and 
construction projects; and provides information services and 
technical assistance. This proposal would eliminate all 
territorial assistance and funding, except funding for the 
brown tree snake. It would terminate grants to the Northern 
Mariana Islands, but fund American Somoa.

    Open a Small Portion of the Coastal Plain of ANWR for 
Exploration. This is the Function 800 component of the proposal 
that appears in Function 300. In this function, payments are 
made to the State of Alaska.

    Accept Administration Savings Proposals. This proposal 
adopts the President's funding reduction in such programs as 
Treasury Buildings and Annex Repair and Restoration; Library 
Buildings and Grounds; Administering the Public Debt; Senate 
Office Building; White House Repair and Restoration; Capitol 
Power Plant; GSA--Policy and Operations; OPM--Salaries and 
Expenses; National Archives and Records Administration--
Operating Expenses; and JFK Assassination Review Board. This 
recommendation also eliminates the Office of Technology 
Assessment, which was included in the fiscal year 1996 budget 
resolution to be eliminated.

    Impose a 6-Year Moratorium on Construction and Acquisition 
of New Federal Buildings. This recommendation places a hold on 
General Services Administration's acquisition and construction 
of all new office spaces and courthouses. This proposal allows 
an exemption in the cases of Federal buildings destroyed by 
unforeseen disasters or acts of God.

    Reduce the Department of Treasury Overhead. This proposal 
calls for efficiency savings in indirect overhead expenses, 
such as spending on travel and transportation of persons and 
things; shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the Department. Reductions have not been assumed 
in those costs that are closely related to the Department's 
central function. The budget resolution recommends that the 
Department head should decide on how to distribute these 
assumed savings among the categories identified above, as well 
as other overhead costs.

    Reform the Department of Interior's Minerals-Related 
Agencies. The budget resolution assumes reforms in Function 300 
that will lead to a more efficient royalty collection process. 
These reforms will lead to higher rents and royalties derived 
from the Outer Continental Shelf [OCS] [Function 950], and also 
higher mineral leasing payments being paid to the States 
[Function 800].

                       FUNCTION 800: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate the Council of Economic                                                                               
 Advisers:                                                                                                      
    Budget authority......................         3        -2        -3        -3        -3        -3        -3
    Outlays...............................         3        -2        -3        -3        -3        -3        -3
Eliminate the Joint Committee on Printing                                                                       
 and Library:                                                                                                   
    Budget authority......................         1        -1        -1        -1        -1        -1        -1
    Outlays...............................         1        -1        -1        -1        -1        -1        -1
Reduce funding for the Executive Office of                                                                      
 the President by 15 percent:                                                                                   
    Budget authority......................       201       -30       -30       -30       -30       -30       -30
    Outlays...............................       191       -30       -30       -30       -30       -30       -30
Reduce funding for the General Accounting                                                                       
 Office:                                                                                                        
    Budget authority......................       374       -30       -30       -30       -30       -30       -30
    Outlays...............................       363       -26       -27       -29       -30       -30       -30
Restructure the Department of the                                                                               
 Interior's Territorial and International                                                                       
 Affairs:                                                                                                       
    Budget authority......................        25       -16       -16       -16       -16       -16       -16
    Outlays...............................        46       -10       -16       -16       -16       -16       -16
Accept the Administration's savings                                                                             
 proposals:                                                                                                     
    Budget authority......................       696       -44       -90      -138      -186      -186      -186
    Outlays...............................       740       -32       -81      -129      -176      -183      -184
Impose a 6-year moratorium on construction                                                                      
 and acquisition of new Federal buildings:                                                                      
    Budget authority......................        66      -545      -545      -545      -545      -545        -0
    Outlays...............................       151       -16       -71      -186      -354      -491      -512
Reduce Department of Treasury overhead:                                                                         
    Budget authority......................        NA      -271      -271      -325      -325      -406      -541
    Outlays...............................        NA      -230      -271      -317      -325      -394      -521
----------------------------------------------------------------------------------------------------------------


                                                                                                                
                          FUNCTION 800: ADDITIONAL MADATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal title V of the McKinney Act:                                                                             
    Budget authority......................   \1\ -10        -3        -3        -3        -3        -3        -3
    Outlays...............................   \1\ -10        -3        -3        -3        -3        -3        -3
Restructure the Department of the                                                                               
 Interior's Territorial and International                                                                       
 Affairs:                                                                                                       
    Budget authority......................        28         7         7         7         7         7         7
    Outlays...............................        46        15        20        16        11         4        -1
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority......................       508         0       575         0       400         1         1
    Outlays...............................       508         0       575         0       400         1         1
Reform the Department of the Interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority......................       508         3         4         2         1         0         0
    Outlays...............................       508         3         4         2         1         0         0
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                       Function 920: Allowances0

    Allow an Open Season for CSRS Participants to Convert to 
FERS. An open season would permit current employees who are 
participants in CSRS to convert to FERS. This will reduce the 
unfunded liability in CSRS to the degree that the option is 
exercised, and move people from a system that costs the 
government 25.4 percent of payroll to one that costs 12.4 
percent of payroll. An advantage for employees is that they 
could fully participate in TSP, gaining the 5-percent employer 
match and qualifying for the tax deferral of up to 10 percent. 
The open season that CSRS participants were granted when FERS 
was created resulted in 5 percent of CSRS participants 
selecting the new system. At that time, there was no C or F 
funds in TSP, and no 10-year track record of TSP performance 
such as we now have for the C fund, which has earned an average 
annual return of 13 percent in that time period. Portions of 
this option also appear in Function 950 and Revenues.

    Reform the Federal Employees Compensation Act. This is the 
Function 920 component of this proposal, which involves savings 
from agency reimbursements for FECA payments as a result of 
ongoing roll management. Other components of this policy appear 
in Functions 500 and 600.

    Contract Out Government Printing Orders of Less than 
$1,000. This proposal calls for savings governmentwide by 
contracting out printing services and requiring that all 
Federal agencies use a credit card to purchase small printing 
jobs of less than $1,000.

    Reduce the Number of Political Appointees. This proposal 
would cap the number of political appointees at 2,300. The term 
``political appointee'' refers to employees of the Federal 
Government who are appointed by the President and certain 
policy advisors. Some political appointees must have Senate 
confirmation. This proposal would not only eliminate about 500 
positions, but it would also save time in the Senate used for 
confirmation.

    Reduce Independent Agencies' Overhead. This proposal calls 
for efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of agencies. Reductions have not been assumed in 
those costs that are closely related to each agencies' central 
function. The budget resolution recommends that the department 
head should decide on how to distribute these assumed savings 
among the categories identified above, as well as other 
overhead costs. This recommendation does not assume overhead 
reduction in Environmental Protection Agencies and National 
Aeronautics and Space Administration.

    Provide Contingency and Emergency Funds. This proposal 
provides more than $4.5 billion in contingency and emergency 
funds. The Conference Report to H.R. 3019, the Balanced Budget 
Down Payment Act, II, rescinded $1 billion of disaster relief 
funds that were provided in the disaster relief and disaster 
relief contingency accounts in Public Law 104-19. The conferees 
indicated that the rescission:

        * * * will leave the Federal Emergency Management 
        Agency approximately $1,300,000,000 short of known or 
        expected requirements by the end of fiscal year 1997. 
        As such, it is expected that FEMA will request an 
        approximate supplemental budget request to meet 
        necessary requirements at an early point during fiscal 
        year 1997.

This proposal provides for the anticipated request by FEMA. In 
addition, eight subcommittees of the House Committee on 
Appropriations--Agriculture; Commerce, Justice, State; Defense; 
Energy and Water; Foreign Operations; Interior; Military 
Construction; and Transportation--provided emergency 
appropriations as part of H.R. 3019. For fiscal year 1997, the 
budget resolution provides for $3.2 billion to pay for 
emergencies that may occur.

                       FUNCTION 920: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              est.   -----------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS participants                                                                      
 to convert to FERS:                                                                                            
    Budget authority......................         0        50        50        50        50        60        60
    Outlays...............................         0        50        50        50        50        60        60
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................        NA         0        -2       -10       -23       -25       -28
    Outlays...............................        NA         0        -2       -10       -23       -25       -28
Contract out Government printing orders of                                                                      
 less than $1,000:                                                                                              
    Budget authority......................        NA       -40       -55       -55       -55       -55       -55
    Outlays...............................        NA       -38       -54       -55       -55       -55       -55
Reduce the number of political appointees:                                                                      
    Budget authority......................       318        -3       -39       -80       -81        -7       -45
    Outlays...............................       318        -3       -38       -78       -81       -10       -43
Reduce independent agencies' overhead:                                                                          
    Budget authority......................        NA      -230      -230      -276      -276      -345      -460
    Outlays...............................        NA      -195      -230      -269      -276      -334      -442
Provide contingency and emergency funds:                                                                        
    Budget authority......................        NA     4,562         0         0         0         0         0
    Outlays...............................        NA       200       800     1,681     1,681       200         0
----------------------------------------------------------------------------------------------------------------

            Function 950: Undistributed Offsetting Receipts

    Allow an Open Season for CSRS Participants to Convert to 
FERS. This is the Function 950 component of the proposal, which 
is fully described in the Function 920 discussion in this 
appendix. This portion of the proposal includes agency 
employers share Social Security tax payments and agency 
contributions to the CSRDF for employees who choose to switch 
from CSRS to FERS.

    0Increase Agency Contributions to Retirement Trust Funds by 
1.5 Percentage Points for CSRS Employees Beginning in Fiscal 
Year 1997. Under the Federal Retirement System, the government 
is required to contribute the full normal cost of accruing 
pension benefits for its employees in the Civil Service 
Retirement and Disability Trust Fund. The full normal cost for 
a CSRS employee is 25.4 percent of payroll. Currently, those 
costs are distributed 7 percent to the employee, 7 percent to 
the agency, and 11.4 percent to the Treasury. This proposal 
shifts 1.5 percent of that contribution from the Treasury to 
the employee's agency, thus making the cost of that employee to 
the agency closer to the true cost of his future retirement 
benefits. This results in a mandatory savings of $3.867 billion 
since the additional cost is transferred from the Treasury to 
the agencies without raising the discretionary spending caps. 
This proposal was included in the Conference Report for the 
Balanced Budget Act.

    Broaden and Extend Spectrum Auctions. The Omnibus Budget 
Reconciliation Act of 1993 granted the Federal Communications 
Commission [FCC] limited authority to auction new licenses to 
use the radio spectrum. The authority, however, was limited to 
a 5-year period ending on September 30, 1998, and did not 
extend to many classes of new licenses. The law excluded 
licenses issued to profitmaking businesses that did not charge 
a subscription fee for telecommunications services. This 
proposal, which was also contained in the Balanced Budget Act 
that President Clinton vetoed, broadens and extends spectrum 
auctions, requires the Federal Communications Commission to 
auction 100 megahertz of spectrum located below 3 gigahertz and 
requires the Department of Commerce to reallocate from Federal 
to non-Federal use a single frequency band of at least 20 
megahertz.

    Sell the Alaska Power Administration [APA]. As provided for 
in the Balanced Budget Act [BBA], the committee again 
reiterates its support for the sale of APA. The 
administration's National Performance Review stated that: 
``[t]he Federal Government should divest its interest in the 
Alaska Power Administration.'' There is no need for Federal 
involvement in this issue since it deals solely with assets 
located within one State. This proposal sells the APA in 
accordance with the terms of the purchase agreements negotiated 
in 1989 between the Department of Energy and the proposed 
purchasers. [Note: This Function includes only the proceeds 
from the asset sale; the remaining transactions appear in 
Function 270.]

    Privatize the Naval Petroleum and Oil Shale Reserves and 
Sell Additional Assets. This reflects the asset sale component 
of this proposal.The remaining transactions appear in Function 
270.] In addition, the President has recommended selling 
additional assets. The budget resolution assumes the sale of 
additional assets. It recognizes, however, that the committees 
of jurisdiction will select the specific assets.

    Reform the Department of Interior's Minerals-Related 
Agencies. The budget resolution assumes reforms in Function 300 
that will lead to a more efficient royalty collection process. 
These reforms will lead to higher rents and royalties derived 
from the Outer Continental Shelf [OCS] (Function 950), and also 
higher mineral leasing payments being paid to the States 
(Function 800).

    Sell Governors Island. Governors Island, situated in New 
York harbor, houses the largest Coast Guard facility in the 
world. To reduce its operating costs, the Coast Guard has 
developed a streamlining plan that includes closing and 
relocating the Coast Guard facilities on Governors Island.
    This proposal would require the Administrator of the 
General Services Administration to sell Governors Island at 
fair market value. It also would give the State of New York and 
the City of New York a right of first refusal to purchase the 
property. The sale would be exempt from the law and regulations 
that currently apply to the disposal of real property by the 
Federal Government.

    Sell Air Rights Adjacent to Union Station. This provision 
directs the Administrator of the General Services 
Administration to sell approximately 16.5 acres of air rights 
adjacent to Union Station at fair market value, in a manner to 
be determined by the Administrator.

                         FUNCTION 950: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS                                                                                   
 participants to convert to FERS:                                                                               
    Budget authority.....................     21,684       -40       -40       -40       -40       -50       -50
    Outlays..............................     21,684       -40       -40       -40       -40       -50       -50
Increase Agency contributions to                                                                                
 retirement trust funds by 1.5 percentage                                                                       
 points for CSRS employees:                                                                                     
    Budget authority.....................     15,702      -566      -536      -525      -514      -501      -489
    Outlays..............................     15,702      -566      -536      -525      -514      -501      -489
Broaden and extend spectrum auctions:                                                                           
    Budget authority.....................  \1\ -4,90                                                            
                                                   0         0    -1,400    -2,600    -4,400    -5,200    -5,600
    Outlays..............................  \1\ -4,90                                                            
                                                   0         0    -1,400    -2,600    -4,400    -5,200    -5,600
Sell Alaska Power Administration:                                                                               
    Budget authority.....................          0         0       -70         0         0         0         0
    Outlays..............................          0         0       -70         0         0         0         0
Privitize the Naval petroleum and oil                                                                           
 shale reserves and sell additional                                                                             
 assets:                                                                                                        
    Budget authority.....................          0    -1,500         0         0         0         0      -600
    Outlays..............................          0    -1,500         0         0         0         0      -600
Reform the Department of the Interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority.....................  \1\ -2,70                                                            
                                                   0         0        -5        -7        -7        -7        -7
    Outlays..............................  \1\ -2,70                                                            
                                                   0         0        -5        -7        -7        -7        -7
Sale of Governors island:                                                                                       
    Budget authority.....................          0         0         0      -500         0         0         0
    Outlays..............................          0         0         0      -500         0         0         0
Sell air rights adjacent to Union                                                                               
 Station:                                                                                                       
    Budget authority.....................          0         0       -40         0         0         0         0
    Outlays..............................          0         0       -40         0         0         0         0
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                     Additional Revenue Provisions

    Allow an Open Season for CSRS Participants to Convert to 
FERS. An open season would permit current employees who are 
participants in CSRS to convert to FERS. This will reduce the 
unfunded liability in CSRS to the degree that the option is 
exercised, and move people from a system that costs the 
government 25 percent of payroll to one that costs 12 percent 
of payroll. An advantage for employees is that they could fully 
participate in TSP, gaining the 5 percent employer match and 
qualifying for the tax deferral of up to 10 percent. The open 
season that CSRS participants were granted when FERS was 
created resulted in 5 percent of CSRS participants selecting 
the new system. At that time, there was no C or F funds in TSP, 
and no 10-year track record of TSP performance such as we now 
have for the C fund, which has earned an average annual return 
of 15 percent in that time period. Portions of this proposal 
also appear in Functions 920 and 950.

    Increase Employee Contributions to Retirement by One-Half 
Percentage Point for CSRS, FERS and Postal Service Employees as 
Proposed by the President. When the Federal Retirement System 
was created in 1920, costs of maintaining the system were 
expected to be shared 50-50 between Federal employees and the 
government. Historically, as system costs grew, the employee 
contribution was increased. Employee contributions were 
increased in 1929, 1939, 1949, 1959, & 1969. However, the 
employees share has not been raised since 1969, even though 
benefits have increased substantially as a result of 
significant levels of inflation and frequent COLA adjustments 
in the 1970's and 1980's. In contrast, Social Security payroll 
taxes (the ``employees share'' of Social Security) have risen 
59 percent since 1970. Employees currently contribute 28 
percent of the resources needed to finance Federal retirement 
benefits, while taxpayers contribute 72 percent of the needed 
funds. By increasing the contributions current employees make 
by half of a percentage point phased in over the next 3 years, 
we can narrow the amount of Federal bailout needed to make good 
on future retirement benefits for Federal employees. Civil 
Service Retirement System employees will see their 
contributions increase from 7 percent of pay to 7.5 percent of 
pay, while FERS employees will see their contributions 
increased from .8 percent to 1.3 percent. This proposal was in 
the Balanced Budget Act and the President's 1997 budget 
submission.

    Improve Federal Debt Collection Procedures. Among the debt 
collection proposals which are assumed in this function is 
enactment of a continuous levy authority for the Internal 
Revenue Service to enhance collection of delinquent tax debt. A 
nonrevenue debt collection enhancement proposal is assumed in 
Function 950.

    Technical Adjustment for Railroad Unemployment Reforms. 
This represents the revenue portion of this adjustment. See 
Function 600 for the benefit change associated with these 
reforms. These reforms are intended to be deficit neutral over 
time and will allow the Railroad Unemployment System to mirror 
State unemployment systems.

    Replace the One-Dollar Bill with a New Dollar Coin. Dollar 
bills constitute approximately 45 percent to 50 percent of all 
notes produced annually by the Bureau of Engraving and 
Printing. One-dollar notes circulate on average only 18 months 
and must be frequently printed and purchased. By contrast, the 
costs of coins are substantially lower because coins have lower 
handling expenses and remain in circulation for up to 30 years. 
The savings for this recommendation stem from reductions in the 
costs of producing and maintaining the Nation's supply of 
currency at the Federal Reserve. [In addition to the above 
savings, replacing one-dollar notes with one-dollar coins would 
produce indirect effects on the Federal budget. These indirect 
effects save $1.1 billion over 6 years. Consequently, the 
savings are reflected in two components in the table below.]

    Reform the Earned Income Credit. This is the revenue 
portion of the proposal to reform the Earned Income Credit. The 
proposal is described fully in Function 600.

                                           ADDITIONAL REVENUE CHANGES                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                          Revenue change \1\                    
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS participants                                                                      
 to convert to FERS.......................  ........       -10       -10       -10       -10       -10       -10
Increase employee contributions to                                                                              
 retirement by one-half percentage point                                                                        
 for CSRS, FERS, and Postal Service                                                                             
 employees................................  ........       265       427       543       558       568       585
Improve Federal debt collection procedures  ........       301       302       302       202       103       105
Technical adjustment for railroad                                                                               
 unemployment reforms.....................  ........         0         3        10        23        22        -2
Replace the one-dollar bill with a new one-                                                                     
 dollar coin..............................  ........         0         0         0        80       110       115
Replace the one-dollar bill with a new one-                                                                     
 dollar coin (seniorage)..................  ........         0         0       -77      -224      -343      -418
Reform the earned income credit...........  ........     1,400     1,434     1,456     1,511     1,555     1,645
Sell Alaska Power Administration..........  ........         0        -1        -1        -1        -1        -1
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes revenue losses.                                                                     

    Sell the Alaska Power Administration. The budget resolution 
assumes that this transaction will go forward using tax-free 
financing.


                               appendix 2



                     Mandate and Regulatory Reform

                              ----------                              


               Unfunded Mandate and Regulatory Budgeting

    The fiscal budget reflects only one part of the Federal 
Government's impact on the nation and the economy. Government 
also extends its size and scope through its power to issue 
regulations on private businesses and families and to 
promulgate mandates on State and local governments. The 
enactment of the Unfunded Mandates Reform Act of 1995 (Public 
Law 104-44) is a strong step toward controlling the number and 
magnitude of future unfunded mandates by ensuring greater 
congressional accountability about the actual costs of mandates 
on State and local governments in the legislative process. The 
104th Congress also has made significant progress in repealing 
or reforming a variety of mandates that have been particularly 
onerous for States and localities. These reforms, which were 
recommended in the report accompanying the House Budget 
Resolution for Fiscal Year 1996 (H. Con. Res. 67) are described 
below. In the current budget resolution report, the Budget 
Committee offers further recommendations for reform of unfunded 
Federal mandates. Congress's achievements in mandate and 
regulatory reform could be made a regular practice through the 
budget process itself--by reflecting the costs of regulations 
and mandates should be reflected in the Federal budget, with an 
eye toward reducing their impact on the economy (as indicated 
by the costs measured as a percentage of Gross Domestic Product 
[GDP]), and subjected to annual votes in the Congress.
    Federal regulations and mandates represent indirect 
government spending. They divert monies away from private 
families, businesses, neighborhoods, and communities, and 
toward governmentally mandated objectives. Regulations and 
mandates transfer power and decisionmaking from neighborhoods, 
local communities, and States to Washington, DC. In short, 
regulations and mandates represent hidden taxes and spending.
    Federal regulations have skyrocketed over the past 25 
years, exploding at the same unsustainable rate as government 
spending. An estimated 10 percent to 20 percent of national 
output is consumed and controlled by government regulation. 
According to the Clinton administration's own estimates, annual 
regulatory costs have reached $647 billion, or $6,565 to $8,869 
per family. When the costs of regulations and mandates are 
added to the costs of taxes, the average American must work 
until July 13 each year to pay the costs of government.
    Other indicators of regulatory costs confirm the explosion 
in Federal regulations. The Federal Register, the annual 
compilation of new regulations, climbed from 12,000 pages in 
1950 to 70,000 pages in 1993 to about 90,000 now. The number of 
Federal regulators--government officials paid to enforce 
regulations--increased from 70,000 in 1970 to 130,000 in 1995. 
The budgets of Federal regulatory agencies has ballooned by 
nearly 200 percent over this same period.
    Just as Federal spending raises taxes and deficits, which 
slow economic growth and limit opportunity, government 
regulations and mandates often slow the improvement of living 
standards. Regulations add an estimated 33 percent to the cost 
of building an airplane engine, 95 percent to the costs of a 
new vaccine, and $3,000 to the costs of a new car. Regulations 
impede job creation. Private-sector job growth has been 
inversely proportional to the proliferation Federal regulators. 
Job creation grew during the 1980's, when the number of 
regulators and regulations were reduced, and it shrank during 
the regulatory heydays of the 1970's, the late 1980's, and the 
Clinton years.
    What's worse, many regulations are issued without public 
accountability. Too often, past Congresses have passed 
legislation authorizing private sector regulatory mandates 
without regard for the cost. Instead, unelected, unaccountable 
government officials at agencies have been provided with 
unchecked, unlimited power to impose regulatory mandates. In 
other situations, Congress has considered regulatory costs, 
carefully balancing proposed legislation to achieve maximum 
governmental objectives at minimum private sector costs. But 
Congress has not incorporated this balance in law. Accordingly, 
agencies are provided unlimited power to issue regulations, 
regardless of the pricetag, even when Congress has carefully 
crafted legislation to minimize costs. Because regulations are 
not subject to cost caps or the budget process, there current 
system produces regulation without representation.
    If the budget is to reflect an accurate and complete 
blueprint of the costs and expenses of the Federal Government, 
the budget must also include the costs imposed by government 
regulations and mandates. A full and complete accounting of the 
government's size and scope requires a statement of the costs 
of government regulations and mandates. The costs of 
regulations and mandates should be determined as part of--and 
should be reflected in--the Federal budget process.
    One kind of Federal regulatory budget proposal would 
allocate to congressional authorizing committees fixed amounts 
of ``regulatory authority.'' The allocations would be capped so 
that the total regulatory costs on the economy would be reduced 
from their current level of 9 percent of Gross Domestic Product 
to 5 percent of GDP over 7 years. Such discipline could reduce 
the regulatory burden on the economy, while simultaneously 
permitting important health, safety, and environmental 
objectives to be met.
    A regulatory budget also would make government regulations 
and mandates accountable to the American people through the 
democratic process. Just as the president is required to 
submit, and the Congress is required to vote on, the level of 
taxes and Federal spending, Congress should vote on the level 
of regulations and mandates, which have the same effect as 
taxes and spending. The American people should be told--and 
their elected officials should be held accountable for--the 
level of hidden taxing and spending which regulations 
represent.
    In the 104th Congress, Budget Committee member Lamar S. 
Smith has introduced the Regulatory Accountability Act. This 
legislation provides the first step to establishing a 
regulatory budget. It restores accountability to the rulemaking 
process. It also provides agencies with appropriate flexibility 
to ensure that regulations can be improved to better improve 
public health, safety, and the environment. The Budget 
Committee will work over the coming months to consider this 
proposal, and other ideas to restore public accountability by 
providing a full accounting of the activities of the Federal 
Government.

                  Accomplishments in Regulatory Reform

    Last year, the report on the House Budget Resolution 
provided a list of the most expensive and onerous unfunded 
Federal mandates and Federal regulations that the committee on 
the Budget recommended for repeal or reform. In the year since 
then, the 104th Congress has successful acted on a number of 
these regulations. Below is a summary of the key repeals or 
reforms:

    Repeal of the Crumb Rubber Mandate, Section 1038(b) 
[ISTEA]. The Intermodal Surface Transportation Efficiency Act 
of 1991 included a Federal mandate on States that required 
crumb rubber from scrap tires be used in an annual fixed 
percentage of asphalt. This unprecedented mandate was opposed 
by State transportation departments, county officials, and the 
highway construction industry due to its added cost and mixed 
performance, and because of unanswered questions regarding the 
environmental and health consequences and recyclability. By 
1997, the additional costs due to the crumb rubber mandate 
could have been as high as $1 billion, according to the U.S. 
Department of Transportation. This mandate was repealed in the 
National Highway System Designation Act (H.R. 2274, Public Law 
104-59).

    Repeal of the National Maximum Speed Limit Mandate. Title 
23 of the U.S. Code, section 154, prohibited States from 
establishing speed limits beyond 55 miles an hour on specified 
highways, even if higher speed limits were appropriate and 
safe. Some routes fitting certain population and other criteria 
were allowed to post maximum limits of 65 miles an hour. States 
carrying maximum limits higher than allowed by the mandate were 
subject to termination of Federal highway funding. Because of 
the mandate, States had to divert significant resources that 
could have been used for crime prevention and law enforcement, 
additional motorist services, DUI enforcement, and a variety of 
other public services. This mandate also was repealed under the 
National Highway System Designation Act (H.R. 2274, Public Law 
104-59).

    Repeal of the Motorcycle Helmets Mandate. Under the 
mandate, States that failed to have mandatory front seat belt 
and motorcycle helmet laws in place by October 1, 1993, were 
notified by the Federal Highway Administration that 1.5 percent 
of their highway construction funds would be transferred to 
their highway safety program. This mandate also was repealed 
under H.R. 2274 (Public Law 104-59).

    Restoration of State Authority in Meeting Certain Clean Air 
Act Mandates. Under H.R. 2274 (Public Law 104-59) and H.R. 325 
(Public Law 104-70), States are now allowed to meet ambient air 
quality standards without being required to implement either 
centralized test-only inspection and maintenance programs or 
the Employee Commute Option Program. The Employee Commute 
Option Program required private companies to undertake 
aggressive, affirmative efforts to reduce the number of work-
related vehicle trips.

    Repeal of the California Clean Air Federal Implementation 
Plan [FIP]. Under the mandate, the EPA was required to put 
three areas of California--Los Angeles, Sacramento, and 
Ventura--in compliance with the air quality requirements in the 
1977 Clean Air Act. The 1,700-page draft plan would have 
imposed draconian limits on emissions, ranging from factories 
to automobiles and trucks and even to lawnmowers. The EPA 
estimated that the FIP could have cost Californians between $4 
billion and $6 billion annually. According to the State of 
California, when fully implemented in 2010, the loss would have 
totaled ``at least $8.4 billion in direct costs, $17.2 billion 
in output, and 165,000 jobs.'' The estimate did not include the 
impact on transportation companies in the rest of the State 
that would have been affected by the rule. This mandate was 
repealed under H.R. 889 (Public Law 104-6).

    Withdrawal of the Enhanced Monitoring Rule. The Enhanced 
Monitoring Rule was proposed by EPA to establish uniform 
pollution monitoring, recordkeeping, and reporting requirements 
for ``major sources'' of air pollution. Existing regulations 
have been highly effective in controlling air pollution, and 
EPA's own studies documented the likely massive costs of this 
new regulation. The EPA withdrew the rule.

    Prohibition on Development of OSHA Ergonomics Rule. The 
Occupational Safety and Health Administration was working on a 
rule that would require employers to take a number of actions 
to address repetitive motion injuries. These are injuries due 
to repeated hand, wrist, or other physical motions that cause 
or aggravate musculoskeletal disorders. Employers would have 
been required to write plans to prevent these injuries and to 
redesign work areas, modify work processes as needed. Private 
industry estimated that a similar rule proposed by California 
OSHA would cost $3.1 billion annually in that State alone. 
Other sources estimated the Federal rule would cost $21 
billion. OSHA announced in June 1995 that it would not issue 
any regulation, but that it would continue to study the matter. 
Public Law 104-134, the Omnibus Appropriations Act passed in 
Apri 1996, includes language prohibiting OSHA from developing 
an ergonomics rule.

    Modification of the Teenage Cardboard Bailer Rule. As 
currently implemented, this regulation prevents teenagers from 
certain kinds of safe and gainful employment. The 40-year-old 
regulation prohibits teenagers from loading paper bailers or 
compactors even when the machines are turned off, despite the 
fact that new technology and advanced features make the 
machines safe. The committee recommended that Hazardous 
Occupation Order No. 12 be modified to allow 16- and 17-year-
olds to load bailers that meet current American National Safety 
Institute worker safety standards. The House passed legislation 
making this needed change on October 24, 1995. The Labor-HHS 
appropriations bill for fiscal year 1996 also included language 
to prevent the use of funds to enforce this regulation. The 
committee hopes for a final resolution of this matter during 
this session.

    Repeal of the Boren Amendment Regulating Medicaid Payment 
Levels. The Boren amendment provides that Medicaid payment 
rates for hospitals and nursing facilities must be ``reasonable 
and adequate'' to meet the costs of ``efficiently and 
economically operated'' facilities in providing care that meets 
Federal and State quality and safety standards. Although the 
goal is laudable, it is disruptive to States' management of 
Medicaid for two reasons. First, the language is ambiguous and 
therefore has been the subject of numerous costly lawsuits 
against States by providers seeking higher payment levels. 
Second, the requirements of Boren do not make the payment 
levels dependent on the ability of the State to pay providers 
at this level. For example, it does not take into account the 
number of Medicaid recipients or the fiscal capacity of the 
State. The State is better able to determine the health care 
circumstances and needs prevailing in the State and the payment 
levels that would provide appropriate care. The Balanced Budget 
Act of 1995 included language repealing this amendment. In 
addition, the President Clinton's Medicaid proposal and the 
National Governors Association's proposal would also repeal the 
Boren amendment.

    Withdrawal of Sunglass Labeling Regulation. The FDA 
prepared a proposal that would have required sunglasses to meet 
certain ultraviolet transmittance characteristics in order to 
be exempt from current medical device premarket notification 
requirements. The FDA has withdrawn its proposed regulation.

    Termination of the FDA Reference List. Since April 1992, 
the Food and Drug Administration had been executing what the 
agency called the Medical Device Reference List. The reference 
list was a set of programs that the FDA's Center for Devices 
and Radiological Health used to link current good manufacturing 
practices [GMP] inspections to the agency's normal scientific 
review of premarket notification (510(k)) submissions. From 
April 1992 until the publication of a Public Notice in the 
Federal Register in October 1993, the existence of a reference 
list program had been kept secret from the medical device 
community and the public. Medical device manufacturers were 
placed on the reference list by being in violation of one or 
more of the FDA's good manufacturing practices regulations. 
Whether or not a medical manufacturer was placed on the 
reference list because of an alleged violation was completely 
at the discretion of the agency. The list was solely an 
internal FDA document, and no company was sure when, or even 
if, it had been placed on the list. Placement on this ``black 
list'' meant that the FDA would immediately halt work on any of 
the company's pending 510(k) applications. The FDA announced in 
June 1995 that it would no longer maintain this list, and it 
released the names of companies that previously had been on the 
list.

Recommended Reforms of Mandates on State, Local, and Tribal Governments

    The following recommendations were compiled after a review 
of various sources, including Governors, State legislators, 
local officials, and the Advisory Commission on 
Intergovernmental Relations' report titled ``The Role of 
Federal Mandates in Intergovernmental Relations.'' The specific 
recommendations, offered to the authorizing committees with 
jurisdiction over the mandates and regulations involved, are 
those of the majority members of the House Committee on the 
Budget.

 labor and employment mandates on state, local, and tribal governments

    Restore State and Local Authority over Labor Standards for 
State and Local Government Employees. Fair Labor Standards Act 
[FLSA]. The Federal Fair Labor Standards Act [FLSA] establishes 
minimum standards for wages, overtime compensation, equal pay, 
record keeping, and child labor for nearly every workplace in 
the United States. In 1974 FLSA was extended to the public 
sector and treated State and local governments the same as the 
private sector. FLSA overtime pay provisions have resulted in 
substantial litigation, with may State and local employees 
winning retroactive pay for work deemed by courts as overtime. 
The liability for many States is in the millions of dollars. 
The provisions of the FLSA applying to State and local 
government employees should be repealed. These are sovereign 
government units; their authority to determine labor standards 
for their own employees should not be usurped. The public 
accountability of elected officials and collective bargaining 
powers of employee unions provides adequate protection for 
workers.

    Restore State and Local Authority over Leave Policies for 
State and Local Government Employees. The Family and Medical 
Leave Act of 1993 requires State and local governments to 
provide eligible employees with up to 12 weeks of unpaid leave 
each year to care for a newborn, adopted or foster child. Leave 
also must be granted to care for a seriously ill child, parent, 
or spouse. In addition, employees may use unpaid family leave 
for serious personal illnesses. Medical insurance benefits must 
also be continued during the leave and employees must be 
reinstated into the same or an equivalent position after leave. 
The law forced State and local governments to revise 
longstanding personnel policies and created unfunded costs 
related to extending medical insurance coverage to employees on 
family and medical leave, to temporary hiring of replacement 
workers, and to additional training and personnel counseling 
activities. The provisions of the FMLA applying to State and 
local government employees should be repealed. These are 
sovereign government units; their authority to determine leave 
policies for their own employees should not be usurped. The 
public accountability of elected officials and collective 
bargaining powers of employee unions provides adequate 
protection for workers.

    Restore State and Local Authority over Occupational Safety 
and Health Standards for State and Local Employees. The 
Occupational Safety and Health Act [OSHA] of 1970 establishes 
standards for safe, healthy and productive work environments. 
State government and their political subdivisions are 
specifically excluded from the definition of ``an employer'' 
under the act. In the case of State governments and their 
political subdivisions, OSHA has no requirements unless a State 
volunteers to participate in the Federal program. States that 
volunteer to administer the Federal OSHA program within their 
jurisdictions are required to extend Federal requirements to 
all public employees in the State; 23 States have assumed 
responsibility for operating the Federal OSHA program. Two 
additional States have federally approved OSHA plans only for 
State and local government employees. Even in the remaining 
States, however, there many be an impact, or a perception of an 
impact, because some OHSA requirements are replicated in State 
laws or are perceived as mandatory even though they are not. 
Numerous complaints expressed about OSHA policies in both 
participating and nonparticipating States attest to the 
widespread misunderstanding about the law's coverage and 
substantial compliance costs. All States, not just the 
nonparticipating States, should be exempt from OSHA with regard 
to their own employees. This would allow all States to set 
there own health and safety standards, taking into 
consideration their priorities and budgetary constraints.

    Provide Local Flexibility in Overtime Pay for the Off-Duty 
Home Care of Canine and Rescue Unit Dogs. Under the Fair Labor 
Standards Act, local governments must treat time spent by 
officers in the care of canine and rescue unit dogs as 
compensable time and as part of their regular work hours. In 
the majority of cases the local governments already pick up the 
cost of the dogs' veterinary care and feeding and the upkeep of 
the canine units. The Federal requirement that officers be paid 
overtime for keeping the dogs in their homes has forced the 
closure of canine unit in many local communities. Therefore, 
local governments should have flexibility in determining 
overtime pay for these officers. Local governments are fully 
capable of reaching fair compensation agreements with the 
officers while keeping the canine units on the job.

    Restore State and Local Authority in Drug and Alcohol 
Testing of Government-Employed Commercial Drivers Drug and 
Alcohol Testing of Commercial Drivers. The Omnibus 
Transportation Employee Testing Act of 1991 (Public Law 102-
142, Title V) directs the Department of Transportation [DOT] to 
issue regulations establishing a program which ``requires motor 
carriers to conduct reemployment, reasonable suspicion, random, 
and post-accident testing of the operators of commercial motor 
vehicles for use * * * of alcohol or a controlled substance.'' 
The motor carrier requirements cover a substantial number of 
State and local government employees who have commercial 
drivers' licenses, and require them to undergo random drug and 
alcohol testing by certain deadlines. The law is inconsistent 
in that it includes some employer such as public works drivers, 
but excludes law enforcement and emergency workers from testing 
requirements. Strict drug and alcohol testing requirements for 
small rural communities and transportation systems with few 
employees create situations where cost of compliance are 
disproportionately high relative to potential findings. State 
and local governments are concerned about drug and alcohol 
problems and will take their own measures to insure that there 
drivers are not a threat to public safety. Therefore, the 
provisions of Public Law 102-142 making some State and local 
employees subject to Federal drug and alcohol testing 
requirements for commercial drivers should be repealed on the 
understanding that State and local governments will pursue 
appropriate testing on their own authority.

    Repeal the Davis-Bacon Act. Davis Bacon only applies to 
Federal Government contracts over $2,000 for construction, 
alteration, and/or repair work. The law requires such contracts 
to specify the minimum wages to be paid to various classes of 
laborers and mechanics employed under the contract. The minimum 
wages must be based on the wages determined by the Secretary of 
labor to be prevailing for the corresponding classes of 
laborers and mechanics employed on similar contacts in the 
city, town and village, or other civil subdivision of the State 
in which the work is to be performed. The Davis-Bacon 
regulation represents a hidden tax on construction jobs, 
inflates the costs of Federal construction, and destroys 
employment opportunities for minorities, small companies, and 
less skilled workers. The Act also has a serious impact on 
State, local, and tribal governments. Approximately 60 related 
Federal laws make compliance with Davis-Bacon provisions a 
condition-of-aid for grants to State and local governments 
(e.g., construction programs related to low-income housing, 
highways and waste water treatment facilities). Some of the 
Davis-Bacon related laws contain special exceptions concerning 
the way in which a grantee must comply with Davis-Bacon 
requirements, but most of them apply the law without 
modification. Compliance with the provisions is generally 
required even if the dollar amount of the Federal grant is a 
minimal share of the total project costs. State, local, and 
tribal governments should be able to manage their construction 
projects cost without Davis-Bacon preconditioned when the major 
share of the project is being funded by the State or local 
government. Besides potentially increasing cost, Davis-Bacon 
requirements impose extensive reporting and record keeping that 
may be especially burdensome for small projects, and may make 
it difficult for small local; businesses to compete.

    Repeal the Service Contracts Act. The McNamara Service 
Contract Act of 1965 is a tax on jobs similar to Davis-Bacon, 
except that it applies to service, rather than construction, 
contracts. The Act requires covered contractors and their 
successors to provide inflated wages and benefits at least 
equal to a locality's prevailing standards of those in a 
collective bargaining agreement of a previous contractor. As 
with Davis-Bacon, the inflated labor costs resulting from the 
Service Contract Act tends to deny employment opportunities for 
small companies, minorities, and less skilled workers.

     environmental mandates on state, local, and tribal governments

    Restore State and Local Authority in Developing Control 
Methods and Timetables for Implementing Federal Clean Water Act 
Standards. The Clean Water Act requires States to designate the 
uses of water, to develop water quality criteria to protect 
those uses, to monitor the condition of water, and to report on 
water quality every 2 years. States may administer a permit 
program for industrial and municipal pollution discharges and 
develop programs for the control of pollution from diffuse or 
nonpoint sources. Local governments are required, either 
directly by the Federal Government or indirectly through State 
implementation of Federal laws, to treat sewage to national 
standards and to control discharges from combined sewers and 
storm water drains. In the Federal Water Pollution Control Act 
Amendments of 1972, Congress provided for a comprehensive 
national program to protect water quality. Key provisions 
included national minimum standards for control of pollutants 
from industrial and municipal sources, additional controls in 
permits as needed to meet State standards, and significant 
grant assistance to support construction of municipal sewage 
treatment facilities. In effect, State and local governments 
ceded responsibility for water pollution controls to the 
Federal Government in return for substantial Federal financial 
aid. In 1987, the Federal Government changed the arrangement by 
making a transition from direct grants to capitalization of 
State loan funds. Loan funds reduce total costs for some 
projects, but they still require local government to pay 
virtually the entire costs of future pollution control projects 
since loans must be repaid to States, while grants were not 
repaid. In addition, the 1987 amendments required 
municipalities to remove harmful amounts of toxins from their 
sewage and to establish storm water management programs. 
Consequently, a national program originally supported and 
encouraged by State and local governments is no longer a 
balanced partnership to clean up the Nation's waterways. 
Federal requirements, especially those dealing with storm water 
drainage, have become increasingly stringent and expensive to 
implement. At the same time, the Federal funding to aid in the 
cleanup has virtually disappeared. Fully restoring the 
successful partnership requires a relaxation of inflexible 
standards and deadlines on State and local governments. State 
and local governments should be able to use the least costly 
alternatives and to work within their fiscal constraints. State 
and local governments traditionally have been concerned about 
reducing pollution, and they should be given authority to work 
constructively with Federal officials to design realistic 
programs that can be completed within technical and budgetary 
constraints.

    Enact Legislation Toward a Long-Term Goal of Returning to 
States the Full Responsibility for Safe Drinking Water. The 
Federal Safe Drinking Water Act regulates drinking water 
standards for the 58,530 waterworks serving 25 or more persons 
year-round, and for the nearly 140,000 additional public water 
systems that serve 25 or more persons on a less regular basis 
(schools, hospitals, restaurants). It establishes maximum 
levels for contaminants known or anticipated to occur in public 
water systems, establishes wellhead protection programs, 
certifies and identifies appropriate analytical and treatment 
techniques, and establishes public notification procedures. It 
requires drinking water suppliers to assume a wide range of 
responsibilities, including monitoring of the water supply. The 
safety of drinking water is a public health issue. Prior to 
1974, States had responsibility for the safety of drinking 
water, but they generally relied on standards set by the Public 
Health Service. Because drinking water endangers not only 
residents of a local community and State but also those 
traveling interstate, the regulation of drinking water may be 
justified as a national concern. It should be recognized, 
however, that other vital public health concerns, such as 
restaurant inspections, are the responsibility of State and 
local governments. Over the long term, this State and local 
authority should apply, once again, to drinking water as well. 
State and local concerns over the Safe Drinking Water Act hinge 
on what constitutes safe drinking water and how to achieve it 
in the most cost-effective way. These governments do not object 
to assuming the costs of providing safe drinking water, but 
some do object to incurring costs that in their opinion do not 
improve water quality. The existing law overreached in the 
standards and compliance requirements it imposed on local water 
systems. Amendments recently approved by the Senate will repeal 
some of the most onerous provisions, including mandatory 
additional tests for contaminants that are not a threat in 
local areas, and eased provisions for treatment of surface 
water supplies.

    Restore States' Role in Developing Measures for Meeting 
Federal Clean Air Standards. The Clean Air Act of 1977 requires 
States to submit for Federal approval plans for meeting air 
quality standards established by the Federal Government. The 
government will prepare a plan for any State that fails to 
comply. The Act spells out how to measure different types of 
pollution, the standards that must be met for each type of 
pollution, the specific compliance measures that may be taken, 
and the deadlines for those actions. Some Federal financial 
assistance for planning and implementation is authorized in the 
law, but each State must provide assurances that ``the state of 
general purpose local governments will have adequate personnel, 
funding, and authority under State and, as appropriate, local 
law to carry out such implementation plan.'' The initial demand 
for Federal help in controlling air pollution came from cities 
that were unable to act effectively on an individual basis. 
Because the Federal Government recognized the need to act on 
regional bases, and in recognition of the Federal system as 
viewed at that time, the States were encouraged by the Federal 
Government to assume responsibility for controlling air 
pollution and were given Federal grants to assist in 
implementing such controls. By 1970, only 21 States had 
submitted implementation plans, and the Federal Government 
decided it was necessary to set standards (including vehicle 
emissions) and to enforce State implementation. In 1990, 
amendments to the law targeted smaller pollution sources, 
including facilities owned by local governments. Governments in 
areas with moderate carbon monoxide pollution were required to 
adopt vehicle inspection and maintenance programs; areas with 
serious carbon monoxide pollution must use cleaner oxygenated 
fuels. Areas with moderate ozone pollution were required to set 
up inspection and maintenance programs and to require use of 
gasoline-pump devices to capture vapors. Failure to implement 
these programs can result in the loss of Federal highway funds. 
As the requirements have become increasingly detailed and 
specific, States have become implementers of Federal laws, and 
have increasingly lost discretion over how to implement them. 
As a result, the requirements often do not reflect conditions 
in a particular State or the preferences of the State's 
citizens. At the same time, States have received less Federal 
financial assistance for the administration of these laws. 
[Please Note: This recommendation assumes that any legal 
actions concerning Clear Air Act violations that are currently 
under way will not be affected.]

    Restore Local-State-Federal Partnership in Addressing 
Endangered Species. The Endangered Species Act of 1973 requires 
every Federal agency to ensure that any action it authorizes, 
funds, or carries out is not likely to jeopardize the continued 
existence of listed threatened and endangered species or the 
destruction or adverse modification of critical habitat. Under 
the law, State, local and tribal governments would also risk 
citizen lawsuits if the Fish and Wildlife Service (or the 
National Marine Fisheries Service) finds that the issuance of a 
Federal permit, license, or grant would lead to jeopardy of the 
listed species. There is an exemption process allowing 
consideration of economic factors, but these provisions are 
rarely used. State and local governments have an inadequate 
share of the decisionmaking authority in the management and 
planning decisions affecting threatened and endangered species. 
The listing process is rigid and limits State and local 
flexibility to apply the Act's provisions in their 
jurisdictions to meet local conditions. There is concern that 
valuable economic development activities within their 
boundaries, both public and private, are being impaired by 
strict Federal regulation. State, local and tribal governments 
should be full partners with the Federal Government in the 
preservation of threatened and endangered species. These 
governments should have shared authority for species 
protection, as well as flexibility to implement conservation 
plans for specific species within their boundaries. In 
addition, exemptions to ESA should be applied more extensively 
to minimize social and economic impact on State, local and 
tribal governments of recovery planning and listing procedures. 
Broader participation by State, local, and tribal governments 
will improve the data collection process and will allow 
biological science, economic constraints, and available 
management resources to be taken in account on a regional 
basis.

       education mandates on state, local, and tribal governments

    Of all government activities, education is the one that 
most clearly should fall under the jurisdiction of State and 
local governments and, above all, parents. Hence, the Committee 
on the Budget makes the following recommendations:

    Allow Local Communities to Educate Their Children by 
Eliminating the Goals 2000 Mandates. Education reform will be 
achieved by encouraging innovation and rewarding results of 
those educators at the local level. Goals 2000 increases 
funding for bureaucracy and imposes new regulations on States 
and localities. Public Law 104-134, the Omnibus Appropriations 
Act passed in April 1996, removes the requirement that the 
Secretary of Education must approve a plan before a State may 
continue to receive Goals 2000 funding, if the plan is approved 
by the Governor and State education director. Meanwhile, many 
States have already chosen to reject the Federal Goals 2000 
program because of its intrusiveness in local education.

    Eliminate the Bilingual Education Mandates and Allow Local 
Communities to Determine Haw to Best Educate Their Children. 
The bilingual instructional services program requires that the 
Secretary of Education award at least 75 percent of the funds 
provided to bilingual education programs, where students are 
taught both English and their native language. Numerous studies 
have shown that heavy reliance on the pupil's native language 
can delay English proficiency. Eliminating the mandate for 
bilingual education would free local school districts to offer 
the most effective programs for their students.

    Promote Swifter and Less Costly Resolution of Disputes 
Under the Individuals with Disabilities Education Act. The 
Individuals with Disabilities Education Act [IDEA] as amended, 
requires local school systems to provide a free appropriate 
education for children with disabilities. The law provides that 
Federal aid to States for elementary and high school education 
will be available only after a State has a Federally approved 
plan for educating children with disabilities. In addition, 
IDEA requires participating States to establish specific 
administrative procedures by which parents or legal guardians 
may challenge the identification, evaluation, or educational 
placement of the children. Requirements of the law are 
conditions of Federal assistance or duties arising from 
participation in this voluntary program. IDEA has provided 
millions of students with disabilities access to a free and 
appropriate education, but the law imposes significant cost and 
administrative burdens on State and local governments. The law 
also limits the flexibility of States and local governments to 
combine IDEA funds with other funding streams to meet the 
unique need of their children. The resolution of disputes under 
the Act also has become overly litigious and has added to 
implementation cost. Currently, local agency decisions may be 
challenged in either State or Federal court after the 
exhaustion of administrative appeals, and, in some cases, 
parents bringing actions on behalf of their children may be 
entitled to reimbursement for their costs, including attorney 
and court fees. The publication titled ``Federal Court Rulings 
Involving State, Local and Tribal Government: Calendar Years 
1994,'' by the Advisory Commission on Intergovernmental 
Relations, emphasizes the litigious nature of this law. The 
appropriate reform would relieve States from prescriptive and 
costly administrative mandates. It also would require 
alternative dispute resolutions practices and that any court 
challenge based on the Federal law should be brought by State 
agencies, not by individuals. The 104th Congress is currently 
considering amendments to the IDEA that include some of these 
reforms.

    Reform the Individuals with Disabilities Education Act 
[IDEA] Mandates. Inflexibility of Federal mandates dealing with 
behavior disorder students, often purposefully violent, have 
tied the hands of school officials trying to create a safe 
structured atmosphere for the education of all students. Steps 
need to be taken to reform the Individuals with Disabilities 
Education Act [IDEA] and the ``Stay-Put'' provision which 
impairs and often stops local education officials from 
disciplining students that endanger the safety other students 
and the faculty. Similar mandates on the local education 
officials regarding the education of attention deficit disorder 
students have impaired local educators from maintaining the 
attention of other students while the attention disordered 
students have free rain to purposefully disrupt the educational 
atmosphere necessary for other students to learn. Currently, 
local challenges to dangerous and disruptive behavior at the 
local level have failed in may cases because of the costs and 
fear of a lawsuits based on the Federal law. Provisions should 
be made for voluntary mediation for parents and school 
officials with legal dispute regarding discipline of such 
students. Behaviorally disabled students must also not be 
exempted from the same punishments as other disabled students 
with disciplinary problems in such areas as mandatory 
suspensions for bringing drugs, weapons and firearms to school 
or assaulting students and teachers. This current variation 
sends the wrong message. Parents, States, and local school 
officials should adjust the disciplinary terms so that they are 
equally applied to all students. The 104th Congress is 
currently considering amendments to the IDEA that include some 
of these reforms.

    Restore Original Congressional Intent Regarding Athletic 
Opportunities Under Title IX. A policy interpretation 
clarifying regulation implementing Title IX of the Education 
Amendments of 1972 has resulted in the elimination of some 
athletic opportunity, primarily as a result of heavy reliance 
on the proportionality rule. The rule is supposed to be one 
option under a three-pronged test of accommodation of interests 
and abilities, but has been given undue deference. 
Proportionality has caused many colleges and universities to 
respond with the elimination of entire athletic teams. As the 
original intent of Congress was to eliminate discrimination, 
not athletic opportunity, Congress should move to clarify that 
implementation of Title IX should not allow for the elimination 
of athletic opportunities for anyone.

    transportation mandates on state, local, and tribal governments

    Provide Flexibility and Relief from Federal Mass Transit 
Mandates on Local Public Agencies. The Federal Government's 
involvement in transit has led to unwise State and local 
decisions, while precluding the adoption of cost effective 
operating methods. This is largely the result of expensive 
Federal mandates. Federal transit labor protections require 
transit agencies to pay up to 6 years of severance payments for 
some laid-off transit employees.

    Repeal Requirements That State and Local Governments 
Convert to Metric on a Federal Timetable as a Condition of 
Receiving Federal Aid. The Omnibus Trade and Competitiveness 
Act of 1988 requires that each Federal agency use the metric 
system of measurement in its procurement, grants, and other 
business-related activities, except to the extent that such use 
is impractical. The act permits the continued use of 
traditional weights and measure in nonbusiness activities. 
Based on this law, the Department of Transportation [DOT] had 
required State and local governments to covert to metric for 
local construction plans and specification by October 1, 1996. 
Public Law 104-59, the National Highway Designation Act of 
1995, extends this deadline to October 1, 2000.
    The Unfunded Mandates Reform Act of 1995 specifically 
requires the Advisory Commission on Intergovernmental Relations 
to consider requirements that State, local, and tribal 
governments use metric system measurements. The principal 
concern, expressed primarily by local governments, is the 
requirement to use metric measurements in the design and 
construction of Federally aided projects. Although most local 
governments may be technically able to prepare plans and 
specification in metric by the deadline, they cite several 
problems, including substantial costs. Another problem is that 
local contractors and suppliers are not used to working with 
metric measurements. As a result, the potential for mistakes in 
the bidding and construction process is significantly 
increased. In addition, metric measures will create problems 
for right-of-way acquisitions with property owners, surveyors, 
and local deed registries. States have made considerable 
progress in the transition to metric, but more than 2,200 
waivers have been necessary to relieve hardship situations. 
Despite the waivers, the deadline for conversions will create 
substantial problems for many local governments without 
corresponding benefits. Rather than require all States to 
implement metric requirements on the same timetable, a better 
approach is to encourage States that are well along on their 
conversions to continue assisting their local governments with 
the process. Successful implementation in these States will 
provide support for others to complete the conversions 
voluntarily.

    Cancel Implementation of Mandate on Minimum Reflectivity 
for Traffic Signs and Pavement Markings. The FHWA is currently 
developing minimum standards for the retroreflectivity of 
pavement markings (striping) and signs, which all States are to 
follow. The States are capable of making their own judgments 
about the visibility of their signs and road markings. A 
Federal mandate is not required.

    Restore State Authority Over Outdoor Advertising. ISTEA 
prohibits erection of new signs on designated scenic highways. 
If States fail to prohibit such signs, 10 percent of major 
highway apportionments would be withheld.

    Repeal Highway Program Administrative Costs Mandate. Title 
23 of the U.S. Code requires State transportation departments 
to maintain administrative staff beyond the minimum level 
necessary to deliver highway projects.

    Additional Transportation Mandates. The Intermodal Surface 
Transportation Efficiency Act of 1991 [ISTEA] amendments to the 
Highway Transit Act contain more than 100 mandates on State and 
local governments. In addition, Federal law contains 
approximately 50 mandates on State and local governments. One 
requires the payment of up to 6 years severance pay to some 
transit employees laid off. Other mandates discourage more 
efficient methods of operation. All these mandates should be 
reviewed for possible repeal.

         Additional Recommended Regulatory and Mandate Reforms

    Repeal the Motor Voter Act Mandate. This unfunded mandate 
on States increases the likelihood of electoral fraud and is 
unnecessary for effective civic participation. Many States have 
complained about this program and its costs. It is a well-known 
mandate that should be eliminated.

    Restore State Authority in Dealing with Problem Drivers. 
The Problem Drivers Pointer System [PDPS] creates a national 
registry for records on all problem drivers. States must check 
this system before issuing licenses. Under a threat of losing 
10 percent of their Federal highway funds, States were required 
to complete a link to the system by April 30, 1995. The 
National Highway Traffic Safety Administration has granted 
extensions to this deadline and has yet to apply any sanctions. 
The Federal Government does cover implementation costs. But the 
system may be unnecessary as long as States require drivers to 
be insured, which clearly would require insurers to do 
background checks. If a national system is warranted, it could 
be handled by a private-sector agency.

    Repeal Mandated Membership in the International Fuel Tax 
Agreement Mandate. States are required to become members of the 
International Fuel Tax Agreement by no later than October 1996. 
Failure to comply could cost them some of their Federal highway 
funds. States should not be required, at their own cost, to 
participate in such international agreements.

    Restore State and Local Responsibility in Implementing the 
Americans with Disabilities Act of 1990. The Americans with 
Disabilities Act prohibits discrimination against individuals 
with disabilities in employment, public services, and public 
accommodations. Any State or local government policies found to 
be inconsistent with ADA provisions are to be modified as soon 
as feasible. Each government program is to be examined for 
physical barriers to access and for remedial measures that need 
to be taken, but States and localities do not have to make 
facilities or programs accessible if it would constitute a 
``fundamental alteration'' or an ``undue burden.'' Structural 
changes are not required if there are other ways of providing 
access. The ADA takes important and warranted steps toward 
removing barriers to persons with disabilities. Yet despite the 
apparent flexibility allowed for its application, it has 
created implementation problems for State and local governments 
because of expensive retrofitting and service delivery 
requirements, confusing and ambiguous statutory language, and 
insufficient technical assistance provided by the Federal 
Government. With tight budgets and limited time to correct 
structural obstacles to improve public accommodations, it has 
been difficult for many governments to implement the extensive 
changes required. Structural changes to existing buildings to 
meet ``program accessibility'' requirements were to be made by 
January 26, 1995, a deadline not met by many State and local 
governments. Also, the use of terms ``reasonable 
accommodation,'' ``undue hardship,'' ``readily achievable,'' 
and countless other broad expressions in the law have subjected 
State and local governments to numerous lawsuits over legal 
interpretations of ADA. The penalties for noncompliance are 
severe, and legal costs can be substantial. Therefore, 
deadlines and requirements under the ADA should be modified to 
allow State and local governments to meet its goals in a manner 
that recognizes technical and budget constraints without 
abridging the national commitment to assuring access and 
opportunity for individuals with disabilities.

    Repeal the Public Utility Regulatory Policies Act [PURPA]. 
This act mandates that public utilities purchase power from 
cogeneration and small power (renewable energy) facilities at a 
price set by the States which may not exceed the utility's cost 
of producing or obtaining the power from alternative sources. 
This mandate, enacted during the government-created energy 
scare of the late 1970's, is based on the notion that 
insufficient energy resources caused the energy shortage. Today 
it forces companies into inefficient and ``politically 
correct'' resources.


                               appendix 3



              Who's Really Working to Balance the Budget?

                              ----------                              


            Congress Versus the Administration--a Chronology

      

------------------------------------------------------------------------
                     104th Congress            Clinton Administration   
------------------------------------------------------------------------
  .........                                                             
(1)JANUARY                                                              
 1995                                                                   
            ------------------------------------------------------------
19-........    House Speaker Newt Gingrich                              
              commits Congress to writing                               
              a comprehensive plan to                                   
              achieve a balanced budget by                              
              2002.                                                     
            ------------------------------------------------------------
26-........    House passes Balanced          Administration officials  
              Budget Amendment (H.J. Res.    publicly oppose balanced   
              1) by a vote of 300-132.       budget amendment.          
========================================================================
  .........                                                             
(1)FEBRUARY                                                             
 1995                                                                   
            ------------------------------------------------------------
1-.........    Congress begins work on                                  
              Contract With America tax                                 
              cuts and 7-year balanced                                  
              budget plan.                                              
            ------------------------------------------------------------
6-.........    House passes Line-Item Veto    President's Budget--      
              bill (H.R. 2) by a vote of     President submits 5-year   
              294-134.                       budget request that        
                                             maintains deficits of $200 
                                             billion a year by his own  
                                             administration's estimates.
                                             CBO estimates it would have
                                             deficit of $276 billion in 
                                             2000. Administration       
                                             officials insist that      
                                             balancing the budget is not
                                             necessary.                 
            ------------------------------------------------------------
22-........    House passes DOD Emergency                               
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              262-165.                                                  
========================================================================
                                                                        
                                                                        
  .........                                                             
(1)MARCH                                                                
 1995                                                                   
            ------------------------------------------------------------
16-........    Senate passes DOD Emergency                              
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              97-3.                                                     
                                                                        
            ------------------------------------------------------------
23-........    Senate passes Line-Item                                  
              Veto bill (S. 4) by a vote                                
              of 69-29.                                                 
            ------------------------------------------------------------
24-........    House passes Welfare Reform                              
              (H.R. 4) by a vote of 234-                                
              199 to restore the American                               
              family, reduce illegitimacy,                              
              control welfare spending,                                 
              and reduce welfare                                        
              dependence.                                               
========================================================================
  .........                                                             
(1)APRIL                                                                
 1995                                                                   
            ------------------------------------------------------------
5-.........    House passes Contract With                               
              America tax cuts, fully                                   
              offset with spending cuts                                 
              (H.R. 1215) by a vote of 246-                             
              188.                                                      
            ------------------------------------------------------------
6-.........    House passes conference                                  
              report on DOD Emergency                                   
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              343-80.                                                   
                                                                        
                                                                        
            ------------------------------------------------------------
10-........                                   President signs into law  
                                             DOD Emergency Supplemental/
                                             Rescissions bill (H.R. 889)
                                             (Public Law 104-6).        
========================================================================
                                                                        
  .........                                                             
(1)MAY 1995                                                             
            ------------------------------------------------------------
18-........    House passes conference                                  
              report on first Rescissions/                              
              Disaster Relief Emergency                                 
              Supplemental (H.R. 1158) by                               
              235-189.                                                  
                                                                        
            ------------------------------------------------------------
19-........    Senate defeats the                                       
              President's budget request                                
              by a vote of 0-99.                                        
            ------------------------------------------------------------
25-........    By a vote of 57-42, Senate                               
              passes budget resolution (H.                              
              Con. Res. 67), which lays                                 
              out a detailed plan for                                   
              balancing the budget by the                               
              year 2002 and provides tax                                
              relief to American families.                              
                                                                        
========================================================================
  .........                                                             
(1)JUNE                                                                 
 1995                                                                   
            ------------------------------------------------------------
7-.........                                   President vetoes first    
                                             Rescissions/Disaster Relief
                                             Emergency Supplemental     
                                             (H.R. 1158).               
            ------------------------------------------------------------
13-........                                   ``Plan'' Two--President   
                                             submits a 10-year budget   
                                             ``outline'' that           
                                             administration claims will 
                                             balance budget by 2005. CBO
                                             estimates more than $200   
                                             billion in deficits in each
                                             year of the ``plan.''      
------------------------------------------------------------------------
21-........    House passes Military                                    
              Construction appropriations                               
              bill (H.R. 1817) by a vote                                
              of 319-105.                                               
            ------------------------------------------------------------
22-........    House passes first                                       
              Legislative Branch                                        
              appropriations bill (H.R.                                 
              1854) by a vote of 337-87.                                
            ------------------------------------------------------------
29-........    House passes second                                      
              Rescissions/ Disaster Relief                              
              Emergency Supplemental (H.R.                              
              1944) by a vote of 276-151.                               
                                                                        
                                                                        
========================================================================
  .........                                                             
(1)JULY                                                                 
 1995                                                                   
            ------------------------------------------------------------
11-........    House passes Foreign                                     
              Assistance appropriations                                 
              bill (H.R. 1868) by a vote                                
              of 333-89.                                                
            ------------------------------------------------------------
12-........    House passes Energy and                                  
              Water appropriations bill                                 
              (H.R. 1905) by a vote of 400-                             
              27.                                                       
            ------------------------------------------------------------
18-........    House passes Interior                                    
              appropriations bill (H.R.                                 
              1977) by a vote of 244-181.                               
            ------------------------------------------------------------
19-........    House passes Treasury-                                   
              Postal appropriations bill                                
              (H.R. 2020) by a vote of 216-                             
              211.                                                      
------------------------------------------------------------------------
20-........    Senate passes first                                      
              Legislative Branch                                        
              appropriations bill (H.R.                                 
              1854) by voice vote.                                      
            ------------------------------------------------------------
21-........    Senate passes and clears                                 
              the second Rescissions/                                   
              Disaster Relief Emergency                                 
              Supplemental (H.R. 1944) by                               
              a vote of 90-7.                                           
                                                                        
                                                                        
            ------------------------------------------------------------
25-........    House passes Transportation                              
              appropriations bill (H.R.                                 
              2002) by a vote of 361-61.                                
            ------------------------------------------------------------
26-........    House passes Commerce-                                   
              Justice-State appropriations                              
              bill (H.R. 2076) by a vote                                
              of 272-151.                                               
            ------------------------------------------------------------
27-........  .............................    President signs into law  
                                             the second Rescissions/    
                                             Disaster Relief Emergency  
                                             Supplemental (H.R. 1944)   
                                             (Public Law 104-19).       
            ------------------------------------------------------------
31-........    House passes VA-HUD                                      
              appropriations bill (H.R.                                 
              2099) by a vote of 228-193.                               
========================================================================
  .........                                                             
(1)AUGUST                                                               
 1995                                                                   
            ------------------------------------------------------------
1-.........    Senate passes Energy and                                 
              Water appropriations bill                                 
              (H.R. 1905) by voice vote.                                
            ------------------------------------------------------------
4-.........    House passes Labor-HHS                                   
              appropriations bill (H.R.                                 
              2127) by a vote of 219-208.                               
            ------------------------------------------------------------
5-.........    Senate passes Treasury-                                  
              Postal appropriations bill                                
              (H.R. 2020) by voice vote.                                
------------------------------------------------------------------------
9-.........    Senate passes Interior                                   
              appropriations bill (H.R.                                 
              1977) by a vote of 92-6.                                  
            ------------------------------------------------------------
10-........    Senate passes                                            
              Transportation                                            
              appropriations bill (H.R.                                 
              2002) by a vote of 98-1.                                  
========================================================================
  .........                                                             
(1)SEPTEMBE                                                             
 R 1995                                                                 
            ------------------------------------------------------------
6-.........    House passes conference                                  
              report on first Legislative                               
              Branch appropriations bill                                
              (H.R. 1854) by a vote of 305-                             
              101.                                                      
            ------------------------------------------------------------
7-.........    House passes Defense                                     
              appropriations bill (H.R.                                 
              2126) by a vote of 294-125.                               
            ------------------------------------------------------------
8-.........    Senate passes Defense                                    
              appropriations bill (H.R.                                 
              2126) by voice vote.                                      
            ------------------------------------------------------------
19-........    Senate passes Welfare                                    
              Reform (H.R. 4) by a vote of                              
              87-12.                                                    
            ------------------------------------------------------------
20-........    Senate passes Agriculture                                
              appropriations bill (H.R.                                 
              1976) by a vote of 95-3.                                  
                                                                        
            ------------------------------------------------------------
21-........    Senate passes Foreign                                    
              Assistance appropriations                                 
              bill (H.R. 1868) by 91-9.                                 
            ------------------------------------------------------------
22-........    Senate passes conference                                 
              report on Military                                        
              Construction appropriations                               
              bill (H.R. 1817) by a vote                                
              of 86-14. Cleared for                                     
              President.                                                
                                                                        
------------------------------------------------------------------------
27-........    Senate passes VA-HUD                                     
              appropriations bill (H.R.                                 
              2099) by a vote of 55-45.                                 
            ------------------------------------------------------------
28-........    Senate attempts to end                                   
              Democrat filibuster of the                                
              Labor-HHS appropriations                                  
              bill (H.R. 2127), but fails                               
              by a vote of 54-46.                                       
                                                                        
            ------------------------------------------------------------
29-........    Senate passes Commerce-                                  
              Justice-State appropriations                              
              bill (H.R. 2076) by voice                                 
              vote.                                                     
                                                                        
            ------------------------------------------------------------
30-........  .............................    President signs into law  
                                             the first continuing       
                                             resolution (H.J. Res. 108) 
                                             (Public Law 104-31).       
========================================================================
  .........                                                             
(1)OCTOBER                                                              
 1995                                                                   
            ------------------------------------------------------------
3-.........  .............................    President vetoes the first
                                             Legislative Branch         
                                             appropriations bill (H.R.  
                                             1854), signs the Military  
                                             Construction appropriations
                                             bill (H.R. 1817) (Public   
                                             Law 104-32).               
            ------------------------------------------------------------
12-........    House passes conference                                  
              report on Agriculture                                     
              appropriations bill (H.R.                                 
              1976) by a vote of 288-132.                               
                                                                        
            ------------------------------------------------------------
19-........    By a vote of 231-201, House                              
              passes comprehensive                                      
              legislation (H.R. 2425) to                                
              preserve and protect                                      
              Medicare.                                                 
------------------------------------------------------------------------
21-........  .............................    President signs into law  
                                             the Agriculture            
                                             appropriations bill (H.R.  
                                             1976) (Public Law 104-37). 
            ------------------------------------------------------------
25-........    House passes the conference                              
              report on Transportation                                  
              appropriations bill (H.R.                                 
              2002) by a vote of 393-29.                                
            ------------------------------------------------------------
26-........    By a vote of 227-203, House                              
              passes Balanced Budget Act                                
              (H.R. 2491), providing tax                                
              cuts of $245 billion over 7                               
              years and achieving a                                     
              balanced budget by 2002.                                  
            ------------------------------------------------------------
28-........    By 52-47, Senate passes                                  
              Balanced Budget Act (H.R.                                 
              2491)                                                     
            ------------------------------------------------------------
31-........    House passes conference                                  
              report on Energy and Water                                
              appropriations bill (H.R.                                 
              1905) by a vote of 402-24.                                
                                                                        
                                                                        
                                                                        
========================================================================
  .........                                                             
(1)NOVEMBER                                                             
 1995                                                                   
            ------------------------------------------------------------
2-.........    Senate passes and clears                                 
              second Legislative Branch                                 
              appropriations bill (H.R.                                 
              2492) by voice vote.                                      
                                                                        
                                                                        
------------------------------------------------------------------------
8-.........    House passes second                                      
              continuing resolution (H.J.                               
              Res. 115) by a vote of 230-                               
              197.                                                      
            ------------------------------------------------------------
9-.........    Senate passes second                                     
              continuing resolution (H.J.                               
              Res. 115) by a vote of 50-                                
              46.                                                       
                                                                        
                                                                        
            ------------------------------------------------------------
10-........    House agrees to the Senate                               
              amendment to the temporary                                
              increase in the public debt                               
              bill (H.R. 2586) by a vote                                
              of 219-185. Cleared for                                   
              President.                                                
            ------------------------------------------------------------
13-........  .............................    President vetoes second   
                                             continuing resolution (H.J.
                                             Res. 115).                 
                                                                        
                                                                        
            ------------------------------------------------------------
15-........    House passes conference                                  
              report on Treasury-Postal                                 
              appropriations bill (H.R.                                 
              2020) by a vote of 374-52.                                
                                              Administration raids      
                                                                        
------------------------------------------------------------------------
16-........    House passes conference                                  
              report on Defense                                         
              appropriations bill (H.R.                                 
              2126) by a vote of 270-158.                               
                                                                        
            ------------------------------------------------------------
17-........    By a vote of 237-189, House                              
              passes conference report on                               
              Balanced Budget Act (H.R.                                 
              2491) which provides tax                                  
              cuts of $245 billion over 7                               
              years and makes policy                                    
              changes to achieve a                                      
              balanced budget by 2002.                                  
                                                                        
            ------------------------------------------------------------
18-........    House passes continuing                                  
              resolution (H.J. Res. 123)                                
              for Medicare and Social                                   
              Security administrative                                   
              funds, and VA benefits by a                               
              vote of 416-0.                                            
            ------------------------------------------------------------
19-........    Senate passes and clears                                 
              continuing resolution for                                 
              Medicare, Social Security,                                
              and VA (H.J. Res. 123) by                                 
              unanimous consent.                                        
                                              President signs into law  
                                                                        
                                                                        
------------------------------------------------------------------------
20-........    House passes further                                     
              continuing resolution (H.J.                               
              Res. 122) incorporating                                   
              language--agreed to by the                                
              President--saying Congress                                
              and the administration                                    
              ``shall enact'' legislation                               
              balancing the budget by not                               
              later than 2002 ``as                                      
              estimated by the                                          
              Congressional Budget                                      
              Office,'' by 421-4.                                       
                                              President signs continuing
                                                                        
            ------------------------------------------------------------
28-........                                                             
(1)  Budget                                                             
 negotiatio                                                             
 ns between                                                             
 administra                                                             
 tion                                                                   
 officials                                                              
 and                                                                    
 bicameral,                                                             
 bipartisan                                                             
 congressio                                                             
 nal                                                                    
 leadership                                                             
 begin.                                                                 
 Administra                                                             
 tion                                                                   
 refuses to                                                             
 lay down a                                                             
 plan by                                                                
 the                                                                    
 President                                                              
 balancing                                                              
 the budget                                                             
 in 7 years                                                             
 using CBO                                                              
 economics.                                                             
            ------------------------------------------------------------
29-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
30-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
========================================================================
  .........                                                             
(1)DECEMBER                                                             
 1995                                                                   
            ------------------------------------------------------------
1-.........  .............................    President fails to sign or
                                             veto the Defense           
                                             appropriations bill (H.R.  
                                             2126). Hence, the bill     
                                             becomes law (Public Law 104-
                                             61).                       
            ------------------------------------------------------------
5-.........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
6-.........    House passes conference        President vetoes the      
              report on Commerce-Justice-    Balanced Budget Act (H.R.  
              State appropriations bill      2491).                     
              (H.R. 2076) by a vote of 256-                             
              166.                                                      
------------------------------------------------------------------------
7-.........    Senate passes conference                                 
              report on Commerce-Justice-                               
              State appropriations bill                                 
              (H.R. 2076) by a vote of 50-                              
              48. Cleared for President.                                
                                              ``Plan'' Three--White     
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
11-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
12-........    Congressional Budget Office                              
              issues revisions of its                                   
              economic projections and                                  
              reestimates the Balanced                                  
              Budget Act using the new                                  
              figures. The new figures                                  
              show the BBA works even                                   
              better than expected--it                                  
              still balances the budget by                              
              2002 and results in deficits                              
              that are cumulatively $135                                
              billion lower than                                        
              previously estimated.                                     
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
13-........    House passes conference                                  
              report on Interior                                        
              appropriations bill (H.R.                                 
              1977) by a vote of 244-181.                               
            ------------------------------------------------------------
14-........    Senate passes conference                                 
              report on Interior                                        
              appropriations bill (H.R.                                 
              1977) by a vote of 58-40.                                 
              Cleared for President.                                    
                                                                        
------------------------------------------------------------------------
15-........    Congressional negotiators      ``Plan'' Four--           
              furnish the administration     Administration offers a    
              with a revised balanced        three-page summary of what 
              budget plan, adding back $75   it contends is a revised   
              billion in Medicare,           balanced budget offer. But 
              Medicaid, welfare,             the ``plan'' contains      
              education, and elsewhere.      virtually no differences   
                                             from the administration's  
                                             previous, unbalanced       
                                             proposal and still rejects 
                                             the use of CBO estimates,  
                                             as agreed to in the        
                                             November 20 continuing     
                                             resolution. CBO scores this
                                             ``plan'' as $69 billion out
                                             of balance in 2002.        
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
18-........    House passes resolution        President vetoes Interior 
              (H.J. Res. 132) reaffirming    appropriations bill (H.R.  
              that budget negotiations       1977).                     
              shall be based on CBO                                     
              numbers and shall achieve a                               
              balanced budget by 2002                                   
              using those numbers by a                                  
              vote of 351-40.                                           
                                                                        
            ------------------------------------------------------------
19-........    House defeats President's      President vetoes Commerce-
              fourth budget ``plan,''        Justice-State              
              which CBO says will still      appropriations bill (H.R.  
              have a deficit of $69          2076).                     
              billion in 2002, by a vote                                
              of 0-412.                                                 
            ------------------------------------------------------------
20-........    House passes continuing                                  
              resolution (H.J. Res. 134)                                
              for VA benefits by a vote of                              
              411-1.                                                    
            ------------------------------------------------------------
21-........    Senate passes resolution                                 
              (H.J. Res. 132) reaffirming                               
              that budget negotiations                                  
              shall be based on CBO                                     
              numbers and shall achieve a                               
              balanced budget by 2002                                   
              using those numbers by a                                  
              vote of 94-0.                                             
                                                                        
                                                                        
------------------------------------------------------------------------
22-........    Senate passes continuing                                 
              resolution (H.J. Res. 134)                                
              for VA benefits by unanimous                              
              consent.                                                  
                                                                        
  .........    House and Senate pass and                                
              clear continuing resolution                               
              (H.J. Res. 136) for welfare                               
              benefits, DC, and VA                                      
              benefits.                                                 
                                              President signs into law  
            ------------------------------------------------------------
29-........  .............................    Administration withholds  
                                             $14.5 billion in interest  
                                             payments to an employee    
                                             trust fund to cover        
                                             government debt.           
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
30-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
31-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
========================================================================
                                                                        
  .........                                                             
(1)JANUARY                                                              
 1996                                                                   
                                                                        
            ------------------------------------------------------------
                                                                        
2-.........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
                                                                        
  .........    By voice vote, Senate                                    
              passes H.R. 1643, bringing                                
              all Federal workers back to                               
              work with pay and back pay,                               
              through January 26.                                       
            ------------------------------------------------------------
3-.........    House attempts to override     President delays meeting  
              veto of Commerce-Justice-      with congressional         
              State appropriations bill      negotiators to harshly     
              (H.R. 2076) but fails by a     criticize Republicans in a 
              vote of 240-159.               nationally televised news  
                                             conference.                
                                                                        
------------------------------------------------------------------------
  .........    House passes continuing                                  
              resolution (H.J. Res. 153)                                
              for DC by voice vote.                                     
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
4-.........    House attempts to override                               
              veto of Interior                                          
              appropriations bill (H.R.                                 
              1977) but fails by a vote of                              
              239-177.                                                  
            ------------------------------------------------------------
5-.........    Congress clears H.J. Res.      President signs H.J. Res. 
              153, allowing the District     153 (Public Law 104-90).   
              of Columbia to use locally                                
              generated funds to run the                                
              city government through                                   
              January 25.                                               
                                                                        
  .........   -By 401-17, House passes                                  
              H.R. 1643, bringing all                                   
              Federal workers back to work                              
              with pay and back pay,                                    
              through January 26. The bill                              
              also includes nonsalary                                   
              funds for all of fiscal year                              
              1996 for specified programs                               
              such as Meals on Wheels,                                  
              child welfare, unemployment                               
              insurance, and National                                   
              Parks' visitors' centers.                                 
              Passage includes an                                       
              amendment; Senate passes                                  
              amended measure by unanimous                              
              consent. Cleared for                                      
              President.                                                
                                                                        
  .........   -H.R. 1358, including funds                               
              for all of fiscal year 1996                               
              for 17 specific programs,                                 
              including Medicaid payments                               
              to States, Medicare funds                                 
              for claims processing and                                 
              contract employees, the FBI,                              
              Federal prisons, Federal                                  
              courts, INS, and virtually                                
              all other law enforcement                                 
              programs. Passage occurs                                  
              through passage of rule, H.                               
              Res. 338, by a vote of 344-                               
              24. Senate passes amended                                 
              measure by unanimous                                      
              consent. Cleared for                                      
              President.                                                
------------------------------------------------------------------------
  .........   -H.J. Res. 134, providing                                 
              operating funds for all                                   
              Federal programs through                                  
              January 26. Passes House by                               
              voice vote on rule H. Res.                                
              336. Senate passes by                                     
              unanimous consent. Cleared                                
              for President.                                            
                                                                        
  .........   -H. Con. Res. 131. Provides                               
              that H.J. Res. 134 will not                               
              be sent to President until                                
              he submits a 7-year balanced                              
              budget plan scored by CBO.                                
              Passage in House is deemed                                
              by passage of rule H. Res.                                
              336. Senate passes by                                     
              unanimous consent. Cleared                                
              for President.                                            
            ------------------------------------------------------------
6-.........    Congress sends full            ``Plan'' 5--President     
              continuing resolution          submits a slightly modified
              (through January 26) to        Daschle plan, which CBO    
              President after receiving      scores as achieving a      
              ``Plan'' 5, which CBO scores   balanced budget by 2002.   
              as achieving a balanced                                   
              budget by 2002.                                           
                                                                        
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 resume.                                                                
 Republican                                                             
 s present                                                              
 a counter-                                                             
 offer                                                                  
 containing                                                             
 bipartisan                                                             
 savings                                                                
 levels for                                                             
 Medicare,                                                              
 Medicaid,                                                              
 and                                                                    
 welfare,                                                               
 and                                                                    
 smaller                                                                
 tax cut                                                                
 number.                                                                
            ------------------------------------------------------------
  8-                                                                    
(1)  White                                                              
 House                                                                  
 negotiatio                                                             
 ns between                                                             
 congressio                                                             
 nal                                                                    
 leaders                                                                
 and the                                                                
 President                                                              
 continue.                                                              
 No                                                                     
 agreements                                                             
 are                                                                    
 reached.                                                               
            ------------------------------------------------------------
9-.........  .............................    President vetoes welfare  
                                             reform bill, H.R. 4.       
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 resume.                                                                
 White                                                                  
 House                                                                  
 presents                                                               
 another                                                                
 ``offer,''                                                             
 a                                                                      
 combinatio                                                             
 n of the                                                               
 Daschle                                                                
 plan and                                                               
 the                                                                    
 administra                                                             
 tion's                                                                 
 earlier                                                                
 ``Plan''                                                               
 2. House                                                               
 and Senate                                                             
 Republican                                                             
 s                                                                      
 reiterate                                                              
 their                                                                  
 offer of                                                               
 January 6.                                                             
                                                                        
  .........                                                             
(1)  Both                                                               
 sides                                                                  
 agree to a                                                             
 ``recess''                                                             
 in                                                                     
 balanced                                                               
 budget                                                                 
 negotiatio                                                             
 ns after                                                               
 Republican                                                             
 s conclude                                                             
 that                                                                   
 further                                                                
 talks are                                                              
 pointless                                                              
 until the                                                              
 President                                                              
 shows real                                                             
 movement                                                               
 from his                                                               
 current                                                                
 position.                                                              
------------------------------------------------------------------------
16-........    Congressional leadership                                 
              sends a letter to the                                     
              President urging him to                                   
              offer a new budget proposal                               
              that can attract bipartisan                               
              support. The letter is                                    
              prompted by comments from                                 
              Richard Gephardt, leader of                               
              the House Democrats, that                                 
              the President's Plan 5 would                              
              be unlikely to get the votes                              
              of a majority of House                                    
              Democrats.                                                
            ------------------------------------------------------------
17-........                                                             
(1)  Negoti                                                             
 ators                                                                  
 engage in                                                              
 a 40-                                                                  
 minute                                                                 
 telephone                                                              
 conversati                                                             
 on without                                                             
 results,                                                               
 because                                                                
 the                                                                    
 President                                                              
 still has                                                              
 not shown                                                              
 that he                                                                
 really                                                                 
 wants a                                                                
 serious                                                                
 budget                                                                 
 plan that                                                              
 reaches                                                                
 balance in                                                             
 7 years.                                                               
 No further                                                             
 negotiatio                                                             
 ns are                                                                 
 scheduled.                                                             
            ------------------------------------------------------------
25-........    By a vote of 371-42, House                               
              passes continuing resolution                              
              (H.R. 2880) funding most                                  
              Federal programs through                                  
              March 15, including a                                     
              downpayment toward balancing                              
              the budget.                                               
            ------------------------------------------------------------
26-........    Senate passes continuing                                 
              resolution (H.R. 2880)                                    
              funding most Federal                                      
              programs through March 15,                                
              including a downpayment                                   
              toward balancing the budget,                              
              by a vote of 82-8. Cleared                                
              for President.                                            
                                              President signs into law  
            ------------------------------------------------------------
31-........    House passes conference                                  
              report on DC appropriations                               
              bill (H.R. 2546) by a 211-                                
              201 vote.                                                 
========================================================================
  .........                                                             
(1)FEBRUARY                                                             
 1996                                                                   
            ------------------------------------------------------------
1-.........    Congress passes (House 396-                              
              0; Senate by unanimous                                    
              consent) a bill to guarantee                              
              timely payment of Social                                  
              Security benefits in March                                
              (H.R. 2924).                                              
------------------------------------------------------------------------
5-.........  .............................    President submits a       
                                             placeholder budget overview
                                             for fiscal year 1997 that  
                                             lacks any details.         
            ------------------------------------------------------------
8-.........  .............................    President signs H.R. 2924 
                                             guarantying timely payment 
                                             of Social Security benefits
                                             in March (Public Law 104-  
                                             103).                      
            ------------------------------------------------------------
12-........  .............................    President signs into law  
                                             the fiscal year 1996       
                                             Foreign Assistance         
                                             Appropriations bill (H.R.  
                                             1868) (Public Law 104-107).
========================================================================
  .........                                                             
(1)MARCH                                                                
 1996                                                                   
            ------------------------------------------------------------
7-.........    Congress passes (House 362-                              
              51, Senate by voice vote) a                               
              bill (H.R. 3021) to                                       
              guarantee continued full                                  
              investment of the Social                                  
              Security and other                                        
              government trust funds by                                 
              temporarily extending the                                 
              debt limit.                                               
                                                                        
            ------------------------------------------------------------
12-........  .............................    President signs a bill    
                                             (H.R. 3021) to guarantee   
                                             continued full investment  
                                             of the Social Security and 
                                             other government trust     
                                             funds by temporarily       
                                             extending the debt limit.  
            ------------------------------------------------------------
14-........    Congress passes (House 238-                              
              179; Senate by unanimous                                  
              consent) a continuing                                     
              resolution (H.J. Res. 163)                                
              as negotiations on the                                    
              Balanced Budget Down Payment                              
              Act, II continue.                                         
------------------------------------------------------------------------
15-........  .............................    President signs the       
                                             continuing resolution (H.J.
                                             Res. 163) (Public Law 104- 
                                             116).                      
            ------------------------------------------------------------
19-........    Senate passes the Balanced                               
              Budget Down Payment Act, II--                             
              an omnibus appropriations                                 
              bill (H.R. 3019) to complete                              
              the fiscal year 1996 funding                              
              process--by a vote of 79-21.                              
            ------------------------------------------------------------
21-........    Congress passes (House 244-                              
              180; Senate by unanimous                                  
              consent) a continuing                                     
              resolution (H.J. Res. 165)                                
              as negotiations on the                                    
              Balanced Budget Down Payment                              
              Act, II continue.                                         
            ------------------------------------------------------------
22-........  .............................    President signs the       
                                             continuing resolution (H.J.
                                             Res. 165) (Public Law 104- 
                                             116).                      
            ------------------------------------------------------------
27-........    Senate passes conference                                 
              report on Line-Item Veto                                  
              bill (S. 4) by a vote of 69-                              
              31.                                                       
            ------------------------------------------------------------
28-........    House passes conference                                  
              report on Line-Item Veto                                  
              bill (S. 4) as part of H.                                 
              Res. 391.                                                 
                                                                        
            ------------------------------------------------------------
29-........  .............................    President signs a bill    
                                             (H.R. 3136) containing the 
                                             Senior Citizens' Right to  
                                             Work Act, the Small        
                                             Business Growth and        
                                             Fairness Act, and a        
                                             permament increase in the  
                                             public debt limit (Public  
                                             Law 104-121).              
========================================================================
  .........                                                             
(1)APRIL                                                                
 1996                                                                   
            ------------------------------------------------------------
9-.........  .............................    President signs Line-Item 
                                             Veto bill (S. 4) (Public   
                                             Law 104-130).              
            ------------------------------------------------------------
25-........    Congress passes (House 399-                              
              25; Senate 88-11) the                                     
              conference report on                                      
              Balanced Budget Down Payment                              
              Act, II--an omnibus                                       
              appropriations bill (H.R.                                 
              3019) to complete the fiscal                              
              year 1996 funding process.                                
            ------------------------------------------------------------
26-........  .............................    President signs the       
                                             Balanced Budget Down       
                                             Payment Act, II--an omnibus
                                             appropriations bill (H.R.  
                                             3019) to complete the      
                                             fiscal year 1996 funding   
                                             process (Public Law 104-   
                                             134).                      
------------------------------------------------------------------------



                               appendix 4



                       Response to the President

                              ----------                              


 Rebuttals to President Clinton's 82 Reasons for Vetoing the Balanced 
                           Budget Act of 1995

                              introduction

    On December 6, 1995, President Clinton vetoed the Balanced 
Budget Act of 1995, the congressionally passed bill that 
details legislative provisions needed to achieve a balanced 
Federal budget by 2002, to reform welfare, to preserve and 
protect Medicare, and to provide tax relief for working 
American families and for economic growth. In addition to his 
formal veto message, the President released an accompanying 
document titled ``President Clinton's Reasons for Vetoing the 
Republican Budget: 82 Selected Issues.''
    The President's veto claims repeatedly distort and 
misrepresent the policies contained in the Balanced Budget Act. 
Worse, the President's claims are at odds with his own actions. 
For example, he boasts of his concern for enforcing 
environmental regulations even though he has proposed reducing 
enforcement personnel by 400 FTE's; he touts his ``cops on the 
beat'' program, but fails to note the program fails to assure 
that funds for additional police officers will go to those 
areas with the highest crime problems. Where candidate Bill 
Clinton promised to ``end welfare as we know it'' and provide a 
middle-class tax cut, President Clinton has done neither; he 
has only rejected congressional proposals to carry out these 
promises.
    This document is designed as a resource for Members, their 
staffs, and others to analyze the President's veto claims and 
weigh them against the facts of the Balanced Budget Act and 
related Republican proposals. The discussion that follows 
provides rebuttals to each of the 82 reasons given for the 
President's veto. Each of the President's veto claims is 
indicated by number, and in most cases the entire claim is 
repeated ver batim. (In some cases, the veto claims have been 
condensed to their substantive content, eliminating mere 
rhetorical claims.) Each claim is then answered with specific 
points. The rebuttals also include information regarding the 
final balanced budget offer made to the President by the 
Republican leadership.
    Although this document provides responses to the President, 
it is important to reiterate in a positive way, the reasons the 
majority in the 104th Congress is trying to balance the budget. 
A balanced budget path serves as a catalyst for the policies 
voters endorsed in the congressional elections of 1994. Seeking 
a balanced budget will drive Congress toward devolving 
important government activities back to where they belong--at 
the State and local levels--rather than financing the one-size-
fits-all, Washington-knows-best approach that has proved a 
failure over the past 30 years. It will promote the kind of 
systemic reforms that are needed in the Federal Government's 
excessively bureaucratic programs. Such reforms will not happen 
as long as the tax-and-spend/borrow-and-spend policies of past 
Congresses persist.
    Balancing the budget also is necessary for protecting the 
Nation's economic future. For decades, the Federal Government 
has been spending more than it takes in, and piling up a huge 
debt in the process.
    Right now the debt is approximately $4.9 trillion. Interest 
payments on the debt total about $235 billion just for this 
year. If the growth of government spending is not curtailed, 
the debt will reach $7.533 trillion by 2005, with interest 
payments of $412 billion. Over the next 15 years--if current 
patterns are allowed to continue--accumulated interest payments 
will total $5.2 trillion. As early as 1997, Americans will pay 
as much interest on the debt each year ($270 billion) as they 
pay for national defense.
    The burden of this debt will fall on our children and 
grandchildren. A child born this year immediately inherits a 
lifetime tax bill of $187,150 just to pay the interest on the 
debt the government has run.
    But even now, Americans are paying for this debt in another 
way: in the form of higher taxes to pay off the debt, and 
interest rates that are about 2 percentage points higher than 
they would be if the budget were balanced. Eliminating those 2 
percentage points, by balancing the budget, will reduce the 
cost of a mortgage on a $75,000 home by as much as $37,000 over 
30 years; will allow a family to save $2,160 over the life of 
an $11,000 college loan; will save the average family as much 
as $900 over 5 years on a $15,000 auto loan; will lead to the 
creation of 4.25 million more jobs over the next 10 years; and 
will increase per-capita incomes 16.1 percent.
    These economic benefits--the expansion of opportunity and 
hope--are the greatest protection the Federal Government can 
offer future generations.

    [This document was prepared by the majority staff of the 
Committee on the Budget, in consultation with committees with 
jurisdiction over programs involved. The document was 
originally published on February 29, 1996, and applies to the 
status of the budget debate at that point.]


                     Medicare and Medicaid Reforms

                              ----------                              

    The President's claims concerning the Republican reforms of 
Medicare and Medicaid are designed to deflect attention from 
the real issues surrounding these two programs. Therefore, 
before addressing the President's veto claims, it is important 
to reiterate the critical factors underlying the congressional 
reforms. They are the following:
1. Without prompt reform, the Medicare program will be bankrupt by 2002 
        or sooner.
  - The Trustees of the Medicare Hospital Insurance Trust Fund 
        reported to Congress in April 1995 that the program 
        would run a deficit in 1996, and be bankrupt in 2002. 
        They stated: ``The trustees believe that prompt, 
        effective, and decisive action is necessary'' to save 
        Medicare from bankruptcy.

  - A Treasury report in October 1995 documented that the trust 
        fund was in deficit in 1995, pointing to a potential 
        bankruptcy date even earlier than previously assumed.

  - President Clinton is clearly aware of these facts but has 
        ignored them, choosing instead to let the problem 
        fester.
2. The congressional majority is not cutting either Medicare or 
        Medicaid.
  - The congressional Medicare plan increases average Medicare 
        spending on each beneficiary from $4,800 in 1995 to 
        $7,100 in 2002. This is more--not less--Medicare 
        spending per beneficiary. It would fully account for 
        the increase in the Medicare population over the 
        period.

  - The reform plan spends $1.651 trillion on Medicare over 7 
        years. This translates to $725 billion more over the 
        next 7 years than Medicare spent over the past 7 years. 
        Medicare spending in 2002 would be an estimated $289.3 
        billion--$111.9 billion more than the 1995 level of 
        $177.4 billion. Overall, Medicare spending would grow 
        an average of 7.2 percent each year over 7 years.

  - Medicaid spending in the reform plan would grow from $89.1 
        billion in fiscal year 1995 to $127.4 billion in fiscal 
        year 2002, a 43-percent increase. Medicaid funding 
        would increase from $443 billion over the past 7 years 
        to $791 billion over the next 7 years, a 74-percent 
        increase. Federal per-capita Medicaid payments would 
        increase from $2,516 in fiscal year 1995 to $3,242 in 
        fiscal year 2002.

  - President Clinton knows these are not spending cuts. In 
        1993, defending his own proposed government takeover of 
        health care, he said: ``Medicaid and Medicare are going 
        up at three times the rate of inflation. We propose to 
        let it go up at two times the rate of inflation * * * 
        Only in Washington do people believe that no one can 
        get by on twice the rate of inflation. So, when you 
        hear all this business about cuts, let me caution you 
        that that is not what is going on.'' (October 5, 1993). 
        The congressional plan allows Medicare to grow at more 
        than twice the rate of inflation; yet the President now 
        calls this a ``cut.''
3. Medicare must be reformed regardless of tax cuts or efforts to 
        balance the budget.
  - The fact that the Hospital Insurance Trust Fund is going 
        broke and Medicare Part B is growing at 13 percent 
        (four times the rate of inflation) clearly indicates 
        the program is unsustainable on its current track. The 
        program must be reformed so it will be there for 
        current seniors, and for when the baby boomers retire.

  - The congressional tax cuts were fully paid for in the 
        Contract With America tax relief bill, which did not 
        touch Medicare. The tax cuts also are fully financed in 
        the Balanced Budget Act exclusive of the act's Medicare 
        reforms.
4. The Republicans have real plans to reform Medicare and Medicaid; the 
        President has only gimmicks and sound bites.
  - The Balanced Budget Act contained the reforms necessary to 
        save the trust fund until 2017. The BBA would offer 
        seniors choices among health care plans like those 
        available in the private sector, but the BBA will still 
        allow seniors to keep the same fee-for-service Medicare 
        they have today if they prefer--with no increased 
        deductibles or copayments, and with premiums held at no 
        more than 31.5 percent of program costs.

  - The congressional Medicaid plan would block grant Medicaid 
        to the States and provide greater flexibility for 
        States to tailor their Medicaid program for their own 
        populations.

  - The President has ignored the need for these reforms, and 
        has resorted instead to expediency. For example, his 
        response to the impending Medicare bankruptcy has been 
        to transfer spending--not save money--from one part of 
        the program to the other to claim a later bankruptcy 
        date. Meanwhile, he has blocked efforts to put the 
        program on a sound financial foundation.
5. The quality of Medicare will improve with the reforms contained in 
        the BBA--just as it has in the private sector.
  - The private sector has proved that more choices of health 
        coverage and innovations in care will increase quality 
        and lower costs. This has been the experience of 
        companies such as Xerox, Kodak, and IBM, detailed in 
        testimony to the Budget Committee.

  - Medicare beneficiaries do not currently enjoy many of the 
        choices available in the private sector, and the BBA 
        would bring this innovation and quality to the program.

    The President's specific veto claims are as follows:
VETO CLAIM No. 1: Magnitude of $433 Billion Medicare and Medicaid Cuts.
    The Republican budget cuts Medicare and Medicaid [a] 
combined $433 billion over 7 years--four times greater than 
anything ever enacted by any Republican or Democratic 
President--to fund a tax cut for the wealthy. These cuts will 
deny health care coverage for nearly 8 million people by 2002, 
threaten urban and rural hospitals with closure, reduce the 
quality of care for everyone, and increase health care costs 
for the privately insured through cost shifting.

  - $433 billion combined Medicare and Medicaid cuts could 
        force many rural and urban hospitals to close.

  - $433 billion Medicare and Medicaid cuts would reduce the 
        quality of care for everyone.

  - $433 billion Medicare and Medicaid cuts will increase 
        health care costs for the privately insured by cost 
        shifting billions of dollars.

  - * * * Medicare and Medicaid cuts in the reconciliation bill 
        could lead doctors and hospitals to raise their fees on 
        privately insured patients by at least $85 billion over 
        7 years through cost-shifting. Cost shifting is the 
        process by which health care providers charge privately 
        insured people more in order to make up for losses from 
        serving Medicare and Medicaid beneficiaries and the 
        uninsured.

  - $67 billion of the $85 billion in increased costs would be 
        passed on to workers by employers in the form of lost 
        wages and higher health care premiums.
REBUTTAL to Veto Claim No. 1
  - Congress is not cutting either Medicare or Medicaid.

        The congressional Medicare plan increases average 
            Medicare spending on each beneficiary from $4,800 
            in 1995 to $7,100 in 2002. This is more--not less--
            Medicare spending per beneficiary. It would fully 
            account for the increase in the Medicare population 
            over the period.

        The reform plan spends $1.651 trillion on Medicare over 
            7 years. This translates to $725 billion more over 
            the next 7 years than Medicare spent over the past 
            7 years. Medicare spending in 2002 would increase 
            to $289.3 billion--$111.9 billion more than the 
            1995 level of $177.4 billion. Overall, Medicare 
            spending would grow an average of 7.2 percent each 
            year over 7 years.

        Medicaid spending in the plan would grow from $89.1 
            billion in fiscal year 1995 to $127.4 billion in 
            fiscal year 2002, a 43-percent increase. Medicaid 
            funding would increase from $443 billion over the 
            past 7 years to $791 billion over the next 7 years, 
            a 74-percent increase. Federal per-capita Medicaid 
            payments would increase from $2,516 in fiscal year 
            1995 to $3,242 in fiscal year 2002.

  - Under the congressional Medicare plan:

        Hospital payments would increase at least 12 percent 
            over 7 years. The plan establishes special 
            provisions for rural and urban hospitals, including 
            the Medicare Dependent Small Rural Hospital 
            Program, a rural emergency access hospital program, 
            a graduate medical education trust fund for 
            teaching hospitals, and continued add-on payments 
            for disproportionate share hospitals at 70 percent 
            of current law levels.

        Hospitals could join with doctors and other providers 
            to offer Medicare benefit plans. This will enable 
            rural and urban hospitals to compete with HMO's and 
            other health plans for Medicare beneficiaries and 
            ensure financial stability.

  - Competition in the private sector is the major factor in 
        reducing the number of insupportable health facilities.

        As the health care market responds to changes in 
            delivery and technology, and the ability to offer 
            services on an outpatient basis increases, 
            facilities requirements will change.

        Competition brings increased quality in every other 
            market, and the quality of health care will 
            increase in the congressional plan as competition 
            brings new benefits, lower out-of-pocket costs, and 
            expanded choice of providers. Providers can be 
            expected to compete for Medicare beneficiaries, and 
            will offer new and innovative opportunities for 
            beneficiaries to attract them to their health plan.

  - With medical savings accounts, Medicare beneficiaries will 
        have greater control over their health care spending, 
        and will receive the benefits for making prudent health 
        care purchases.

  - Under the Balanced Budget Act, payments to providers will 
        increase.

  - The cost-shifting argument assumes Medicare payments are 
        below provider cost, and there is no inefficiency or 
        waste in the system.

        In fact, in markets with high penetration of private 
            sector managed care, Medicare is the highest payer. 
            The BBA creates incentives for providers to become 
            more efficient, and provide sufficient payments to 
            cover costs.

        According to Foster Higgins Inc., the company that 
            surveys and reports on private sector health 
            spending, corporations had lower premium costs in 
            1995 than the years before. Private sector costs 
            reflect flaws in the private health insurance 
            market, rather than cost shifting in Medicare. 
            Congress should pass targeted private health care 
            reform, but the first responsibility is the Federal 
            health programs that are spending out of control--
            Medicare and Medicaid.


                                Medicare

                              ----------                              

VETO CLAIM No. 2: [The Balanced Budget Act] Cuts Medicare Well Below 
        Private Sector Rates.
  - BBA's $270 billion cut will turn Medicare into a second 
        class health care program.

  - The BBA reduces Medicare spending growth per beneficiary 
        far below projected private sector growth rates. Based 
        on CBO data, private sector per capita health care 
        spending is projected to increase 7.1 percent per year 
        over the next 7 years, but the BBA reduces Medicare 
        spending growth per beneficiary to 5.5 percent, on 
        average.

  - Federal Medicare spending per beneficiary would be $1,700 
        less than under current law in 2002.
REBUTTAL to Veto Claim No. 2
  - The Balanced Budget Act does not cut Medicare.

        The Balanced Budget Act would allow Medicare spending 
            per beneficiary to increase from an average of 
            $4,800 in 1995 to an average of $7,100 in 2002. 
            This is more--not less--Medicare spending per 
            beneficiary. It would fully account for the 
            increase in the Medicare population over the 
            period.

        The Balanced Budget Act would spend a total of $1.651 
            trillion over 7 years. The plan would spend $725 
            billion more over the next 7 years than Medicare 
            spent over the past 7 years. Medicare spending in 
            1995 was $177.4 billion; under the Republican plan, 
            spending in 2002 would be an estimated $289.3 
            billion--$111.9 billion higher in 2002 than 1995. 
            Spending would grow an average of 7.2 percent each 
            year over 7 years.

  - The trustees of the Medicare Hospital Insurance Trust Fund 
        reported to Congress in April 1995 that the program 
        would run a deficit in 1996, and be bankrupt in 2002. 
        They stated: ``The trustees believe that prompt, 
        effective, and decisive action is necessary'' to save 
        Medicare from bankruptcy. A Treasury report in October 
        1995 documented that the trust fund was in deficit in 
        1995, pointing to a potential bankruptcy date even 
        earlier than previously assumed.

  - The President's response to the impending Medicare 
        bankruptcy has been to offer gimmicks and rhetoric. The 
        President would transfer spending--not save money--from 
        one part of the program to the other in order to claim 
        a later bankruptcy date and has blocked efforts to put 
        the program on a sound financial foundation.

  - When the administration, in 1993 and 1994, proposed a 
        government takeover of the country's entire health care 
        system and a new entitlement from Medicare and Medicaid 
        spending, the President said the following:

        ``Medicaid and Medicare are going up at three times the 
            rate of inflation. We propose to let it go up at 
            two times the rate of inflation * * * Only in 
            Washington do people believe that no one can get by 
            on twice the rate of inflation. So, when you hear 
            all this business about cuts, let me caution you 
            that that is not what is going on.'' (October 5, 
            1993)

        The Balanced Budget Act passed by Congress would allow 
            Medicare to grow at more than twice the rate of 
            inflation. Yet, contrary to his own prior 
            assertions, the President now calls this a ``cut.''

  - Medicare reforms in the BBA would save the trust fund to 
        2017. This is the first step to ensure the program is 
        there for today's retirees, and prepares the way for 
        the needs of the baby boom generation's retirement.

  - Medicare reforms in the BBA would expand choice of health 
        care coverage for seniors, preserve the option to 
        choose one's doctor, and allow beneficiaries to realize 
        savings from prudent health care spending with medical 
        savings accounts. The BBA would bring these 
        innovations, many of which are available in the private 
        sector today, to Medicare. The surest way to have 
        Medicare become a ``second class'' health care program 
        is to block these reforms, as the President is now 
        doing.

  - Many private and public insurers (such as the State of 
        California) have proven that by demanding efficiencies 
        and by negotiating rates with their health care 
        providers they can reduce their health care costs to 
        much lower than 7-percent growth per year.

        Foster Higgins Inc., a health care research firm, 
            reported this year that health care premiums for 
            private employers actually declined in 1994.

        Medicare is the largest purchaser of health care 
            services and products in the country. By following 
            the lead of many innovative health care insurers 
            and employers, it is reasonable to believe that 
            Medicare can reduce its rate of growth to a 
            substantially lower rate the current projected 11-
            percent growth rate.
VETO CLAIM No. 3: [The Balanced Budget Act] Slashes Funding for Poor 
        Elderly and Disabled Medicare Beneficiaries.
  - Under current law, Medicaid pays all Medicare premiums, 
        coinsurance, and deductibles for people below 100 
        percent of poverty (known as QMB's) and premiums for 
        people with incomes between 100 percent and 120 percent 
        of poverty.

  - As many as 5.4 million elderly and disabled people 
        currently have their Medicare cost sharing covered by 
        Medicaid. This assistance ensures that they can afford 
        Medicare.

  - Does not set aside any funds for their copayments and 
        deductibles. The congressional budget completely 
        eliminates the requirement that States cover 
        coinsurance and deductibles for poor elderly and 
        disabled people, and does not set aside any money for 
        this purpose.

        More than 5 million elderly and disabled people would 
            immediately lose their guarantee of assistance with 
            copayments and deductibles.

  - Sets aside less than half of what is needed for their 
        premiums. While Congress claims to cover poor elderly 
        and disabled premiums, they set aside less than half of 
        the money needed to cover their premiums by 2002.

        As many as 950,000 could lose assistance with their 
            premiums--just when premiums are increased. HHS 
            estimates that as many as 950,000 poor elderly and 
            disabled people could lose funding for their 
            Medicare premiums in 2002--at the same time that 
            the Republicans plan increases these premiums.

  - Could force the poor to leave fee-for-service plans. 
        Without assistance with premiums, copayments, and 
        deductibles, poor Medicare beneficiaries may be forced 
        to leave their fee-for-service plan and enroll in a 
        managed care plan that does not require cost-sharing--
        if one exists in their area.
REBUTTAL to Veto Claim No. 3
  - Under MediGrant--the congressional plan's block grant 
        Medicaid reform--States would be required to provide 
        protection for aged Medicare beneficiaries with incomes 
        below 100 percent of poverty through a set-aside 
        mechanism. Each State must spend a minimum of 90 
        percent of its 3-year (1993 through 1995) average 
        Medicaid payments for Medicare Part B premiums for the 
        aged.

  - This set-aside is a minimum, a floor and not a ceiling. 
        With total Federal spending of $791 billion for 
        Medicaid over 7 years under the Balanced Budget Act of 
        1995 (and $834 billion over 7 years under the latest 
        revision to the planned funding), States will have 
        adequate funding to cover the Medicare Part B premiums 
        contemplated by both Congress and the administration in 
        their budgets. The funds will also be more than 
        adequate to cover coinsurance and deductibles.

  - It is disingenuous for the President to argue that ``poor 
        Medicare beneficiaries may be forced to leave their 
        fee-for-service plan and enroll in a managed care plan 
        that does not require cost-sharing.'' In 1993, the 
        administration proposed a health program that would 
        have effectively forced most of the under-65 population 
        into managed care. Further, President Clinton continues 
        to endorse managed care.
VETO CLAIM No. 4: [The Balanced Budget Act] Allows Doctors to 
        Overcharge.
  - Allows doctors to ``balance bill'' or charge Medicare 
        beneficiaries above the Medicare payment rates.

  - Without protections from balance billing, beneficiaries in 
        the new Medicare plans would be subject to higher 
        charges.

  - The opportunity to balance bill in the new Medicare plans 
        will give doctors incentives to leave the traditional 
        Medicare fee-for-service plans, forcing many patients 
        to change their doctor or leave the fee-for-service 
        program.
REBUTTAL to Veto Claim No. 4
  - Once again, President Clinton is trying to scare Medicare 
        beneficiaries by claiming the congressional plan takes 
        away Medicare as they know it--and allows doctors and 
        hospitals to charge beneficiaries any amount they wish. 
        These claims are false.

        The reform plan strictly maintains existing laws that 
            prohibit providers from ``balance billing'' 
            (charging an amount over and above the Medicare 
            payment allowance) Medicare beneficiaries who 
            remain in the traditional fee-for-service plan.

        Furthermore, if a beneficiary chooses a coordinated 
            care network option (such as an HMO or provider 
            service organization) the beneficiary cannot be 
            subject to balance billing as long as they stay 
            within the network of that organization.

        The only balance billing arrangement allowed under the 
            Republican plan would apply to certain private fee-
            for-service plans and medical savings accounts. The 
            Republican plan allows for such arrangements to all 
            greater choice for a greater number of 
            beneficiaries. Many beneficiaries oppose current 
            law, which strictly prevents Medicare beneficiaries 
            from paying a non-Medicare participating provider 
            out of their own pocket even if it is the 
            beneficiaries' wish to do so.

        In other words, the choice is left to beneficiaries: 
            they can choose to stay in traditional Medicare 
            where they will not be subject to balance billing, 
            or they can choose from a number of private plans--
            some of which are allowed to balance bill and some 
            of which are not.

  - It is ridiculous to assume that there will be enough 
        ``balance billing opportunities'' to cause a major 
        migration of doctors to private fee-for-service plans. 
        As estimated by CBO, most beneficiaries will remain in 
        traditional fee-for-service Medicare or choose a 
        private network which does not allow balance billing. 
        Total physician income in the United States is very 
        dependent upon Medicare payments so that most doctors 
        do not have the choice to not accept Medicare patients.
VETO CLAIM No. 5: [The Balanced Budget Act] Increases Medicare 
        Premiums.
  - Increases Medicare premiums and burdens older and disabled 
        Americans--just to pay for a tax cut for the wealthy.

  - Increases premiums from 25 percent of Part B program costs 
        to 31.5 percent, increasing costs in 1996 by $264 per 
        couple. The President's plan maintains the current 
        policy and permanently sets premiums at 25 percent of 
        program costs--three quarters of all Medicare 
        beneficiaries have incomes below $25,000.

  - Since 1984, the Part B premium has been set to finance 25 
        percent of Part B program costs. The premiums were set, 
        in advance, at specific dollar amounts that were 
        anticipated to equal 25 percent of program cost for 
        1991 to 1995--as a result of misforecasting, the 
        premium equaled 31.5 percent in 1995--even though 
        Congress never intended to raise premiums above 25 
        percent. OBRA '93 directed that the Part B premium 
        would be 25 percent of program costs each year, from 
        1996 through 1998, instead of setting specific dollar 
        amounts in advance. As a result, the Part B premium 
        dropped from $46.10 in 1995 to $42.50 in 1996.

  - Among the 36 million Medicare recipients who will face 
        higher premiums, 8.8 million veterans--one-third of all 
        veterans in the United States--will be forced to pay 
        higher out of pocket costs for lower quality care.
REBUTTAL to Veto Claim No. 5
  - Low- and moderate-income working families should not have 
        to subsidize Medicare premiums for high-income seniors. 
        Therefore, the congressional plan calls for relating 
        Medicare premiums to the incomes of beneficiaries.

        Currently, taxpayers subsidize 75 percent of the 
            premium for all Mediare beneficiaries, regardless 
            of the beneficiaries' incomes.

        The congressional plan phases out this subsidy starting 
            at income levels of $60,000 for individuals and 
            $90,000 for couples. The subsidy is fully phased 
            out at income levels of $110,000 for individuals 
            and $150,000 for couples.

  - Because all individuals, whether they have high incomes or 
        low incomes, are entitled to Medicare benefits at the 
        age of 65, and because 90 percent of Medicare is paid 
        for through payroll and income taxes, many working 
        families with less wealth than retired Medicare 
        beneficiaries, are being increasingly taxed to support 
        health care for seniors. For this reason, Republicans 
        intend to give back to working families some of their 
        hard-earned money, and at the same time, try to reduce 
        the growth of Medicare spending to a level closer to 
        that of similar spending in the private sector.

        Many struggling families have incomes around or below 
            $25,000--and these families are far less likely to 
            own a home or car than those of previous 
            generations. While many seniors have incomes around 
            or below $25,000, they are more likely to own their 
            own homes and cars, and to have fixed living 
            expenses, than are working families with similar 
            incomes. Also, the Medicaid program pays the Part B 
            Medicare premium for the poor elderly.

        The congressional plan simply keeps the Medicare 
            premium at 31.5 percent of program costs--the same 
            percentage of Part B program costs as they did in 
            1995. This would prevent the taxpayers from having 
            to foot more of the Part B Medicare bill than they 
            are already paying.

  - Historically speaking, the President's claim that Congress 
        never intended the premium to rise above 25 percent is 
        false.

        When the Medicare program was first created in 1965, it 
            was structured so that beneficiaries paid 50 
            percent of all Part B program costs.

        The premium remained at 50 percent until 1975, when for 
            a time the premium was unlinked from the cost of 
            the program and increased by a cost of living 
            standard. The ``25-percent standard'' did not begin 
            until 1984.

        If the congressional plan were to go into effect, 
            beneficiaries would see their monthly premiums 
            increase by about $6--about the same amount they 
            are used to seeing their premiums increase each 
            year.

  - Because the Medicare program does not discriminate against 
        or classify veteran Medicare beneficiaries any 
        differently from any other Medicare beneficiaries, 
        veterans who are eligible for Medicare would receive 
        the same expanded, high-quality health care delivery 
        options as all Medicare beneficiaries.

  - Under the congressional plan, veterans would be able to 
        choose from a variety of private plans, which might 
        offer them more services than they are currently 
        receiving from Medicare, and they may even have a plan 
        in their area that would require far lower out-of-
        pocket costs than they currently pay.

  - Veterans would also, of course, have the option of 
        remaining in the traditional Medicare fee-for-service 
        plan.

        If they chose the traditional plan, their only 
            increased out-of-pocket costs would be about a $6 
            increase in monthly premiums--which all Medicare 
            beneficiaries experience each year as the cost of 
            the Medicare Part B program increases.
VETO CLAIM No. 6: [The Balanced Budget Act] Constrains Spending in 
        Traditional Medicare More than in New Plans.
  - The congressional plan disadvantages the traditional 
        Medicare fee-for-service program compared to the new 
        MedicarePlus by constraining spending in the early 
        years in the fee-for-service program far more than in 
        the new plans.

  - In 1996 alone, the congressional plan allows spending in 
        the new plans to increase at an average per capita rate 
        of 8.0 percent--one third higher than the increases for 
        traditional Medicare.

  - The uneven treatment * * * will harm quality and create 
        incentives for doctors to leave traditional Medicare.
REBUTTAL to Veto Claim No. 6
  - The President's claims are inaccurate. In the BBA, Medicare 
        spending for the entire program would increase 7.2 
        percent on average per year. The BBA would have allowed 
        Medicare fee-for-service to grow 8.3 percent in 1996--
        not one-third lower than private plans. This amount is 
        more than two times greater than inflation. Payments in 
        fee-for-service Medicare are sufficient to account for 
        increased population, price increases, and an add-on 
        factor.

  - The President would allow the program to continue the 
        inefficient and unsustainable spending growth in both 
        fee-for-service and managed care plans. The BBA would 
        reform the payment method in both fee-for-service and 
        MedicarePlus.

  - The claim that ``uneven treatment * * * will harm quality'' 
        is unsupported by the reforms in the plan. According to 
        the Congressional Budget Office analysis of the plan, 
        there would be no harm to quality of care.

  - It has been demonstrated that areas with high penetration 
        of managed care plans have lower fee-for-service costs. 
        The objective in the congressional plan is to maintain 
        the same spending restraint on both fee-for-service and 
        MedicarePlus plans.
VETO CLAIM No. 7: Medical Savings Accounts.
  - Medical savings accounts tend to attract only the 
        healthiest individuals, who expect few medical expenses 
        in the coming year and who typically cost the Medicare 
        program little.

  - To the extent that MSA vouchers are set at a level that 
        exceeds the cost of these healthy beneficiaries under 
        the current Medicare system, MSA's will increase 
        spending on healthy beneficiaries.

  - In fact, CBO estimates that MSA's will raise Medicare costs 
        by nearly $5 billion over 7 years. A Lewin-VHI study 
        concluded that MSA's would cost the Medicare system 
        $15-20 billion over 7 years.

  - Since the congressional plan caps Medicare spending, MSA 
        costs would have to be offset by further cuts in 
        services for the less healthy beneficiaries remaining 
        in the traditional fee-for-service plans.
REBUTTAL to Veto Claim No. 7
  - Medical savings accounts would enable seniors to have 
        control over their health care spending and allow them 
        to realize the benefit of prudent health spending. The 
        attitude of the President is that seniors do not know 
        what type of health care is best for themselves and 
        should not be able to have that choice.

  - The claim that only healthy Medicare beneficiaries will 
        choose MSA plans is only an assumption, not based on 
        fact. Because there are no true MSA's in the 
        marketplace, there is no evidence for this claim.

  - The only real evidence in the marketplace comes from a 
        number of companies that offer MSA-type plans. For 
        these companies, individuals with expected health 
        expenses choose MSA's because the money in the account 
        is available for use, and they do not have to meet the 
        $250 deductible out of pocket.

        Medicare also has deductibles that must be paid out of 
            pocket or by beneficiary-paid MediGap plans. MSA's 
            would give beneficiaries more control of their 
            health spending, and allow them to receive the 
            benefit for wise health purchases.

        Amounts above 60 percent of the deductible could be 
            withdrawn for nonhealth purposes, or used to 
            purchase long-term health care.

  - Medicare payments to MSA's will be adjusted to account for 
        the health status of the covered beneficiary. Healthier 
        beneficiaries will receive a lower payment to reflect 
        lower anticipated costs.

  - The estimate that MSA's will cost $4.4 billion is based on 
        the assumption that only healthy beneficiaries will 
        choose them, and when health expenses do occur, the 
        beneficiary would switch back to fee-for-service 
        Medicare. But everyone acknowledges that high-
        deductible insurance is less costly than low-deductible 
        plans, and the incentives for MSA's will produce 
        substantially lower costs over time.

  - Even though Republicans do not accept the estimate that 
        MSA's will cost the Medicare program billions, the BBA 
        fully offsets the estimate with reductions in payment 
        increases to providers. The Republican plan does 
        include ``cuts in services'' but requires all Medicare 
        plans to fully cover all Medicare benefits.
VETO CLAIM No. 8: [The Balanced Budget Act] Locks Beneficiaries Into 
        Plans.
  - Under current law, beneficiaries are permitted to leave a 
        managed care plan at any time, with termination 
        effective as of the first of the month following the 
        request to leave.

  - Under the Balanced Budget Act, beneficiaries who enroll in 
        one of the new MedicarePlus plans, including managed 
        care plans, provider-sponsored organizations, or a 
        high-deductible medical savings account plan, would 
        generally be locked into that plan for a year. In 
        general, they could not leave the program except during 
        the annual open enrollment period.

  - The President's proposal retains current law and allows 
        beneficiaries to leave at any time.
REBUTTAL to Veto Claim No. 8
  - Under the congressional plan, a beneficiary can be 
        committed to a plan for a year only if that beneficiary 
        chooses to be.

        If among the many options offered, a beneficiary 
            chooses a closed network with an annual enrollment, 
            the beneficiary has the option to disenroll from 
            that plan within the first 90 days.

        Once the beneficiary has had 90 days to try the new 
            plan, they are enrolled for a full year.

  - If a beneficiary does not want to commit to a plan for a 
        full year, there are other care delivery options to 
        choose from. The congressional plan provides more 
        options for health care delivery than beneficiaries 
        have ever had before. These include traditional 
        Medicare, point of service options, private fee-for-
        service plans, and medical savings accounts.

  - For years the Health Care Financing Administration has been 
        recommending that the current Medicare HMO option be 
        changed from a month-to-month enrollment to an annual 
        enrollment. An annual enrollment is good for both the 
        patient and the health plan. The patient receives a 
        better coordinated continuum of care which has proven 
        to be a positive factor in quality of care; and the 
        plan can better anticipate its enrollment size and 
        therefore provide its enrollees with the proper size 
        staff to meet enrollees' needs.
VETO CLAIM No. 9: [The Congressional Medicare Plan] Increases Costs for 
        Beneficiaries Without Expanding Benefits or Prevention.
  - The Republican budget increases beneficiary costs while 
        only adding one new benefit: coverage of oral 
        nonsteroidal antiestrogen for the treatment of breast 
        cancer.

  - Currently, Medicare does not cover the array of preventive 
        benefits now offered by many private plans, 
        particularly managed care plans. These preventive 
        benefits can both increase beneficiary's health and 
        reduce costs at the same time.

  - President Clinton's proposal updates the Medicare benefit 
        package to make it more comparable to private sector 
        benefit packages, including: mammography, certain 
        colorectal screening, preventive injections, respite 
        benefit for beneficiaries with Alzheimer's disease.
REBUTTAL to Veto Claim No. 9
  - Under the congressional plan the President vetoed, Medicare 
        beneficiaries would have the option to remain in the 
        traditional Medicare fee-for-service plan. If they were 
        to choose the traditional plan, they would have no 
        increased copayments or deductibles. The only increase 
        they would have realized would be the slight increase 
        (about $6) in their Part B premium which is about what 
        they experience in every new year.

  - What the Clinton plan does not offer is new choices of 
        health care delivery that can actually decrease 
        beneficiaries' out-of-pocket costs. Under the 
        congressional plan, beneficiaries would be able to 
        choose from a variety of private plans, which might 
        offer them more services than they are currently 
        receiving with far lower out-of-pocket costs than they 
        currently pay.

  - The President increases Medicare costs by adding more 
        ``Washington-knows-best, one-size-fits-all'' 
        ``benefits.''

        These include $6.6 billion for new preventive benefits 
            and $6.4 billion to allow family/informal care 
            givers of Alzheimer victims to employ 32 hours of 
            professional care per year (this Alzheimer benefit 
            has the potential to explode in the same manner as 
            home health care has exploded).

        The Alzheimer respite benefit is a typical example of 
            establishing ballooning programs for all 
            beneficiaries--regardless of whether they want them 
            or need them.

  - In contrast, the congressional majority has designed a plan 
        of options from which beneficiaries can choose 
        according to their particular needs.

        For example, if a beneficiary wants a plan that will 
            offer preventive benefits, he or she will have 
            access to private plans that will coordinate health 
            care and include these kinds of benefits.

        Some plans will even allow beneficiaries to determine, 
            at the point a service is needed, whether or not 
            they want to receive the service from their regular 
            plan, or go outside of the plan to receive this 
            service elsewhere.

  - In the latest offer, Congress has included additional, new 
        preventive screening benefits in the traditional 
        Medicare benefit package. But unlike the President's 
        plan, the costs of these benefits are offset through 
        real savings and increased efficiencies elsewhere in 
        the program.


                                Medicaid

                              ----------                              

    The majority's reform for Medicaid calls for block-granting 
the program to States, allowing States greater flexibility to 
tailor services according to their needs. The new program would 
be called MediGrant.
VETO CLAIM No. 10: Magnitude of $163 Billion Cuts--Lowering Average 
        Annual Spending Growth Per Recipient to 1.6 Percent Could Cause 
        Millions to Lose Coverage.
  - The Balanced Budget Act cuts Federal support for Medicaid 
        by an unprecedented $163 billion--over 10 times 
        anything ever enacted by any Republican or Democratic 
        President.

  - The congressional plan achieves these savings by capping 
        overall spending. This means that spending growth per 
        beneficiary would fall from the current 7.0 percent to 
        1.6 percent annually--far below the rate of inflation.

  - States cannot sustain coverage when Federal funds are 
        increasing at only 1.6 percent per beneficiary. States 
        will be forced to reduce benefits and/or provider 
        payments and eliminate coverage for millions of people 
        on Medicaid.
REBUTTAL to Veto Claim No. 10
  - The administration's claims are misleading. Under the 
        Republican plan to modernize and add State flexibility 
        to Medicaid, as proposed in the Balanced Budget Act of 
        1995, Medicaid Federal outlays will not be cut; they 
        will grow.

        The growth proposed is from $89.1 billion in fiscal 
            year 1995 to $127.4 billion in fiscal year 2002, a 
            43-percent increase.

        Funding would increase from $443 billion over the past 
            7 years to $791 billion over the next 7 years, a 
            74-percent increase.

  - In negotiations with the administration, Republicans agreed 
        to allow faster increases than those provided for in 
        the Balanced Budget Act.

        The growth proposed in the latest offer is from $89.1 
            billion in fiscal 1995 to $143.0 billion in fiscal 
            year 2002, a 60-percent increase.

        Funding would increase from $443 billion over the past 
            7 years to $839 billion over the next 7 years, an 
            89-percent increase.

  - Under the latest offer, Federal per-capita Medicaid 
        payments would increase from $2,516 in fiscal year 1995 
        to $3,242 in fiscal year 2002. Under these new funding 
        levels, Federal Medicaid payments to the States will 
        allow per-capita payments to Medicaid beneficiaries (as 
        forecast by the CBO) to grow at or above the CBO 
        forecast of inflation in each of the next 7 years.

  - Governors and State Medicaid directors have testified to 
        the Commerce Committee that, under the funding levels 
        proposed in the Balanced Budget Act--with Medicaid 
        outlays of $791 billion over 7 years--they can improve 
        their programs and will not be forced to throw people 
        off the roles. Instead, by introducing common sense and 
        less Federal one-size-fits-all regulations, an improved 
        Medicaid program will be the result.

  - The administration's charge that States will be forced to 
        reduce benefits and/or provider payments and eliminate 
        coverage for millions of people on Medicaid fails to 
        recognize that there is a third alternative--to provide 
        the services more efficiently.

  - Several States, including Arizona, Tennessee, and Oregon, 
        have shown they can cover more people and also slow the 
        rate of Medicaid outlays. Under the Medicaid reform 
        plan all States will be able either to replicate these 
        successful strategies or develop their own approach 
        without seeking expensive and time-consuming waivers.
VETO CLAIM No. 11: Medicaid Cuts Could Double if States Reduce Their 
        Spending.
  - The $163 billion reflects only the Federal cuts. Medicaid 
        is a Federal-State plan, and if States only contribute 
        the amounts that the Federal Government will match and 
        provide no additional funding, the Center on Budget and 
        Policy Priorities estimates the total reduction in 
        Federal and State Medicaid funds would exceed $400 
        billion over 7 years, compared with current law.

  - While States are unlikely to limit funding to the match, 
        with the squeeze from other cuts, the overall Federal-
        State cuts could total far beyond $163 billion.
REBUTTAL to Veto Claim No. 11
  - Under Congress' plan to modernize and add State flexibility 
        to Medicaid, as proposed in the Balanced Budget Act of 
        1995, some of the power currently vested in Washington 
        will be returned to the States. States will then have 
        the option to provide Medicaid services through 
        increased use of managed care or through other 
        innovative ways. These approaches have been tried in a 
        few States and they work. States should have the 
        flexibility to use these and other program-improving 
        approaches without going through the expensive and 
        time-consuming waiver process which characterize the 
        current Medicaid program. Further, Medicaid Federal 
        outlays will not be cut; they will grow, as discussed 
        above.

  - It is true that States are likely to share in the benefits 
        that can be achieved through introducing common sense 
        and efficiencies into the Medicaid program. This will 
        save State taxpayers money.

  - Savings can be expected from several areas--especially from 
        managed care. For example, the General Accounting 
        Office [GAO] reported on October 4, 1995, that between 
        1994 and 1995 the capitation rates--the rate of 
        payments made per person for specified services--fell 
        by about 11 percent in the Arizona statewide Medicaid 
        demonstration. This program provides the best data on 
        savings from managed care in Medicaid.
VETO CLAIM No. 12: [The Balanced Budget Act] Ends National Guarantee of 
        Coverage.
  - The congressional plan repeals the Medicaid program, 
        replacing it with a ``block grant.''

  - Completely eliminates Medicaid's guarantee of defined, 
        meaningful coverage for Americans who are sick, 
        elderly, poor, blind, or disabled in other ways.

  - Because the block grant constrains spending growth per 
        beneficiary to 1.6 percent per year, providing 28 
        percent less funding than under current law by 2002, 
        States will be forced to significantly reduce Medicaid 
        eligibility and benefits.

  - Under current law, all States are required to cover a 
        minimum set of services, including hospital, physician, 
        and nursing home services. States have the option of 
        covering an additional 31 services, including 
        prescription drugs, hospice care, and personal care 
        services.

  - States could eliminate almost any benefit currently covered 
        by Medicaid. The only required services would be 
        immunizations and limited family planning.
REBUTTAL to Veto Claim No. 12
  - It is true that the congressional plan would replace 
        Medicaid with a block grant to the States. This is part 
        of the real reform. It also is part of a broader 
        movement toward moving power back to the States, 
        reforming regulations, and introducing common sense in 
        government.

  - Each State would develop eligibility and coverage policies 
        that meets the needs of the people in that State. This 
        approach rests on the principle that good public policy 
        need not rest on Federal regulations.

  - Under the current Medicaid program, all States cover 
        population groups that they are not required by Federal 
        Medicaid regulations to cover. All States also provide 
        services that they are not required to cover. Why then 
        would one question the basic desire of the States to do 
        what is right for their citizens under a block grant?

        Funding levels will provide for growth in per-capita 
            outlays that meet or exceed current forecasts of 
            price inflation for each of the next 7 years. There 
            is adequate Federal funding. State Governors and 
            Medicaid directors have testified to the adequacy 
            of the funding levels proposed in the Balanced 
            Budget Act. Subsequently, the level of funding has 
            been increased even more.

        When coupled with expected gains in efficiency through 
            the elimination of the Federal regulation, more 
            than basic eligibility and coverage can be 
            expected. Indeed, many of the Nation's uninsured 
            whose incomes are above the poverty level and not 
            eligible for Medicaid will likely become eligible.

        The Medicaid reform plan specifies that States can 
            provide coverage to those with family incomes up to 
            275 percent of poverty--far above the level in the 
            current Medicaid regulations.
VETO CLAIM No. 13: [The Balanced Budget Act Provides] No Guarantee of 
        Even Minimal Health Care Coverage for Poor Children Under Age 
        13, Pregnant Women, and People With Disabilities.
  - While the proposal includes language calling for States to 
        provide MediGrant services to poor children under 13, 
        pregnant women, and people with disabilities, 
        financially strapped States could satisfy this 
        requirement with de minimis coverage, which could mean 
        millions fewer people receiving a meaningful benefits 
        package.

  - The President believes it is wrong to change the laws in 
        ways that could lead to less coverage for poor 
        children, pregnant women, and Americans with 
        disabilities.
REBUTTAL to Veto Claim No. 13
  - No one is proposing ending or reducing eligibility or 
        coverage for America's vulnerable populations.

        Under the Medicaid reform proposed in the Balanced 
            Budget Act, States would be required to set aside 
            funds to ensure coverage of broad groups of people 
            currently covered under Medicaid: children and 
            pregnant women, the elderly, and the disabled.

        The goal is to free States from Federal regulations 
            that are overly constraining and inhibit the 
            efficiency gains to free up funds to extend 
            coverage and eligibility.

  - The Medicaid reform proposed in the Balanced Budget Act 
        attempts to expand, not shrink, Medicaid coverage.

        It specifies that States can provide coverage to those 
            with family incomes up to 275 percent of poverty--
            far above the level in the current Medicaid 
            regulations.

        Medicaid demonstration programs sanctioned by the 
            Clinton administration in Tennessee, Arizona, and 
            other States clearly show that through managed care 
            efficiencies coverage can be extended to literally 
            millions of poor children, pregnant women, and 
            Americans with disabilities who have no health 
            insurance and are currently not qualified for 
            traditional Medicaid.

  - It is wrong not to change laws in ways that can lead to 
        more coverage for more poor children, pregnant women, 
        and Americans with disabilities.
VETO CLAIM No. 14: Deep Cuts Plus Elimination of Guarantee Could Lead 
        to Millions Getting Less Coverage or No Coverage.
    With Federal Medicaid funding per beneficiary growing on 
average at one-fourth the rate of private health insurance 
spending per person, based on Congressional Budget Office data, 
States cannot continue to guarantee coverage.

  - Of the 36 million recipients, more than 18 million are 
        children: one out of every five children in the Nation.

  - Another 6 million current Medicaid recipients are disabled. 
        Medicaid functions as the primary insurer for many 
        people with disabilities, since private insurance is 
        generally not affordable for people with pre-existing 
        conditions.

  - About one-third of all babies born in the United States are 
        covered by Medicaid.

  - Over 90 percent of children with AIDS are covered by 
        Medicaid.

  - Loss of Medicaid coverage under reform plan: The reduction 
        in Federal support under the Republican plan could 
        force States to deny coverage for nearly 8 million 
        Americans in 2002 alone, according to HHS estimates. 
        These nearly 8 million people include:

        3.8 million children who could be denied coverage;

        1.3 million people with disabilities who could be 
            denied coverage;

        850,000 elderly who could be denied coverage;

        330,000 nursing home residents--over 70 percent of them 
            likely to be women; and

        150,000 veterans could be denied coverage.
REBUTTAL to Veto Claim No. 14
  - Contrary to the impression given by the reference to 
        ``private health insurance spending per person, based 
        on Congressional Budget Office data,'' CBO does not 
        survey private sector firms to determine levels of 
        private health insurance spending per person.

        But a draft table from CBO reviewing the 1995 premium 
            and health care cost changes reports declining 
            premiums for major public employee groups: Federal 
            Employees Health Benefits Plan (minus 3 percent); 
            CalPERS (minus 4 percent); Minnesota State 
            Employees Insurance Plan (minus 5 percent).

        The table also shows slow growth in employer health 
            care costs as reported by two major benefits 
            consulting firms: Hay Huggins (plus 2 percent) and 
            Towers Perrin (plus 2 percent).

  - A recent survey of private sector HMO costs and premiums in 
        1995 suggest that both are declining. According to a 
        Milliman & Robertson survey of 376 HMO's required 
        revenue (what is needed to cover expected medical and 
        administrative costs) declined 2.7 percent, from $132 
        to $128 per member per month. The average annual 
        premium shrank 0.7 percent. The declines were due to 
        shorter hospitalizations, greater efficiency from the 
        use of guidelines, and modest cost reductions in other 
        areas, including a decline in inpatient costs per day 
        from $1,299 to $1,244.

  - Under the Medicaid reform proposed in the Balanced Budget 
        Act, payments per recipient would rise. Under the $90-
        billion saving plan, Federal MediGrant outlays per 
        recipient would rise from $2,516 in 1995 to $3,242 in 
        2002. These increases in per-person outlays meet or 
        exceed in each year the increases in the consumer 
        prices [CPI] that the CBO forecasts. Therefore, there 
        is no reason to believe that there would be any loss in 
        coverage under the Republican plan.
VETO CLAIM No. 15: [The Balanced Budget Act] Weakens Quality 
        Protections for Nursing Homes Against Abuse and Negligence.
  - Current law: The nursing home reform law of OBRA '87 sought 
        to address at times deplorable treatment in nursing 
        homes, including unjustified physical restraints, and 
        gross negligence in caring for nursing home residents, 
        by establishing the Federal quality standards in place 
        today. Prior to the OBRA '87 reforms, the Institute of 
        Medicine reported that all States had some facilities 
        with serious deficiencies in nursing home quality of 
        care.

  - Progress: Since OBRA '87 reforms were implemented, nursing 
        home quality has improved dramatically. The use of 
        physical restraints has declined 25 percent; 
        dehydration has declined 50 percent; hospitalization 
        rates have declined 31 percent. [Research Triangle 
        Institute: HCFA].

  - Federal enforcement and protections would be repealed: The 
        bill takes away key OBRA '87 projections and 
        enforcement. In addition, States would no longer be 
        required to optimize individual resident's health and 
        well-being. While States may want to maintain these 
        guarantees, inadequate resources could lead them to 
        fail to set and enforce quality standards that protect 
        elderly and disabled people in nursing homes.

        States could turn over their survey and enforcement 
            responsibilities to private accreditation 
            organizations with no Federal review, thereby 
            reducing accountability and increasing variations 
            in quality and enforcement.

        Nursing homes would no longer be required to optimize 
            individual resident's health and well-being. The 
            bill repeals the current requirement that nursing 
            homes provide services to ``attain or maintain the 
            highest practicable physical, mental, and 
            psychosocial well being of each resident.'' Thus, 
            residents could be denied skilled nursing and 
            rehabilitative services necessary to improve their 
            ability to function.

        Residents would no longer be guaranteed the same 
            comprehensive assessment of their health and 
            functional status now required nationally.

        Uniform data collection would not be required, making 
            monitoring more difficult.

        Federal training requirements for hands-on care givers 
            would be eliminated; each State could determine who 
            would be trained and how.
REBUTTAL to Veto Claim No. 15
  - President Clinton is now defending what he once criticized. 
        The Medicaid nursing home standards are overly 
        prescriptive. A 1989 National Governors' Association 
        resolution signed by 48 Governors (including the former 
        Governor of Arkansas, Bill Clinton) attacked them as 
        both laden with trivia and having too much 
        micromanagement. Instead, the resolution called for the 
        establishment of State standards.

  - The Medicaid nursing home standards were mandated in 1987 
        but the regulations, which comprise hundreds of pages 
        of detailed instructions, were not put on the books 
        until 1995.

  - The Medicaid nursing home standards are exceedingly complex 
        and difficult to enforce.

  - Even so, the BBA kept the structure and many of the 
        provisions of the Omnibus Budget Reconciliation Act of 
        1987 Medicaid nursing home protections. For the 
        remainder it gives the States the authority to enact 
        enforceable, reasonable, common-sense nursing home 
        quality assurance standards in compliance with broad, 
        comprehensive Federal guidelines.
VETO CLAIM No. 16: [The Balanced Budget Act Provides] No Adequate 
        Quality of Care for Medicaid Managed Care Plans.
  - Unlike the explicit protections in current law for 
        residents of nursing homes and institutions caring for 
        mentally retarded individuals, the current Federal 
        Medicaid contracting rules for Medicaid managed care 
        plans use proxy measures--such as enrollment 
        composition requirements (the ``75/25 rule'')--that 
        vaguely, at best, relate to quality of care for 
        Medicaid beneficiaries who are enrolled in managed care 
        systems.

  - The conference agreement includes no quality-of-care 
        standards for managed care systems--even though 23 
        percent of all Medicaid enrollees received their health 
        care through managed care programs in 1994, and an even 
        greater proportion in enrolled in managed care in 1995.

        States would not be required to establish or enforce 
            quality standards for capitated managed care plans.

        The Federal Government would have no authority to 
            enforce managed care access standards or quality 
            requirements.

        The administration's proposal would ensure quality of 
            care for managed care enrollees and nursing home 
            residents by replacing outdated statutory rules 
            with real quality-of-care projections for managed 
            care enrollees--quality improvement programs that 
            have been field tested in several States and were 
            developed with extensive industry participation.
REBUTTAL to Veto Claim No. 16
  - State laws already regulate quality of care in health 
        maintenance organizations and other kinds of managed 
        care.

  - The suggestion being made by those attacking the Medicaid 
        reform proposal is that those on Medicaid should 
        receive a quality of health care that is higher than 
        that received by those paying for Medicaid through 
        their taxes.

  - Managed care plans for most workers are regulated by State 
        governments. This level of regulation will work well 
        for those on Medicaid as well.
VETO CLAIM No. 17: [The Balanced Budget Act] Eliminates Quality 
        Standards for Facilities That Serve Mentally Ill and Mentally 
        Retarded Individuals.
  - Federal law calls for explicit, outcome-oriented quality-
        of-care protections for mentally ill and mentally 
        retarded Medicaid beneficiaries who live in 
        institutions.

  - While the congressional Medicaid proposal maintains some 
        projections for nursing homes, it completely eliminates 
        the current statute that includes explicit, outcome-
        oriented quality-of-care protections for nursing home 
        residents and mentally ill and mentally retarded 
        beneficiaries who live in institutions.
REBUTTAL to Veto Claim No. 17
  - With almost no exception, the current Medicaid program does 
        not require States to cover mental health services. 
        Such services are an ``optional'' service. The Balanced 
        Budget Act conference report states: ``It is the 
        expectation of the conferees that States will respond 
        to the needs of the chronically mentally ill. For this 
        purpose, State MediGrant plans will provide under 
        section 2139 (c) quality assurance programs for 
        individuals with chronic mental illness.''
VETO CLAIM No. 18: [The Balanced Budget Act] Weakens Protections 
        Against Spousal Impoverishment.
  - The congressional budget undermines protections against 
        spousal impoverishment that were signed into law by 
        President Reagan in 1987.

  - The congressional budget leaves it entirely up to States to 
        determine which persons in institutions receive 
        MediGrant assistance. Individuals could be denied 
        coverage for long-term care services altogether. 
        Spouses of individuals denied coverage would receive no 
        protection from the ``spousal impoverishment'' 
        provisions. Because the budget repeals the guarantee of 
        nursing home coverage, it also effectively eliminates 
        the guarantee of protection from spousal 
        impoverishment.

  - The congressional budget also repeals the right of 
        individuals to enforce spousal impoverishment 
        projections in court when they believe they have been 
        wrongfully denied, making the protections 
        unenforceable.
REBUTTAL to Veto Claim No. 18
  - Currently, a nursing home resident is required to ``spend 
        down'' his or her assets before qualifying for Medicaid 
        coverage for nursing home costs. Spouses, however, are 
        permitted to keep minimum levels of income and assets.

  - Under the congressional Medicaid reform, each State will be 
        required to include eligibility standards in the plan 
        that protect the income and resources of a married 
        individual who is living in the community and whose 
        spouse is residing in an institution in order to 
        prevent the impoverishment of the community spouse.

  - Under the congressional Medicaid reform proposal, the key 
        structure of existing community spouse protections is 
        retained. For example, no income of the community 
        spouse shall be deemed available to the institutional 
        spouse. Property exclusions in existing law are 
        retained (house, auto, household goods, and personal 
        effects), with asset levels for nonexcluded assets 
        ranging from about $15,000 to about $75,000 and indexed 
        by the CPI. In general, protected income levels would 
        range from 15 percent of poverty for a family unit of 
        two people (about $1,230 per month) to about $1,871 per 
        month.

  - Individuals will continue to be able to enforce spousal 
        impoverishment projections in State courts when they 
        believe they have been wrongfully denied benefits.
VETO CLAIM No. 19: [The Balanced Budget Act] Eliminates Financial 
        Protections--Puts Medicaid Beneficiaries' Homes and Family 
        Farms at Risk.
  - Under the congressional budget, the sick could be forced to 
        sell their homes, family farm, car, and all their 
        savings in order to qualify for Medicaid. The 
        congressional proposal repeals all Federal laws 
        protecting a minimum level of income and assets (such 
        as the family home or farm) in determining Medicaid 
        eligibility.

        It allows States to count the value of one's home or 
            family farm in determining Medicaid eligibility.

  - People whom States define as no longer ``poor enough'' to 
        qualify for medical assistance would be faced with 
        paying all their medical costs themselves, or seeking 
        help from relatives or charity.

  - In the worst cases, families would have to mortgage or sell 
        their homes to be able to pay for care, or elderly 
        people needing long-term care would have no choice but 
        to turn to their children for help.

  - Nursing facilities could require additional payments from 
        residents or their families in order to be admitted, or 
        in order to continue living in the facility.

  - The congressional Medicaid plan would remove all 
        restrictions on how large a share of the costs of 
        medical care States can require from eligible 
        individuals, other than children and pregnant women.

  - Cuts in the scope of the nursing home benefits could mean 
        that families of poor patients will have to pay for 
        services such as personal hygiene, laundry, or various 
        therapies, that States now pay.
REBUTTAL to Veto Claim No. 19
  - Under current Federal law, a nursing home resident is 
        required to ``spend down'' his or her assets before 
        qualifying for Medicaid coverage for nursing home 
        costs. Spouses, however, are permitted to keep minimum 
        levels of income and assets.

  - Under the congressional Medicaid reform plan, each State 
        will be required to include eligibility standards in 
        the plan that protect the income and resources of a 
        married individual who is living in the community and 
        whose spouse is residing in an institution in order to 
        prevent the impoverishment of the community spouse.

  - Under the congressional Medicaid reform plan, the key 
        structure of existing community spouse protections is 
        retained:

        No income of the community spouse shall be deemed 
            available to the institutional spouse.

        Property exclusions in existing law are retained 
            (house, auto, household goods, and personal 
            effects), with asset levels for nonexcluded assets 
            ranging from about $15,000 to about $75,000 and 
            indexed by the CPI.

        In general, protected income levels would range from 15 
            percent of poverty for a family unit of two people 
            (about $1,230 per month) to about $1,871 per month.
VETO CLAIM No. 20: [The Balanced Budget Act] Repeals Requirement That 
        All Communities in a State Receive Comparable Benefits.
  - The congressional Medicaid plan eliminates all requirements 
        that comparable services be provided across the 
        different geographic areas of a State. Thus, people in 
        politically weak communities could receive fewer 
        benefits than those in more powerful communities.
REBUTTAL to Veto Claim No. 20
  - The requirement that comparable services be provided across 
        the different regions of a State has impeded efforts 
        toward greater efficiency through managed care.

        Not all geographic areas of a State have HMO's. Hence, 
            comparability of service requirements, and others--
            such as that allowing Medicaid recipients to choose 
            any provider--have made it more difficult for 
            States to enroll recipients into managed care.

        Only through expensive and time-consuming waivers can 
            States overcome these impediments.

  - In several States, the Clinton administration has granted 
        waivers allowing States to provide different services 
        in different regions. Thus, the administration has done 
        what the President now criticizes.
VETO CLAIM No. 21: [The Balanced Budget Act] Hurts Urban Areas.
  - Approximately 75 percent of Medicaid recipients live in 
        cities. Assuming a proportional allocation of the $163 
        billion Republican cuts, Medicaid spending in urban 
        areas will drop by $122 billion.

  - The congressional budget will deny Medicaid coverage to 6 
        million people living in urban areas, according to HHS, 
        including:

        Almost 3 million urban children;

        975,000 urban people with disabilities; and

        650,000 urban elderly.
REBUTTAL to Veto Claim No. 21
  - Under the congressional plan outlays are projected to 
        increase by 7 percent each year, instead of the 9.9 
        percent currently forecast. Contrast the proposed 7 
        percent increase in Medicaid with health care costs in 
        the private sector, which are declining.

        A recent survey of private sector HMO costs and 
            premiums in 1995 suggest that both are declining in 
            the private sector. According to a Milliman & 
            Robertson survey of 376 HMO's required revenue 
            (what is needed to cover expected medical and 
            administrative costs) declined 2.7 percent, from 
            $132 to $128 per member per month. The average 
            annual premium shrank 0.7 percent.

        The declines were due to shorter hospitalizations, 
            greater efficiency from the use of guidelines, and 
            modest cost reductions in other areas, including a 
            decline in inpatient costs per day from $1,299 to 
            $1,244.

  - Under the congressional Medicaid reform plan, payments per 
        recipient would rise. Under the $90 billion saving 
        plan, Federal MediGrant outlays per recipient would 
        rise from $2,516 in 1995 to $3,242 in 2002. These 
        increases in per-person outlays meet or exceed in each 
        year the increases in the consumer prices [CPI] that 
        the CBO forecasts. Therefore, there is no reason to 
        believe that there would be any loss in coverage in 
        urban areas under the Republican plan.

  - President Clinton is resorting to disingenuous tactics in 
        criticizing the congressional plan, which proposes 
        Medicaid growth averaging 7 percent each year over the 
        next 7 years (a rate that is more than twice the 
        expected rate of inflation).

        Only a little over 2 years ago President Clinton said: 
            ``Medicaid and Medicare are going up at three times 
            the rate of inflation. We propose to let it go up 
            at two times the rate of inflation * * * Only in 
            Washington do people believe that no one can get by 
            on twice the rate of inflation.'' (President 
            Clinton, speech to the American Association of 
            Retired Persons, October 5, 1993). Nevertheless he 
            now refers to the congressional Medicaid spending 
            increases as ``cuts.''


                                 Taxes

                              ----------                              

VETO CLAIM No. 22: The Size of the Tax Cut, Which Explodes Outside the 
        Budget Window, Cannot Be Justified.
  - At a time when we are working to balance the budget, the 
        ``Contract'' tax cuts are too costly, forcing excessive 
        cuts in Medicare, Medicaid, education, technology, and 
        the environment, as well as the earned income tax 
        credit.

  - Over 7 years, these tax cut provisions, including capital 
        gains cuts, estate tax cuts, and individual retirement 
        account provisions, cost $258 billion. Moreover, the 
        cost of these tax provisions, particularly those for 
        the most affluent, is designed to explode outside the 
        7-year budget window--to more than $400 billion over 10 
        years.
REBUTTAL to Veto Claim No. 22
  - The majority of the congressional tax cut is the child tax 
        credit, which benefits middle-class working families--
        precisely the people to whom candidate Clinton promised 
        a tax cut when he was running for President. President 
        Clinton never delivered on his promise; the 
        congressional majority did.

  - More than three-fourths of the congressional tax cuts will 
        go to families earning less than $100,000 a year.

  - The tax cut will reduce projected government revenues by 
        only about 2.2 percent over the next 7 years (the tax 
        cut is $245 billion; projected revenues are $11.2 
        trillion). Subsequent congressional majority offers 
        have reduced the ratio to about 1.5 percent. Yet, 
        astonishingly, Clinton contends this tax cut is 
        unjustifiably large.

  - Unlike President Clinton, Republicans believe families are 
        better suited to spend their money wisely than the 
        government is. President Clinton doesn't want the tax 
        cuts because he wants the money for more government 
        spending.

  - The numbers identified by the administration make a poor 
        case for backloading.

        If the decline in projected revenue were perfectly 
            balanced--that is, if an equal proportion occurred 
            in each of the 10 years--then it would be 70 
            percent in the first 7 years and 30 percent in the 
            last three.

        In the administration's own example, the $258 billion 
            that occurs in the first 7 years represents 64.5 
            percent of the total $400 billion revenue change 
            over 10 years, leaving 35.5 percent for the last 3 
            years. That is not significant backloading.

  - The President's tax package has a similar pattern: 60 
        percent of the revenue losses in the President's tax 
        package occurs in the first 7 years.

  - A good part of the reason is that both plans recommend 
        provisions to expand individual retirement accounts. 
        The President's IRA proposal reduces projected revenue 
        by $11.1 billion over 7 years; the BBA proposals 
        regarding IRA's reduce projected revenue by $11.7 
        billion over 7 years. Taxpayers enjoy a larger tax cut 
        related to IRA's in later years because they are 
        required to own IRA's for 5 or more years before 
        withdrawals can be made tax-free.

  - The spending restraint in the BBA does not stop in the year 
        2002 or 2005.

        A CBO analysis requested by congressional Democrats 
            shows that under the BBA, the budget remains 
            balanced through 2005, despite the alleged 
            ``backloading'' of the tax cuts.

        The fiscal dividend that follows from balancing the 
            budget continues to grow as time goes on.
VETO CLAIM No. 23: It Is Wrong to Single Out Low- and Moderate-Income 
        Working Families Earning Under $30,000 a Year for a Special Tax 
        Increase.
  - The Balanced Budget Act raises income taxes on low- and 
        moderate-income working families by $30.8 billion 
        through cuts in the earned income tax credit [EIC], a 
        provision that President Ronald Reagan called ``the 
        best antipoverty, the best pro-family, the best job 
        creation measure to come out of the Congress.''

  - President Clinton expanded the EITC to move families from 
        welfare to work and to help ensure that parents who 
        work full time do not have to raise their children in 
        poverty.

  - Under the congressional plan, 12.6 million working 
        Americans with 14.5 million children would lose, on 
        average, $332 of the EIC in 1996. Moreover, even after 
        accounting for the fully phased in congressional tax 
        cuts, about 7.7 million families who earn under $30,000 
        a year would face an average net tax increase in 1996 
        of $318 per family under their plan.

  - On average, families in the lowest 20 percent of income 
        distribution would face a net tax increase, not a tax 
        cut, under their plan.
REBUTTAL to Veto Claim No. 23
  - Under the congressional plan, working families with 
        children will not suffer tax benefit losses as a result 
        of the EIC reform. When considered together, the GOP 
        proposals for modifying the EIC and providing a $500 
        per child tax credit will result in tax liability 
        remaining either the same or declining for virtually 
        all EIC claimants with children.

        The 3.5 million who would experience a ``tax increase'' 
            as described by the administration are filers 
            without children, most of whom have incomes below 
            the threshold for income tax liability.

        Another 600,000 are families with three or more 
            children. This group would be held harmless by a 
            technical correction to the BBA policy, which is 
            part of the latest GOP offer.

        The remainder are persons with substantial itemized 
            deductions used to reduce their income to taxable 
            levels qualifying for the EIC, or persons with 
            substantial sources of outside income or qualifying 
            children over age 18 (the EIC is provided to 
            families with children up to age 20--or 24 in the 
            case of full-time students--while the $500 per 
            child credit applies to children up to age 18).

  - OBRA '93--President Clinton's tax bill--expanded the EIC to 
        cover persons without dependent children, even though 
        taxpayers without dependent children were explicitly 
        excluded from EIC eligibility when the program that 
        Ronald Reagan commended was originally created.

        Persons with no qualifying children claiming the 
            maximum EIC credit are not working full time. Most 
            of the EIC for childless workers is fully phased 
            out at an income lower than would be earned by a 
            full-time minimum wage worker.

        Persons working part time with no children should 
            supplement their incomes by getting another part-
            time job rather than looking for a federally funded 
            benefit payment.

  - In 1986, when President Reagan lauded the earned income 
        credit, the program cost $2.5 billion. In 1996, under 
        current law, the EIC is projected to cost $24 billion, 
        and less than 15 percent of that figure represents 
        reduced income tax liability.
VETO CLAIM No. 24: Tax Cuts Are Targeted Too Heavily to Benefit the 
        Wealthiest Taxpayers, and Not Enough on Helping Middle Class 
        Families.
  - At a time when we are all working to balance the budget, 
        any tax relief must be focused on middle income 
        Americans.

  - Our plan targets 85 percent of the benefits to families 
        earning under $100,000 a year.

  - The congressional bill gives nearly half the tax benefits 
        to the top 12 percent of families with incomes of 
        $100,000 or more. The highest income 1 percent of 
        families, those with incomes over $349,000, would 
        receive an average tax break of almost $8,500 per 
        family.

    Their bill provides $13 billion in retroactive capital 
gains relief, a huge windfall for past investments, with no 
conceivable economic purpose. This windfall cannot be justified 
in light of cuts on working families and the poor.
    Overall, they provide capital gains tax cuts costing $47 
billion over 7 years and $77 billion over 10 years, cuts that 
overwhelmingly benefit the wealthy. In fact, 75 percent of the 
benefit of the capital gains cuts go to the wealthiest 12 
percent of households earning over $100,000 a year.
REBUTTAL to Veto Claim No. 24
  - The majority of the tax cut is the child tax credit, which 
        benefits middle-class working families--precisely the 
        people to whom candidate Clinton promised a tax cut 
        when he was running for President. President Clinton 
        never delivered on his promise; the new congressional 
        majority did.

  - More than three-fourths of the tax cuts will go to families 
        earning less than $100,000 a year.

  - The capital gains tax relief in the plan is needed to get 
        the current sluggish economy moving again.

  - According to the Joint Committee on Taxation [JCT] 
        distributional analysis, more than three-fourths of the 
        benefit of the tax changes in the Balanced Budget Act 
        go to families with incomes below $100,000.

  - The administration is using its unique concept of ``family 
        economic income'' to do its analysis of the 
        distributional effects of the BBA tax package.

        The administration's ``family economic income'' is the 
            broadest measure of income and includes: accrued 
            capital gains (whether or not realized); net rental 
            income from owner-occupied housing (imputed rental 
            income); accrued pension and other fringe benefits, 
            and income that is unreported or underreported on 
            tax returns and in survey data. Potentially every 
            family has more ``income'' under the administration 
            measure than under the JCT measure.

        The JCT uses a narrower income concept for its 
            analysis. For example, JCT includes capital gains 
            and pension benefits in income when they are 
            realized instead of as they accrue. JCT also does 
            not include imputed rental income from owner-
            occupied housing in income.

        The administration says that 12 percent of all families 
            have ``incomes'' above $100,000. JCT says that 5 
            percent of all families have incomes above 
            $100,000. Because the administration puts more than 
            twice as many families above $100,000 to begin 
            with, it is not surprising that their analysis 
            shows tax policy changes affecting people above 
            this income level.
VETO CLAIM No. 25: Special Interest Tax Loopholes.
  - The American people elected this Congress and this 
        President to balance the budget and move the country 
        forward, not to provide special tax breaks for special 
        interests.

  - The Balanced Budget Act contains dozens of special tax 
        breaks for particular taxpayers and special interests, 
        costing the rest of American taxpayers more then $3 
        billion over 7 years. These special-interest 
        provisions, both large and small, are designed to 
        benefit, among others:

        Multinational corporations that stockpile assets 
            overseas;

        The airline industry;

        Certain coal companies;

        Real estate developers;

        Insurance companies;

        Certain convenience stores;

        Newspaper companies; and

        Certain pharmaceutical companies with operations in 
            Puerto Rico.

  - These special-interest favors for the well-connected are 
        inappropriate in this deficit-reduction bill, 
        especially since this bill would result in tax 
        increases for many needy working families. These 
        provisions have little or nothing to do with 
        stimulating the economy or creating new jobs. Now is 
        the time to close loopholes and special interest 
        provisions, not open up new ones.
REBUTTAL to Veto Claim No. 25
  - A ``special tax break'' is one targeted to the benefit of 
        specific companies. To make this veto claim, the 
        administration cites tax provisions that affect whole 
        industries, rather than a few selected companies. This 
        is much broader than the typical understanding of 
        targeted tax breaks.

  - The congressional tax provisions being criticized are 
        designed to fix glitches in the tax code and end abuses 
        that favor a few companies. This is a sharp departure 
        from the practice under the formerly Democrat-
        controlled Congress of providing specifically targeted 
        tax relief, such as the $3 billion worth of special--
        often company-specific--tax breaks built into the 1986 
        Tax Reform Act.

  - Congressional tax provisions dealing with multinational 
        companies that stockpile assets overseas are designed 
        to reform the administration's failed 1993 provision 
        (tax code section 956A) that has prompted movement of 
        assets overseas by these companies.

  - Provisions dealing with real estate developers make a 
        technical correction, favored by the Treasury 
        Department in the past, to allow more appropriate 
        depreciation.

  - Provisions dealing with certain convenience stores 
        recognize that a gas station with a convenience store 
        (up to a certain size) should be treated, for 
        depreciation purposes, not as a regular commercial 
        building but, instead, as a regular gas station. 
        Adopting commonsense rules in the tax code is hardly 
        creating a loophole.

  - The Balanced Budget Act phases out the section 936 credit, 
        which is used by pharmaceutical companies with 
        operations in Puerto Rico. Rather than providing a tax 
        benefit to these companies, the BBA takes away one.
VETO CLAIM No. 26: All Profitable Corporations Should Pay at Least Some 
        Income Tax, but Under the Congressional Alternative Minimum Tax 
        Provision, Some Profitable Corporations Would Pay No Income 
        Tax, While Millions of Workers Pay Their Fair Share.
  - This administration is committed to simplifying the 
        Alternative Minimum Tax [AMT] without compromising 
        fairness. The congressional majority's bill goes too 
        far.

  - Under their bill, some profitable corporations would be 
        able to pay little or no income tax, at a cost to the 
        rest of America's taxpayers of $15 billion over 7 years 
        and $18 billion over 10 years.

  - Their provision rewards investments that are 7 years old 
        and makes the tax code more complex, not less.
REBUTTAL to Veto Claim No. 26

  - The current AMT is a job killer. Companies are penalized 
        for making needed investments in productive assets.

  - In no other country in the industrialized world is 
        investment penalized as heavily as in the United States 
        under current law.

        For example, a company investing in factory robots in 
            the United States will recover only 50 percent of 
            the cost of its investment after 5 years, while the 
            same investment in Singapore will have recovered 
            100 percent after only 3 years.

        In Korea, Taiwan, and Germany more than 80 percent will 
            be recovered after 5 years.
VETO CLAIM No. 27: A $90,000 Per Estate Tax Cut Cannot Be Justified.
  - We ought to help farmers and small businesses whose heirs 
        want to continue running the family business, but we 
        would not provide tax breaks to the wealthiest estates 
        at high cost when we are trying to balance the budget.

  - Their provision would give an average of $90,000 in estate 
        tax relief to the wealthiest on percent of decedents 
        who owe estate tax each year--about 30,000 wealthy 
        estates--costing $13 billion over 7 years and $27 
        billion over 10 years.

  - Only the wealthiest 1 percent of taxpayers who die each 
        year pay any estate tax. An estate that could take full 
        advantage of proposed changes could save over $1 
        million in taxes, with some estates cutting their bill 
        by over 75 percent.
REBUTTAL to Veto Claim No. 27
  - Small businesses and family-owned farms are run by people 
        who work hard and play by the rules all their lives. 
        When the owner dies, the family should not have to sell 
        the business to pay their taxes.

  - The proposal increases the estate tax exemption amount from 
        $600,000 to $750,000 and then indexes it for inflation. 
        The $600,000 current law amount was established in 1987 
        and has not been increased since then, despite the 
        impact of inflation.

  - Absent the change in the bill, an even greater portion of 
        families would become subject to the estate tax, the 
        greatest penalty the tax code now imposes on savings.
VETO CLAIM No. 28: Wealthy Americans Should Not Be Able to Avoid Paying 
        U.S. Tax on Their Gains by Renouncing Their U.S. Citizenship.
  - Wealthy Americans who seek to avoid their taxes by 
        renouncing their citizenship should pay the same tax on 
        income accrued while they were subject to U.S. tax laws 
        that those who remain will pay.

  - The congressional bill effectively leaves open a loophole 
        for expatriates. Their provision would reward tax 
        avoiders who are willing to wait 10 years before 
        realizing gains; it rewards those who invest in foreign 
        assets; and it makes enforcement very difficult.
REBUTTAL to Veto Claim No. 28

  - The congressional proposal would apply to any individual 
        who renounces his or her U.S. citizenship on or after 
        February 6, 1995, and any long-term resident whose U.S. 
        residency is terminated on or after June 13, 1995.

  - It is more comprehensive than the President's plan because 
        it covers a wider class of individuals who forego their 
        citizenship or residence.

  - The congressional expatriate proposal raises $1 billion 
        more in revenue than does the President's plan.
VETO CLAIM No. 29: Multinational Corporations Should Not Be Able to 
        Avoid Paying Their Fair Share of Income Taxes by Sheltering 
        Passive Assets in Offshore Tax Havens.
  - This administration put in place a new rule in 1993 to 
        reduce the incentive for multinational companies to 
        stockpile passive assets in excess of reasonable 
        business needs, primarily to avoid taxes, not to 
        invest, grow, and compete.

  - The congressional bill repeals this provision, enhancing 
        the incentive for these companies to move capital 
        overseas and to keep their profits in passive assets 
        there.
REBUTTAL to Veto Claim No. 29

  - This provision repeals a failed administration tax policy 
        (Tax Code Section 956A), passed as part of Clinton's 
        1993 Tax Act, that was intended to reduce the incentive 
        for companies to stockpile passive assets in offshore 
        subsidiaries. Perversely, the administration's policy 
        has actually encouraged companies to move active assets 
        offshore--the opposite of the intended result.
VETO CLAIM No. 30: All Americans Who Work Hard and Play by the Rules 
        Ought to Be Able to Count on Their Pensions When They Retire.
  - During the 1980's, corporations removed more than $20 
        billion from employee pension plans, often to fund 
        corporate takeovers, until Congress effectively put an 
        end to this. And just last year, we took further steps 
        to improve pension funding and reduce taxpayer risk 
        through the administration's 1994 Retirement Protection 
        Act.

  - Now, the conference agreement permits employers to transfer 
        without any excise tax, pension assets in excess of 125 
        percent of a pension plan's ``termination liability'' 
        to pay certain employee benefits. In effect, this would 
        allow companies to use pension assets to free up other 
        corporate funds for other purposes.

  - Their provision would increase risk to the Pension Benefit 
        Guaranty Corporation, and ultimately to American 
        taxpayers. A plan's financial condition can change 
        rapidly as interest rates and markets fluctuate. 
        Today's ``overfunded'' plan can become tomorrow's 
        underfunded plan, and experience shows that the 
        financial condition of plans can deteriorate 
        significantly prior to termination.

  - Their provision would permit corporations to use valuable 
        tax benefits granted to help American workers 
        accumulate retirement savings for nonpension, corporate 
        purposes.

  - * * * would permit corporations to remove billions from the 
        retirement system at a time when it is critical to 
        increase national savings and retirement security.
REBUTTAL to Veto Claim No. 30
  - Excess retirement plan assets increase because of better 
        than average investment returns. The excess assets--
        those above what is needed to keep retirement plans 
        actuarially sound--are the property of the employer.

  - Current law severely restricts the ability of employers to 
        use excess retirement plan assets.

        Generally the assets may be used only for retiree 
            health benefits (Tax Code Section 420).

        Current law section 420 treats unfavorably companies 
            that have relatively younger work forces because it 
            provides for additional benefits for retirees', but 
            not current employees', health benefits.

  - The asset reversion proposal requires employers to maintain 
        the same asset security cushion as current section 420 
        (125 percent of retirement plan benefits), thus 
        preventing retirement plans from being underfunded. 
        Employees are protected by the same 125-percent 
        cushion.

  - The asset reversion proposal will allow employers to fund a 
        wider variety of employee benefits (health care, 
        pensions, et cetera) than current section 420 does.

  - There have been no underfunding problems with current 
        section 420 and there is no reason to believe the 
        proposal will cause any retirement plan underfunding.

  - The proposal creates jobs by freeing up capital companies 
        cannot otherwise use. It also puts the United States in 
        line with many of our trading partners--for example, 
        Britain, which requires disgorgement of surplus pension 
        assets.
VETO CLAIM No. 31: We Ought to Be Helping Low-Income Working Families 
        Raise Their Children in Affordable Housing and Rebuild Their 
        Communities.
  - This administration made the low-income housing tax credit 
        permanent in 1993. Since its enactment in 1986, State 
        housing agencies report that the credit has been used 
        to construct or rehabilitate nearly 100,000 units of 
        low-income rental housing per year.

  - The Balanced Budget Act terminates the low-income housing 
        tax credit at the end of 1997, a cut of $3.5 billion 
        over 7 years. Their budget also ends an incentive for 
        community development that builds bridges between 
        businesses and communities.
REBUTTAL to Veto Claim No. 31
  - The proposal does not immediately terminate the credit. 
        Rather, the credit will once again become a temporary 
        credit, as it was before OBRA '93 made it permanent.

  - The low-income housing tax credit is being treated 
        similarly to the research and experimentation tax 
        credit and other popular incentives. The R&E tax credit 
        expired earlier this year, and the proposal would 
        extend it through 1997. Thus, both the R&E tax credit 
        and the low-income housing tax credit would be subject 
        to the same sunset and review process in 1997.


                                Welfare

                              ----------                              

    Before addressing the President's specific veto claims, it 
is crucial to reiterate four basic conditions underlying the 
need for fundamental reform of the welfare system. These four 
conditions have guided the congressional welfare reform plan. 
They are the following:
1. The current welfare system is a failure, and virtually everyone 
        agrees about that. That's why in 1992 candidate Bill Clinton 
        promised to ``end welfare as we know it.'' President Clinton 
        has yet to deliver on that pledge.
        The Great Society's war on poverty has failed. While 
            total social spending at all levels of government 
            increased five-fold between 1960 and 1990, the 
            poverty rate has failed to decline.

        Between 1960 and 1990, illegitimate births rose 400 
            percent, the divorce rate quadrupled, the number of 
            children living in single-parent households 
            tripled, and violent crime increased 560 percent.
2. In many communities today, welfare pays more than work.
        In nine States, welfare pays more than the average 
            first-year salary for a teacher, according to an 
            analysis by the Cato Institute. In 29 States, it 
            pays more than the average starting salary for a 
            secretary. In the six most generous States, welfare 
            pays more than the entry level salary for a 
            computer programmer.

        In 40 States, welfare pays more than an $8.00 per hour 
            job. In 17 States, the welfare package is more 
            generous than a $10-an-hour job, according to Cato.
3. Congress has a plan that attacks the two main causes of long-term 
        welfare dependency--lack of participation in work and 
        illegitimacy.
        The GOP welfare reform legislation requires States to 
            have 50 percent of their single-parent welfare 
            recipients working 35 hours per week by 2002. 
            Welfare recipients will be required to work within 
            2 years of going on welfare or lose benefits.

        Under the GOP plan, able-bodied food stamp recipients 
            between 18 and 50 who have no dependent children 
            will be required to work at least 20 hours per week 
            after receiving benefits for 4 months or lose their 
            benefits.

        The BBA toughens child support enforcement to ensure 
            that noncustodial ``deadbeat dads'' provide 
            economic support for their children. Moreover, it 
            places new requirements on establishing paternity 
            as a condition of obtaining welfare.

        The congressional plan discourages illegitimacy by 
            giving States the option to deny cash welfare 
            benefits to teenagers who give birth out of 
            wedlock, as well as the option to cap welfare 
            benefits to mothers on welfare who have additional 
            children while on public assistance.
4. Despite candidate Bill Clinton's promise to ``end welfare as we know 
        it,'' President Clinton has vetoed meaningful welfare reform 
        legislation not once but twice. Indeed, the only person 
        standing in the way of welfare reform is President Clinton 
        himself.

        Major welfare reform legislation was included in the 
            Balanced Budget Act vetoed by the President in 
            December, 1995.

        Separate welfare reform legislation was enacted by 
            Congress and vetoed by the President in January 
            1996.

        In January 1996, the President threatened to veto a 
            third welfare reform plan--a version that he had 
            endorsed in August 1995. When congressional leaders 
            considered sending him that exact bill, he added 
            new conditions and demanded changes as a 
            prerequisite for a signature.

    The President's specific veto claims concerning welfare 
reform are as follows:
VETO CLAIM No. 32: [The Balanced Budget Act Contains] Excessive Cuts 
        for Disabled Children.
  - The budget cuts aid to severely disabled children by 25 
        percent, slashing $12 billion from disabled children's 
        SSI benefits.

  - The tightening of eligibility would apply to children 
        currently receiving benefits, so that 160,000 children 
        currently in the program would lose eligibility 1 year 
        after enactment.

  - The provision makes an illogical division between severely 
        disabled children, making some of them eligible for 
        only 75 percent of the Federal benefit rate. The low-
        income parents of all of these children experience 
        special costs and reduced employment opportunities 
        because of their responsibility for these children.
REBUTTAL to Veto Claim No. 32
  - SSI Disability benefits were never intended for children, 
        since the purpose of SSI is to replace the incomes of 
        adults who are unable to work. We do not expect 
        children to earn incomes to support their families, and 
        therefore families with disabled children lose income 
        only when the child's disability is so severe that a 
        parent must leave the work force to care full time for 
        the child.

        For families with severely disabled children who face 
            this dilemma, the BBA makes no changes.

        But families whose children are not so disabled, and 
            where parents can continue to work will have their 
            benefits calculated at 75 percent of the amount 
            received by families with children requiring round-
            the-clock care.

        This change is made only for new applicants; and all 
            families currently on the benefit rolls with 
            eligible children whose conditions are not so 
            severe would see their benefits continue unchanged. 
            The BBA simply recognizes that future applicants' 
            benefit levels should be calculated based on the 
            level of financial hardship the family faces as a 
            result of a child's disability.

  - Tightening the eligibility standards for children in the 
        SSI disability program is proposed in both the BBA and 
        the administration's proposals in response to 
        widespread reports of abuse resulting from lax 
        eligibility criteria.

        Current rules give parents an incentive to coach their 
            children into appearing to have disabilities, 
            because benefit levels for disabled children are 
            substantially higher than those provided for 
            children on AFDC.

        Because the current weak criteria for SSI disability 
            includes behavioral problems as disabling 
            conditions, this can lead to parents encouraging 
            their children to engage in negative behavior to 
            obtain benefits. Moreover, once a child is 
            classified as disabled, it is likely that less will 
            be expected or demanded of the child in school, 
            leading to diminished future prospects for that 
            child.

        The administration's criticism suggests that the 
            administration is prepared to correct the problem 
            that allowed for abuse of the program, but 
            unwilling to terminate benefits for persons 
            currently on the rolls who got there by virtue of 
            that abuse.

        The BBA simply requires families to be able to 
            demonstrate that their children do in fact meet the 
            legal criteria for being considered disabled in 
            order to continue receiving SSI disability benefits 
            for their children.

        The administration's current 7-year budget plan, 
            proposed in January 1996, has accepted reviewing 
            eligibility for all children currently on SSI 
            disability to ensure they meet the legal criteria, 
            with termination of benefits for those who do not 
            by 1998. This simply delays the policy contained in 
            the BBA for 1 additional year.
VETO CLAIM No. 33: Too Little Child Care for Real Welfare Reform That 
        Would Move People From Welfare to Work.
  - The Balanced Budget Act does not provide the child care 
        that is essential to move people from welfare to work.

  - The bipartisan Senate welfare reform bill would have 
        increased child care funding from $3 billion over the 
        next 5 years. The Balanced Budget Act cuts that funding 
        by $1 billion, which would mean thousands of mothers 
        will stay at home and on welfare instead of going to 
        work.

  - The budget also weakens important bipartisan work 
        provisions of welfare reform such as requiring States 
        to maintain their stake in moving people from welfare 
        to work, rewarding States for putting more people to 
        work, requiring recipients to sign personal 
        responsibility agreements, and providing a contingency 
        fund for economic downturns.
REBUTTAL to Veto Claim No. 33
  - The BBA increases by $1 billion the amount available for 
        child care, and does so in a way that expands parental 
        choice of child care providers while increasing the 
        amount of Federal child care spending that is actually 
        used to provide care by reducing spending on 
        bureaucratic micromanagement and Federal rulemaking.

  - The President vetoed a second welfare reform proposal that 
        increased the amount available for child care by $2 
        billion. The administration's January offer is $1 
        billion above that contained in the GOP bill, but no 
        objective criteria have been presented by the 
        administration to justify why spending $18 billion on 
        child care over the next 7 years is insufficient, but 
        spending $19 billion will meet the perceived level of 
        need.

  - The work requirements in the GOP welfare reform bill are 
        significantly tougher than current law.

        By 2002, States will be required to have at least 50 
            percent of their single-mother welfare caseload 
            working or face sanctions.

        Moreover, welfare recipients will be limited to no more 
            than 2 years on welfare without working at least 35 
            hours per week.

  - States will have a strong stake in moving their welfare 
        populations into work under the BBA since they will 
        lose a portion of their Federal cash welfare block 
        grant if they fail to meet the timetable in the bill 
        for moving welfare recipients into work.

  - The administration believes States that are successful 
        moving recipients from welfare to work should be 
        rewarded with additional money to spend on welfare 
        benefits.

        In contrast, the congressional plan rewards States that 
            successfully move welfare recipients into work by 
            allowing the State to spend less of its own money 
            on welfare.

        Clearly, the administration still fails to get the 
            message that successful welfare reform means more 
            people working and less tax dollars spent on 
            benefits to people who do not work.

  - The congressional plan contains contingency funds for 
        economic downturns. But the issue of contingency funds 
        should not become a smokescreen to block reforms, as 
        the administration apparently seeks to use it.

        Cyclical fluctuations in the economy are not 
            responsible for the long-term welfare dependency 
            that the GOP plan seeks to address. Two-thirds of 
            the families receiving AFDC at any one point in 
            time will receive benefits for 8 years or more, and 
            their welfare dependency is not linked to the 
            business cycle.

        Contingency funds are irrelevant in addressing the 
            causes of most welfare dependency, and if the plan 
            is successful at beginning to move long-term 
            recipients into the work force, the level of 
            funding provided in welfare block grants should be 
            sufficient to respond to economic downturns.
VETO CLAIM No. 34: Excessive Cuts in Nutrition Assistance for 14 
        Million Children in 2002.
  - The Balanced Budget Act cuts food stamp benefits by about 
        $35 billion over 7 years. And it cuts child nutrition 
        and the school lunch program by $5 billion. Every one 
        of the 14 million children now receiving food stamps 
        would receive considerably less under the congressional 
        proposals.

  - Current law states that families with children that pay 
        over 50 percent of their income for housing will 
        receive food stamps in order to keep these families 
        from having to choose between food and shelter. The 
        congressional budget repeals this provision.
REBUTTAL to Veto Claim No. 34
  - The BBA does not cut nutrition assistance for children. 
        Under the BBA, spending on food stamps will be 32 
        percent higher over the next 7 years than it was over 
        the past 7 years, and funding for child nutrition 
        programs will increase by an annual average of 4 
        percent.

  - The BBA does, however, begin to address the autopilot 
        spending increases locked into food stamps.

        The Food Stamp Program contains five separate indexing 
            mechanisms that increase the value of food stamp 
            benefits over time.

        The BBA freezes four of those indexes at current 
            levels, while allowing benefits to be increased 
            annually to reflect the rising cost of food.

  - The BBA does not repeal the shelter deduction in food 
        stamps. It simply freezes it at the fiscal year 1996 
        level of $247 rather than allowing current law to 
        remain in force, which would have permitted an 
        unlimited shelter deduction after 1997.

  - The welfare reform bill passed by the Congress, which 
        represents the most recent congressional offer on child 
        nutrition programs, contains no reductions in payments 
        to schools for the school lunch program, and makes only 
        one policy change to the program that generates 
        savings: barring illegal aliens from receiving free and 
        reduced price school lunches.

  - The administration's proposal contains most of the 
        recommended policy changes for child nutrition and the 
        school lunch program that were contained in the BBA. 
        The primary policy dispute that the administration has 
        with the BBA on child nutrition is not one of spending 
        levels but instead one of maintaining Federal control 
        to micromanage local school lunch programs from 
        Washington.

        The administration opposes optional block grants for 
            child nutrition programs that would return 
            authority over the programs from Washington to 
            States and local communities.

        The primary area where funding is an issue is whether 
            or not to exclude illegal aliens from participation 
            in free or reduced price school lunches. The 
            administration favors illegal aliens participating 
            in the program, while the BBA would end this 
            taxpayer subsidy of persons violating U.S. 
            immigration laws.
VETO CLAIM No. 35: The Balanced Budget Act Jeopardizes Immunizations 
        for Children.
  - The congressional budget repeals the Vaccines for Children 
        Program, putting at risk at least $1.5 billion over 7 
        years that would otherwise provide vaccinations for 
        children.
REBUTTAL to Veto Claim No. 35
  - Under MediGrant--the reform plan for Medicaid--States would 
        be required to cover childhood immunizations for 
        eligible children.

  - Under MediGrant, the Federal entitlement program enacted in 
        OBRA '93 for the distribution of pediatric vaccines to 
        the States, called the Vaccines for Children [VFC] 
        Program, is repealed. VFC was designed to remove 
        vaccine cost as a barrier to immunization by making 
        federally purchased vaccines free of charge to eligible 
        children. During fiscal year 1995, VFC outlays are 
        estimated at $457.3 million.

  - The Vaccines for Children Program fails to address the root 
        problem of why children do not receive vaccines. A 1995 
        GAO study of VFC found that the primary barrier to the 
        vaccination of children is not availability or cost; it 
        is that parents are not taking their children to 
        physicians' offices or to clinics to be vaccinated.

  - Further, there have been both quality and availability 
        concerns regarding VFC.

        The Federal Government was storing the vaccines 
            inappropriately--in Federal Government paint 
            warehouse not designed for drug storage.

        Federal involvement has, in some cases, actually 
            restricted the availability of vaccines because the 
            Federal Government is unable to distribute them 
            efficiently. Many States complained that the 
            vaccines, which had previously been available to 
            the States for use in their Medicaid programs 
            through the pharmaceutical market, were now not 
            available from the Federal Government in adequate 
            quantities.
VETO CLAIM No. 36: [The Balanced Budget Act] Slashes Child Protection 
        by 20 Percent.
  - The budget slashes child protection, including foster care, 
        adoption, and investigations of reports of child abuse 
        and neglect. HHS estimates that total spending is 
        slashed by about 20 percent, or about $4 billion over 7 
        years. These cuts would occur at a time when GAO and 
        others report that resources are already failing to 
        keep pace with the need. Between 1983 and 1993, foster 
        care caseloads mushroomed by two-thirds. Over 1,300 
        children die each year due to child abuse and neglect. 
        Yet the budget slashes and caps these programs, 
        eliminating the guarantee of child protection services.
REBUTTAL to Veto Claim No. 36
  - The BBA does not cap funding for or end the entitlement to 
        Federal foster care maintenance payments or adoption 
        assistance payments. The BBA combines the remaining 20 
        programs which provide funding for the administrative 
        costs of State child protection programs into two block 
        grants.

  - Under the congressional welfare reform bill, which 
        represents the current GOP offer on child protection 
        programs, spending for foster care and child protection 
        programs will increase from $3.2 billion in 1995 to 
        $6.3 billion in 2002.

        Clearly, this is not a 20-percent cut as claimed by the 
            administration.

        Under the GOP plan, States will be granted 
            significantly more latitude to adapt their programs 
            to local needs and priorities, such as child abuse 
            prevention programs.

  - Under the currently existing programs the administration is 
        defending, more than 1,300 children die each year due 
        to child abuse and neglect.


                         Education and Training

                              ----------                              

VETO CLAIM No. 37: Education and Training Funding Should Be 
        Strengthened: Not Cut by $30 Billion.
  - While Congress claims that it is balancing the budget to 
        protect our children and grandchildren, their budget 
        proposals would make devastating cuts in education that 
        would deny many children the tools needed to rise to 
        their full stature as human beings. These cuts would 
        halt years of progress preparing children for learning, 
        raising educational goals and standards, and making 
        student loans more affordable.

  - Republicans propose to sell our Nation's seedcorn. They cut 
        education and training by more than $30 billion over 7 
        years, denying millions of children and youths 
        opportunities to succeed.
REBUTTAL to Veto Claim No. 37
  - The congressional majority wants every child in America, 
        whether they are rich or poor, live in the inner city, 
        on a farm, or on a suburban cul de sac, to have access 
        to a first-rate education.

  - Where Congress differs with the President is who can best 
        spend taxpayers' money to improve education for the 
        Nation's children--parents and local school districts 
        or the education bureaucrats in Washington.

        As noted by David S. Broder in the Washington Post: 
            ``[Education Secretary] Riley has a deputy 
            secretary, an undersecretary, 11 assistant 
            secretaries, and 14 deputy assistant secretaries. 
            Beyond that there are 21 boards, commissions and 
            councils, each with its own hierarchy. Each of the 
            department's 10 regional offices boasts separate 
            representatives for the secretary and deputy 
            secretary plus an array of directors. That's a lot 
            of chiefs for very few Indians.''

  - Congress believes the quality of education can best be 
        increased by reducing Washington's wasteful education 
        bureaucracy and sending tax dollars back home.

        As Alice Rivlin--President Clinton's former budget 
            director--explains in her book, ``Reviving the 
            American Dream'':

        ``Improving education will take bottom-up reform. 
            Presidential speeches and photo opportunities, 
            national testing and assessment; federally funded 
            experimental schools, even new grants spent in 
            accordance with Federal guidelines, can make only 
            marginal contributions to fixing the schools. 
            Education in America will not improve significantly 
            until States and communities decide they want 
            better schools. Making education more effective 
            will take parents who care, committed teachers, 
            community support, and accountable school 
            officials. An `education President' can help focus 
            media attention on schooling, but he risks diluting 
            State and local responsibility by implying that 
            Washington can actually produce change.''
VETO CLAIM No. 38: Direct Loans: Choice and Competition Must Not Be 
        Eliminated.
    The Balanced Budget Act cuts off direct lending 
opportunities for 2.5 million students in 1,350 institutions in 
1996 alone.

  - The proposal effectively replaces the Direct Lending 
        Program with the more costly, inefficient guaranteed 
        loan program by ``capping'' direct lending at 10 
        percent of total loan volume; 90 percent of all schools 
        will be denied the opportunity to choose the student 
        loan program.

  - On November 15, 1995, over 450 college presidents wrote the 
        President, Speaker, and Senate majority leader making 
        clear that direct lending was very popular.

  - This year 1,450 colleges and universities will offer direct 
        loans, with an estimated loan volume of $12 billion. 
        With 2 million borrowers, direct loans now account for 
        35 to 40 percent of total student loan volume.
REBUTTAL to Veto Claim No. 38
  - Republicans strongly support the student loan program. The 
        debate is not whether students will get college loans, 
        but how these loans should be delivered. No student 
        will be denied access to a loan because of the 
        congressional reforms.

  - A critical concern is whether the Department of Education 
        can manage a large-scale direct-lending program. The 
        administration likes to argue that the Direct Loan 
        Program is successful because students get their loan 
        checks more quickly. But the true test of the Direct 
        Lending Program will be when loans are up for 
        repayment. Will the Department of Education be able to 
        prevent massive student loan defaults? Already there 
        are serious doubts:

        In 1994 the Department of Education disbursed $700 
            million in direct loans, yet has failed to account 
            for nearly 15 percent of the loans. In other words, 
            the government already has ``lost'' almost $100 
            million of the taxpayers' money--and the loans 
            aren't even due yet.

        Schools with high default rates, particularly 
            proprietary schools, have flocked to the Direct 
            Lending Program.

        According to the Advisory Committee on Student 
            Financial Assistance, the Department of Education 
            has allowed institutions with poor performance 
            records to enter the Direct Lending Program.

        Almost 300 schools had default rates of 25 percent or 
            higher in at least one of the three recent fiscal 
            years for which data were available; 10 schools 
            selected to participate in year two of the program 
            had default rates exceeding 40 percent.

  - No student will be denied a student loan because of the cap 
        on direct lending in the BBA. Every student will have 
        access to a guaranteed student loan. In fact, a number 
        of the schools that will transition to guaranteed 
        lending currently participate in both the direct and 
        guaranteed lending program.

  - Supporters of the status quo complain that Congress is 
        taking away the schools' right to choose the Direct 
        Lending Program. On July 25 last year, Secretary Riley 
        and Secretary Rubin sent a bill to Congress that would 
        force 80 percent of the schools in this country to 
        participate in the Direct Loan Program next year, with 
        the remaining 20 percent forced to join in 1997. The 
        President's new-found support for choice only occurred 
        after the administration realized that Congress was not 
        going to support a massive Federal takeover of the 
        student loan program.

  - The Balanced Budget Act approved by Congress requires that 
        the guaranteed lending program offer the exact same 
        repayment terms as the Direct Lending Program. So even 
        if direct lending is capped, students would have access 
        to flexible repayment terms under the guaranteed loan 
        program.

  - Capping direct lending at 10 percent will save more than $1 
        billion over the next 7 years, according to CBO.
VETO CLAIM No. 39: Income Contingent--Pay As You Earn--Option Should 
        Not Be Withdrawn for Millions of Students.
  - The Balanced Budget Act also effectively eliminates one of 
        the most promising features of the Direct Lending 
        Program, which gives students the options of adjusting 
        their repayment to reflect their ability to pay. That 
        simple change will make it more difficult for many 
        students to take low-paying public service jobs or 
        start a new business or take a year off to raise a 
        child.
REBUTTAL to Veto Claim No. 39
  - Although the President claims to support income contingent 
        repayment terms for students, he has blocked reform 
        efforts to require that banks in the guaranteed lending 
        program offer flexible repayment terms. This is because 
        the President will do anything to promote the Direct 
        Lending Program over the guaranteed lending program, 
        even if students have to pay the price.
VETO CLAIM No. 40: Unbiased Scoring of Savings.
  - Congress claims that capping or eliminating direct lending 
        will save taxpayers' money. But that conclusion is 
        based on a scoring gimmick--a special interest scoring 
        rule imposed on the Congressional Budget Office by the 
        Congress.

  - That biased rule requires CBO to include certain kinds of 
        expenses when calculating the cost of direct lending 
        but not when calculating the cost of ordinary 
        guaranteed loans.

  - The proposals put the special interests--the banks--ahead 
        of student interests. The Senate proposal to cap direct 
        lending would increase loan volume under the guaranteed 
        loan program by more than $100 billion. That would 
        ensure as much as $6 billion in additional profit for 
        banks, lenders, and others who hold guaranteed student 
        loans.
REBUTTAL to Veto Claim No. 40
  - The administration has ignored the back-end costs of direct 
        lending--the costs of collecting the loans--to create 
        phony budget savings. This gimmick makes the Direct 
        Lending Program appear cheaper than guaranteed lending. 
        The nonpartisan Congressional Budget Office recommended 
        a correction be made so the programs could be compared 
        on an equal footing.

  - Even Senator Edward Kennedy, a strong advocate of the 
        Direct Lending Program, has admitted that ``* * * the 
        1993 estimates inadvertently disadvantaged the 
        guaranteed loan program compared to the Direct Loan 
        Program in one respect--the manner in which the 
        administrative costs of the programs are calculated. An 
        adjustment was needed to provide a more accurate 
        comparison of the costs of the two programs.''
VETO CLAIM No. 41: Education--Discretionary Cuts.
  - Nearly all Americans agree that investing in education is 
        critical to our future economic prosperity.

  - Despite this consensus, the caps on discretionary spending 
        proposed by Congress would have a devastating impact on 
        educational opportunity for children and students of 
        all ages.

        The massive cuts in education proposed in just the 
            first year of the congressional budget plan 
            constitute nothing less than a downpayment on the 
            elimination of effective Federal support for 
            education.

        The congressional plan is an attack on programs that 
            will improve academic achievement, create safer 
            school environments, improve the quality of our 
            teachers, promote parental involvement, and provide 
            innovative technology in our classrooms.

        Moreover, Congress is proposing severe cuts in 
            precisely those areas that parents, teachers, and 
            business leaders agree are most important for 
            making real improvement in our education system, 
            such as improving basic skills, raising standards 
            for all students, keeping schools safe and drug-
            free, raising the qualifications of teachers, and 
            bringing technology into the classroom.
REBUTTAL to Veto Claim No. 41
  - None of the so-called ``cuts'' the President is attacking 
        are part of the Balanced Budget Act. The only education 
        funding dealt with in the Balanced Budget Act is in 
        connection with reforms of the student loan program. 
        All other changes in education funding are contained in 
        the Labor/HHS appropriations bill, not the Balanced 
        Budget Act.

  - The President and Congress both support increasing 
        educational opportunities for Americans. The questions, 
        as noted above, is who can best spend taxpayers' money 
        to improve education for children--parents and local 
        school districts or the Department of Education 
        bureaucrats in Washington.

        Congress believes the quality of education can be 
            increased by reducing Washington's wasteful 
            education bureaucracy and by sending taxpayers' 
            dollars back home.

        As Alice Rivlin--President Clinton's former Budget 
            Director--explains in her book, ``Reviving the 
            American Dream'':

        ``Improving education will take bottom-up reform. 
            Presidential speeches and photo opportunities, 
            national testing and assessment; federally funded 
            experimental schools, even new grants spent in 
            accordance with Federal guidelines, can make only 
            marginal contributions to fixing the schools. 
            Education in America will not improve significantly 
            until States and communities decide they want 
            better schools. Making education more effective 
            will take parents who care, committed teachers, 
            community support, and accountable school 
            officials. An `education President' can help focus 
            media attention on schooling, but he risks diluting 
            State and local responsibility by implying that 
            Washington can actually produce change.''
VETO CLAIM No. 42: Cuts in Head Start Would Leave Thousands of Children 
        Without a Chance.
        Congressional budget proposals cut $135 million from 
            Head Start in 1996--$535 million below the 
            President's request for 1996.

        Assuming spending on Head Start remains frozen at 1996 
            levels, this proposal would deny comprehensive 
            education, health, and social services to 180,000 
            children by the year 2002.

        Most of the children participating in Head Start are 
            only 3 and 4 years old; 95 percent of these 
            children come from families below the poverty line 
            and 13 percent have a diagnosed disability.

        Head Start is a good investment in our Nation's future. 
            As the Council of Economic Advisors concluded, 
            after reviewing the literature on Head Start, 
            ``Participants in Head Start-style programs are 
            less likely to be held back in school and less 
            likely to be classified as special-education 
            students, and more likely to graduate from high 
            school.''
REBUTTAL to Veto Claim No. 42
  - The Balanced Budget Act does not cut children from Head 
        Start; it reduces the bureaucracy.

        From 1993 through 1999, the dollars requested for Head 
            Start will provide a 246-percent funding increase 
            but will result in only a 53-percent increase in 
            the number of slots for children. Based on figures 
            from HHS, $594 million has been spent since 1990 on 
            increasing teacher salaries in the program. The 
            majority of the expansion funds have gone to 
            teacher salaries and benefits.

        The President's 1995 budget request showed a 54-percent 
            increase in funding and only a 12-percent increase 
            in the number of slots for children.

  - It is disingenuous to claim that participants of Head 
        Start-style programs are less likely to be held back in 
        school, less likely to be classified as special 
        education students, and more likely to graduate from 
        high school.

        These claims are based on comparisons with programs 
            that are somewhat similar to Head Start, and from 
            results of the highly touted study of the Perry 
            Preschool Project in Ypsilanti, MI, which was very 
            different from a Head Start program.

        The similar programs were much more intense, more 
            highly structured and better funded than Head 
            Start. The Perry study indicated that early 
            intervention could lower delinquency, joblessness, 
            and teen-pregnancy rates. But according to 
            researchers, achieving these results requires that 
            intervention be early, consistent, and long-term.

        The Perry Project was more highly organized and much 
            more expensive than the typical Head Start program. 
            Only 123 children were included in this study with 
            58 attending a high-quality preschool program at 
            ages three and four; the other 65 poor children 
            made up a control group of students who did not 
            attend preschool. This was a half-day program 
            attended for 2 years and the staff-child ratio was 
            one adult for every five or six children.

        Over the 30-year existence of the Head Start program, 
            many studies have evaluated the effects of Head 
            Start on the lives of thousands of poor children. 
            Not one has found long-term gains for children 
            comparable to the results from the Perry Project.
VETO CLAIM No. 43: Ending Goals 2000 Would Cripple State and Local 
        Efforts to Raise Academic Standards.
  - The congressional proposal to eliminate Goals 2000 would 
        cut off 9,000 schools currently using Federal funds to 
        raise educational standards, just as States and 
        communities have completed their planning and begun to 
        implement comprehensive reforms based on their own high 
        academic standards.

  - The President's proposal would extend funding to a [sic] 
        additional 8,000 schools, for a total of 17,000 schools 
        serving an estimated 8 million children.
REBUTTAL to Veto Claim No. 43
  - The idea of developing standards in core subjects for 
        students is reasonable. But who should be developing 
        these standards--State education agencies and local 
        school boards or the Federal Government?

        Without any Federal funding or Federal mandates, the 
            State of Virginia has proposed a set of rigorous 
            academic standards.

        The danger of empowering the Federal Government with 
            this task is best illustrated by the history 
            standards developed by the UCLA History Department. 
            Lynne Cheney, former Chairman of the National 
            Endowment for the Humanities testified that: ``The 
            United States history standards imply that Joseph 
            McCarthy (mentioned 19 times in the standards) is 
            more important to our Nation's story than George 
            Washington (mentioned twice) or Robert E. Lee 
            (mentioned not at all). Some of America's (and the 
            world's) greatest achievements in science are 
            ignored. Alexander Graham Bell, the Wright 
            brothers, Thomas Edison, Albert Einstein, Jonas 
            Salk, and Neil Armstrong are never mentioned in the 
            U.S. history standards, although the standards do 
            contain references to Roseanne Arnold and Bart 
            Simpson.''
VETO CLAIM No. 44: Slashing Funds for Basic and Advanced Skills Hits 
        Those Students Who Need Help the Most.
  - Congress has proposed to cut more than $1 billion and 1 
        million students from the Title I Education for the 
        Disadvantaged Program that helps low-achieving poor 
        children reach the same high standards expected of 
        other students.

  - More than 14,000 school districts and more than 50,000 
        schools rely on title I funding to help improve basic 
        skills for disadvantaged students.

  - The President has requested increased funding and greater 
        targeting of those funds on communities with the 
        highest concentrations of poor children, but Congress 
        would both cut funding and reject greater targeting.
REBUTTAL to Veto Claim No. 44
  - There is little evidence the chapter 1 program improves the 
        academic performance of low-income students, in fact, 
        in some cases the program may hinder the progress 
        students. According to the Department of Education's 
        own assessment of the chapter 1 program: ``Chapter 1 
        participants did not improve their relative standing in 
        reading or math in the fourth grade or in math in the 
        eight grade; only eighth grade reading participants 
        showed improvement. Chapter 1 participants improved on 
        standardized tests or on criterion-referenced 
        objectives no more than nonparticipants with similar 
        backgrounds and prior achievements * * *, test scores 
        for students in high-poverty schools actually decline 
        from the early grades to the later grades.''

  - Congress should not continue to ratchet up funding for 
        Title I, Education for the Disadvantaged, until there 
        is more evidence it increases education achievement for 
        disadvantaged students.
VETO CLAIM No. 45: Sharp Reductions in Safe and Drug-Free Schools Would 
        Cripple Efforts to Reduce Drug Abuse, Prevent Violence, and 
        Improve Discipline in America's Schools.
  - The budget cuts spending on Safe and Drug-Free Schools by 
        more than half, from $466 million to just $200 million.

  - These funds currently support drug abuse and violence 
        prevention activities for 39 million students in nearly 
        all elementary and secondary schools.

  - The budget amounts to a surrender to the drugs and violence 
        that plague so many of our communities, despite the 
        fact that school safety and student abuse of drugs and 
        alcohol are among the greatest concerns of parents and 
        teachers.

  - The President's budget rejects surrender and raises Safe 
        and Drug-Free Schools funding to $500 million per year.
REBUTTAL to Veto Claim No. 45
  - Discouraging kids from using drugs is an activity almost 
        everyone supports. The question is: Does the Safe and 
        Drug-Free Schools achieve this goal? A total of $3 
        billion has been spent on this program since 1987, yet 
        statistics indicate that the fear of marijuana use is 
        declining among young people and substance abuse is 
        increasing.
VETO CLAIM No. 46: Teachers Would Be Denied the Training They Need to 
        Help Students Reach Higher Academic Standards.
  - Congress cuts the Eisenhower Professional Development State 
        Grant Program by 80 percent, from $251 million to just 
        $50 million.

  - The President, by contrast, would nearly triple funding for 
        the Eisenhower to $735 million, providing States and 
        communities with substantial new resources for teacher 
        training.
REBUTTAL to Veto Claim No. 46
  - The Eisenhower Professional Development State Grant for 
        teacher training is included in a Professional 
        Development and Program Innovation Block Grant. This 
        will give States more flexibility to spend education 
        dollars where they can make the most difference in 
        improving the quality of education.

  - The Clinton administration would prefer to dictate to 
        States precisely how to spend their education moneys.
VETO CLAIM No. 47: Education Technology Cuts Threaten to Leave Schools, 
        Libraries and Communities Off the ``Information Superhighway.''
  - The private sector will build, own, and operate the 
        emerging National Information Infrastructure. President 
        Clinton has made clear, however, that he will not allow 
        the emerging information superhighway to bypass middle-
        class Americans, to extend the gap between the well off 
        and the needy, or to let the United States become a 
        nation of information ``haves'' and ``have-nots.''

  - That is why he strongly opposes plans to gut the National 
        Telecommunications and Information Infrastructure 
        Assistance Program [TIIAP]. Cuts, like those proposed 
        for TIIAP, would mean that hospitals, clinics, schools, 
        libraries, local governments, and nonprofits may be 
        excluded from the development of the advanced NII.
REBUTTAL to Veto Claim No. 47
  - Experience shows that the government is not good at picking 
        winners and losers in the technology marketplace.

  - The administration's policy allows the administration to 
        dole out millions in corporate welfare.

  - In appropriations, the House and Senate voted to reduce 
        spending on information infrastructure grants from $49 
        million in 1995 to $22 million. In contrast, the 
        administration requested a doubling of this program to 
        $99 million.
VETO CLAIM No. 48: Cuts to the Pell Grant Program Deny Deserving 
        Students a College Education.
  - Pell Grants are one of the bedrock Federal student aid 
        programs, providing assistance to more than 3.7 million 
        financially needy students.

  - Proposals in 1996 have cuts [sic] $450 million from Pell 
        Grants. By 2002, these cuts would deny Pell Grants to 
        380,000 deserving students.
REBUTTAL to Veto Claim No. 48
  - There are no cuts to the Pell Grant Program when the fiscal 
        year 1995 carryover of $800 million is added to the 
        1996 funding level proposed by the House.

  - In fact, the House bill increases the maximum Pell Grant 
        award to $2,440, the highest level in the program's 
        history.
VETO CLAIM No. 49: [The Balanced Budget Act] Eliminates AmeriCorps--
        Preventing Students From Learning Responsibility Through 
        Community Service.
  - The proposal would eliminate the AmeriCorps national 
        service program.

  - These cuts would deny nearly 50,000 young people the 
        opportunity to serve their communities while earning 
        money toward college education.

  - Gen. David Jones, former Chairman of the Joint Chiefs of 
        Staff, captured the spirit of the national service 
        program best when he said: ``AmeriCorps programs work. 
        They show what we can accomplish when the government 
        operates as a true partner of communities. Most 
        important, they build partnerships by enacting an old 
        truth that men and women in our Armed Forces learned so 
        well: to earn opportunity you must take responsibility 
        for yourself and others.''

  - In contrast to the congressional cuts, the President would 
        increase funding for national service by $345 million 
        next year, providing nearly 50,000 community service 
        and college opportunities next year.
REBUTTAL to Veto Claim No. 49
  - AmeriCorps undermines General Jones' fundamental point. 
        Personal responsibility is not enhanced when the 
        government pays people to exercise it. AmeriCorps is 
        little more than a make-work program.

  - Community service on college campuses is thriving without 
        government payments. According to surveys by the 
        Independent Sector in 1994, 89.2 million Americans age 
        18 and over volunteered in some capacity, putting in an 
        average of 4.2 hours a week. They do not expect pay in 
        return for their services.

  - AmeriCorps commissioned a cost-benefit analysis in the 
        effort to portray the national service program as a 
        boon to Americans. An analysis of the report shows that 
        most of the data used come from studies examining a 
        preschool program from some 30 years ago--the Perry 
        Preschool Project. Not only is the information out of 
        date, it has, at best, a tangential relationship to the 
        endeavors of AmeriCorps volunteers.

  - Even if the benefits of this program were monumental, the 
        costs have been seriously underestimated.

        A recent GAO audit found that, depending on the type of 
            grant, the average volunteer cost the Federal 
            Treasury from $26,000 to $31,500. Volunteers are 
            funded by the taxpayers at amounts ranging from $19 
            to $23 per hour.

        The average Corporation for National and Community 
            Service grant administered through a Federal agency 
            cost $31,500. Some of the grants are much more 
            expensive and some are less. AmeriCorps is not a 
            bargain.
VETO CLAIM No. 50: [The Balanced Budget Act] Eliminates Funding for 
        Women's Educational Equity Act.
  - The budget eliminates the Women's Educational Equity 
        Program, denying schools funding for research and 
        training programs designed to promote educational 
        equity for women and girls.
REBUTTAL to Veto Claim No. 50
  - This is a very small, highly specialized program. President 
        Clinton's defense of the program is more symbolic than 
        substantive since the limited funding is probably 
        spread too thinly to have much of an impact.

  - Rather than dictating narrower funding requirements, 
        Congress favors more broadly based block grants that 
        empower States to spend education dollars in ways they 
        think will make the most difference in improving 
        education.
VETO CLAIM No. 51: Elimination of the Summer Jobs Program Will Hurt 
        Disadvantaged Youths.
  - Proposals to eliminate the Summer Jobs Program would deny 
        600,000 disadvantaged young people meaningful work 
        opportunities that prepares [sic] them to be active 
        contributors to the work force and the community.

  - By eliminating the Summer Jobs Program, Republicans deny 
        nearly 4 million disadvantaged youth summer job 
        opportunities by 2002, compared to the President's 
        request.

  - Contrary to some claims, studies show that the Summer Jobs 
        Program does not displace private market employment 
        but, rather, employs youth who would otherwise be 
        unemployed and on the streets.
REBUTTAL to Veto Claim No. 51
  - This program provides government jobs for disadvantaged 
        youth age 14 to 21. This program has not provided 
        permanent skills training or education for young 
        people. It is basically an income supplement.

  - According to the Labor Department's analysis of job 
        training programs, ``What's Working (and what's not)'':

        ``Little is known about the effect of in-school 
            employment on academic achievement or future 
            employment success. We do know, though, that 
            subsidized work experience alone has not been 
            particularly successful in improving the 
            employability of out-of-school disadvantaged high 
            school dropouts once the subsidized work had 
            ended.''

  - The administration proposed cutting the JTPA youth program 
        by $310 million in 1996 because of questions about its 
        effectiveness.
VETO CLAIM No. 52: Cuts in Employment and Training Programs Leave 
        Workers Unprepared for the New Economy.
  - The congressional budget proposed to cut employment and 
        training programs by $1.6 billion--or 26 percent below 
        the 1995 funding levels.

  - The budget reduces funding to help dislocated workers find 
        new jobs by $379 million--or 31 percent--compared with 
        1995 levels.

  - For the dislocated workers program alone would deny 155,000 
        workers help obtaining the skills they need to adjust 
        to the new economy and to corporate downsizing.
REBUTTAL to Veto Claim No. 52
  - The Department of Labor's own reviews show short-term job 
        training under the Job Training Partnership Act has had 
        minimum success. The most recent comprehensive 
        inspector general's audit report indicated that only 53 
        percent of participants obtained jobs; of the 
        participants that got jobs, half said that they found 
        them without JTPA assistance.

  - It is much the same story for dislocated worker training. 
        According to the Department: ``In the case of workers 
        displaced from high-tenure jobs, on average even a year 
        or two of successful training often does not create 
        income gains large enough to restore earning to their 
        predisplacement level.''

  - An inspector general's audit revealed that many 
        participants were unable to obtain jobs related to 
        retraining and that less than half were working in jobs 
        related to their training. Participants also believed 
        that they could have obtained 60 percent of the jobs 
        without the benefit of retraining.


                     Environment and Public Health

                              ----------                              

VETO CLAIM No. 53: [The Balanced Budget Act] Opens the Arctic Refuge to 
        Oil Drilling.
  - The Arctic National Wildlife Refuge is a rare, pristine 
        wilderness that the President supports protecting 
        permanently, for the benefit of future generations.

  - The reconciliation bill would open the Arctic Refuge to 
        drilling by the oil industry in hopes of generating 
        $1.3 billion in Federal revenues. The $1.3 billion is 
        overstated by several hundred million dollars due to 
        oil price assumptions and other factors. It also 
        assumes that the State of Alaska will not sue for 90 
        percent of the revenues (up from 50 percent in the 
        bill)--even though the Alaska statehood legislation 
        gave them 90 percent.

  - Exploration and development would disturb the area and 
        create unacceptable risks of oil spills and pollution.
REBUTTAL to Veto Claim No. 53
  - Pristine? There are no natural wonders in the coastal plain 
        of the refuge, where the actual oil prospects lie. 
        Instead, this area is a barren and desolate stretch of 
        tundra bordering the Arctic Ocean. Only a few hundred 
        tourists annually visit ANWR.

  - The estimate of Federal revenues was provided by the 
        Congressional Budget Office. As recently as February 
        17, 1993, the President stated: ``I'll point out that 
        the Congressional Budget Office was normally more 
        conservative in what was going to happen and closer to 
        right than previous Presidents have been. * * *''

  - Concerning the revenue split, the Governor of the State of 
        Alaska has indicated that ``a 50-50 split of the 
        revenue is necessary to attain favorable congressional 
        action'' and he ``will introduce and pursue legislation 
        [to amend the Alaska Statehood Act] if Congress adopts 
        a 50-50 revenue split.'' Finally, the President of the 
        Alaska State Senate and the Speaker of the Alaska State 
        House support the 50-50 revenue split.

  - Alaska has the safest oilfields in the world: 20 years of 
        experience at nearby Prudhoe Bay have proven that oil 
        development can be done in an environmentally sound 
        manner in the Arctic. According to the Governor of 
        Alaska, the caribou in the region have increased from 
        6,000 to over 22,000 since drilling was initiated at 
        Prudhoe Bay. ANWR provides the best opportunity for a 
        major onshore U.S. discovery.
VETO CLAIM No. 54: [The Balanced Budget Act] Continues to Turn Over 
        Billions of Dollars of Taxpayer-Owned Minerals for a Pittance, 
        Even While It Raises Taxes on Working Families.
  - The bill includes sham mining reform that provides for the 
        sale of Federal mineral rights at their ``market 
        value'' defined as the value of the surface land, not 
        the minerals. It's like selling Fort Knox for the price 
        of the roof.

  - The provision--which sets a 5-percent royalty imposed after 
        minerals are processed and after numerous deductions--
        is so riddled with loopholes that the Congressional 
        Budget Office estimates that it will produce less than 
        $1 million per year for the Treasury for all Federal 
        hard rock mines in the Nation.

  - This, together with the mining provision in the Interior 
        appropriations, provides for the continued giveaway of 
        public treasures under a law signed by Ulysses S. Grant 
        in 1872. Just last Friday, Interior Secretary Bruce 
        Babbitt was forced to turn over nearly $3 billion worth 
        of copper and silver for less than $2000.
REBUTTAL to Veto Claim No. 54
  - To claim that the proposal is ``sham'' reform is totally 
        disingenuous, especially following 40 years of Democrat 
        control of the Congress. The BBA requires payment of 
        fair market value for the land within mining claims and 
        charges--for the first time since 1846--a 5-percent net 
        proceeds royalty on gold, silver, lead, and copper 
        mined on public lands. The BBA also extends claim 
        rental payments.

  - The ``loopholes'' or deductions that are so derided by the 
        administration are the same as those allowed under 
        Nevada's very successful net proceeds tax.

  - The last claim sounds incredible--and it is. Where is the 
        Secretary getting his numbers from? Recently, Senator 
        Bumpers made the claim that the value of patents 
        granted to the Stillwater Mining Co. was $38 billion. 
        That was for a company whose total fair market value is 
        approximately $400 million.
VETO CLAIM No. 55: [The Balanced Budget Act] Mandates Transfer of Ward 
        Valley, CA, Site for a Low-Level Radioactive Waste Dump--
        Without Public Safeguards.
  - The administration has engaged in negotiations with the 
        State of California to transfer the site with 
        conditions recommended by a distinguished panel of the 
        National Academy of Scientists. This provision would 
        bypass good science and mandate unconditional transfer.
REBUTTAL to Veto Claim No. 55
  - Any new commercial low-level radioactive waste disposal 
        facility--including Ward Valley--must be licensed by 
        the Nuclear Regulatory Commission [NRC] and meet the 
        Federal safety standards and technical requirements for 
        disposal site selection, design, waste acceptance 
        limits, operation, closure, and financial assurances 
        for long-term environmental monitoring and maintenance 
        set forth in the U.S. Nuclear Regulatory Commission's 
        Title 10 CFR Part 61 regulations.

  - Furthermore, according to Gov. Pete Wilson: ``It would be 
        imprudent to abandon this provision on either public 
        policy or fiscal grounds. All legitimate scientific and 
        public health issues have been addressed, and the 
        unconditional transfer of this site to California is 
        critical to the successful execution of long-standing 
        Federal policy.''
VETO CLAIM No. 56: [The Balanced Budget Act] Fails to Take Steps to 
        Build on Our Efforts to Protect and Restore the Florida 
        Everglades.
REBUTTAL to Veto Claim No. 56
  - One must question the administration's efforts and 
        sincerity to ``protect and restore the Florida 
        Everglades.'' The May 3, 1994, issue of the Washington 
        Post noted that the ``Everglades Forever Act brokered 
        by Interior Secretary Bruce Babbitt, effectively ends a 
        mammoth 6-year lawsuit brought by the Federal 
        Government against the State of Florida, which was 
        charged with failing to protect America's greatest 
        marshland from the polluted waters of south Florida's 
        vast sugar cane fields.'' The article went on to note, 
        however, that ``critics [of the act] say the Chiles and 
        Clinton administrations caved in to wealthy sugar 
        growers, in particular Alfonso Fanjul, Jr., chairman of 
        Flo-Sun Corp. and one of the most influential 
        fundraisers for Democrats and Bill Clinton in south 
        Florida.''
VETO CLAIM No. 57: Environmental Budget Is a Catchall for Various 
        Objectionable Policies, Many Having Nothing to Do With 
        Balancing the Budget.
  - Other provisions in the bill pander to special interests at 
        taxpayer expense, including special loophole water 
        deals for corporate agriculture and certain water 
        districts and changes to Federal oil and gas royalty 
        collection that invite evasion by making collection 
        more difficult and costly.
REBUTTAL to Veto Claim No. 57
  - The BBA transfers ownership of two water projects (Sly Park 
        in California and Colbran in Colorado) to their current 
        operators, a concept proposed by the President in the 
        National Performance Review Phase II. In the case of 
        Sly Park, the current operators have been operating the 
        facilities since the 1950's. After the transfer of 
        ownership, the operation of the facilities must still 
        conform with all existing environmental laws.

  - Along with the transfer of title is a transfer of water 
        interests. These water interests are currently held 
        ``in trust'' by the Federal Government until the 
        repayment of the construction cost is complete. The 
        water rights, however, are already owned by the 
        irrigation districts. The government has no independent 
        ownership of the water.

  - The oil and gas provision raises $51 million for the 
        Federal Government and $33 million for States, reduces 
        costs and empowers the States to perform royalty 
        activities.

        This bill eliminates an antiquated, inefficient royalty 
            collection system resulting in a more aggressive 
            cost effective program, requires royalty 
            collections be completed within 7 years, 
            establishes reciprocity for interest payments to 
            encourage proper payment, and greatly reduces the 
            time to resolve disputed royalty claims.

        A bipartisan group of 12 Governors support the bill, 
            which gives to States the opportunity to perform 
            Federal oil and gas post-lease activities.

        Through performance of these activities, States will be 
            able to further reduce administrative costs by 
            eliminating duplication and increase collections.

  - During budget negotiations, the White House expressed that 
        the President supported this legislation as part of a 
        package to balance the budget. The administration 
        expressed four areas of concern and, in late January, 
        the House, Senate, and administration reached agreement 
        on three of the four areas.

  - The open issue is the delegation of ``downstream'' Federal 
        oil and gas activities to States.

        A bipartisan group of Governors met during the National 
            Governors Association meeting to discuss this 
            legislation.

        Given that the delegation is consistent with the Vice 
            President's reinventing government proposals to 
            devolve royalty collections, inspections, and 
            enforcement to States, the Governors hope to find 
            common ground with the administration over the next 
            couple of weeks.
VETO CLAIM [Unnumbered, Concerning VA-HUD and Interior Appropriations]
    The President and the Vice President believe that the 
impact of deep Republican cuts in nondefense discretionary 
spending imposed by the caps in the Republican reconciliation 
bill would have a devastating effect on the public health and 
safety over 7 years. In fact, the Republican multiyear budget 
resolution specifically called for cuts to clean and safe water 
infrastructure, land management and national parks. 
Furthermore, the addition of special interest riders and policy 
provisions severely limits EPA's ability to set and enforce 
environmental standards, and DOI's and USFS's ability to manage 
lands in a sound manner. Their budget also cuts the President's 
own environmental advisors, the Council on Environmental 
Quality, by more than 50 percent.
REBUTTAL to Unnumbered Veto Claim
    The President has indicated he vetoed the Republican 
``budget'' for 82 selected issues. In reality, he vetoed the 
Balanced Budget Act. Many of the issues he identified are not, 
as he surely knows, even in the Balanced Budget Act.
    Over the past 7 years, the Federal Government spent $134.8 
billion in the area of natural resources and the environment. 
The original congressional budget envisions spending $131.6 
billion over the next 7 years in this area. By any measure, 
this represents a considerable commitment of resources. 
Subsequent proposals have added an additional $25 billion, with 
a portion of those funds being allocated for environmental 
programs.
    In the President's plan titled ``A Balanced Budget That 
Puts People First,'' the President even proposed some of the 
same cuts for which he now criticizes Republicans. With regard 
to wastewater and water treatment construction, he ``would 
reduce funding over time to $1.5 billion a year as States gain 
access, as a permanent source, to the repayments of previous 
loans.'' In addition, the document states: ``The President 
proposes to phase-down spending on Federal land acquisition to 
$100 million a year, focusing on high-priority projects and the 
expanded use of land exchanges.'' The Conference Report of the 
Concurrent Resolution on the Budget for Fiscal Year 1996 notes 
that ``[t]he administration proposed a 5-percent reduction in 
the National Park Service [NPS] operations and an 11-percent 
reduction for NPS construction by 2000.''
    Such a commitment, however, is only one factor in 
maintaining a healthy environment. Equally important is whether 
the government is spending money wisely on those items that 
pose the greatest risk to the public. As stated by the 
respective appropriations committees, the approach envisioned 
by Congress for the Environmental Protection Agency closely 
parallels recommendations made by the National Academy of 
Public Administration in a report titled: ``Setting Priorities, 
Getting Results: A New Direction for EPA.'' NAPA recommended 
important management changes for EPA, including that 
environmental priorities be selected based on the level of risk 
to the public.
    Finally, concerning the President's Council on 
Environmental Quality, the Senate Committee on Appropriations 
noted that ``many of the CEQ's activities duplicate those of 
EPA and other agencies, a luxury which can no longer be 
afforded.''
VETO CLAIM No. 58: Irresponsible Enforcement Cuts Would Lead to Dirty 
        Water, Unhealthy Air and Unsafe Land.
  - Cutting fair and consistent enforcement would hurt families 
        who depend on clean air and water, and hurt companies 
        that obey the law. Enforcement cuts would help only 
        those companies who continue to evade environmental 
        laws and pollute irresponsibly.

  - The Balanced Budget Act contains a 25-percent cut in EPA's 
        enforcement budget from the President's request.

  - According to the Philadelphia Inquirer, budget cuts have 
        already forced EPA to cut back on hundreds of 
        inspections at toxic waste sites and for industrial air 
        pollution and drinking water supplies; the budget would 
        put even more people at risk. (11/28/95)
REBUTTAL to Veto Claim No. 58
  - The vast majority of Federal environmental regulations are 
        enforced by the States, under authority delegated to 
        them by EPA. The proposed reductions would encourage 
        further efforts by EPA to set enforcement priorities 
        based on areas of highest risk.

  - Much of the money spent on environmental ``enforcement'' is 
        spent on litigation. Between 1990 and 1992, the Justice 
        Department spent over 800,000 man-hours on Superfund 
        litigation. An overwhelming portion of the cost of 
        environmental protection goes not to protecting the 
        environment, but rather to lining the pockets of 
        environmental lawyers.

  - The President's alleged concern for environmental ``cops on 
        the beat'' does not square with the fact that he 
        requested a 400 FTE reduction for environmental 
        enforcement for fiscal year 1996.
VETO CLAIM No. 59: [The Balanced Budget Act] Cuts Funds by 17 Percent 
        to Set Public Health Standards for Air Pollution, Pesticides, 
        and Clean and Safe Water.
REBUTTAL to Veto Claim No. 59
  - The Federal Government already has in place standards for 
        air pollution, pesticides, and clean and safe water.

  - In addition, the States can also set stricter standards for 
        the protection of public health. According to the 
        Competitive Enterprise Institute, Americans spent over 
        $150 billion complying with environmental laws in 1994.
VETO CLAIM No. 60: Drinking Water Cuts Would Lead to More Contaminated 
        Water.
  - Safe drinking water is the first line of defense for 
        protecting public health. President Clinton believes 
        that when Americans turn on their taps, there should be 
        no doubt that the water is safe.

  - The Republican budget cuts by 45 percent ($225 million) the 
        money that goes directly to States to protect 
        communities' drinking water. There funds are used by 
        communities to upgrade facilities and better treat 
        contaminants such as cryptosporidium, which in 1993 
        killed 100 people and sickened 400,000 others in 
        Milwaukee.

  - In the last 2 years, millions of residents of major U.S. 
        cities, such as New York and Washington, DC, have been 
        ordered to boil their drinking water.
REBUTTAL to Veto Claim No. 60
  - The President requested $500 million for safe drinking 
        water. Congress provided $500 million for safe drinking 
        water. Of that amount, $275 million was ``new'' money 
        and $225 million was ``old'' money.

  - The ``old'' money represented money that had been 
        appropriated in prior years but was not going to be 
        spent. The $225 million of ``old'' money is being 
        called a ``cut'' by the administration, even though 
        Congress provided exactly what was requested.
VETO CLAIM No. 61: Clean Water Cuts Would Block Efforts to Keep Raw 
        Sewage and Other Pollution Off Beaches and Out of Waterways.
  - The Clean Water Act is a great American success story: 25 
        years ago, the Cuyahoga River was so polluted it 
        burned. Lake Erie was dead. Garbage floated in the 
        Chesapeake Bay. Today, those waters are on the rebound.

  - The Balanced Budget Act specifically cuts funds that go to 
        States for wastewater treatment--making it difficult 
        for States to comply with the Clean Water Act.

  - The budget cuts the President's request for wastewater 
        treatment support to the States by 30 percent. This 
        money is used to construct and upgrade wastewater 
        treatment facilities that keep raw sewage from flowing 
        into our rivers, lakes, and streams.

  - The bill also adds a particularly objectionable rider that 
        will prevent EPA from stopping the dumping of harmful 
        fill into rivers and wetlands.
REBUTTAL to Veto Claim No. 61
  - In the President's plan titled, ``A Balanced Budget That 
        Puts People First,'' the President even proposed some 
        of the same cuts for which he now criticizes.

  - With regard to wastewater and water treatment construction, 
        he ``would reduce funding over time to $1.5 billion a 
        year as States gain access, as a permanent source, to 
        the repayments of previous loans.''

  - The report that accompanies the VA-HUD appropriations bill 
        states: ``Presidential annual budget submissions show 
        that as of the end of fiscal year 1994 there were about 
        $1.6 billion in unobligated annual appropriations plus 
        about $6.1 billion in unliquidated obligations in State 
        revolving funds. Preliminary indications are that these 
        balances are the result of States being unable to make 
        loans fast enough to keep pace with annual 
        congressional appropriations. The EPA inspector general 
        recently reported that in one State about $283 million 
        in excess grant money had built up in the State 
        revolving fund because of unmade loans, and indications 
        are that excess grant funds may exist in other States 
        as well.''

  - The so-called ``wetlands rider'' simply prevents EPA from 
        vetoing a permit that has already been approved by the 
        Corps of Engineers. The result is a more coordinated 
        permit process--run by one agency rather than two--that 
        retains all the important safeguards.
VETO CLAIM No. 62: Budget Cuts Would Stop or Slow Cleanup of Toxic 
        Waste Dumps.
  - Fifteen years after Love Canal, one in four Americans--and 
        5 million children under the age of 4--still live 
        within 4 miles of a Superfund toxic dump site.

  - The budget cuts the President's request for the Superfund 
        toxic dump cleanup program by 25 percent ($382 
        million), needlessly exposing citizens living near 
        these sites to dangerous chemicals.

  - Meanwhile, Congress continues separately to change 
        Superfund to relieve polluters--including the company 
        responsible for Love Canal--of the responsibility to 
        pay for the pollution they caused and shift that burden 
        to the American people.
REBUTTAL to Veto Claim No. 62
  - The environmental cleanup program called ``superfund'' has 
        suffered from gross bureaucratic inefficiency. In the 
        15-year life of the program, only 75 sites have been 
        completely cleaned up, at a cost of $60 billion in 
        public and private funds.

        In 1994, the House Committee on Commerce, then 
            controlled by Democrats, stated: ``[T]he program's 
            weaknesses are recognized by virtually all 
            Superfund stakeholders.''

        The program illustrates how a centralized bureaucracy 
            attracts a lot of litigation while achieving little 
            cleanup. As President Clinton's 1996 budget 
            correctly stated, the ``program attracts criticism 
            for costing too much and accomplishing too 
            little.'' The effectiveness of the program cannot 
            be improved by simply throwing money at the 
            problem.

  - The Congress is committed to reforming the program in a 
        manner that will reform the high cleanup and legal 
        costs, correct the unfairness of the liability scheme, 
        reduce the overlapping authority and responsibility 
        between various levels of government, and alter the 
        economic incentives to use undeveloped--or 
        ``greenfield''--sites to avoid potential Superfund 
        liability.

  - The current proposal, pending in the House Commerce and 
        Transportation and Infrastructure Committees, will 
        result in more cleanup than under the existing program. 
        The reformed program will be paid for by polluters and 
        business--not by American families--through a Superfund 
        tax.
VETO CLAIM No. 63: Extraneous Policy Provisions Threaten Our Water, Air 
        and Land--and the Public's Right to Know.
  - On August 8, President Clinton signed an Executive order on 
        pollution disclosure to protect peoples' access to 
        information about toxic emissions in their communities. 
        He had once before expanded the public's ``right to 
        know.'' The law is the most cost-effective pollution 
        reduction program we have.

  - The congressional budget originally included 17 separate 
        special-interest riders--including one blocking the 
        public's right to know. The conference budget contains 
        several back door ways to include previously attached 
        riders.

  - The conference report threatens the next phase of the 
        Clinton administration's effort to expand information 
        available to communities--information not currently 
        reported to the public about dangerous chemicals. The 
        bill may prevent EPA from moving forward.

  - Efforts to prevent the reduction of toxic pollutants from 
        hazardous waste facilities and block upgraded pollution 
        control facilities have also been transferred to report 
        language.

  - Echoing two riders on the House budget proposal, the report 
        language advises the EPA to delay for nearly 1 year the 
        Clinton administration's combustion strategy, which 
        would issue overall protections to reduce pollutants 
        from hazardous waste incinerators.
REBUTTAL to Veto Claim No. 63
  - Concerning the combustion strategy, the conference report 
        states: ``* * * the National Academy of Sciences is 
        conducting currently a study on the health effects of 
        waste combustion scheduled for completion in September 
        1996. To ensure that policies are based on the best up-
        to-date science and to incorporate appropriate Academy 
        findings, the conferees believe the sensible approach 
        would be to await the results of the study before 
        finalizing a rule addressing the combustion of 
        hazardous waste.''

  - The conference report also addresses other ``riders.'' For 
        example, it states that for the Agency's rule 
        concerning maximum achievable technology [MACT] ``the 
        agency drafted much of the rule relying on data that 
        was as much as 15 years old, even when agency-
        acceptable 3-year-old data was available.''

  - Despite the President's continued protests, he has 
        effectively signed two of the other riders into law.
VETO CLAIM No. 64: Reduces Environmental Research and Technology.
  - Environmental research and technology funding is cut by 
        nearly $1 billion or 20 percent from the President's 
        request for fiscal year 1996.

  - The cuts include a 92-percent reduction from the 
        President's request for the Environmental Technology 
        Initiative [ETI], which would thwart efforts to 
        encourage the development of new technologies.

  - The budget also proposes to slash scores of other 
        environmental research programs that provide objective 
        information in forestry, agriculture, minerals 
        management, global climate change, natural disasters, 
        fisheries, weather forecasting, and other areas. This 
        would stifle our efforts to better understand and cope 
        with environmental change.
REBUTTAL to Veto Claim No. 64
  - The Federal Government may have a role in basic research, 
        but it should not be engaged in applied research and 
        product development.

  - Considerable evidence shows the Federal Government is not 
        capable of picking projects with the most potential for 
        technological and commercial success. Excluding this 
        classic example of corporate welfare, Republicans have 
        proposed spending more on environmental science and 
        technology.
VETO CLAIM No. 65: Interior Appropriations Bill Joins Reconciliation 
        Bill to Continue Mining Giveaway.
  - The Interior appropriations report would allow the 
        moratorium on new mining patents to be lifted 
        prematurely. This, together with the mining provision 
        in reconciliation, provides for the continued giveaway 
        of public treasures under a law signed by Ulysses S. 
        Grant. Just last Friday, Interior Secretary Babbitt was 
        forced to turn over almost $3 billion worth of minerals 
        to a foreign mining company for less than $2,000.
REBUTTAL to Veto Claim No. 65
  - The Interior bill continues the existing moratorium on 
        issuing mining patents until mining law reform is 
        enacted into law. This is the same moratorium carried 
        in the Interior bill in 1995.

  - The administration supports continuing the exemption for 
        the 373 grandfather applications that have been 
        partially approved. These are the same applications 
        which were grandfathered under the 1995 Interior bill.
VETO CLAIM No. 66: [The Balanced Budget Act] Waives Environmental Laws 
        and Opens Tongass Rainforest to Clearcutting.
  - The budget proposes to dictate timber-cutting levels in 
        Alaska's Tongass National Forest beyond sustainable 
        levels. It would waive environmental laws and expand 
        clearcuts through an extraneous policy provision in the 
        Interior appropriation bill.

  - The proposal could hurt sport and commercial fishing 
        interests in the area and region's tourism industry, 
        which has grown 40 percent in 4 years.

  - According to tour operators, the visitor industry is more 
        profitable and has a higher payroll by far than the 
        timber industry, but increased logging will directly 
        hurt their business. (New York Times, September 12, 
        1995)
REBUTTAL to Veto Claim No. 66
  - No provision in any appropriations bill ``dictates'' any 
        level of timber harvest in the Tongass National Forest. 
        The administration's claim to the contrary is 
        categorically wrong.

  - No provision in any appropriations bill proposes to dictate 
        timber harvests in the Tongass beyond sustainable 
        levels. The sustainable harvest level on lands that are 
        suitable is 704 million board feet. Current logging 
        levels are between 350 million and 425 million board 
        feet.

  - The Tongass provision will not hurt commercial or sport 
        fisheries in southeast Alaska. All Tongass fish streams 
        in timber harvest areas receive a minimum 100-foot no-
        harvest zone and additional on-site protection.

  - There is no evidence that existing fish stream protection 
        is insufficient. In fact, salmon runs in Alaska 
        increase every year, which is the best evidence of a 
        vibrant fishery.

  - The Tongass appropriations provision actually lowers the 
        maximum harvest level on the Tongass by 7 percent and 
        freezes the timber land base available for harvest at 
        1.7 million acres.

  - The Tongass appropriations provision also releases a timber 
        sale originally done for one timber purchaser that the 
        Forest Service wants to change to different timber 
        purchasers. The sale is withheld in the Ninth Circuit 
        Court of Appeals on a technicality that has nothing to 
        do with the minimal environmental consequences 
        associated with the sale.

  - Regarding the administration's statement on tourism in 
        southeast Alaska, it may be true that tourism has grown 
        recently, but that has little to do with timber 
        harvesting. Since the 1950's, timber harvesting in the 
        Tongass has remained relatively stable at 9,000-12,000 
        acres per year. The fact the tourism and timber have 
        coexisted at such a harvest level for 45 years is 
        evidence to the contrary of the administration's claim 
        that tourism will suffer at continuing rates of 
        harvest.

  - The administration's reliance on an allegations reported in 
        The New York Times as if they were true does not mean 
        they are credible. In fact, like most other Times 
        pieces about the Tongass, it lacks factual accuracy and 
        even the lowest level of understanding about the 
        Tongass. It is no basis for use in a veto message.
VETO CLAIM No. 67: [The Balanced Budget Act] Blocks Efforts to Protect 
        Pacific Northwest Salmon.
  - For centuries, salmon have been among the most valued 
        resources in the Pacific Northwest, as the Oregonian 
        says, ``a treasured part of our natural heritage.''

  - The Interior appropriations bill includes a policy rider 
        that would block efforts to protect salmon and ensure 
        sustainable economic growth in the Columbia River 
        Basin, by terminating comprehensive planning for the 
        management of public lands in that area.
REBUTTAL to Veto Claim No. 67
  - The Interior bill does not block the Columbia Basin 
        Ecosystem Management Project:

        In fact, the bill provides $4 million for the 
            completion of the Draft Environmental Statement.

        To date, $24 million has been spent on this study with 
            no on-the-ground results.

  - In addition, the current study proposes a one-size-fits-all 
        solution to the resource problems in the Columbia 
        Basin. The Interior bill provides money to finish the 
        draft EIS, and allows individual forest supervisors to 
        use this scientific information to amend the forest 
        management plans to address resource issues at the 
        forest levels.
VETO CLAIM No. 68: [The Balanced Budget Act] Undermines the California 
        Desert--the Nation's Newest National Park.
  - Last year, Congress passed, and the President signed, the 
        California Desert Protection Act, the largest single 
        designation of parks and wilderness areas ever in the 
        lower 48 States.

  - The new reserve protects broad desert vistas, rugged 
        mountain ranges, and unique archeological sites.

  - The budget provides $1 for the National Park Service to 
        operate the new Mojave National Preserve.
REBUTTAL to Veto Claim No. 68
  - Early last year, the National Park Service's sudden, 
        aggressive management of the area caused problems with 
        local homeowners and small businesses. Almost 
        overnight, certain historical uses of the area 
        including recreational, vehicle use, signage, et 
        cetera, were restricted or eliminated.

        The public outcry resulted in language being included 
            in the Interior appropriation bill which 
            temporarily transferred the day-to-day operation of 
            the Mojave back to the Bureau of Land Management, 
            which had run the area for more than 50 years, 
            until the National Park Service establishes the 
            Citizen Advisory Commission which was specified in 
            the legislation and completes a management plan for 
            the area.

        The Interior bill also included the $500,000 necessary 
            for the first year of planning and allows the 
            National Park Service to have park interpreters on 
            site during peak visitation. This plan of action is 
            more sensitive to property owners and traditional 
            recreational users by allowing a longer, more 
            orderly transition period.
VETO CLAIM No. 69: [The Balanced Budget Act] Would Compromise 
        Management of Healthy Ancient Forests.
  - The Republican Interior appropriations includes a rider 
        that would prohibit the administration from using the 
        most current and appropriate science to protect forests 
        in the Pacific Northwest, a practice that could lead to 
        expanded logging of healthy ancient forests.
REBUTTAL to Veto Claim No. 69
  - The Interior bill encourages--it does not prohibit--use of 
        ``the most current and appropriate science'' in the 
        Pacific Northwest. In fact, the bill provides funding 
        ($4 million for fiscal year 1996) and directs the 
        Forest Service and Bureau of Land Management to 
        complete a comprehensive environmental analysis of the 
        Columbia River Basin.

        The results of this assessment are then to be used by 
            the Forest Service and BLM when the agencies amend 
            or revise each applicable forest management plan.

        The management plans are amended or revised in 
            accordance with the National Forest Management Act 
            of 1976 and the National Environmental Policy Act 
            of 1969.

  - Completion of the scientific assessment and use of the 
        assessment results will lead to better conservation of 
        old growth forests in the Pacific Northwest.

        Agency scientists have determined that overstocking, 
            insect and disease infestations, and catastrophic 
            fire pose the greatest risk to these forests. 
            Therefore, application of the most current and best 
            science is needed to ensure that current old growth 
            conditions can be maintained and enhanced.

        The Interior bill provides the funding and direction 
            needed to ensure that the scientific information is 
            made available on a timely basis to National Forest 
            and BLM land managers to that they may best address 
            these critical forest health concerns.
VETO CLAIM No. 70: Shortsighted Budget Cuts Undercut Efforts to Head 
        Off Changes to the Earth's Weather.
  - Last week, a panel representing 2,500 scientists from 100 
        nations confirmed that human activity is affecting the 
        global climate. Earlier this year, scientists won a 
        Nobel Prize for their work on ozone depletion.

  - Climate change could bring an increase in heat waves, fires 
        and pest outbreaks, increase the number of heat-related 
        deaths and illnesses, and expand the range of 
        infectious diseases like malaria, yellow fever, and 
        encephalitis.

  - The congressional budget cuts by more than 40 percent the 
        programs designed to slow global warming through 
        innovative, voluntary energy efficiency programs and 
        prevent depletion of the ozone layer.

  - These programs reduce pollution, save money, and create 
        jobs.
REBUTTAL to Veto Claim No. 70
  - ``Voluntary energy efficiency'' programs are wasteful 
        efforts to promote the specific agency rather than save 
        the environment.

  - In fact, the EPA recently launched the Energy Star Program, 
        to be funded at $100 million over 5 years, whose 
        charter specifically directs some of the funds to be 
        spent on banners, pencils with logos, and a bus.
VETO CLAIM No. 71: Budget Cuts Energy Efficiency, Will Cause Energy Use 
        and Energy Costs Rise.
  - The budget cuts DOE energy conservation by almost 40 
        percent ($187 million) from the President's request.

  - Energy efficiency programs such as these and the programs 
        listed above, save consumers money, create jobs, and 
        reduce emissions that contribute to air pollution and 
        climate change. The Department of Energy estimates that 
        Federal energy efficiency programs would save 
        homeowners $17 billion and businesses $12.5 billion per 
        year by the year 2005 and would create 57,000 jobs.

  - In addition, the oil that could be saved by these programs 
        is greater than the oil that can be recovered in the 
        Arctic National Wildlife Refuge.
REBUTTAL to Veto Claim No. 71
  - Energy conservation in the United States has been a clear 
        success. In the 1980's, for example, the economy grew 
        by a third while energy use remained flat due to 
        market-driven energy conservation.

  - Business has incentives to market, and customers have 
        incentives to buy, conservation technologies that work 
        well. DOE is left to fund less reliable and less 
        promising technologies. According to the Congressional 
        Budget Office, DOE may ``be crowding out private sector 
        firms or, alternatively, conducting R&D that those 
        private sectors are likely to ignore--a common fate of 
        the technologies generated within DOE's national 
        laboratories.''


                  Research, Technology, and Innovation

                              ----------                              

VETO CLAIM No. 72: [The Balanced Budget Act] Cuts Nondefense R&D by 
        One-Third.
  - The Republican budget plan would cut nondefense research 
        and development [R&D] by one-third in real terms over 
        the next 7 years, from $34 billion in fiscal year 1995 
        to $23 billion in fiscal year 2002, according to 
        independent analysis by the American Association for 
        the Advancement of Science. This is an amount 
        equivalent to eliminating all Federal spending on 
        university research.

  - Americans hold millions of jobs in industries that have 
        grown as a result of wise public and private investment 
        in R&D, including (as of 1992): biotechnology (79,000 
        jobs), computers (479,000 jobs), communications 
        (366,000 jobs), software (450,000 jobs), aerospace 
        (895,000 jobs), semiconductors (317,000 jobs).

  - In 1992 average pay for workers in these and other high-
        technology industries was 60 percent higher than the 
        average for all American workers.
REBUTTAL to Veto Claim No. 72

  - The administration correctly includes R&D categories such 
        as aerospace as a key to economic growth. But President 
        Clinton's defense cuts have resulted in the loss of 
        approximately 1 million defense-related jobs, including 
        tens of thousands of defense-aerospace jobs. The White 
        House priorities are clear: the President has slashed 
        R&D that protects the national security in favor of 
        corporate welfare grant programs.
VETO CLAIM No. 73: [The Balanced Budget Act] Eliminates Partnerships 
        With Industry That Promote Investment in High-Risk Research 
        With Broad Economic Potential.
  - American competitiveness in the 21st century depends on our 
        ability to continue to fund the development of high-
        risk, innovative technologies. Yet, despite historical 
        bipartisan support, Congress has proposed to eliminate 
        the Advanced Technology Program [ATP], a merit-based, 
        competitive, cost-shared industry-led partnership that 
        is enabling the private sector to invest in high-risk 
        technologies with broad-based future economic 
        potential.

  - Meanwhile, public and private investment in R&D--in 
        particular long-term R&D--has been anemic for more than 
        a decade, with industry's R&D investment growth rate 
        negative for the past 4 years. This trend has made the 
        ATP a small, but critical, part of the Nation's R&D 
        portfolio that must be maintained.

  - By eliminating the Advanced Technology Program, Congress 
        will force the government to renege on its commitment 
        to fund up to 250 ATP projects involving 700 different 
        small and large companies, universities, and other 
        organizations in 36 States, who have committed nearly a 
        billion dollars of their own money to these projects. 
        Perhaps more importantly [sic], without the ATP, 
        American companies will find it even more difficult to 
        invest in the breakthrough technologies upon which this 
        Nation's future depends.
REBUTTAL to Veto Claim No. 73
  - In appropriations, the House and Senate voted to eliminate 
        the Advanced Technology Program [ATP]. Although the 
        Clinton administration euphemistically calls it a 
        ``partnership with industry,'' the ATP is in reality 
        the most egregious form of corporate welfare and State-
        run industrial planning.

        The ATP provides millions in grants to many of 
            America's richest industrial giants. Recent 
            grantees include IBM, 3M, Unisys, DuPont, AT&T, and 
            Xerox. Clearly, these companies have the resources 
            and incentives to develop new technologies without 
            government handouts, and have been for years.

        In defense of the ATP, the administration claims that 
            the program funds projects which are too risky for 
            corporate America. In response to this, T.J. 
            Rodgers, CEO of Cypress Semiconductor, testified 
            that ``* * * [These are] bad investments that fall 
            below the corporate cut line for good reasons.'' 
            The operative attitude in the corporate community 
            seems to be, ``It's free money; let the government 
            pay for it. If it works, fine.''

  - The ATP program was first appropriated $10 million in 1990. 
        The Clinton administration has stated its plan to 
        increase spending on the program by nearly $500 million 
        by 2002, a 10,000 percent increase in a little more 
        than a decade.

  - Corporate Welfare/Industrial Planning by the State does not 
        work because, according to T.J. Rodgers, ``It penalizes 
        a country's winners with excess taxes in order to fund 
        that country's losers with inefficiently run government 
        programs. `They've got subsidies; we need subsidies' is 
        exactly wrong.''


               Fighting Crime and Empowering Communities

                              ----------                              

VETO CLAIM No. 74: [The Balanced Budget Act] Abolishes Commitment to 
        100,000 New Cops on Street.
  - The plan calls for a block grant that would repeal the 
        national commitment to fund 100,000 new police.

  - President Clinton's crime bill is well on the way to 
        placing 100,000 new police officers on the streets. The 
        congressional plan would bring that program to a halt 
        and not guarantee a single additional new officer on 
        America's streets.
REBUTTAL to Veto Claim No. 74
  - In fact, little of the ``cops on the beat'' funding has 
        gone to the cities that need it the most. Among the 
        cities with the highest violent crime rates, many have 
        received a disproportionately small amount of the 
        ``cops on the beat'' funding.

        The President's community policing (``cops on the 
            beat'') program requires a local match of 25 
            percent for communities to receive any of the 
            Federal funds, and the 1994 crime bill allows the 
            Attorney General to give preference to applicants 
            that provide contributions exceeding the 25-percent 
            match. As a result, a disproportionate share of the 
            Federal money can go to wealthier communities 
            rather than those with more serious crime problems.

        The ``cops on the beat'' program includes so many 
            conditions on receiving funds that many officials 
            have chosen not to apply because the program is too 
            expensive.

        If the ``cops on the beat'' program is to result in 
            100,000 new officers, it will require $28 billion 
            of additional local spending.

        The ``cops on the beat'' funding for police is 
            gradually phased out over the 3-year funding period 
            so that the States eventually assume the full costs 
            of the officers. When the funding runs out, local 
            government will be strapped with the salaries and 
            pension of these officers. In the end, the 
            communities that hired the police officers under 
            the President's program will have to either pay 
            their full cost or let them go.

  - The congressional plan--the Local Law Enforcement Block 
        Grant--gives States and localities the power and 
        resources to choose how they spend the money to combat 
        violent crime according to their local needs and 
        priorities, rather than letting Washington usurp those 
        decisions.

        The 10-percent match required under the block grant 
            enables more communities to hire police.

        The block grant is designed to attack high crime 
            problem areas. It distributes funds to local 
            governments based on population and their numbers 
            of violent crimes compared with the number of 
            violent crimes reported by other localities in 
            their States.
VETO CLAIM No. 75: [The Balanced Budget Act] Reduces the Effectiveness 
        of the Violence Against Women Act.
  - Slashes $72 million from the domestic violence prevention 
        and intervention programs in police stations, 
        courthouses and homeless shelters reducing the 
        effectiveness of the Violence Against Women Act.

  - The budget proposes $50 million less than the President for 
        law enforcement and prosecution programs that fund 
        domestic violence prevention programs in police 
        stations and courthouses.

  - The budget also eliminates programs that attempt to reduce 
        the sexual abuse of youth.
REBUTTAL to Veto Claim No. 75
  - Funding for the act is $175 million for the fiscal year 
        1996. This is $100,000 greater than the President's 
        request and $149 million over the 1995 level.

  - Under the plan, no prevention programs are eliminated. 
        Funding for many programs has been added to the block 
        grant to empower the localities to set their own 
        priorities to fight crime. But the Violence Against 
        Women Act is not part of the block grant; it is funded 
        separately.
VETO CLAIM No. 76: [The Balanced Budget Act] Abolishes New Community 
        Development Banks Proposal to Leverage More Private Sector 
        Investment in Distressed Communities.
  - The budget eliminates the Community Development Financial 
        Institutions Fund which was created to bring credit and 
        growth to distressed communities by promoting the 
        formation and expansion of community development 
        financial institutions [CDFI's].

  - The Treasury Department estimates that each dollar of 
        Federal money generates $10 in new development 
        activity, creating jobs and economic growth.
REBUTTAL to Veto Claim No. 76
  - The conference agreement for the Veterans and Housing and 
        Urban Development appropriation bill provides no 
        funding for the Community Development Financial 
        Institutions Fund.

  - The CDFI is another example of duplication in Federal 
        programs.

        The fund, created in 1994 and funded at $125 million in 
            1995, extends loans and loan guarantees to 
            financial institutions to provide credit for 
            economic development in low-income areas.

        This purpose is already served by numerous Federal 
            programs and agencies, including: the Neighborhood 
            Reinvestment Corporation, programs within the Small 
            Business Administration, the section 108 program 
            within the Community Development Block Grant 
            program, and a number of programs within the 
            Economic Development Administration, as well as 
            others.

  - Federal economic development assistance, whether through 
        direct loans, loan guarantees or grants, must be 
        reformed to ease the bureaucratic complexity and ensure 
        efficiency in directing resources where they are 
        needed. The CDFI is unnecessarily duplicative and 
        should not be funded.
VETO CLAIM No. 77: [The Balanced Budget Act] Slashes Funding to 
        Demolish the Most Severely Distressed Housing Projects.
  - The Republican budget cuts nearly in half the President's 
        request for funding to reform public housing and 
        revitalize communities by demolishing the most severely 
        distressed housing.
REBUTTAL to Veto Claim No. 77
  - The Severely Distressed Housing Program, for which $500 
        million was appropriated in 1995, does not go for the 
        demolition of dilapidated public housing projects.

        The President's own budget describes it as a program to 
            repair existing public housing units: ``This 
            program provided Federal resources to rehabilitate 
            and restore severely dilapidated public housing 
            projects.''

        The reality is that the funding may even be used to 
            build what are essentially new public housing 
            units. The President's own housing reform proposal 
            would eliminate this as a separate program.

  - The real problem with the elimination of distressed public 
        housing units is the requirement that units eliminated 
        be replaced by another unit. Public housing authorities 
        need more flexibility to eliminate unusable units and 
        renovate their housing projects.


                          Farming/Agriculture

                              ----------                              

VETO CLAIM No. 78: [The Balanced Budget Act] Threatens Conservation 
        Benefits Achieved Under the Conservation Reserve Program.
  - The Conservation Reserve Program is designed to achieve 
        long-term conservation benefits by authorizing long-
        term contracts with farmers to keep environmentally 
        sensitive land out of production.

  - The bill would allow producers to withdraw from 10- to 15- 
        year Conservation Reserve Program contracts--which were 
        entered into voluntarily--simply by giving USDA 60 days 
        notice.

  - The main purpose of the CRP is to achieve long-term 
        conservation benefits. This self-declared withdrawal 
        process completely undermines that concept. It also 
        invalidates the whole concept of a long-term contract 
        between the public and the farmer.

  - Currently, only the Secretary of Agriculture has the 
        authority to grant such ``early outs.'' He continues to 
        use that authority judiciously to ensure that only 
        those lands that truly belong in the CRP remain there. 
        But a standing provision that allows contract holders 
        to withdraw whenever they want and at no cost is bad 
        public policy and should not be law.
REBUTTAL to Veto Claim No. 78
  - Contrary to what the President stated, the CRP was not 
        originally designed to achieve long-term conservation 
        benefits. CRP was originally designed as a balancing 
        measure to slow burgeoning farm program costs (caused 
        by people putting too much land into production) while 
        maintaining an adequate supply of productive cropland 
        in a manner that focused on environmentally sensitive 
        land. Since that time, two things have happened:

        Congress has continually decreased the amount of money 
            available for farm programs, which has taken 
            pressure off of putting environmentally sensitive 
            land into production.

        People have realized that CRP has resulted in 
            conservation and environmental benefits, so that 
            the focus today is using CRP as a conservation 
            policy tool.

  - Today, however, the United States as well as the rest of 
        the world, is not ``awash in grain'' as it was in the 
        mid-1980's when CRP was started.

  - The President states that giving farmers the choice of 
        opting out of CRP completely undermines the long-term 
        conservation benefits of CRP. This is wrong. Today, 
        Federal farm program payments do not distort 
        agricultural land use as much as they did in the 
        1980's; therefore, CRP land which is poorly suited for 
        crop production will likely stay out of production, 
        even if the owner is given the option of getting out of 
        the CRP. Given that the world needs grain right now, it 
        certainly makes sense to allow individual farmers to 
        make the decision about whether their CRP land would be 
        more productive as cropland. This option will result in 
        fragile land staying in, while lowering the costs to 
        the government for CRP payments for land which is 
        better suited for growing much-needed grain. In 
        addition, farmers who opt out of the CRP will have to 
        farm their land in accordance with conservation plans 
        before they can receive benefits.
VETO CLAIM No. 79: [The Balanced Budget Act] Prevents Farmers From 
        Granting Permanent Easements Under the Wetlands Reserve 
        Program.
  - The budget would prevent permanent easements under the 
        Woodlands Reserve Program.

  - Right now this important--and completely voluntary--
        woodlands restoration program relies on 30-year or 
        permanent easements. The response to the program from 
        farmers has been overwhelming: For every acre USDA has 
        agreed to fund, farmers have offered 7.

  - Moreover, from the standpoint of protecting the interests 
        of the American taxpayer, permanent easements offer the 
        government its best value--taxpayers only have to pay 
        for woodlands protection once.

  - The budget would federally mandate the exclusive use of 15-
        year contracts or easements. This would require 
        repeated renewals and additional costs to achieve 
        permanent protection. The bill does not make sense--
        either to farmers, who like the current program, or to 
        taxpayers, who want the most for their money.

  - The Clinton administration also opposes the bill's 
        prohibition on permanent easements and its exclusive 
        reliance on 15-year easements for woodlands 
        preservation. We believe that far sounder public policy 
        would be to give farmers choices for protecting 
        woodlands--ranging from cost-sharing assistance to 
        long-term and permanent easements.
REBUTTAL to Veto Claim No. 79
  - The President states that substituting 15-year easements 
        for permanent easements would require ``repeated 
        renewals and additional costs to achieve permanent 
        protection.'' This is just not true. The main reason 
        for making this change was to save money while 
        achieving the same level of conservation and wildlife 
        benefits.

  - Also, this change makes good sense in today's world. The 
        Wetlands Reserve Program was created because Congress 
        determined that too many wetlands were being drained, 
        including those that were converted into agricultural 
        production. Today, however, wetlands are not being 
        drained to grow crops--a separate law (the 
        ``Swampbuster'' provisions) that prevents farmers from 
        getting Federal farm program payments on wetlands that 
        are converted.

  - While it is good public policy to have an incentive for 
        creating wetlands, there is no need for the government 
        to pay for a permanent easement--the distorted farm 
        program incentives that caused wetlands to be drained 
        in the past are not here today. It is very unlikely 
        that, after 15 years, a landowner will drain a wetland 
        just because the easement expires.
VETO CLAIM No. 80: [The Balanced Budget Act] Shreds the Farm Safety Net 
        by Cutting the Link Between Commodity Payments and Farm 
        Conditions.
  - The budget slashes the farm safety net. In contrast to the 
        present system, which provides assistance to farmers 
        only during period of low prices, the Republican 
        proposal provides a fixed payment to producers during 
        good years and bad--and then eliminates this critical 
        safety net for American farmers altogether.

  - Fixed payments do not respond to changing market 
        conditions. By cutting the link between farm payments 
        and market prices, the Republican budget leads to 
        undesirable results. Producers could receive windfall 
        profits in good years when prices are high, while 
        family farmers' incomes would not be protected when 
        prices are low.

  - Fixed payments can mean producers get unnecessarily large 
        amounts of money when market prices--and profits--are 
        very high. This invites public criticism of all farm 
        programs when budgets are tight.
REBUTTAL to Veto Claim No. 80
  - The President states that the BBA slashes the farm safety 
        net. Actually, the BBA would provide a 7-year safety 
        net with the certainty of fixed payments, which would 
        allow farmers and their lenders to be able to plan 
        accordingly.

  - The President states that the BBA leads to undesirable 
        results because farmers could get windfall profits in 
        good years when prices are high, while family farmers' 
        incomes would not be protected when prices are low. But 
        his Secretary of Agriculture, in announcing that he is 
        giving farmers up to 3 years in which to repay advance 
        deficiency payments (required because prices are high) 
        admits that the President's position is completely 
        wrong.

        High prices do not mean windfall profits, and low 
            prices do not mean low farm income.

        In fact, just the opposite seems to be the general 
            rule: low prices generally occur during good 
            harvests when farmers get a lot of income from the 
            market, while high prices generally occur in short-
            supply situations when farmers cannot benefit 
            because they do not have good harvests.

  - The high price/low price situation highlights the biggest 
        fault with current farm programs: they deliver benefits 
        based on commodity prices, not farm income. This 
        frequently ends up giving farmers payments when they 
        are getting plenty of income from the marketplace.

  - The President's assertion that giving farmers payments when 
        prices are high will invite public criticism is 
        misplaced, especially since all the defenders of the 
        current programs are now also saying that we cannot 
        force farmers who didn't produce a good crop to repay 
        their farm program payments. Why not just admit that 
        the current programs don't work?

  - The BBA would not eliminate this critical safety net 
        altogether after 7 years. At the end of 7 years, 
        Congress would assess the success of the program as 
        well as the proper future role of the Federal 
        Government with respect to farmers.
VETO CLAIM No. 81: Crop Insurance.
  - Last year's crop insurance reform produced a program that 
        is cost-effective and reliable for both producers and 
        taxpayers. The reform linked insurance benefits to farm 
        program participation in order to ensure maximum 
        producer participation.

  - Now, Congress wants to disrupt this program by eliminating 
        the link between farm program benefits and insurance. 
        If this happens, farmers who do not see the advantage 
        of signing up for crop insurance will be financially 
        vulnerable when disaster strikes.

  - This will undoubtedly lead to producers asking Congress and 
        taxpayers for crop disaster assistance money. It is bad 
        policy to ask taxpayers to pay for two programs 
        designed for crop losses--the crop insurance program 
        and disaster assistance.
REBUTTAL to Veto Claim No. 81
  - The President says that by eliminating the link between 
        buying insurance and getting farm program benefits, 
        farmers who do not see the advantage will be 
        financially vulnerable when disaster strikes, and that 
        they will undoubtedly ask Congress and taxpayers to pay 
        for disasters.

  - The BBA assumes that American farmers are smart enough to 
        make this decision for themselves. Besides, the BBA 
        would require farmers to sign a waiver, making it 
        impossible for them to get any disaster assistance. The 
        BBA recognizes that a little individual responsibility 
        in this matter is a good thing.
VETO CLAIM No. 82: [The Balanced Budget Act] Cuts the Export 
        Enhancement Program.
  - The bill cuts funding for the Export Enhancement Program 
        [EEP] to levels well below those agreed to with our 
        trading partners.

  - EEP is designed to counteract the unfair pricing practices 
        of trading competitors.

  - EEP funding in fiscal year 1996 is set at just $350 
        million, $633 million less than the level permitted 
        under the Uruguay Round Agreement in 1994. Should our 
        producers need the EEP in future years, lack of funding 
        could hinder U.S. farm export efforts.
REBUTTAL to Veto Claim No. 82
  - The President says that the BBA cuts funding for EEP to 
        levels below those agreed to with our trading partners, 
        which is not completely true. Yes, EEP funding is cut 
        for the first 3 years, but ask the President if he is 
        even going to be using the money. The fact is that for 
        the next 3 years the funding levels for EEP are more 
        than adequate to cover the anticipated needs.

        Commodity prices right now are hitting record highs, 
            supplies are short, and no one can justify even 
            using EEP to export commodities right now anyway.

        So, cutting EEP funding levels for the first 3 years 
            makes good economic sense, for both the government 
            and the taxpayers.

  - More important, though, the BBA fully funds EEP for the 
        1999 through 2002 fiscal years. In 1999, EEP will be 
        fully funded at the maximum GATT levels, so that the 
        United States can continue to promote free and fair 
        trade with the rest of the world's trading partners.


                               appendix 5



                     The Causes of Current Deficits

                              ----------                              

    The conventional argument in Washington dates the beginning 
of the current deficit spending problem to some time in the 
early 1980's, and blames President Reagan's tax cuts and 
defense spending increases. In fact, however, the problem took 
root in the mid-1970's, and it resulted principally from the 
dramatic growth of entitlements that was spawned in the late 
1960's. It was aided by a change in philosophical assumptions 
regarding government deficits, and by the ``reform'' of 
congressional budgeting procedures, which actually made it more 
difficult to control spending.
    It is important to understand these factors, because any 
efforts to balance the budget will fail if they attack the 
wrong problem. For example, in both 1990 and 1993, Congress 
passed large tax increases and defense spending cuts, 
presumably to reduce deficits. But neither of these measures 
brought Federal spending anywhere near a path to balance. Table 
6-A below shows that, if no further action is taken soon, 
deficits will begin climbing again next year and will reach 
$287 billion by 2002.

 TABLE 6-A: PROJECTED DEFICITS (-), 1995-2002, IN BILLIONS OF DOLLARS AND PERCENTAGES OF GROSS DOMESTIC PRODUCT 
----------------------------------------------------------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Total Outlays...........................    1,519    1,569    1,652    1,738    1,830    1,927    2,018    2,127
Total Revenues..........................    1,355    1,428    1,483    1,544    1,609    1,681    1,758    1,840
Deficit.................................     -164     -140     -169     -195     -221     -246     -261     -287
Deficits as a Percent of GDP............     -2.3     -1.9     -2.1     -2.4     -2.6     -2.7     -2.7     -2.9
----------------------------------------------------------------------------------------------------------------
Source: The Congressional Budget Office, ``The Economic and Budget Outlook: Fiscal Years 1997-2006--A           
  Preliminary Report,'' March 28, 1996.                                                                         

    The discussion below will show that chronic deficits were 
not caused by a few bad decisions over a limited time. Instead, 
they resulted from the convergence of various intellectual, 
fiscal, and procedural forces that combined to make imbalances 
between spending and revenues inevitable and persistent. It is 
this fundamental, structural mismatch that must be corrected if 
Congress hopes to balance the Federal budget.

                       the effect of keynesianism

    Whether the ``Keynesian revolution'' \1\ amounted to a 
totally new analytical framework for understanding the 
macroeconomy is a matter of debate. But it undoubtedly marked a 
change of focus in the economics profession. The emphasis 
shifted from the longer run, in which the economy was fully 
employed, to the short run, with its periods of unemployment. 
Keynes argued that economic downturns were undesirable episodes 
instead of needed corrections to overheated economies. He said 
they were common and relatively long-lasting, not transient 
abnormalities in an otherwise well-functioning economy. Most 
important, he contended that they could be avoided, or at least 
ameliorated, through policies designed to boost economy-wide 
demand.
---------------------------------------------------------------------------
    \1\ Named after economist John Maynard Keynes, 1883-1946.
---------------------------------------------------------------------------
    Preeminent among the tools available to policymakers, 
according to Keynes, was ``fiscal policy''--the manipulation of 
the government's budget to increase or decrease total demand. 
Fiscal policy also could have a ``pump-priming'' effect, 
causing others to increase spending and demand as their incomes 
rose due to the government's stimulus.
    The late Prof. Aaron Wildavsky traced the emergence of 
Keynesian economics in Federal budgeting to the 1930's. At that 
time--despite the Depression--most politicians of both parties 
shared a conviction that budgets should remain balanced. But 
Progressive publicists such as Waddill Catchings and William 
Trufant Foster encouraged deficit spending to boost employment 
through public works. They argued that the resulting new debt 
could be repaid more easily through the economic activity 
generated by increased public spending than through an ongoing 
depression.\2\ Soon, a number of politicians gained interest in 
the Keynesian view, as Wildavsky explains in the following 
account:
---------------------------------------------------------------------------
    \2\ Wildavsky, Aaron, ``The New Politics of the Budgetary Process'' 
(Glenview, IL: Scott, Foresman and Company, 1988), p. 64.

          By the early 1930's, a number of Americans in the 
        Democratic party began to seek a rationale for 
        encouraging the government to expand public works and 
        thus increase employment. They found this rationale in 
        the work of economist John Maynard Keynes and 
        introduced his thought to key figures, including 
        President Roosevelt. Building on ideas advanced in 1931 
        by his collaborator R.F. Kahn, Keynes argued that it 
        was appropriate, in a deflationary period when vast 
        economic resources went unused, for the government to 
        create deficits as a means of expanding demand. When 
        economic activity was slow, government should step in 
        to speed it up; when the economy overheated and 
        inflation resulted, government could decrease spending. 
        In short, raising and lowering the deficit would become 
        a prime means of economic control. The important point, 
        however, is not the practice of Keynesian doctrine--any 
        student of politics knows that it would be much easier 
        to raise than to lower spending--but that it provided a 
        strong intellectual rationale for doing what many 
        people wanted. At long last, politicians could combine 
        spending with virtue. [Emphasis added.] \3\
---------------------------------------------------------------------------
    \3\ Ibid., p. 65.

    But deficit spending failed to win enough support at the 
time to affect the Federal Government's budget significantly. 
President Roosevelt apparently disagreed with Keynes and 
continued to pursue balanced budgets, though economic 
conditions, and then World War II, prevented this. After the 
war, the norm of budget balance remained strong through the 
administrations of Presidents Truman and Eisenhower. As Truman 
noted in his memoirs: ``There is nothing sacred about the pay-
as-you-go idea so far as I am concerned except that it 
represents the soundest principle of financing that I know.'' 
\4\ The commitment to this principle lasted until the early 
1960's. Wildavsky describes the ensuing events in the following 
passage:
---------------------------------------------------------------------------
    \4\ Truman, Harry S, ``Memoirs by Harry S Truman,'' two volumes 
(Garden City, NY: Doubleday & Company, 1956), 2:41, quoted in Herbert 
Stein's ``The Fiscal Revolution in America'' (Chicago: University of 
Chicago Press, 1969), p. 207, and Aaron Wildavsky's ``The New Politics 
of the Budgetary Process'' (Glenview, IL: Scott, Foresman and Company, 
1988), p. 67.

          In the 1960's balance became partisan in a way that 
        it had not been since before the Civil War, only now 
        the Democrats were the skeptics. Balance was a 
        conservative position used by lower-spending 
        Republicans as a weapon against the higher-spending 
        liberal Democrats. Since the dominant theory of 
        economic management was Keynesian economics, the norm 
        of balance also conflicted with the widespread desire 
        that the government ensure a healthy economy. The 
        balanced-budget norm could no longer constrain and 
        coordinate decisions as it had in the past.\5\
---------------------------------------------------------------------------
    \5\ Wildavsky, Aaron, ``The New Politics of the Budgetary Process'' 
(Glenview, IL: Scott, Foresman and Company, 1988), p. 64.

    By this time, Keynesians had come to think of unemployment 
as the norm and overemployment as the aberration, so that 
``counter-cyclical'' deficit spending became a hallmark of 
Keynesian economic policy. Indeed, even though Keynesian 
``demand management'' could only work on unemployment caused by 
deficient demand, many Keynesians came to think of deficit 
spending as the cure for unemployment regardless of the cause. 
Any unemployment regarded as ``high''--even that due to supply 
factors--was given as a reason to run Federal budget deficits.
    The Keynesian view then got a boost from a presidential 
endorsement. In a commencement speech at Yale University in 
June 1962, President Kennedy urged that fiscal traditions and 
taboos be replaced by the more sophisticated thinking in the 
intellectual and economic communities. Columnist Robert J. 
Samuelson, in an article titled ``Original Sin Remembered,'' 
argued that Kennedy's speech made possible what was politically 
unacceptable before:

          Politicians could now rationalize careless policies 
        in the guise of enlightened economics. Deficits were 
        okay because they would increase economic growth and 
        ultimately balance the budget. Faster growth made new 
        spending programs affordable.\6\
---------------------------------------------------------------------------
    \6\ Samuelson, Robert J., the Washington Post, June 3, 1992, p. 
A19.

    In content and style, the thinking President Kennedy 
expressed clearly was drawn from Keynesianism. Put simply, 
Keynesian thinking colored political decisionmaking in two 
overlapping ways: It replaced political conviction with the 
rationalism of economic theory, and it provided an intellectual 
justification for deficit spending.

                    the growth of domestic spending

    The first warning of the Federal Government's spending 
problem came from an interagency task force of President 
Nixon's Domestic Policy Council. The task force was to advise 
how best to allocate the surplus resources that were expected 
to accrue from the wind-down of the Vietnam war--a sum that was 
termed the ``peace dividend.'' As it turned out, this 
``dividend''--in the sense of extra cash available for tax 
relief or spending on other programs--did not exist. Economist 
Herbert Stein, then a member of the policy council's task 
force, explains that growing claims against post-Vietnam 
resources already were embodied in law and would swallow up the 
savings from projected defense spending cuts.\7\
---------------------------------------------------------------------------
    \7\ Stein, Herbert, ``The Washington Economist,'' March-April 1990, 
p. 18.
---------------------------------------------------------------------------
    These new claims resulted, for the most part, from Great 
Society entitlement programs. In a piece called ``Remembrance 
of Peace Dividends Past,'' Stein also notes the summation made 
by Daniel Patrick Moynihan, Nixon's Domestic Policy Council 
Director. Moynihan called the peace dividend ``as evanescent as 
the morning clouds over San Clemente.''
    Although the term ``peace dividend'' itself had not been 
used before, the phenomenon to which it referred--a surplus of 
resources available for peacetime uses--had been customary, and 
its absence after Vietnam was unprecedented. Prof. Allen Schick 
has given the following explanation of how this occurred (see 
Tables 6-D, 6-E, and 6-F in the Summary Tables at the end of 
this appendix):

          Vietnam did not conform to the budgetary patterns of 
        previous American wars. Without exception, each 
        previous war had produced a steep rise in Federal 
        spending followed by a sharp postwar decline, though to 
        a trough well above the prewar level. However, in no 
        year following the Vietnam war has spending been lower 
        than in the peak war years * * *. Part of the reason 
        for this deviation from past patterns was a radical 
        change in the composition of the Federal budget. * * * 
        Before the Vietnam conflict, most of the budget was 
        spent on the operations of government agencies. As 
        measured in the national income accounts, 55 percent of 
        the fiscal 1964 outlays (the last year before 
        significant Vietnam escalation) went for purchases of 
        goods and services, with 25 percent for transfer 
        payments, and less than 10 percent for grants to State 
        and local governments. The distribution was quite 
        different in fiscal 1975, the last year before 
        implementation of the congressional budget process. 
        Forty percent of the 1975 budget was spent on transfer 
        payments to individuals, and another 15 percent was 
        granted to States and localities.\8\
---------------------------------------------------------------------------
    \8\ Schick, Allen, ``Congress and Money: Budgeting, Spending and 
Taxing'' (Washington, DC: the Urban Institute, 1980), p. 26.



    Federal domestic spending actually had been growing since 
the mid-1950's in constant dollars, in percentages of gross 
domestic product, and as shares of total Federal outlays. But 
by the mid-1970's, this spending reached historic levels. The 
Great Society programs launched during the Johnson 
administration were ripening. The budget ``superfunction'' 
called ``human resources'' claimed the majority of total 
Federal outlays--50.4 percent--for the first time in 1974 (see 
Table 6-G). Since then, it has never fallen below that mark. In 
1975, ``human resources'' crossed another threshold, rising 
into double digits of gross domestic product for the first time 
ever, at 11.5 percent (see Table 6-H). It has not slipped below 
10 percent of GDP since then.

   TABLE 6-B: OUTLAYS FOR PAYMENTS TO INDIVIDUALS AND TOTAL FEDERAL SPENDING, AS PERCENTAGES OF GROSS DOMESTIC  
                                               PRODUCT, 1971-1980                                               
----------------------------------------------------------------------------------------------------------------
                                             1971   1972   1973   1974   1975   1976   1977   1978   1979   1980
----------------------------------------------------------------------------------------------------------------
Payments to Individuals...................    7.7    8.1    8.2    8.6   10.2   10.7   10.3    9.8    9.6   10.5
Total Federal Spending....................   20.0   20.1   19.3   19.2   22.0   22.1   21.3   21.3   20.7   22.3
----------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1997.''                        

    The category classified as ``payments to individuals'' also 
sheds light on the domestic spending trend. These payments--
entitlement programs--also exceeded 10 percent of GDP for the 
first time in 1975, more than double their claim on national 
economic resources just 10 years earlier. Only twice since then 
have they fallen back to single-digit shares of GDP--to 9.8 
percent in 1978 and 9.6 percent in 1979 (see Table 6-B above). 
As these trends occurred, spending on national defense was 
undergoing a long-term decline. The post-World War II peak for 
defense spending occurred in the mid-1950's. It was 14.5 
percent of GDP and 69.4 percent of total outlays in 1953, and 
13.4 percent of GDP and 69.5 percent of outlays in 1954. In 
1960, national defense fell below 10 percent of GDP for the 
first time since the Korean conflict, reaching 9.5 percent. In 
1962, it dropped below 50 percent of outlays--its lowest level 
since Korea--falling to 49 percent. Only twice since then--
during the Vietnam war and the 1981-1985 Reagan buildup--has 
defense received a spending boost relative to GDP or total 
Federal outlays.
    The growth of domestic spending in the 1970's overshadowed 
long-term defense savings by enough to drive total Federal 
spending to historic levels. In 1975, total outlays reached 
22.0 percent of GDP. It was only the fourth time since World 
War II that spending levels had crossed the 20-percent 
threshold (the others were 1968, 1971, and 1972), but this time 
it was permanent: Since 1975, outlays have never consumed less 
than a fifth of the Nation's total economic resources--even 
though defense spending usually has been declining. In short, 
the shift away from national defense and toward higher domestic 
spending already was under way by the mid-1970's; but at that 
point, it reached virtually unprecedented levels, from which it 
has not retreated.
    The largest increase in domestic spending has been in the 
``payments to individuals'' entitlements. The level of spending 
for these programs rose by $188.9 billion in real terms, or 
40.1 percent, between 1987 and 1995. The categories ``all 
other'' and ``all other grants''--which represent most of the 
government's domestic discretionary spending--will have 
essentially held steady in real terms, at $143.8 billion in 
1987 dollars (compared with $148.5 billion in 1987). Net 
interest will have risen $41.6 billion, or about 30.0 percent, 
in real terms (see Table 6-C on the next page).

                       the budget reform of 1974

    It is often correctly noted that maintaining a balance 
between spending and taxes requires, above all, political will. 
But the procedures under which budgetary decisions are made can 
hinder or help, depending on the incentives they provide to 
policymakers. The budget reform of 1974 altered these 
incentives in important ways--and in some respects the reform 
made it more difficult for Congress to restrain spending.

                            TABLE 6-C: OUTLAYS, RECEIPTS, AND DEFICITS (-) IN BILLIONS OF CONSTANT (1987) DOLLARS, 1987-1996                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                   1996 
                                                                  1987     1988     1989     1990     1991     1992     1993     1994     1995     est. 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Defense.......................................................      282      283      286      273      241      250      237      221      207      196
Nondefense....................................................      583      597      615      674      718      719      728      759      772      790
Net Interest..................................................      139      147      156      163      165      165      160      161      180      183
                                                               -----------------------------------------------------------------------------------------
      Total Outlays...........................................    1,004    1,027    1,057    1,110    1,123    1,133    1,126    1,140    1,159    1,168
      Total Receipts..........................................      854      877      916      914      895      895      922      982    1,034    1,063
                                                               -----------------------------------------------------------------------------------------
      Total Deficit...........................................     -150     -150     -141     -196     -229     -238     -204     -159     -125      104
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1997.''                                                                
                                                                                                                                                        
Note.--Nondefense includes international spending, which is about 1 percent to 2 percent of the nondefense total.                                       

    It should be noted that deficit control was not a principal 
goal of the 1974 Budget Act. At that time, deficits were not 
considered to be the problem they are today. The Budget Act was 
chiefly intended to draw together Congress' disparate spending 
and taxing functions. That is why the legislation created the 
House and Senate Budget Committees. It also created the 
Congressional Budget Office so that Congress would have its own 
fiscal analysis agency.
    Nevertheless, some of the act's features did arguably, if 
unintentionally, make spending and deficits more difficult to 
control. For example, the 1974 Budget Act did not indicate 
whether taxing and spending should rise or fall, and did not 
prescribe the appropriate size of the deficit (as did the 
Gramm-Rudman-Hollings law adopted 11 years later). Those 
matters were to be left to the majority in Congress. Partly 
because there was no penalty for deficits--the kind of penalty 
that sequestration under GRH imposed--there was no procedural 
inclination to reduce deficits. This omission might not have 
been problematic under normal circumstances. In this case, 
however, it coincided with a period of unusual upward pressure 
on spending, which the Budget Act did not restrain.
    A second factor was the Budget Act's codification of 
current services budget ``baselines,'' not only as an 
analytical tool, but as a foundation of the budget itself. As 
Prof. Schick has put it: ``The baseline is a legitimate concept 
that has been put to questionable use. In the hands of skilled 
manipulators, it has become the alchemy of Federal budgeting, 
capable of transforming an increase into a reduction.'' \9\ He 
continues as follows:
---------------------------------------------------------------------------
    \9\ Schick, Allen, ``The Capacity to Budget'' (Washington, DC: the 
Urban Institute, 1990), p. 95.

          The baseline assumes that existing programs will 
        continue without policy change. It adjusts projected 
        expenditures for estimated inflation and mandated 
        workload changes. A simple example will show how a 
        baseline is constructed and used. A program spending 
        $100 million a year and projected to have an annual 5-
        percent increase in participants and a 5-percent 
        inflation rate would have approximately a $110-million 
        baseline for the next year, a $121-million baseline for 
        the second year, and a $133-million baseline for the 
        third year. These hypothetical extrapolations are 
        highly sensitive to the assumptions underlying them. 
        Any action projected to reduce spending below these 
        hypothetical levels would be scored as a cutback, even 
        if spending would still be above the previous 
        year's.\10\
---------------------------------------------------------------------------
    \10\ Ibid., p. 65.

    The practice came from section 605 of the 1974 budget 
reform, which requires the President to estimate the ``budget 
outlays and proposed budget authority that would be included in 
the budget for the following fiscal year if programs and 
activities of the United States Government were carried on 
during the year at the same level as the current fiscal year 
without a change in policy.'' \11\
---------------------------------------------------------------------------
    \11\ The section reference is to the 1974 version of the Budget 
Act, which has been amended several times since then. This language 
also is contained in Title 31, Chapter 11 of the United States Code, 
which was amended by the Budget Act.
---------------------------------------------------------------------------
    Baselines are useful and appropriate for analysis and for 
projecting future program needs. But they also make it more 
difficult to constrain spending because they carry an explicit 
bias that holds all Federal programs harmless from inflation. 
Therefore, it becomes even more difficult to cut into the base 
of programs, which is what is needed to truly control the 
growth of government, according to Schick. Wildavsky has urged 
Congress to eliminate the current services baseline as a key 
step toward budget balance. In contrast to Schick, who views 
the issue from the perspective of the policymakers who deliver 
the funds, Wildavsky argues from the point of view of the 
constituencies on the receiving end:

          This [the current services budget] is misconceived. 
        The idea is that everybody who has a claim on the 
        Federal Treasury, for whatever reason, deserves not 
        only to get what they had last year in outlays, but to 
        make up for whatever inflation there has been, and 
        therefore, Congress and its Budget Committees have to 
        chase after them to claw money back if that is 
        necessary. It should be the other way around, that the 
        collective comes first. You speak for the common 
        interests. No individual interest has the right to say 
        ``I come first,'' which is to say, everybody gets the 
        outlays that they had and if they want the inflation, 
        then they have to come to you to get it and you in your 
        political wisdom should decide how much of that they 
        should get.\12\
---------------------------------------------------------------------------
    \12\ Wildavsky, Aaron, testimony to the House Committee on the 
Budget, May 11, 1992.

    Baselines may be useful for projecting future spending 
demands if current policies are maintained. But even when 
legitimately used, baselines build an assumption of automatic 
growth into aggregate spending. Their application in the 1974 
budget reform--when Federal deficits were growing anyway, 
mainly because of domestic spending growth--only added to the 
difficulties in trying to constrain spending.

                               Conclusion

    As noted at the outset, it is important to understand the 
real causes of today's deficit spending problem so that efforts 
to balance the budget are based on real solutions. Some of the 
needed changes already have occurred. The Keynesian tolerance 
for deficit spending has been largely abandoned by the public, 
and now by the Congress as well: It is now an accepted 
consensus--as it was before the 1960's--that the Federal budget 
should be balanced. Second, the 104th Congress has stressed 
that, despite the conventional ``baseline''-oriented talk of 
spending ``cuts,'' government spending will grow even as 
Congress pursues a balanced budget. Major entitlement programs 
such as Medicare and Medicaid will continue to grow, 
notwithstanding what balanced budget opponents claim about 
``cuts'' in these areas.
    But the biggest problem remains. It involves the political 
will to control the growth of overall spending and the size and 
scope of government. These challenges were met in the Balanced 
Budget Act of 1995, and are met again in this budget 
resolution. The remaining question is whether the President 
will match his newly found balanced budget rhetoric with 
appropriate action.

                     Summary Tables for Appendix 5

trends in federal spending during eras of world war ii, the korean war, 
                          and the vietnam war

                               TABLE 6-D: WORLD WAR II-ERA FEDERAL SPENDING TREND                               
                                 [Outlays in billions of constant 1987 dollars]                                 
----------------------------------------------------------------------------------------------------------------
                                                    1940   1941   1942   1943   1944   1945   1946   1947   1948
----------------------------------------------------------------------------------------------------------------
Defense..........................................     19     65    223    538    670    732    380    102     72
Nondefense.......................................     70     63     84    105    101     58     56    106     99
Net Interest.....................................      8      8      8     12     17     23     27     23     22
                                                  --------------------------------------------------------------
      Total Outlays..............................     97    135    315    655    787    813    463    231    193
----------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1997.''                        


                                TABLE 6-E: KOREAN WAR-ERA FEDERAL SPENDING TREND                                
                                 [Outlays in billions of constant 1987 dollars]                                 
----------------------------------------------------------------------------------------------------------------
                                                                  1950   1951   1952   1953   1954   1955   1956
----------------------------------------------------------------------------------------------------------------
Defense........................................................    101    172    310    332    306    262    244
Nondefense.....................................................    135     92     84     89     74     97    105
Net Interest...................................................     24     22     22     23     22     21     22
                                                                ------------------------------------------------
      Total Outlays............................................    261    286    416    445    401    380    370
----------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1997.''                        


                                TABLE 6-F: VIETNAM WAR-ERA FEDERAL SPENDING TREND                               
                                 [Outlays in billions of constant 1987 dollars]                                 
----------------------------------------------------------------------------------------------------------------
                                             1965   1966   1967   1968   1969   1970   1971   1972   1973   1974
----------------------------------------------------------------------------------------------------------------
Defense...................................    204    226    269    296    283    263    237    220    197    185
Nondefense................................    212    234    257    278    273    292    322    357    380    390
Net Interest..............................     30     32     34     36     39     42     41     40     43     50
                                           ---------------------------------------------------------------------
      Total Outlays.......................    446    492    560    609    594    596    599    618    620    625
----------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1997.''                        


                                                         TABLE 6-G: OUTLAYS BY SUPERFUNCTION, AS PERCENTAGES OF TOTAL OUTLAYS, 1960-1977                                                        
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   1960    1961    1962    1963    1964    1965    1966    1967    1968    1969    1970    1971    1972    1973    1974    1975    1976    1977 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense................................    52.2    50.8    49.0    48.0    46.2    42.8    43.2    45.4    46.0    44.9    41.8    37.5    34.3    31.2    29.5    26.0    24.1    23.8
Human Resources.................................    28.4    30.5    29.6    30.1    29.8    30.9    32.2    32.6    33.3    36.2    38.5    43.7    46.5    48.6    50.4    52.1    54.8    54.2
Physical Resources..............................     8.7     7.9     8.3     7.2     8.0     9.5    10.0     9.3     9.0     6.5     8.0     8.7     8.5     8.4     9.3    10.7    10.5    10.0
Net Interest....................................     7.5     6.9     6.4     7.0     6.9     7.3     7.0     6.5     6.2     6.9     7.4     7.1     6.7     7.1     8.0     7.0     7.2     7.3
Other Functions.................................     8.4     8.8    11.6    13.0    13.9    14.5    12.6    10.9    10.0     9.9     8.8     7.8     8.2    10.2     9.1     8.3     7.3     8.4
Undistributed Offsetting Receipts...............    -5.2    -4.9    -4.9    -5.2    -4.8    -5.0    -4.9    -4.6    -4.5    -4.3    -4.4    -4.8    -4.2    -5.5    -6.2    -4.1    -3.9    -3.6
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
      Total Federal Outlays.....................     100     100     100     100     100     100     100     100     100     100     100     100     100     100     100     100     100     100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1995.''                                                                                                        


                                                    TABLE 6-H: OUTLAYS BY SUPERFUNCTION, AS PERCENTAGES OF GROSS DOMESTIC PRODUCT, 1960-1977                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   1960    1961    1962    1963    1964    1965    1966    1967    1968    1969    1970    1971    1972    1973    1974    1975    1976    1977 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense................................     9.5     9.6     9.4     9.1     8.8     7.5     7.9     9.0     9.7     8.9     8.3     7.5     6.9     6.0     5.7     5.7     5.3     5.1
Human Resources.................................     5.2     5.8     5.7     5.7     5.6     5.5     5.9     6.5     7.0     7.2     7.6     8.7     9.3     9.4     9.7    11.5    12.1    11.6
Physical Resources..............................     1.6     1.5     1.6     1.4     1.5     1.7     1.8     1.8     1.9     1.3     1.6     1.7     1.7     1.6     1.8     2.3     2.3     2.1
Net Interest....................................     1.4     1.3     1.2     1.3     1.3     1.3     1.3     1.3     1.3     1.4     1.5     1.4     1.3     1.4     1.5     1.5     1.6     1.6
Other Functions.................................     1.5     1.7     2.2     2.5     2.6     2.5     2.3     2.2     2.1     2.0     1.8     1.6     1.6     2.0     1.7     1.8     1.6     1.8
Undistributed Offsetting Receipts...............    -1.0    -0.9    -0.9    -1.0    -0.9    -0.9    -0.9    -0.9    -0.9    -0.9    -0.9    -1.0    -0.8    -1.1    -1.2    -0.9    -0.9    -0.8
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
      Total Federal Outlays.....................    18.3    18.9    19.2    19.0    19.0    17.6    18.3    19.8    21.0    19.8    19.9    20.0    20.1    19.3    19.2    22.0    22.1    21.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: ``Historical Tables: Budget of the United States Government--Fiscal Year 1995.''                                                                                                        

                       Views of Committee Members

    Clause (2)(1)(5) of rule XI requires each committee to 
afford a 3-day opportunity for members of the committee to file 
additional minority, or dissenting views and to include the 
view in its report. The following views were submitted:
            ADDITIONAL VIEWS OF REPRESENTATIVE WAYNE ALLARD

    First, I want to commend Chairman Kasich for his leadership 
on this budget. Once again, the Budget Committee has lead the 
way in downsizing the federal government and returning money 
and power to states, local communities, and families.
    Of course, I would like to do more, but this budget keeps 
us on the path to balance and ensures that Congress will 
continue to make the tough choices necessary for deficit 
reduction.
    I have two recommendations for improvement as this budget 
works its way through the process. First, our welfare reform 
savings are too modest. While we reduce the growth of welfare 
programs by over $50 billion, these programs continue to grow 
and they continue to be subject to excess federal control. I 
recommend that we freeze welfare spending and then block grant 
all funding to the states. This would save the taxpayers far 
more through 2002. It would also permit the states total 
freedom to reform welfare. The states could require work, job 
training and education, they could limit the time on welfare, 
and they could include a cap, or other reforms designed to end 
welfare and move able-bodied recipients from dependency to 
work.
    The states are where the true reforms are occurring with 
welfare. Unfortunately, states that now propose dramatic 
welfare reform must come to the federal government and beg for 
waivers. This is wrong, states should be free to design their 
own reforms.
    The second recommendation that I make is that we use a 
portion of these additional welfare savings to make the 
proposed reduction in the federal gas tax permanent. State and 
federal gas taxes now total over 40 cents a gallon, this is a 
tremendous burden on the middle class and working poor, it also 
hits particularly hard in the high mileage states out West. 
Repealing the 1993 increase would save taxpayers in my state of 
Colorado $70 million a year.
    Working families deserve welfare reform and they deserve 
tax relief. Reform the welfare state and let working families 
keep more of their money.

                                   Wayne Allard. 




                         Additional Views to the
                   Fiscal Year 1997 Budget Resolution
                  Reps. Bill Orton and Charlie Stenholm

    Last year, we joined with our colleagues in the Coalition and with 
other fiscally responsible members of the Democratic party to offer an 
alternative balanced budget proposal that sought to balance the budget 
in a fair and reasonable manner.  When we offered our proposal, we 
stated our belief that it represented the basis for a middle-ground 
compromise that could be supported by both parties.  Throughout the 
debate, we stood firm in our support of the provisions of our budget, 
while both sides in the budget negotiations gradually moved towards the 
numbers in our budget.  The resolution proposed by the majority is a 
further validation of our assertion that the Coalition budget 
represents a common ground where a consensus can be reached.
    We would sincerely like to compliment the majority for its 
willingness in this resolution to moderate the savings proposed in 
previous budgets and move towards the savings levels proposed in the 
Coalition budget. By proposing $100 billion less savings in Medicare 
and $110 Medicaid savings compared to last year's proposal, the 
Majority has addressed many of our concerns about the impact that the 
savings they proposed last year would have had on the health care 
system and to the populations which depend on these programs.  The 
savings in discretionary spending, welfare programs, the earned income 
tax credit and student loans are much lower than the original budget 
proposed by the majority, although the reductions in these programs are 
still higher than the Coalition budget.  While part of the change in 
the savings contained in the budget resolution can be attributed to 
lower CBO estimates of savings as a result of the new baseline and a 
second part by the fact that we are now discussing a six year budget 
instead of a seven year budget, the movement that the Majority has made 
toward the Coalition budget should not be underestimated.  
    The fact that the numbers in this resolution and the budget 
submitted by the President earlier this year move toward the Coalition 
budget compared to their respective prior positions reinforces our 
belief that a bipartisan agreement on a balanced budget plan can and 
should be reached. We have been disappointed by the apparent 
unwillingness of the majority to engage in discussions toward a budget 
agreement.  We encourage both the majority leadership and the 
administration to take advantage of the opportunity presented by the 
movement of both sides and renew the balanced budget negotiations 
immediately.
    Although the majority has made major strides in moderating the 
savings included in their budget, they have not shown as much 
willingness to compromise on the issue of tax cuts.  The resolution 
still contains a net tax cut of $122 billion.  Summary material 
released by the Chairman indicates that he envisions a gross tax cut of 
$176 billion or more.  We continue to believe that the federal 
government should not place additional debt on future generations in 
order to pay for a tax cut today.  As a result of the majority's 
continued insistence on beginning its effort to balance the budget by 
borrowing $122 billion to pay for a tax cut, the majority's resolution 
achieves $137 billion less deficit reduction than the Coalition budget.  
It is because we share the concern of the Chairman and other members of 
the majority about the debt burden we are placing on future generations 
that we oppose cutting taxes before the budget is balanced.
    In addition to our concern about borrowing money to pay for a tax 
cut, we have concerns about many of the policy assumptions in the 
Republican budget.  While we are encouraged that the majority has 
adopted numbers very close to the Coalition budget, a budget is about 
more than just numbers.  The policies assumed in a budget represent a 
statement about the type of government we want and the role of 
government in society.  There are still very real policy differences 
between the Coalition budget and the Republican budget that can not, 
and should not, be ignored.


                        Discretionary Spending

    While continuing to call on the already tapped discretionary side 
of the budget to assist in deficit reduction, the Coalition Budget 
provides $108 billion more budget authority and $78 billion more 
outlays for domestic discretionary spending authority over the next six 
years than the Republican Budget.  This level of funding allows for 
adequate funding for investments in education, training, health care, 
economic development scientific research and other important programs.  
The Coalition budget provides investments for discretionary programs in 
the following areas:

    EDUCATION AND TRAINING. The Coalition Budget provides $38 
    billion more for discretionary education and job training spending 
    over the next six years, allowing adequate funding in such programs 
    as Pell Grants, Chapter 1, Goals 2000, Impact Aid, the National 
    Service Program, and the Corporation for Public Broadcasting (CPB). 
    In contrast, the Republican Budget eliminates Goals 2000, National 
    Service, and requires deep cuts in other education programs. 
    
    HEALTH CARE. The Coalition Budget provides $8.7 billion more for 
    discretionary spending for health research programs, which are run 
    by NIH, HHS, and other health agencies.  The Republican budget 
    makes significant cuts to HHS, and terminates several important 
    rural health programs. 
    
    COMMUNITY DEVELOPMENT. The Coalition Budget provides $10 billion 
    more for discretionary spending for economic development programs. 
    In contrast, the Republican budget eliminates the Department of 
    Commerce, the Economic Development Administration (EDA), and the 
    Appalachian Regional Commission. 
    
    SCIENCE, SPACE, AND TECHNOLOGY. The Coalition Budget provides $4 
    billion more for function 250, which include scientific research, 
    technology, and NASA.  The Republican Budget cuts funding for these 
    investments in science programs. 
    
    ENERGY  The Coalition budget provides $10 billion more than the 
    majority's resolution for energy programs.  The Coalition budget 
    rejects the Republican proposal to phase out funding for research 
    and development in conservation, renewable energy, fossil energy 
    and other programs to reduce our dependance on foreign oil.  Given 
    the current political rhetoric regarding increased gas prices, we 
    have a hard time understanding the decision of the majority to 
    phase out support for these programs. 


                            Welfare Reform

    Although the majority praised the welfare reform proposal of the 
National Governor's Association when it was released, the reality of 
this budget does not match their rhetoric.  The budget resolution 
reported by the Budget Committee explicitly rejects the National 
Governor's Association proposal.  The bipartisan National Governor's 
Association resolution recommended several changes to the vetoed 
welfare reform bill that would have restored over $10 billion for child 
care, contingency funds for states facing economic downturns, bonuses 
to reward states with successful programs, and other important 
programs.  The budget proposed by the majority does not provide funds 
for any of these changes recommended by the governors, returning 
instead to the vetoed welfare reform bill.  The Chairman explicitly 
stated that the budget assumes the provisions of H.R. 4 instead of the 
governor's agreement. The Coalition budget provides funds for real 
welfare reform that contains the resources that the states have said 
are necessary to make welfare reform work.
    The Republican budget rejects the National Governors Association 
proposal for additional child care funds.  CBO estimated that the 
funding assumed in the Republican budget will not be sufficient for 
states to meet the work requirements in the bill. By contrast, the 
Coalition budget provides the funding that CBO says is necessary for 
child care and work programs sufficient to help welfare recipients make 
the transition to work.
    The Republican budget leaves states to bear the burden of increased 
costs during economic downturns, forcing cutbacks in services to the 
most vulnerable in society when they need assistance most.  The 
Coalition budget provides states facing economic downturns with 
additional resources to meet the increased needs during an economic 
downturn.
    The Republican budget would undermine the integrity of the food 
stamp program as a national safety net by placing a cap on food stamp 
benefits and allowing states to convert the program into a block grant.  
The Coalition budget preserves the integrity of the food stamp program.
    Finally, the Coalition budget recognizes that making work pay more 
than work through the Earned Income Tax Credit is critical to the 
success of welfare reform.   The Coalition budget rejects the $20 
billion cuts in the Earned Income Tax Credit contained in the 
Republican budget.  The Coalition budget contains $4.5 billion in 
savings in the EITC from fraud reduction and increased compliance 
recommended by the administration.  However, it does not contain the 
proposals in the majority's budget denying the EITC to childless 
workers and scale back the credit for families with children.  At a 
time when Congress is debating policies to provide workers with a 
livable wage and make work pay more than welfare, a budget that 
requires a $20 billion cut in a program that has proven successful in 
achieving both of these goals does not make sense.


                               Medicaid

    The majority has moderated the Medicaid savings being proposed 
substantially, and we commend them.  The budget proposes $108 billion 
less savings than were proposed in the budget resolution passed last 
year, suggesting that the majority now agrees with the proponents of 
the Coalition budget that the Medicaid savings proposed last year were 
unreasonable.  
    Although the majority has moved dramatically toward the Medicaid 
savings proposed by the Coalition, the policy differences between the 
Republican budget and the Coalition budget are perhaps the greatest in 
the area of Medicaid.  The Republican budget proposes to undermine the 
30 year commitment to the poor, disabled, and seniors through its 
proposed Medicaid reforms.  Their plan eliminates the enforceable 
guarentee of coverage of all populations and eliminates guaranteed 
coverage for poor children between 13 and 18.  It also eliminates a 
national definition of ``disabled''.  It gives states unlimited freedom 
to set the ``amount, duration, and scope'' of benefits and to vary 
services in different parts of the state, as in rural vs. urban areas.  
The Coalition Budget maintains the current enforceable guarantees of 
coverage.  Just as importantly, the Coalition budget preserves the 
guarantee of an adequate benefits package for Medicaid beneficiaries.  
    The Republican plan significantly rolls back the state matching 
requirement for Medicaid.  In fact, the Republican members of the 
Committee explicitly rejected an amendment expressing the sense of 
Congress that states should maintain current levels of funding for 
Medicaid.  Thus, in addition to federal cuts of $72 billion, the 
Republican plan permits states to reduce their Medicaid funding by an 
additional $178 billion.  In contrast, the Coalition Budget maintains 
current matching requirements.  The Coalition budget also retains 
current prohibitions against provider taxes and other financing schemes 
that would be allowed under the majority budget.
    Finally, the Coalition budget assumes a financing mechanism in 
which the federal government fully shares in the changes in program 
costs resulting from population increases.  The Republican budget 
limits the amount of federal funds that are available for states facing 
increased population, leaving states to bear the costs of increased 
caseload resulting from population growth and economic downturns.  At 
the same time, states that experienced lower than projected caseloads 
would not return any of the savings from the caseload reduction to the 
federal government.  The Coalition budget preserves the current 
federal-state partnership in which the federal government fully shares 
with states the burdens of increased caseload and the benefits from 
reduced caseload.


                               Medicare

    The moderation of the savings from $270 billion in Medicare 
proposed by the Majority last year is almost as dramatic as the changes 
in the proposed Medicaid savings.  While the $168 billion in savings 
over six years contained in the Majority's resolution is equal to the 
savings that the Coalition budget achieved over seven years under the 
old baseline, when the estimates from the Coalition budget are adjusted 
to reflect the new baseline and the loss of a year, the savings are 
reduced to $146.7 billion.  In other words, when the two budgets are 
related on comparable terms, the Republican budget requires over $21 
billion more in Medicare savings than was included in the Coalition 
budget. 
    The similarity in the aggregate Medicare savings masks differences 
in policies assumed in achieving the savings.  The Coalition budget 
assumes savings to strengthen the Medicare Trust Fund not contained in 
the majority budget by applying the Hospital Insurance tax to state and 
local workers just as it is currently applied to all other workers The 
Coalition budget also achieves much greater savings from means-testing 
the Medicare Part B premium for upper income beneficiaries by using 
existing methods to collect the premiums instead of establishing a new 
bureaucracy within the Department of Health and Human Services as the 
majority would do.  As a result of these differences, the Republican 
budget requires $40 billion more savings from providers than was 
contained in the Coalition budget. In fact, members of the majority 
acknowledged that this resolution assumes essentially the same provider 
cuts that were contained in the reconciliation bill that was vetoed 
last fall.
    In addition to the greater reduction in provider payments in the 
Republican budget, other major policy differences remain between it and 
the Coalition budget.  The Republican Budget provided no funds for 
additional preventive care.  The Coalition Budget provides $2.1 billion 
in funding for mammographies, pap smears, and diabetes and prostate 
cancer screening. 
    Both the Coalition budget and the majority's budget provide 
Medicare beneficiaries with increased choice of private options.  
However, the Coalition budget is much more aggressive in ensuring that 
seniors in rural areas and other underserved areas can share in the 
increased choice by correcting regional disparities in payments to 
private plans under Medicare.  In addition, the Coalition budget 
protects seniors from managed care plans charging Medicare 
beneficiaries additional amounts beyond the Part B premium.  The 
majority budget allows managed care companies to bill seniors for costs 
above their per-person payment.  None of these additional payments 
would go where they belong -- back into the Medicare trust fund.
    The majority's resolution assumes aggressive implementation of 
Medical Savings Account's despite the fact that many experts have 
criticized MSAs as primarily benefitting healthier, wealthier seniors 
at the expense of older, sicker, poorer seniors.  CBO has estimated 
that the MSAs in the majority budget would have a cost to the Medicare 
trust fund of $4.6 billion.  Given the contradictory claims, the 
Coalition Budget prudently authorizes MSA's on a limited demonstration 
basis only.


                          Budget Enforcement

    Finally, the Coalition budget contains a sense of the Congress 
provision endorsing the strong deficit enforcement provisions that were 
included in the Coalition reconciliation substitute last year. These 
provisions locked in the deficit reduction from the Coalition budget 
through hard deficit targets enforced by sequestration.  If the deficit 
fell off the glide path toward balance and exceeded the deficit target 
for any year, Congress and the President would be required to take 
action to put the deficit back on the glide path toward balance.  If 
Congress and the President failed to take corrective action, there 
would be a sequestration of all programs to eliminate the excess.  The 
reconciliation bill passed by the majority last year did not contain an 
enforcement mechanism of this type, and the resolution is silent on 
this point.  We hope that the majority will underscore its commitment 
to achieving a balanced budget in fact by agreeing to budget 
enforcement provisions included in the Coalition budget.


                              Conclusion

    We will offer the Coalition budget as an alternative again this 
year.  The Coalition budget continues to offer the best roadmap for a 
balanced budget agreement.  The fact that both sides are moving toward 
the Coalition budget gives us optimism that an agreement can be 
reached.  We should not let this historic opportunity to reach an 
agreement to balance the budget pass us by.



                Summary of Budget Resolution Substitute
                             May 14, 1996


Deficit Recuction

    Achieves $729.8 billion in deficit reduction over six years -- $138 
    billion more than the Republican budget resolution.  Reaches a 
    budget surplus of $4.2 billion in 2002.  Provides for a steady 
    deficit reduction glidepath.

Medicare

    Calls for $146.4 billion in Medicare savings over the next six 
    years.  Assumes the Medicare policies in the Coalition 
    reconcilation bill, updated to reflect an effective date of October 
    1, 1996 and scored under the April CBO baseline.

Medicaid

    Calls for $70 billion over seven years through limits on federal 
    spending and increased targeting of disproportionate share payments 
    while maintaining the national guarantee of coverage.  Assumes 
    growth rates from Coalition budget, with the savings target updated 
    to reflect the changes in the April CBO baseline.

Welfare Reform

    Provides for $42 billion in savings in welfare programs, which is 
    consistent with the welfare reform provisions in the Coalition 
    reconcilation substitute modified to incorporate the food stamp and 
    child nutrition savings in the administration budget.

    Provides for an additional $4.6 billion in savings by assuming 
    adoption of the administration's proposals regarding EITC 
    compliance.

Discretionary spending

    Sets total discretionary spending at the levels of the spending 
    caps in the Coalition reconciliation bill, a $254.6 billion 
    reduction from the April CBO capped baseline.

    Allows for increases of $45 billion for education and training; 
    $8.7 billion for discretionary health programs; $12.5 for community 
    and economic development; and $14 billion for energy and scientific 
    research.

Consumer Price Index

    Assumes $50.8 billion in savings from a legislated change in the 
    CPI to achieve a 0.5% correction in the CPI calculations.

Spectrum Auction

    Assumes $19.2 billion in savings from spectrum auctions. Does not 
    assume auction of analog spectrum.

Agriculture

    Spending levels reflect enactment of Farm Bill. Does not call for 
    any additional legislation (but does not prohibit deficit neutral 
    changes in agriculture policy).

Veterans

    Provides for $3.2 billion in savings over seven years ($1 billion 
    less than the reconciliation conference report). Does not assume 
    extension of copayments for prescription drugs.

Housing

    Provides for $3 billion in savings in housing programs by assuming 
    provisions from Coalition reconcilation bill.

User fees

    Provides for $2 billion in savings by assuming enactment of all 
    user fees in the Coalition reconciliation bill except the extension 
    of railroad user fees.

Expiring excise taxes

    Assumes extension of excise taxes which expired at the end of last 
    year (superfund excise tax, LUST and airline ticket tax).

Miscellaneous

    Provides for $3.3 billion in savings by assuming enactment of 
    provisions in the Coalition reconciliation bill selling U.S. 
    Enrichment Corporation, privatizing helium reserves, denying 
    unemployment for voluntary military separation, and other 
    miscellaneous items.  Does not include provisions in the Coalition 
    reconciliation bill requiring prefunding of postal health benefits 
    or extending railroad safety fees.



                    ADDITIONAL DISSENTING VIEWS OF
                      HON. LOUISE M. SLAUGHTER

    Since 1990, overall domestic discretionary spending has been reduced far greater than any other area in the budget.  The difficult choices made in 1990 and 1993 have successfully controlled the growth in discretionary spending.  Domestic discretionary spending which allows the government to meet basic responsibilities like education, environmental protection, criminal justice, biomedical research, nutritional assistance, boarder patrol and transportation is seriously jeopardized by the levels proposed in the Republican Budget Resolution. Further draconian reductions in domestic discretionary spending is simply not the answer.  OBRA 1990 and OBRA 1993 restored integrity in the budget process and the caps guaranteed real discipline.  We should not be using domestic discretionary cuts to provide unnecessary tax cuts.  We should stay the course and meet the caps.  The results of OBRA 1990 and OBRA 1993 have meant a declining deficit for four straight years.

    It is claimed that domestic discretionary will be frozen at FY96 levels, however, it appears that the proposal levels of budget authority falls short by $2 billion and outlays are close to $5 billion below a freeze. Non-defense budget authority is $228 billion in 1997, about $3 billion below the 1996 level as annualized after the FY96 Omnibus Appropriation Bill and $20 billion below the President's request.  Yet defense spending is increased by $12 billion over the President's proposed FY97 Budget.  Through 2002, non-defense discretionary spending is cut $77 billion below a freeze at 1996 levels.  This is deeply troubling and certainly foolish. Most domestic discretionary programs represent investment as opposed to consumption spending.  Cutting investments in education, medical research, civilian R&D, transportation, environmental protection, public health and safety as well as criminal justice will do little to maintain our global, competitive advantage and maintain our standard of living.

    What kind of impact does a $3 billion cut have on education, WIC, and Head Start?  Looking at the levels provided for domestic discretionary spending in this budget it is simply unacceptable to argue that there will only be a marginal impact.  It is estimated that Function 500 will be reduced, in real dollars, by $20 billion over the next 6 years.  How many more children will be denied WIC, Head start, hot lunch?  How many cancer research projects will go unfunded?  The Republicans argue that they are only slowing the growth in many of these programs, but the bottom line is that there will be significant reductions in key domestic investment programs.  There is simply no way they can claim a $108 billion in savings over three years and not classify this as a cut or in some cases an assault.  Our economic security will be seriously jeopardized if we are forced to walk away from making real investments in social infrastructure programs.

    I accept the argument that in some programs or Functions we may be spending more in today's dollars, but the amounts allocated each year cannot meet the necessary growth in these programs and the population is served by these programs.  Do we honestly think that the states will fill the gap?  A recent review of State budgets shows that growth in investments for education, infrastructure, job training and child nutrition have not even kept pace with inflation.  The result will be a rapid decline in our standard of living, which has been the envy of the World.

    To give an example of the benefits of real investment in domestic discretionary spending, for the first time ever, total deaths from breast cancer have declined slightly. This means that fewer women lost the fight to breast cancer. Was their standard of living improved?  What about those of their families?  This decline can be directly attributed to an increase in the federal commitment to breast cancer research and educational outreach.  Can we honestly guarantee that a cut of $77 billion below a freeze will not force the Appropriations committee to make reductions in funding for the National Institutes of Health (NIH)?

    States, the private sector, who will step in and take responsibility for educating our children, feeding our seniors, and children?  Who will fill the void and fund critical cancer and AIDS research?

    These cuts simply put, go too far.  We can have a balanced budget without turning our backs on the most vulnerable in society; the sick, the poor, the young, the old and the disabled.


                        MINORITY VIEWS

                    The Republican Budget
                  ``Deja Vu All Over Again''

    Over the last year the new Republican majority has learned a great 
deal about the federal budget and it has made real improvements upon 
the proposals that were before us in the Contract for America budget of 
a year ago.  The mean-spirited attacks on school lunch and child 
nutrition programs have been dropped.  The ignorant and misguided 
attacks on student aid and Head Start have been dropped.  The draconian 
cuts proposed for Medicare and Medicaid have been scaled back 
considerably and the outrageous rip-offs that comprised most of the 
Contract for America's tax package have been somewhat reduced.  
Nevertheless, the policy proposals contained in this year's budget 
remain dangerously radical and out of touch with the American populace 
and should be rejected by the House.

    While the Medicare cuts have been scaled back from $288 billion 
over seven years to $167 billion over six years, they are still too 
deep.  The Medicaid cuts have been scaled back from $186 billion over 
seven years to $72 billion over six years.  Unfortunately, the plan 
allows states to reduce their contribution to this program so deeply 
that more than $250 billion may come out of these services.  Clearly, that loss of resources will devastate health care for many very 
vulnerable people.  And while the tax package has been scaled back, 
when you are in the process of trying to eliminate a large deficit it 
makes no sense to begin by ``digging the hole deeper''.

    There is no doubt that the federal government can be improved.  The 
American people want and deserve quality services at a reasonable 
price.  And they want the government to ``live within its means''.  It is clear that spending in certain areas can be reduced and programs can 
be reformed, particularly in the area of health care.  But this budget 
goes too far.

    President Clinton and the Democratically-controlled 103rd Congress 
made a strong start on balancing the federal budget in 1993 and federal 
deficits are now down for the fourth year in a row.  This year the 
Republican-controlled Congress and President Clinton added to that 
package by making additional cuts in discretionary spending.  In fact, 
when this fiscal year is over the federal deficit will have been cut in 
half since the beginning of the Clinton presidency.  We should continue 
on the path to balance with a bi-partisan budget that rejects the 
radical policies contained in this budget and moves forward with a plan 
that truly reflects the values of mainstream America.


                               SUMMARY

    Clearly, federal health care programs need reform.  Both Medicare 
and Medicaid are growing at rates of 10 percent a year as far as the 
eye can see.  That is not sustainable and must be addressed.  But this 
budget, while it has become more realistic on the level of federal 
spending needed for these programs, remains mired in policies that are 
too radical and too risky.


Medicare

    The Republican proposal for Medicare cuts funding $167 billion over 
the next six years.  It continues to rely on the untested and 
potentially dangerous Medical Savings Accounts (MSA's) as its 
centerpiece.  The proposal would set up a system whereby the healthiest 
and wealthiest seniors could leave the Medicare system and many of the 
doctors who treat them could refuse to continue treating other seniors 
who depend on Medicare.  This proposal could truly end universal health 
coverage for the elderly, effectively reversing 30 years of progress.  

    The MSA proposal has received few public hearings and very little 
analysis and is fraught with risk.  As one respected columnist, Robert 
J. Samuelson, recently said in the Washington Post, ``we should not 
unleash a health care upheaval simply as an afterthought.''  Clearly, 
this proposal could cause serious harm to America's senior citizen 
population and goes far beyond any change the electorate wants.


Medicaid

    The Republican plan for Medicaid is even more extreme and has the 
potential to cause as much or more harm than the Medicare package.  
Medicaid is the basic program whereby the federal government helps 
states provide health care for the poorest and most vulnerable people 
in our nation.  This budget proposes to cut federal Medicaid funding by 
$72 billion which is rather severe in itself.  But to make matters even 
worse, the Republican proposal allows states to drain large amounts of 
money out of the system by significantly reducing the states 
``maintenance of effort'' requirements.  At the same time, they allow a 
return to the state financing gimmicks of the past that were banned in 
1992 at the urging of the Bush Administration. 

    It would send a loosely defined block grant back to the states 
without the current guarantees of care for low-income children, 
pregnant women, disabled people, or senior citizens.  By relying 
heavily on the Republican governors for the design of their new 
Medicaid package, the Republican congress has proposed a program that 
allows states to reduce their financial commitment to the program 
without any guarantee that poor people and seniors will receive the 
health care taxpayers are paying for.  Clearly, the Medicaid program 
could benefit from large-scale regulatory reform, but this is just 
plain ridiculous.  


Welfare Reform

    There is almost universal agreement that the present welfare system 
needs reform.  Most people agree that any serious effort at welfare 
reform must be designed to help move people who are able to work off 
the welfare rolls and onto the work rolls.  

    This budget incorporates much of the Republican welfare package 
passed in the House last year.  The majority has shown some progress 
and the mean-spirited cuts in school lunch and child nutrition programs 
have been deleted.  But again the cuts of $53 billion when combined 
with the EITC cuts of $20 billion over the next six years remain too 
steep, and the structural changes proposed contain serious flaws. 

    The package eliminates all individual guarantees for assistance to 
needy families and replaces them with a series of block grants to 
states.  The states are then allowed to make deep cuts in their share 
of funding for welfare benefits, thereby producing a double hit on the 
most vulnerable among us.  While the budget purports to help people 
move from ``welfare to work'', it simply does not contain the resources 
needed to sustain a serious effort to encourage work.  And its grants 
of widescale flexibility for states when combined with its reductions 
in state maintenance of effort will most certainly exacerbate pressures 
among states to ``race to the bottom''.


Discretionary Spending

    In addition to its problems in the areas of Medicare, Medicaid, and 
welfare reform, this budget contains cuts in discretionary spending 
which are seriously backloaded and deeply destructive of the federal 
government's ability to meet its responsibilities.  Areas such as 
energy research and development, transportation, agriculture, rural 
health care, and housing are seriously short-changed in this budget.  
By the year 2002, the purchasing power of overall nondefense 
discretionary appropriations will be reduced by 26 percent below this 
year's level if this budget is enacted.   


                                Taxes

    The Republican budget starts with the premise that we can balance 
the budget and cut taxes at the same time.  Yet, all our historical 
experience runs counter to that premise.  And, in fact, we are still 
suffering from the last time that tactic was tried in 1981.

    While the tax package in this budget is smaller than last year's 
and somewhat less backloaded, it continues to add to the national debt 
by borrowing money for tax breaks which disproportionately benefit the 
affluent.  And its proposal to cut $20 billion from the Earned Income 
Credit for low-income working people while providing enriched capital 
gains benefits for people at the top seems particularly mean-spirited.  
When we are making a big push to get people off welfare and into the 
workforce, isn't it counterproductive to punish people who have stayed 
off welfare and kept working?  

    Clearly, the tax package in this budget does not reflect either the 
fundamental sense of fairness of the American people or their basic 
common sense.  At a time when we are trying to balance the budget, we 
should not be ``digging the hole deeper'' with new tax breaks we cannot 
afford.


                              Conclusion

    We should make every effort to get the federal budget into balance 
in a reasonable time.  But the manner by which balance is achieved is 
just as important as the act of balancing itself.  A budget should be 
fair to all Americans, it should spread the burden of sacrifices 
required to reach balance evenly throughout the populace, it should not 
destroy the government's ability to provide basic government services, 
and it should be sustainable under stable economic conditions.  This 
budget fails to meet those standards.  

    There are two attachments to these views.  The first is an 
editorial from the Minneapolis Star Tribune which makes several salient 
points about the Majority's budget resolution.  The second is a 
detailed analysis of this budget prepared by the Democratic staff of 
the House Budget Committee.

_____________________    _____________________    
Martin Olav Sabo         Charles W. Stenholm      
_____________________    _____________________    
Carrie P. Meek           Lynn C. Woolsey          
_____________________    _____________________    
William Orton            Bennie G. Thompson       
_____________________    _____________________    
John W. Olver            Sander M. Levin          
_____________________    _____________________    
Patsy T. Mink            William J. Coyne         
_____________________    _____________________    
Louise M. Slaughter      Glen Browder             
_____________________    _____________________    
Alan Mollohan            Lynn N. Rivers           
_____________________    _____________________    
Earl Pomeroy             Lucille Roybal-Allard    
_____________________    _____________________    
Jerry F. Costello                                 









                          TABLE OF CONTENTS

        I.  ENTITLEMENTS.................................. 1

            Medicare...................................... 3
            Medicaid...................................... 4
            Welfare Reform................................ 5
            Banking & Housing Programs.................... 7
            Civilian & Military Retirement................ 8
            Veterans Benefits & Services.................. 9
            Student Loans.................................10
            Spectrum Auctions.............................10
            Asset Sales...................................10
            Other.........................................11

       II.  DISCRETIONARY PROGRAMS........................13

            National Defense..............................16
            International Affairs.........................16
            General Science, Space & Technology...........17
            Energy........................................17
            Natural Resources & Environment...............18
            Agriculture...................................18
            Commerce & Housing Credit.....................19
            Transportation................................20
            Community & Regional Development..............21
            Education, Training & Social Services.........22
            Health........................................23
            Income Security...............................24
            Veterans Benefits & Services..................25
            Administration of Justice.....................25
            General Government............................26

      III.  REVENUE PROVISIONS............................28



                        I. ENTITLEMENT PROGRAMS

    In most respects, the 1997 budget resolution is a continuation of 
the policies that the Republican majority developed last year and that 
were vetoed by the President.  There are some areas where the 
Republicans have backed off their earlier policies:  The current budget 
no longer includes deep cuts in the school lunch program, elimination 
of the in-school interest subsidy for the student loan program, or 
plans to raise Medicare Part B premiums to 31.5 percent.  But, in other 
areas, the majority's philosophies remain clear:  For instance, the new 
budget continues to assume that numerous entitlement programs will 
become block grants, including Medicaid and AFDC, and it calls for 
optional block grants for food stamps and school lunches. 

    The Republicans have claimed credit for moderating the size of 
their proposed reductions in entitlement programs.  Although the amount 
of the multi-year savings has shrunk in most cases, this does not 
always reflect a commensurate moderation of the policies producing 
these savings.  

    In discussions that occurred during the mark-up of the 1997 budget 
resolution, Republican members of the Budget Committee made it clear 
that many of the policies in the new budget are identical to those 
included in last year's vetoed reconciliation bill (H.R. 2491).  For 
example, the Medicare policies were described as ``essentially the 
same'' as in the vetoed bill, with the exception of the Part B premium, 
which the Republicans are now proposing to maintain at 25 percent 
rather than increase to 31.5 percent.   Similarly, the welfare savings 
in the budget resolution reflect the same policies as H.R. 4, which was 
vetoed by the President. 


         Why do the Savings Drop if the Policies are the Same?

    In some cases, the Republican savings estimates have shrunk while 
the policies remain much the same because the implementation of the 
policy has been delayed by one year, and the multi-year savings now 
cover only six years rather than seven years.  A one-year delay can 
mean that the policy is the same, but its effects simply come one year 
later.  Or the policies are phased in more rapidly so that the same 
savings are achieved by 2002.  In either case, the six-year savings 
will be less than the original seven-year savings.

In addition, the Congressional Budget Office (CBO) has changed its 
estimates of the cost of maintaining several programs under current 
law.  For instance, CBO now estimates that Medicare, Medicaid, and some 
of the welfare-related programs will no longer grow as rapidly as it 
had projected a year ago.  As a result, some of the policies intended 
to reduce the growth in these programs are no longer ``scored'' as 
producing as much savings.

    For instance, the vetoed welfare bill (H.R. 4) was originally 
estimated to save $68 billion between 1996 and 2002 (excluding indirect 
effects on Medicaid).  But now H.R. 4 is estimated to save $53 billion 
between 1997 and 2002.   The policies are the same, only the enactment 
date has been delayed and CBO has changed its projections of the cost 
of the underlying programs.


                House Republican 1997 Budget Resolution
                         Entitlement Changes
             (Savings from baseline in billions of dollars)
                       1997  1998  1999  2000  2001   2002  6 yrs

Medicare*              -6.8 -11.3 -21.0 -29.1 -39.3  -50.6 -158.1

Medicaid               -2.0  -4.6  -8.4 -12.6 -18.0  -26.4  -72.0
       
Welfare reform         -1.5  -6.9  -9.2 -10.7 -11.5  -13.2  -53.0
       
EITC                   -3.1  -3.2  -3.2  -3.4  -3.5   -3.7  -20.0
       
Banking and housing 
  programs             -3.3  -0.0  -0.3  -0.4  -0.3   -1.0   -5.3
       
Civilian and military 
   retirement          -1.2  -1.5  -1.7  -1.7  -1.7   -1.7   -9.4
       
Veterans benefits and 
  services             -0.1  -0.1  -1.1  -1.3  -1.3   -1.4   -5.3
       
Student loans          -0.8  -0.3  -0.6  -0.8  -0.8   -0.9   -4.2
       
Spectrum auctions        na  -1.4  -2.6  -4.4  -5.2   -5.6  -19.2
       
Asset sales            -1.6  -0.4  -0.2  -0.1   0.2   -0.5   -2.7
       
Other                  -1.0  -1.3  -1.5  -1.3  -1.1   -1.0   -7.2
                       ----- ----- ----- ----- ----- ----- ------
  TOTAL CHANGES       -21.4 -31.1 -49.9 -65.6 -82.6 -105.9 -356.4

*Includes spending increases totaling $10 billion over six years for 
Graduate Medical Education.  Excluding this spending increase, Medicare 
program cuts total $168 billion.



                                Medicare

    The 1997 Republican budget resolution includes Medicare cuts of 
$168 billion over six years, spending of $10 billion on graduate 
medical education, and massive restructuring of the Medicare program.  
The overall cuts are significantly lower than those in the vetoed 
reconciliation bill ($226 billion).  These lower numbers do not 
necessarily reflect a great change in the principles of the underlying 
proposal.  One reason the cuts are lower is that the new plan covers a 
six-year time frame versus the seven-year one under last year's vetoed 
bill.  Most of the policies embodied in the budget are essentially the 
same as those put forth by the Republicans last year, with the 
exception of maintaining the Part B premium at 25 percent.


 Cuts -- Spending is cut by $168 billion over the next six 
         years.  This cut is similar to the first six years (1996-2001) 
         of the Medicare cut in last year's vetoed bill.  For instance, 
         in this year's budget, the spending cut in the sixth year, 
         2002, is $50.6 billion.  In last year's bill, the spending cut 
         in the sixth year was $50.0 billion.

           -- Source of Cuts -- The cuts proposed under this year's 
              Republican resolution are basically the same types of 
              cuts proposed last year.  The bulk of the reductions come 
              from cuts in the reimbursement rates paid to various 
              providers (hospitals, doctors, durable medical 
              equipment).  Other spending reductions come from 
              beneficiaries shifting to cheaper types of medical care 
              plans offered under the proposal.

              Further savings come from the premiums paid by 
              beneficiaries.  Like last year's vetoed bill, this year's 
              Republican resolution calls for income-relating the Part 
              B premium for individuals with incomes above $75,000 and 
              couples with incomes above $125,000.  However, unlike 
              last year's bill, the resolution maintains beneficiaries' 
              base premiums at 25 percent of program costs instead of 
              increasing them to 31.5 percent.

 Restructuring Medicare -- The Republican budget continues to 
         call for tremendous restructuring of the current Medicare 
         program.  Great emphasis is placed on repealing regulatory 
         standards, expanding the types of providers who may 
         participate in Medicare, creating incentives for seniors to 
         participate in managed care plans or a medical savings account 
         option, and repealing a prohibition against charging patients 
         for the amount by which a physician's fee exceeds Medicare's 
         established reimbursement rates (balance billing in managed 
         care options).  These policies were also embodied in last 
         year's vetoed Medicare plan.

                               Medicaid

    The 1997 Republican budget resolution assumes a massive 
restructuring of the Medicaid program, and a cut of $72 billion in 
federal spending for Medicaid over six years.  The program becomes a 
modified block grant instead of an individual entitlement program.  The 
states are given vast flexibility in determining the duration and scope 
of services and the eligibility of certain groups. States may lower 
their contributions to the program without losing federal resources.  
The Republican plan is based on the principles outlined in the February 
6, 1996 plan put forward by the National Governors Association.  While 
the cuts are substantially lower than those in the vetoed conference 
report ($133 billion), many structural changes envisioned in the vetoed 
plan are embraced in the 1997 Republican budget.

 Cuts -- Federal spending is cut by $72 billion over six years. 
         Cuts are achieved by limiting growth to 7.4 percent in 1997, 
         declining to 4.9 percent in 2002. 

 Distribution of Funds -- The allocation formula will be based 
         on factors such as number of people in poverty, caseloads, 
         cost of service and inflation.  The base allocation is blended 
         with a ``rainy day fund'' which is supposed to protect the 
         states from unanticipated increases in their Medicaid 
         expenditures. 

 Eligibility Terminations -- The following groups are at risk of 
         losing Medicaid coverage under the Republican budget: 

         -- Poor Children -- The plan eliminates the current 
            requirement to provide health care to children aged 13-18 
            living in poverty. 

         -- Disabled Persons -- Federal disability standards are 
            eliminated, leaving states free to establish their own 
            disability definitions. Disabled persons now receiving 
            Medicaid services may not be eligible under the new rules. 

         -- Low-Income Medicare Beneficiaries -- The Republican plan 
            does not guarantee that all low-income seniors who cannot 
            afford Medicare will have their premiums covered under 
            Medicaid. 

 State Match Requirements Reduced -- Under the Republican plan, 
         states may reduce state funding without losing federal 
         resources.  This feature combined with federal cuts may 
         translate into a loss of low-income health care assistance 
         that is much larger than the federal cut of $72 billion over 
         six years. 

 Repeal of Current Law Limiting ``Gaming'' of System -- The 
         Republican budget repeals current law which prohibits states 
         from using creative financing mechanisms to qualify for 
         additional federal Medicaid dollars without expending state 
         resources on health care for low-income people.  The 
         elimination of current prohibitions on these schemes gives an 
         incentive to states to reduce their actual health care 
         expenditures and still receive federal resources without 
         penalty. 


                            Welfare Reform

 Savings from Welfare Reform -- The House Republican budget 
         resolution calls for a $53 billion cut in welfare-related 
         spending over six years ($73 billion if cuts in the Earned 
         Income Tax Credit (EITC) are included).  (See the revenue 
         section for details of the Republican EITC proposal.)  The 
         budget assumes the policies of the H.R. 4  conference 
         agreement, which was vetoed by the President, not the policies 
         of the National Governors' Association. 

 Cash Assistance & Time-Limited Benefits -- The Republican 
         resolution assumes the elimination of the individual 
         entitlement to Aid to Families with Dependent Children (AFDC) 
         and assumes that AFDC is replaced with a block grant 
         (Temporary Assistance for Needy Families -- TANF) to the 
         states.  Under TANF, eligibility for cash benefits is limited 
         to five years. 

 State Maintenance of Effort & Transferability -- The 
         Republican resolution assumes that states only need to 
         maintain state funding for TANF block grant activities from 
         their own funds at a level equal to 75 percent of the amount 
         they spent in 1994 for similar services.  Moreover, the 
         resolution assumes that up to 30 percent of federal funds 
         received under the TANF block grant may be transferred by 
         states to the Child Care and Development Block Grant (CCDBG), 
         Child Protection Block Grant (CPBG), and the Social Services 
         Block Grant (Title XX). 

 Contingency Fund --The Republican resolution assumes the 
         establishment of a $1 billion contingency fund to help states 
         in the event of an economic downturn. 

 Welfare to Work -- The Republican resolution assumes the 
         elimination of the Job Opportunities and Basic Skills (JOBS) 
         program, and assumes that work-related programs are folded 
         into the TANF block grant to the states.  TANF recipients 
         cannot receive cash benefits for more than 24 months (or less, 
         at the option of the state) without participating in 
         work-related activities.  In the event that parents fail to 
         find work and lose cash benefits, there is no protection 
         provided for their children.  States must achieve a 50 percent 
         work participation rate by 2002. 

 Performance Penalty -- The Republican resolution assumes that 
         a state's TANF block grant is reduced by up to five percentage 
         points if the state fails to meet the work participation rate. 

 Child Care --The Republican resolution assumes the elimination 
         of the current entitlement to child care services for AFDC 
         recipients, and assumes that the entitlement is folded into 
         the TANF block grant.  States are expected to integrate these 
         funds into programs established by the state under the 
         existing Child Care and Development Block Grant (CCDBG). 

 Child Protection -- The Republican resolution assumes that the 
         entitlement for foster care maintenance and adoption 
         assistance payments is maintained as in current law.  However, 
         the resolution also assumes the creation of two new block 
         grants.  The Child Protection Block Grant (CPBG) replaces 
         family preservation and support services, as well as the 
         current law entitlements for foster care administrative and 
         training expenses, adoption assistance administrative and 
         training expenses, and independent living services.  The Child 
         and Family Services Block Grant (CFSBG) replaces the Child 
         Abuse Prevention and Treatment Act (CAPTA) and several related 
         smaller programs. 

 Family Cap -- The Republican resolution assumes that states 
         must deny cash assistance to a child born to a family while 
         the family is receiving cash assistance.  However, this 
         prohibition does not apply to circumstances in which the child 
         is the product of rape or incest, or if a state's legislature 
         passes a measure to specifically ``opt out'' of the 
         prohibition. 

 Supplemental Security Income (SSI) -- The Republican 
         resolution assumes a more strict definition of disability for 
         children, assumes that individualized functional assessments 
         (IFAs) for children are discontinued, and assumes more 
         frequent continuing disability reviews (CDRs) for children. 
         The resolution also assumes the creation of a two-tiered 
         system of benefits for children.  Eligible children who 
         require personal care assistance and who, without such 
         assistance, would require specialized care outside the home 
         receive 100 percent of the federal SSI benefit.  However, 
         children with disabilities who do not meet this personal care 
         assistance test receive 75 percent of the SSI benefit amount. 

 Food Stamps -- The Republican resolution assumes new caps on 
         annual program spending.  The resolution also assumes that 
         states have the option of receiving food stamp funds in a 
         block grant.  Moreover, it assumes states can use most of the 
         new rules and procedures for TANF block grant benefits to 
         determine food stamp eligibility for cash assistance 
         recipients, allowing states to shift costs to the federal 
         government.  The resolution further assumes that the current 
         $247/month cap on the deduction for excessive shelter costs is 
         maintained (this cap is scheduled to expire on January 1, 
         1997). 

 Child Nutrition -- The Republican resolution assumes that up 
         to seven states can receive a block grant instead of receiving 
         funds under the current School Lunch program. 

 Legal and Illegal Aliens -- The Republican resolution assumes 
         that most federal, state, and local benefits (including School 
         Lunch) are denied to illegal aliens.  The resolution also 
         assumes that SSI and food stamps are denied to legal aliens 
         until they become citizens.  Furthermore, the resolution 
         assumes that most federal means-tested public benefits are 
         denied to legal aliens (who arrive after enactment) for a 
         period of five years.  It also assumes the expansion of 
         mandatory deeming to many more federal means-tested programs 
         than under current law.  The deeming holds until an alien 
         becomes a citizen or has worked 40 calendar quarters without 
         receiving public assistance. 


                     Banking and Housing Programs

 Housing -- The budget resolution assumes legislation similar 
         to the President's ``FHA portfolio reengineering'' proposal to 
         restructure FHA debt and buy down mortgages to reflect market 
         prices.  The proposal is limited to HUD assisted multifamily 
         housing with project-based rental assistance.  Even though the 
         proposal costs $383 million in 1997, it is intended to prevent 
         future FHA costs and lower section 8 renewal costs.  The 
         budget also saves $80 million in 1997 from changes in the FHA 
         multifamily property disposition program. 

         The budget resolution assumes three provisions that were in 
         last year's vetoed reconciliation bill and included in the 
         President's 1997 budget request.  The first provision reforms 
         the FHA single-family assignment program, giving HUD more 
         flexibility in working with lenders and borrowers to prevent 
         default on FHA mortgages, saving $872 million over six years.  
         It applies only to mortgages originated after October 1, 1996 
         that are projected to default, because legislation dealing 
         with earlier loans has already been enacted. 

         Two other provisions reduce annual rent adjustments for 
         Section 8 units.  The first provision reduces by one 
         percentage point the annual rent adjustments for units in 
         which there is no tenant turnover (-$2.2 billion).  The second 
         restricts the adjustments to only that portion of the rent 
         that covers operating costs, and not debt service.  This 
         restriction applies only to project-based Section 8 units with 
         rents above the fair market rent (-$684 million). 

 BIF-SAIF -- The budget resolution assumes $800 million in 
         savings over six years from legislation dealing with the 
         Savings Association Insurance Fund (SAIF) and Banking 
         Insurance Fund (BIF).  The proposal is similar to one included 
         in the President's 1997 budget request and in last year's 
         vetoed reconciliation bill.  The savings result from 
         provisions that do the following:  impose a one-time special 
         assessment on thrifts to recapitalize SAIF bringing it up to 
         the designated 1.25 percent reserve ratio; allow certain banks 
         including most ``Oakar banks'' (which are banks that purchased 
         thrift deposits during the savings and loans crises and pay 
         SAIF premiums) to receive a 20 percent reduction in the 
         special assessment; require banks to contribute pro rata to 
         FICO thrift debt payments; require SAIF premiums to be no less 
         than BIF premiums until January, 1, 1998; and merge the 
         insurance funds for thrifts and banks on January 1, 1998, 
         unless a federally insured savings association is still in 
         existence. 

 Reduce Flood Insurance Subsidies -- The budget reduces the 
         subsidy by 50 percent, raising $1.1 billion over six years.  
         Under current law, the National Flood Insurance program offers 
         insurance at subsidized rates for buildings constructed before 
         January 1, 1975, or before the completion of a participating 
         community's ``Flood Insurance Rate Map'' (FIRM).  Coverage in 
         the subsidized program is currently priced at about one-third 
         of its actuarial value.  Owners of post-FIRM construction pay 
         actuarial rates for their insurance. 


                    Civilian and Military Retirement

    In 1997, the Republican plan proposes reforms in the federal 
retirement system, some of which were included in the vetoed 
reconciliation bill and in the President's 1997 budget.  The 1997 
budget resolution raises employee and agency contributions to the 
federal retirement systems and reduces future pensions for Members of 
Congress and congressional staff.  It also continues the current three-
month COLA delay for each year from 1997 though 2002 for both civilian 
and military retirees.  

 Civilian and Military COLA Delay -- The Republican budget 
         resolution proposes to continue the current three-month COLA 
         delay for civil service retirees in each year from 1997 
         through 2002.  This saves $2.1 billion over six years.  The 
         budget also proposes to conform military retirement COLAs to 
         the same as that of civilian retirees to save $1.1 billion 
         over six years. 

 Members of Congress and Congressional Staff -- The Republican 
         budget proposes to conform future retirement benefits for 
         Members of Congress and congressional staff to the accrual 
         rate of other federal employees to save $9 million over six 
         years. 

 Employee Contributions -- The Republican budget proposes to 
         increase employee payroll contributions to the Civil Service 
         Retirement System (CSRS) and the Federal Employees Retirement 
         System (FERS) for all federal employees by 0.50 percentage 
         point.   This increases revenues $2.9 billion over six years. 

 Agency Contributions -- The Republican budget increases agency 
         retirement contributions for CSRS employees by 1.5 percentage 
         points.  This saves $3.1 billion over six years. 

 Other -- The Republican budget proposes reforms to the Federal 
         Employees Compensation Act and an open season to allow 
         employees now in CSRS to transfer to FERS. 


                   Veterans Benefits and Services

 Repeal Gardner Decision -- The Republican budget resolution 
         assumes repeal of the Gardner decision.  In that decision, the 
         Supreme Court affirmed a lower court ruling awarding 
         compensation to VA medical patients suffering disabilities 
         from VA medical care although no fault was found with the VA.  
         This provision reduces spending by $744 million over six 
         years. 

 Repeal Davenport Decision -- The Republican budget resolution 
         assumes repeal of the Davenport decision.  The effect of this 
         repeal would be to re-establish the link the VA requires 
         between a veteran's service-related disability and his or her 
         employment handicap in order to receive rehabilitative 
         assistance. This provision cuts benefits to veterans by $284 
         million over six years. 

 Extend Expiring Provisions -- The Republican budget resolution 
         assumes the extension of several provisions of law set to 
         expire at the end of 1998.  These include: health care per 
         diems and prescription drug copayments (-$172 million through 
         2002); loan origination fees and resale losses (-$633 million 
         over six years); income verification for medical care and 
         pensions (-$130 million over six years); third-party 
         reimbursement for medical care unrelated to service (-$934 
         million); and the $90 per-month pension limitation for 
         beneficiaries in medicaid nursing homes (-$692 million over 
         seven years).  

 Other Reductions -- The Republican budget resolution assumes 
         reductions relating to the following provisions: debt 
         collection (-$90 million in 1997); rounding down of the 1997 
         compensation COLA (-$434 million over six years); flat-rate 
         COLAs for old-law DIC beneficiaries (-$156 million over six 
         years); REMIC conduits (-$30 million over six years). 

 Spending Increases -- The Republican budget resolution 
         proposes to take spending reductions from some veterans 
         programs and increase spending on other veterans programs by 
         about $35 million a year.  These increases include:  provide a 
         $500 scholarship for college seniors under the GI Bill or 
         VEAP; convert VEAP education participants to Montgomery GI 
         Bill participants; allow surviving spouses to retain 
         compensation/pension prorates to day of death; extend current 
         law limits on payment of back benefits to surviving spouses 
         from one year to two years; make permanent the alternative 
         teacher certification program; fund pro bono legal program at 
         the Court of Veterans Appeals, and raise auto allowance for 
         severely disabled veterans. 


                             Student Loans

    The Republican budget saves $4.2 billion over the next six years by 
eliminating the direct student loan program; reducing subsidies to 
banks, guarantee agencies and secondary markets; and limiting the 
Department of Education's administrative costs.  The proposal is almost 
identical to the one included in last year's vetoed reconciliation 
bill, with one major difference.  The new proposal eliminates direct 
lending while the one in reconciliation capped it at 10 percent.  There 
are currently 1,400 schools participating in the direct lending program 
and 400 additional schools are planning to enter on July 1.  

    In addition, the budget resolution continues the scoring change 
made in the 1996 budget resolution.  CBO was directed to include the 
present value of certain federal administrative costs in its subsidy 
calculation of the direct loan program.  By incorporating this change 
into the baseline, proposals to shrink or eliminate the direct student 
loan program would score as savings.  Under CBO's official baseline, 
such proposals -- including the one contained in the budget resolution 
-- would have scored as a cost.

    Finally, the proposal, like last year's, assumes $3 billion in cuts 
from changes affecting lenders, guarantee agencies and secondary 
markets. 


                           Spectrum Auctions

    The House Republican budget resolution assumes $19.2 billion in 
savings over six years from auctioning nonbroadcast spectrum.  These 
savings include the following: broaden and extend the Federal 
Communication Commission's existing auction authority ($6.0 billion) 
and authorize the sale of an additional 120 MHz of spectrum ($13.2 
billion).  These provisions were included in last year's reconciliation 
conference agreement, as well as in the President's 1997 budget.


                              Asset Sales

 Sell Oil from Arctic National Wildlife Refuge -- The 
         Republican budget resolution again proposes opening the Arctic 
         National Wildlife Refuge (ANWR) to oil and gas exploration and 
         leasing.  Projected receipts total roughly $2.0 billion, half 
         of which would be paid to the state of Alaska. 

 National Defense Stockpile -- The Republican budget resolution 
         assumes the sale of $649 million worth of materials from the 
         national defense stockpiles. 

 Naval Petroleum Reserves -- The Republican budget resolution 
         assumes that the Naval Petroleum Reserves (NPR)  will be sold.  
         Last year's defense authorization bill provided for the sale 
         of the site at Elk Hills, California.  The Republican budget 
         resolution assumes that Elk Hills as well as the other 
         portions will be sold in 1998.  The budget resolution assumes 
         $1.5 billion in receipts from the sale of the NPR and $600 
         million in 2002 from other unspecified asset sales.  However, 
         when combined with the loss of receipts currently generated by 
         the NPR, the sale of the NPR and the unspecified other assets 
         garners about $500 million. 

 Sell the Alaska Power Administration -- The Republican budget 
         resolution assumes that the Alaska Power Administration (APA) 
         will be sold.  Legislation providing for this was enacted last 
         year.  This asset sale is estimated to raise $70 million, but 
         will result in loss of $7 million a year in receipts which 
         will no longer flow into the Treasury after the sale. 

 Sell Air Rights Adjacent to Union Station -- The Republican 
         budget resolution assumes that the air rights adjacent to 
         Union Station will be sold, earning $40 million in 1998. 

 Sell Governors Island -- The Republican budget resolution 
         assumes that Governors Island will be sold, earning $500 
         million in 1999. 


                                 Other

 Eliminate Trade Adjustment Assistance -- The budget 
         resolution eliminates the Trade Adjustment Assistance (TAA) 
         program which provides income replacement, training, and other 
         related services to workers who lose their jobs as a result of 
         import competition, including workers affected by NAFTA.  The 
         cut from eliminating training and related services totals $532 
         million over six years, while the cut from eliminating cash 
         benefits totals $1.1 billion. 

 Nuclear Regulatory Commission Fees -- Currently, the costs of 
         the Nuclear Regulatory Commission (NRC) are completely offset 
         by fees it charges to licensees.  The authority for the NRC to 
         collect one-third of these fees expires after 1998.  The 
         budget resolution assumes the extension of the authority for 
         the NRC to recover all of its costs through 2002.  This 
         proposal increases fees by $1.2 billion through 2002. 

 Lease the Strategic Petroleum Reserve -- The House Republican 
         budget resolution assumes leasing part of the storage capacity 
         of the Strategic Petroleum Reserve (SPRO).  The budget 
         resolution assumes receipts of $39 million over six years. 

 Debt Collection -- The Republican budget includes debt 
         collection legislation that would strengthen debt collection 
         tools and increase both tax and non-tax debt collections.  The  
         legislation will allow the IRS to contine levying to collect 
         overdue federal taxes, allow  agencies to contract with
         private collection services and to increase the use of 
         electronic fund transfers in federal benefit programs.  The 
         proposal is estimated to yield about $1.6 billion in savings 
         over six years, $235 million in outlays and $1.3 billion in 
         revenues. 

 Reimbursement to the U.S. Postal Service -- The Republican 
         budget eliminates reimbursement to the U.S. Postal Service for 
         the ongoing costs of pre-July 1971 workers' compensation 
         liabilities to save $100 million over six years. 

 Extend expiring patent and trademark fees -- The budget 
         extends the Patent and Trademark Office (PTO) fees included in 
         the Omnibus Reconciliation Acts of 1990 and 1993, raising $476 
         million from the private sector between 1999 and 2002. 

 Replace dollar bill with dollar coin -- The budget assumes the 
         dollar bill is replaced with a dollar coin, saving $757 
         million between 1999 and 2002. 


                      II. DISCRETIONARY PROGRAMS

    The new Republican budget once again proposes drastic reductions in 
discretionary spending.  Under the 1997 budget resolution, total 
discretionary outlays would fall from $536 billion in 1996 to $511 
billion in 2002 even though this budget projects inflation of 3 percent 
a year.  Although the Republicans are proposing slightly higher outlays 
in 1997 through 2000 than under last year's vetoed plan, the totals for 
2001 and 2002 are actually $3 billion and $4 billion lower, 
respectively.  


                House Republican 1997 Budget Resolution
                        Discretionary Funding
                       (In billions of dollars)

                         1996   1997   1998   1999   2000   2001   2002
Total Discretionary

  Budget authority      495.8  495.0  492.2  488.6  496.3  488.9  499.0
  Outlays               536.0  535.1  526.4  524.3  524.5  513.7  511.4

Defense Discretionary

  Budget authority      264.9  268.0  269.7  272.4  275.1  277.8  280.7
  Outlays               264.5  265.7  264.5  267.8  271.5  270.7  270.8

Nondefense Discretionary

  Budget authority      230.9  227.0  222.5  216.2  221.2  211.0  218.3
  Outlays               271.5  269.5  262.0  256.5  252.9  243.0  240.6


    Defense outlays would increase from $265 billion in 1996 to $271 
billion in 2002.  This funding for defense is essentially the same as 
in last year's budget.  

    Nondefense spending, on other hand, falls precipitously over the 
period, dropping from $271 billion in 1996 to $241 billion in 2002.  
This $30 billion cut is even more dramatic when one considers that it 
comes on top of the amounts needed just to keep up with inflation.  
Over time, inflation erodes the purchasing power of a dollar.  From 
1996 to 2002, the Republican budget calls for a 25 percent reduction in 
purchasing power for nondefense programs.  Moreover, these cuts are 
measured relative to 1996 nondefense program levels that are sharply 
lower than the 1995 levels provided in the 103rd Congress, prior to 
enactment of the 1995 rescission bill (P.L. 104-19).

    For 1997, the new Republican budget resolution is $4.5 billion in 
budget authority and $6.9 billion in outlays below the ``freeze'' level 
estimated by the Congressional Budget Office (CBO).1  As shown in the 
table on the following page, only three program areas are budgeted for 
increases:  defense, veterans, and administration of justice.  All 
other budget functions are below the 1997 freeze level.

    By 2002, virtually all of the nondefense functions would face 
sharply lower funding.   These reductions are compounded by the effects 
of inflation over time.  As the table on the following page shows, some 
program areas would face enormous reductions in purchasing power by 
2002.  For instance, Agriculture would have its buying power cut by 
more than 50 percent, while Energy and International Affairs would be 
cut by more than 40 percent.  

    To achieve these reductions, the Republicans continue to propose 
the elimination of two cabinet agencies -- Commerce and Energy -- and 
the termination of 135 programs.  Among the programs slated for 
termination or phase-out are the National Endowment for the Arts, the 
National Endowment for the Humanities, the Legal Services Corporation, 
Americorps, and at least 30 education programs.  But even this long 
list of program eliminations and reductions is not sufficient to 
achieve the low spending levels envisioned in the Republican budget.  
Ultimately, the Budget Committee was forced to rely on unspecified 
``overhead reductions'' totaling $13.5 billion over six years -- or a 
quarter of the $52.5 billion in nondefense outlay cuts below a freeze 
identified by the Republicans.


------------------------
    1 The CBO freeze for 1997 holds budget authority at the 1996 
enacted level, plus any advanced appropriations provided in 1996 for 
1997.  The CBO estimates include the effect of H.R. 3019, the 1996 
full-year continuing appropriation enacted in April 1996, and corrected 
estimates for the subsidized housing program.


                HOUSE REPUBLICAN 1997 BUDGET RESOLUTION
              PROPOSED FUNDING FOR DISCRETIONARY PROGRAMS
                        (In billions of dollars)

                                                               Percent
                                                             Change in
                                                          Buying Power
                                 1997               2002     from 1996
                          Freeze*   Proposed    Proposed       to 2002
                          ---------------------------------------------
TOTAL DISCRETIONARY
  Budget Authority         499.5       495.0       499.0        -18.8%
  Outlays                  542.1       535.1       511.4        -19.0%

DEFENSE DISCRETIONARY
  Budget Authority         264.9       268.0       280.7        -11.8%
  Outlays                  266.0       265.7       270.8        -12.8%

NONDEFENSE DISCRETIONARY
  Budget Authority         234.5       227.0       218.3        -26.4%
  Outlays                  276.0       269.5       240.6        -25.1%
-----------------------------------------------------------------------
Nondefense functional categories 
 (budget authority unless otherwise noted):

150 International Affairs   18.5        17.7        13.3        -40.1%

250 General Science, Space  16.7        16.5        15.6        -22.0%

270 Energy                   5.1         3.8         3.2        -47.5%

300 Natural Resources and 
     Environment            20.6        19.8        18.5        -26.1%

350 Agriculture              3.9         3.0         2.1        -56.0%

370 Commerce and Housing 
     Credit                  3.1         2.4         2.3        -35.8%

400 Transportation**        36.8        36.4        32.5        -22.6%

450 Community and Regional 
     Development            10.5         6.4         5.9        -52.3%

500 Education and Training  37.5        35.4        34.7        -21.9%

550 Health                  23.2        22.2        21.5        -22.5%

570 Medicare                 3.0         3.0         3.0        -22.3%

600 Income Security**       40.4        39.9        37.5        -19.7%

650 Social Security**        3.2         2.7         2.7        -29.9%

700 Veterans                18.4        19.1        18.7        -17.5%

750 Administration of 
     Justice                20.7        21.9        20.4        -19.1%

800 General Government      11.6        10.5        10.5        -25.6%

920 Allowances              -0.2         2.7        -2.2            na

* CBO estimate of a ``freeze'' at 1996 enacted levels plus any advanced 
appropriations for 1997 provided in 1996. It includes the impact of 
H.R. 3019, the 1996 full-year continuing resolution, and corrected 
housing estimates.

** Outlays are shown, because budget authority is not a good indicator 
of budgetary resources in this function.

HBC Democratic Staff                                          14-May-96


                           National Defense

    In 1997, the House Republican budget resolution calls for an 
increase of $3.0 billion in budget authority and a decrease of $350 
million in outlays compared to the freeze level for discretionary 
defense programs.  By 2002, the budget proposes an 11.8 percent 
reduction in real purchasing power for these programs.

    The House Republican budget resolution assumes discretionary 
spending levels for defense programs consistent with those set forth in 
last year's budget resolution.  Compared to the President's budget for 
1997, the House Republican budget resolution includes an additional 
$12.8 billion in budget authority and an additional $4.1 billion in 
outlays above the level requested by the President.


                         International Affairs

    In 1997, the House Republican budget resolution calls for a 
decrease of $824 million  compared to the freeze level for 
discretionary international affairs programs.  By 2002, the budget 
proposes a 40.1 percent reduction in real purchasing power for these 
programs.

 Eliminate the United States Agency for International 
         Development, the United States Information Agency and the Arms 
         Control and Disarmament Agency -- The Republican budget 
         resolution assumes the elimination of the United States Agency 
         for International Development (USAID), the United States 
         Information Agency (USIA), and the Arms Control and 
         Disarmament Agency (ACDA).  The budget resolution assumes that 
         the responsibilities carried out by these agencies will be 
         carried out by the Department of State, whose budget is also 
         cut. 

 Reduce Funding to the Department of State -- In addition to 
         assuming that the Department of State takes over the 
         responsibilities of three other foreign affairs agencies (see 
         above), the Republican budget resolution assumes reductions to 
         the Department of State for 1997 of 5 percent below the 1996 
         level growing to a 45 percent cut in 2002. 

 Reduce Funding for Development Assistance -- The Republican 
         budget resolution assumes reductions below a freeze for 
         development assistance programs of $422 million in 1997 
         growing to $1.9 billion in 2002.  This represents a 6 percent 
         cut in 1997 and a 27 percent cut in 2002 below the 1996 
         enacted level. 

 Eliminate Support for the International Development 
         Association and Reduce Support for Other Multilateral Banks -- 
         The Republican budget resolution assumes no support for the 
         International Development Association (IDA) after 1997.  In 
         addition, the Republican budget resolution assumes reductions 
         in funding to multilateral banks  consistent with elimination 
         of ``soft-loan'' activities administered by these 
         institutions.  The Republican budget resolution assumes a 
         total reduction of $800 million below the 1996 funding level 
         in each year beginning in 1998.


                General Science, Space, and Technology

    In 1997, the House Republican budget resolution calls for a 
decrease of $251 million compared to the freeze level for discretionary 
science, space, and technology programs.  By 2002, the budget proposes 
a 22 percent reduction in real purchasing power for these programs.

 National Science Foundation (NSF) -- In 1997, the House 
         Republican budget resolution increases NSF funding by $66 
         million compared to the freeze level.  Funding is increased 
         for NSF civilian research grants, while some cuts are made by 
         ending recent starts for major research equipment and changing 
         other programs. 

 NASA -- In 1997, the House Republican budget resolution 
         decreases NASA funding by $349 million compared to the freeze 
         level.  Reductions are to come from operating the space 
         shuttle privately and obtaining scientific data from the 
         private sector for the Mission to Planet Earth Program.  For 
         1997 through 2002, cuts total $4.8 billion. 


                                Energy

    In 1997, the House Republican budget resolution calls for a 
decrease of $1.35 billion compared to the freeze level for 
discretionary non-defense energy programs.  By 2002, the budget 
proposes a 47.5 percent reduction in real purchasing power for these 
programs.

 Eliminate the Department of Energy -- The Republican proposal 
         assumes the elimination of the Department of Energy (DOE).  
         Most of the functions of the Department of Energy are not 
         eliminated but instead would be transferred to other parts of 
         the federal government. 

 Eliminate Fossil Energy Research and Development -- The 
         Republican budget resolution calls for a 47 percent cut below 
         the 1996 level for 1997 and ultimately the elimination of the 
         fossil energy research and development program by 2000. 

 Eliminate the Clean Coal Technology Program -- The Republican 
         budget resolution assumes no further funding for the clean 
         coal technology program.  The Republicans assume a $500 
         million cut in 1997, and a $1.2 billion reduction over six 
         years through 2002. 

 Eliminate Energy Conservation Research -- The Republican 
         budget resolution assumes a 45 percent cut for energy 
         conservation research in 1997, and elimination of the program 
         by 2000. 

 Reduce Energy Supply Research and Development -- The 
         Republican budget resolution assumes a cut of 7 percent below 
         the 1996 level for energy supply research and development 
         programs, dipping to a 27 percent reduction in 2002.  Affected 
         programs include solar, geothermal, hydrogen  and other 
         renewable resources technology, nuclear energy research, 
         environmental management, civilian waste research and 
         development. 


                   Natural Resources and Environment

    In 1997, the House Republican budget resolution calls for a 
decrease of $817 million for discretionary natural resources programs.  
By 2002, the budget proposes a 26.1 percent reduction in real 
purchasing power for these programs.

 Reduce Funding for Land Acquisition -- The budget proposes a 
         $77 million cut in 1997 funding for land acquisition for 
         conservation and recreation purposes, suggesting that the cut 
         be made by encouraging land swaps instead of purchases.  The 
         1996 appropriation for land acquisition by the Park Service, 
         Forest Service, Fish & Wildlife Service and Bureau of Land 
         Management was approximately $139 million, so the proposed cut 
         is more than 50 percent. 

 Reduce Funding for Facilities Construction -- The plan calls 
         for reducing the facilities construction budget for national 
         parks, forests, wildlife refuges and the like by $121 million, 
         with the remaining funds focused on projects needed to protect 
         life or safety or critical historical resources.  This 
         proposal would cut funding more than 50 percent below 1996. 

 Cut Agricultural Conservation Operations -- The Republican 
         plan calls for reducing spending by $139 million by 
         ``prioritizing'' conservation operations within the Department 
         of Agriculture.  This represents a cut of about 22 percent 
         below 1996 in the Conservation Operations program, which 
         provides technical assistance to land owners and local 
         governments in planning and installing soil and water 
         conservation measures. 

 Environmental Protection Agency -- The Republican budget 
         resolution assumes a $698 million increase in funding for the 
         Environmental Protection Agency above the 1996 enacted level.  
         This increase is to accomodate proposed Republican changes to 
         Superfund liability requirements.  The budget resolution also 
         assumes an increase of $39 million a year for safe drinking 
         water revolving funds and a $38 million cut to be guided by 
         focusing EPA science on ``risk-based regulation''. 

 Cut the National Oceanic and Atmospheric Administration -- The 
         Republican budget resolution assumes cutting the National 
         Oceanic and Atmospheric Administration (NOAA) below the 1996 
         level by $75 million in 1997, growing to $251 million cut in 
         2002. (see Function 370 for additional discussion of NOAA) 


                              Agriculture

    In 1997, the House Republican budget resolution calls for a 
decrease of $971 million  (a cut of roughly 25 percent) compared to the 
freeze level for discretionary agriculture programs.  By 2002, the 
budget proposes a 56 percent reduction in real purchasing power for 
these programs.

    Under the Republican plan, total discretionary funding for 
agriculture programs would fall from $3.9 billion in 1996 to $3.0 
billion in 1997.  The plan envisions further cuts in each subsequent 
year, with total funding declining to $2.1 billion in 2002.  

 Reduce Overhead and ``Unnecessary Bureaucracy'' -- According 
         to the majority's description, $695 million of the 1997 cuts 
         -- more than two-thirds of the total -- are supposed to come 
         from ``reducing unnecessary bureaucracy'' and reducing 
         ``overhead''.  The proposed $695 million cut is extremely 
         large relative to total spending.  Funding in 1996 for the 
         Farm Service Agency (which administers farm programs at the 
         local level) totalled $795 million, and funding for various 
         central administration and management accounts represented 
         roughly another $300 million. 

 Reduce Funding for Research and Extension Services -- Another 
         $215 million of the 1997 cut is proposed to come from 
         agricultural research and extension services.  This represents 
         a reduction of about 13 percent below the 1996 total funding 
         level for the Agricultural Research Service and the 
         Cooperative State Research, Education, and Extension Service. 


                      Commerce and Housing Credit

    In 1997, the House Republican budget resolution calls for a 
decrease of $658 million compared to the freeze level for discretionary 
commerce and housing programs.  By 2002, the budget proposes a 35.8 
percent reduction in real purchasing power for these programs.

 Eliminate the Department of Commerce -- The Republican budget 
         eliminates or phases out the following programs:  industrial 
         technology services, including the Advanced Technology Program 
         (ATP) and the Manufacturing Extension Partnership (MEP) 
         program; the U.S. Travel and Tourism Administration; the 
         National Telecommunications and Information Administration; 
         the Minority Business Development Administration; the salaries 
         and expenses of the Technology Administration; NOAA's fleet 
         modernization; the Inspector General; and general 
         administration.  (For additional cuts, see Functions 300, 450 
         and 500). 

 Increase research funding for the National Institute of 
         Standards and Technology (NIST) -- The budget increases 
         funding for the construction of NIST research facilities by 
         $105 million in 1997.  It also provides an additional $30 
         million for NIST scientific and technical research and 
         services in 1997 and a 3 percent annual increase thereafter. 

 Provide funding for the Decennial Census -- The budget adds 
         $99 million in 1997 and $3.1 billion over six years to conduct 
         the 2000 decennial census. 

 Cut funding for rural housing programs -- The budget cuts $166 
         million, or 26 percent, from rural housing programs in 1997, 
         increasing to $186 million, or 29 percent, in subsequent 
         years. 

 Make FHA's multi-family project mortgage insurance 
         self-financing 

 Cut Small Business Administration (SBA) programs -- The budget 
         eliminates federal funding for Small Business Development 
         Centers.  The budget cuts SBA overhead 8 percent below the 
         1996 level in 1997 and freezes spending at this reduced level 
         for the next five years. 

 Eliminate the Federal Trade Commission 


                            Transportation

    In 1997, the House Republican budget resolution calls for a 
decrease of $352 million in outlays compared to the freeze level for 
transportation programs.  By 2002, the budget proposes a 22.6 percent 
reduction in real purchasing power for these programs.  (Note:  Outlays 
are used for these comparisons because spending from the transportation 
trust funds is controlled by obligation limitations rather than 
discretionary budget authority.)

 ``Redefine the Federal Role in Transit'' -- The Republican 
         budget proposes several changes in transit that cut outlays 
         below the freeze level by $0.1 billion in 1997 and a total of 
         $6.5 billion for 1997 through 2002.  The steps required to 
         achieve these savings include the following:  reduce matching 
         rate for transit capital grants from 80 percent to 50 percent, 
         phase out transit operating assistance, eliminate mass transit 
         new starts, end funding for Washington Metro in 1999, and 
         eliminate transit planning and research. 

 Eliminate Highway Demonstration Projects -- The Republican 
         budget proposes to rescind funding for surface transportation 
         demonstration projects.  The proposal saves $16 million in 
         outlays in 1997 and a total of $265 million for 1997 through 
         2002.  In addition, the budget resolution assumes mandatory 
         savings of $75 million in 1997 and $888 million for 1997 
         through 2002 by eliminating highway demonstration projects 
         authorized under ISTEA. 

 Phase Out Amtrak Operating and Capital Assistance -- The 
         Republican budget phases out operating and capital assistance 
         for Amtrak between 1999 and 2002.  This saves $0.1 billion in 
         1999 and a total of $1.2 billion for 1999 through 2002. 

 Terminate Other Rail Programs -- The budget eliminates 
         high-speed rail development and ends funding for Northeast 
         Corridor Improvement Program in 1999. 

 Terminate funding for Intelligent Vehicle Development 

 Eliminate Federal Maritime Commission and the Maritime 
         Administration 

 Provide funding for Advanced Train Control Safety Research 

 Eliminate Air Transportation programs -- The budget eliminates 
         the Civil Aeromedical Institute and the FAA Management 
         Training Institute. 

 Cut NASA Aeronautics -- The budget cuts funding for subsonic 
         research and development, saving $17 million in 1997 and a 
         total of $0.7 billion for 1997 through 2002. 

 Rescind Funds for NASA Wind Tunnel 


                  Community and Regional Development

    In 1997, the House Republican budget resolution calls for a 
decrease of $4.1 billion compared to the freeze level for discretionary 
community and regional development programs.  By 2002, the budget 
proposes a 52.3 percent reduction in real purchasing power for these 
programs.  (The freeze baseline includes $2.4 billion in emergency FEMA 
and SBA disaster assistance.  If this emergency money is excluded from 
the baseline, the decrease in 1997 is $1.7 billion and, by 2002, real 
purchasing power declines 36.9 percent)

 End the Community Development Block Grant (CDBG) and Community 
         Development Financial Institutions (CDFI) programs -- The 
         Republican budget eliminates these programs, combining them 
         with the HOME program (see Function 600), into one program 
         administered by state housing and development agencies and 
         local governments.  The funding is cut by $1.3 billion, or 29 
         percent, below the 1996 enacted level and frozen at this 
         reduced level for the following five years. 

 Eliminate the Economic Development Administration (EDA) -- The 
         budget eliminates EDA and transfers its programs to the Small 
         Business Administration (SBA).  It also calls for a 4 percent 
         cut in 1997, increasing to a 7 percent cut in 1998 through 
         2000.  Beginning in 2001, the budget eliminates all funding 
         for these programs. 

 Cut rural development programs -- The budget creates a new 
         rural development block grant, cutting the funding by $127 
         million below the 1996 enacted level and then freezing it at a 
         reduced level thereafter.  It cuts rural water and waste 
         disposal loans, community facility loans, and business and 
         development grants and loans.  The budget also includes rural 
         housing programs in the block grant (see Functions 370 and 
         600). 

 Cut funds for the Appalachian Regional Commission -- The 
         budget calls for a 9 percent cut in 1998, dipping to a 41 
         percent cut in 2001 and 2002. 

 Phase out TVA's non-power programs -- The budget cuts these 
         programs by 82 percent in 1997 and eliminates all funding 
         beginning in 1998. 

 Reduce funds for Bureau of Indian Affairs (BIA) -- The budget 
         proposes a new Native American block grant, reducing the 
         funding by $54 million in 1997 and then freezing it at this 
         reduced level in subsequent years.  It reduces BIA central and 
         area office  operations by 50 percent relative to fiscal year 
         1995 and includes construction in the block grant.  Beginning 
         in 2000, Indian education and health programs also are 
         incorporated into the block grant. 


          Education, Training, Employment and Social Services

    In 1997, the House Republican budget resolution calls for a 
decrease of $2.1 billion in budget authority compared to the freeze 
level for discretionary education, training, employment and social 
services programs.  By 2002, the budget proposes a 21.9 percent 
reduction in real purchasing power for these programs.

 Eliminate Goals 2000 

 Eliminate bilingual and immigrant education 

 Eliminate Innovative Education Program Strategies State Grants 

 Eliminate new funding for Perkins loans and State Student 
         Incentive Grants 

 Eliminate funding for Howard University, redirect half of 
         savings to Historically Black Colleges 

 Eliminate new awards from the Robert C. Byrd Scholarship 
         program 

 Eliminate 24 other education programs -- The budget documents 
         claim elimination of 5 elementary and secondary education 
         programs, 7 higher education grants, 8 fellowships and 
         scholarships and 4 education improvement programs.  (Note that 
         14 of these programs were already eliminated in 1996.  This 
         means other educational programs will have to be cut further 
         to meet this target). 

 Cut Aid to Higher Education Institutional Development -- The 
         budget cuts institutional support by $46 million in 1997 and 
         each year thereafter. 

 Cut funding for libraries by 20 percent and block-grant the 
         programs 

 Reduce Department of Education administration by 24 percent 

 Cut job training and education programs -- The budget cuts the 
         job training and education programs consolidated in the 
         ``Careers'' bill, which is now in conference, by $1.1 billion, 
         or 25 percent, below 1996 enacted levels.  This funding level 
         also is approximately $1.3 billion, or 28 percent, below the 
         authorization levels in the House-passed version of the 
         ``Careers'' bill (H.R. 1617), which already cut these programs 
         20 percent below the original 1995 appropriations level.  This 
         reduced funding then is frozen for the next five years. 
 Reduce funding for the Job Corps program -- The budget cuts 
         the Job Corps program by $88 million, or 8 percent, below the 
         1996 enacted level and freezes it at this reduced funding 
         level in subsequent years. 

 Cut other Department of Labor programs -- The budget reduces 
         both the Employment Standards Administration (ESA) and 
         departmental management by 8 percent below the 1996 level and 
         includes an unspecified cut of $23 million in each year. 

 Increase funding for the Bureau of Labor Statistics -- The 
         budget provides a $5 million increase in 1997 and 1998 for the 
         revision of the Consumer Price Index (CPI). 

 Privatize the Corporation for Public Broadcasting 

 Terminate the National Endowments for the Arts after 1997 and 
         the National Endowment for the Humanities after 1998 

 Eliminate the National and Community Service programs 
         (Americorps) 

 End National Telecommunications and Information Administration 
         programs -- The budget eliminates three programs administered 
         by the Department of Commerce:  information infrastructure 
         grants; public broadcasting facilities, planning and 
         construction; and the endowment for children's educational 
         television. 

 Repeal Davis-Bacon Act and Service Contract Act (These 
         proposals are found in Function 920: Allowances in the budget 
         resolution). 


                                Health

    For 1997, the House Republican budget resolution calls for a 
decrease of $0.9 billion in budget authority compared to the freeze 
level for discretionary health programs.  By 2002, the budget proposes 
a 22.5 percent decline in real purchasing power for these programs.

 Cut Health Resources and Services Administration (HRSA) -- The 
         1997 Republican budget calls for cuts in HRSA programs of $215 
         million, 7.7 percent, below a freeze.  In 2002, HRSA funding 
         is cut $250 million below the freeze level.  HRSA programs 
         include the Maternal and Child Health Block Grant, Ryan White 
         AIDS programs, community health centers, rural health 
         research, family planning, and training programs for health 
         professions. 

 Cut Overhead at the Department of Health and Human Services 
         (HHS) -- For HHS overhead, the 1997 Republican budget 
         resolution calls for unspecified cuts of $398 million below a 
         freeze.  In 2002, the unspecified cuts are $797 million below 
         a freeze. 
 Cut and Restructure the Food and Drug Administration (FDA) -- 
         The Republican budget freezes FDA funds in 1997, and cuts them 
         $66 million below that level in 1998.  In 1999, the cuts are 
         $139 million below the 1997 freeze level, and funding is 
         continued at the lower level thereafter.  The plan also 
         assumes enactment of a proposal changing, among other things, 
         FDA's drug and medical device review procedures. 

 Freeze National Institutes of Health (NIH) -- For 1997, the 
         Republican plan freezes NIH research at last year's level of 
         $11.9 billion, and continues funding at this level through 
         2002.  This represents a decline in real purchasing power of 
         15.9 percent by 2002. 

 Freeze and Cut Indian Health Services and Facilities -- The 
         Republican plan freezes 1997 funds for these accounts at the 
         1996 level.  Beginning in 2000, funds are cut below the 1996 
         freeze level by 5.6 percent, and continue at the lower level 
         thereafter.  The Republican budget resolution also calls for 
         incorporating Indian Health Services and Facilities into a new 
         Native American block grant (see also Function 450). 

 Terminate the National Institute for Occupational Safety and 
         Health (NIOSH) -- In 1997, the Republican budget eliminates 
         NIOSH.  No other agency is given responsibility or resources 
         to conduct research on workplace hazards (illness and injury). 

 Cut and Combine the Mine Safety and Health Administration 
         (MSHA) and the Occupational Safety and Health Administration 
         (OSHA) -- The Republican plan transfers MSHA to OSHA.  In 
         1997, it cuts the combined program by 20.3 percent below a 
         freeze, and continues funding at the lower level thereafter. 


                            Income Security

    In 1997, the House Republican budget resolution calls for a 
decrease of $500 million in outlays compared to the freeze level for 
discretionary income security programs.  By 2002, the budget proposes a 
19.7 percent reduction in real purchasing power for these programs.  
(Note:  Outlays are used in this function because budget authority 
includes long-term housing contract renewals to maintain current 
housing assistance.  Expiring contracts cluster more in some years than 
others and expire over different time periods, which can make year-to-
year comparisons of budget authority misleading.)

 Special Supplemental Nutrition Program for Women, Infants and 
         Children (WIC) -- The Republican resolution calls for $3.7 
         billion for WIC, equal to the freeze level for the program. 

 Low-Income Home Energy Assistance Program (LIHEAP) -- The 
         Republican resolution calls for $1.3 billion for LIHEAP, an 
         increase of $300 million compared to the freeze level for the 
         program.  The resolution does not call for advance 
         appropriations for 1998 as would be the normal budget process 
         for LIHEAP. 

 Commodity Assistance Program -- The Republican resolution 
         calls for $166 million for the Commodity Assistance Program, 
         equal to the freeze level for the program. 

 Reduce funding for housing programs -- The Republican 
         resolution for 1997 provides $0.8 billion in budget authority 
         and $0.8 billion in outlays less than the amount needed to 
         continue assisted housing programs at their 1996 enacted level 
         and to renew section 8 contracts (at market rates) when they 
         expire.  Over six years, the housing reduction is $19 billion 
         in budget authority and $20 billion in outlays.  House Budget 
         Committee documents provide very little background on the 
         assumptions behind these numbers.  According to the 
         information provided, the budget resolution assumes the 
         administration's ``mark-to-market'' plan to restructure FHA 
         assistance which would lower Section 8 renewal costs.  The 
         budget replaces the present system of private project-based 
         assistance with a system largely based on vouchers and 
          combines the HOME program with the CDBG and community
         development bank programs into one program (CDBG and community 
         development banks are cut 28 percent, see  Function 450).  The 
         budget combines public housing programs into one or more block 
         grants, puts rural rental housing programs into a rural 
         development block grant, and consolidates Native American 
         housing and development programs into one grant program. 


                    Veterans Benefits and Services

    In 1997, the House Republican budget resolution calls for an 
increase of $654 million for discretionary veterans programs.  By 2002, 
the budget proposes a 17.5 percent reduction in real purchasing power 
for these programs.

 Veterans Medical Care -- For 1997, the Republican budget 
         resolution assumes an increase of $740 million above the 1996 
         level for veterans medical care. 


                       Administration of Justice

    In 1997, the House Republican budget resolution calls for an 
increase of $1.2 billion compared to the freeze level for discretionary 
justice programs.  By 2002, the budget proposes a 19.1 percent 
reduction in real purchasing power for these programs.

 Violent Crime Reduction Trust Fund (VCRTF) -- The Republican 
         resolution calls for $4.7 billion for the VCRTF, an increase 
         of $594 million compared to the freeze level for the VCRTF.  
         However, this level falls more than $300 million short of the 
         full amount allowed under statute for the VCRTF. 
 COPS Program -- The Republican resolution does not call for 
         any funding for the Community Oriented Policing Services 
         (COPS) program, virtually all of which is contained in the 
         VCRTF.  Instead, the Republican resolution calls for an 
         unspecified amount of VCRTF funds to go toward a Local Law 
         Enforcement Block Grant, making it unlikely that the goal of 
         putting 100,000 new police officers on the street by the year 
         2000 will be met. 

 Legal Services Corporation -- The Republican resolution calls 
         for $95 million for the Legal Services Corporation, a decrease 
         of $191 million compared to the freeze level for Legal 
         Services.  This two-thirds cut in the program is the first 
         step toward elimination of Legal Services by 1999. 


                          General Government

    In 1997, the House Republican budget resolution calls for a 
decrease of $1.1 billion compared to the freeze level for discretionary 
general government programs.  By 2002, the budget proposes a 19.1 
percent reduction in real purchasing power for these programs. 

 Impose a six-year moratorium on construction and acquisition 
         of new federal buildings.

 Require all government printing to be sent out for competitive 
         bidding.

 Reduce Treasury overhead -- The Republican budget assumes $2.1 
         billion of unspecified reductions below the freeze level over 
         six years in the overhead cost of the Treasury Department, the 
         largest part of which is the Internal Revenue Service. 

 Cut the Executive Office of the President by 15 percent and 
         eliminate the Council of Economic Advisers. 


                         III. REVENUE PROVISIONS

    The Republican budget resolution allows for $122.4 billion in net 
``tax relief'' over six years, and suggests that additional tax 
reductions could be accommodated by extending the airline ticket tax 
and closing loopholes.  It also includes an additional allowance for 
the cost of suspending 4.3 cents of the gasoline excise tax -- but only 
through the end of this year.

    Further, the resolution calls for $20 billion in cuts in the Earned 
Income Tax Credit for low-income workers.  Of this total, $9 billion 
comes as revenue increases and $11 billion as reduced outlays for 
direct payments to workers whose EITC exceeds their tax liability.  

    The resolution's targets also include non-tax revenue increases 
totaling $3.5 billion over six years, consisting mainly of higher 
federal employee contributions to their retirement plans and improved 
federal debt collection.  Finally, the resolution includes further 
revenue losses ($3.9 billion over seven years) to reflect the cost of 
certain tax legislation recently passed by the House -- most notably 
the Medical Savings Account provisions of the health insurance reform 
bill.

    According to the draft committee report and statements from 
Chairman Kasich, total tax cuts proposed in the resolution are 
considerably larger than the $122 billion net figure.  According to one 
fact sheet from the Budget Committee majority, the intended total is 
$175 billion.  These additional tax cuts are intended to be financed 
through extension of the aviation excise taxes and other expiring 
provisions and closing of corporate tax loopholes and subsidies.


               The Children's Tax Credit is Underfunded
    The major revenue policy is a revenue loss for tax relief totaling 
$122.4 billion over six years (and $124.9 billion over seven years).  
The explanation offered for this figure, and for the Senate Budget 
Committee's similar figure, is the $500 per-child tax credit that was 
included in the ``Contract with America'' and the vetoed Balanced 
Budget Act of 1995.  

    The $124.9 billion seven-year allowance is insufficient, however, 
to cover a children's credit that begins with tax year 1996.  The 
seven-year revenue loss for such a credit is more than $130 billion.  
Further, the budget resolution allowance for 1997 is only $15.9 
billion, which is clearly insufficient for a full 1996 tax year credit.  
A full-year credit would reduce 1997 revenues by at least $21 billion.

    The credit is also clearly underfunded for the year 2002.  The tax 
cut allowance is only $15.6 billion for this year, but the cost would 
be significantly higher.  

    If the full cost of a 1996 children's credit had been included in 
the new budget, the budget would fail to show progress in reducing 
deficits.  That is, the 1997 deficit would be  higher than the 1996 
deficit.

    If the full cost of the credit had been included for the year 2002, 
the new budget would not be in balance.  Nevertheless, Chairman Kasich 
has stated that his budget does not ``trigger-off'' the tax credit in 
order to reach balance in the year 2002.  Therefore, the tax committees 
will either have to scale back the credit for fiscal year 1997 and 
fiscal year 2002, or find a tax increase to help offset the revenue 
loss.


              A Permanent Gasoline Tax Cut Is Not Funded

    Senator Dole and others recently suggested that permanent repeal of 
4.3 cents per gallon of the gas tax be ``written into'' the new 
Congressional budget.  

    However, the specific figures in the new budget accommodate only a 
temporary, seven-month suspension.  Permanent repeal of the 4.3 cents 
would reduce revenues by another $31 billion through the year 2002.  
The new budget cannot accommodate both a $500 per child tax credit and 
a permanent repeal of the 4.3 cents, unless a new major tax increase 
package, not seen in last year's proposals, is enacted by the Congress 
or unless most of the other tax cuts from last year's bill are 
eliminated entirely.


              Other Tax Cuts Are Promised But Not Funded

    Even setting aside the issue of a permanent gasoline tax cut, it is 
not possible to include all the major tax cuts in last year's Balanced 
Budget Act (BBA) without either busting the new budget or coming up 
with major new revenue raisers not seen last year.  Today, the BBA 
would lose $36 to $61 billion more in revenues than the amount allowed 
in this new budget -- even after assuming extension of the airline 
ticket tax and enactment of all the revenue-raising provisions from 
last year's bill.

    Nevertheless, the House Budget Committee report states that the new 
plan accommodates a long list of tax cuts in addition to the children's 
credit, the measures recently passed by the House and the temporary 
suspension of part of the gasoline excise tax.  Specifically, the 
committee report promises a reduction in the ``marriage penalty,'' new 
deductions for at-home care of the elderly, new backloaded tax-
preferred retirement accounts, a 50 percent capital gains exclusion and 
a lower capital gains tax rate for corporations.  The report also cites 
a reduction in the alternative minimum tax, an increase in the 
``expensing'' deduction for small business, and the extension of 
``several tax provisions due to expire.''

    If the Republican majority assembles a deficit-neutral package of 
added tax cuts and tax increases, the package is likely to shift 
resources in favor of the affluent.  The reason is that the benefits of 
a capital gains tax cut are highly skewed to the affluent.  The 
Treasury Department estimates that 46 percent of the benefit of a 
capital gains tax cut goes to the most affluent one  percent of all 
taxpayers.


                        Corporate Tax Subsidies

    The Budget Committee report states that the plan assumes reductions 
in corporate subsidies such as the interest deduction for corporate-
owned life insurance and the section 936 tax credit for profits 
attributed by corporations to Puerto Rican operations.  The report 
states that $26 billion can be raised from more than two dozen changes 
in provisions that uniquely benefit corporations.  

    However, $26 billion is nowhere near enough to cover the unfunded 
part of the children's credit plus the large costs of all of the other 
tax cuts in the vetoed Balanced Budget Act of 1995 and promised in the 
committee report on the new budget resolution.  Furthermore, some of 
these ``corporate subsidy'' items are already counted elsewhere in the 
new budget because they are being used to offset some of the revenue 
losses from proposals like Medical Savings Accounts in legislation 
recently passed by the House.  

    An alternative policy would be to reduce corporate tax subsidies 
and to use the revenue to substitute for deep cuts in programs like 
Medicaid and Medicare, and to fund assistance to help people get off 
welfare and into jobs.


                   Recently-passed House Legislation

    The budget plan also includes a net revenue loss of $3.9 billion 
over seven years to accommodate recently-passed House legislation.  
Most of this revenue loss is accounted for by the House-passed version 
of the Kennedy-Kassebaum health insurance portability legislation.  
Unlike the Senate-passed bill, the House bill includes Medical Savings 
Accounts (MSAs).  

    This provision adds another health-insurance-related preference to 
the tax code.  Taxpayers who purchase a ``high deductible'' health 
insurance plan get a tax deduction for funds set aside in an MSA.  In 
addition, investment earnings on these funds are free from current 
income taxes.  The funds can be used tax-free for meeting health costs 
not covered by the high-deductible health insurance.  Taxpayers able to 
accumulate funds in an MSA can withdraw them penalty-free for 
retirement, having enjoyed the benefit of deferring income taxes on 
contributions to MSAs and the MSA investment earnings.  

    Medical Savings Accounts are attractive mainly to the healthy and 
wealthy.  The more affluent can afford to pay their own health bills 
until a high-deductible health insurance plan kicks in.  Because their 
marginal income tax rates are higher, the affluent get more out of the 
MSA tax break.  The healthy are attracted to MSAs, because they are 
less likely to have to use up their MSA funds to pay health bills.  
They will be able to build up tax-preferred investments for retirement.  
If MSAs prove to be popular, they will draw healthier Americans out of 
the  insurance pool, driving up health insurance rates for less healthy 
Americans.


                   Earned Income Tax Credit (EITC)

    The House Budget Committee plan cuts the EITC by $20 billion over 
seven years, plus another $1.6 billion already included in legislation 
passed earlier this year by the House.  This $21.6 billion is somewhat 
less than the $28 billion in the vetoed Balanced Budget Act of 1995.  
However, during the Budget Committee mark-up, the Majority explained 
that its new plan was essentially the same as in last year's bill.

    The $21.6 billion EITC cut cannot be accounted for solely by 
compliance measures, or even by eliminating the EITC for childless 
workers.  In the Balanced Budget Act (BBA), these measures produced 
less than $6 billion in savings over seven years.

    Because the new Republican Budget is like the old one, families 
with children and modest incomes will experience EITC cuts that take 
away most of their benefit from the ``children's credit.''  In 
addition, millions of families with children would be made worse off. 

    The children's tax credit will not benefit 34 percent of the 
nation's children because they live in families that are ineligible 
because their family's income is too low.  And among the 66 percent who 
do benefit, many are in families with modest incomes like $20,000, who 
will not actually get a full $500 per child.  

    Further, the new budget uses EITC cuts to take back children's 
credits from modest-income families.  For example, a couple with two 
children and a $20,000 income would lose 78 percent of the benefit it 
would otherwise get from the children's credit.  Although the 
children's credit is $500 per child, it is limited to the income tax 
liability of the family.  As a result, the $20,000 income family would 
get a $458 rather than $1,000 benefit from the children's credit.  The 
EITC changes that are apparently assumed in this new budget would then 
reduce that family's EITC by an additional $356, taking away most of 
the benefit.  These EITC takebacks affect two-children families with 
incomes up to $28,000.

    Because the EITC credit goes only to working people, the credit is 
a reward for working rather than relying on welfare.  Cutting the 
credit is a peculiar policy to follow when trying to move people off 
welfare into the workforce.




                      DISSENTING VIEWS
                  RESEARCH AND DEVELOPMENT

    This Budget Resolution has been characterized by Republicans as a 
more moderate budget plan, one that avoids the extremism that was so 
apparent a year ago.  Yet the reality is that this budget resolution is 
every bit as extreme--the claims of moderation have been greatly 
exaggerated.

    This Budget Resolution continues a disturbing pattern of 
sacrificing long term investments in research and development for short 
term political gains associated with a major tax cut and other 
misguided public policies.  Over the past year, Republican and 
Democratic views towards the value of Federal expenditures on research 
and development and their role in overall economic policy have come 
sharply into focus.  As a part of their balanced budget plan, Democrats 
have maintained R&D as a critical investment and stimulus to economic 
productivity. 

    Republicans, on the other hand, have treated R&D as a low priority 
expenditure and a form of corporate welfare.  R&D has been used as the 
``cash cow'' that would help pay for the tax cut.  Republicans have 
developed both budgetary and philosophical constraints intended to 
sharply curb Federal investment in R&D.    

    Last year, Republicans proposed a reduction of over 33% in civilian 
R&D over the seven year period of the budget resolution.  Rigid 
ideological guidelines concerning the Federal role in funding basic 
research vs. applied research were imbedded into the budget resolution 
and were represented as binding on Authorization and Appropriations 
committees.

    To fill in the void left by the proposed Federal disinvestment in 
R&D, Republicans have publicly fantasized about the willingness of the 
private sector to take over a greater role in funding responsibility.  
The reality is that the programs which Republicans want to eliminate 
are not the product-oriented, short-term investments that have 
characterized industrial R&D.  Simply said, the premise of the 
Republican position is irrational from both an economic and public 
policy standpoint. 

    This Republican budget resolution renews the assault on Federal R&D 
and the misguided public policies that was initiated at the outset of 
the 104th Congress.   The aims of this Republican budget include the 
following:

     A reduction from the President's request of over $3 
             billion in civilian science agencies in F.Y. 97 and a 
             reduction of over $15 billion over the next six years. 
     A phase out of Department of Energy energy research 
             programs directed at solar and renewable energy 
             technologies, new fossil energy technologies, and energy 
             conservation measures;
     Elimination of Department of Commerce technology 
             partnership programs including the Advanced Technology 
             Program and the Manufacturing Extension Program;
     A major reduction in the scope of the National Oceanic and 
             Atmospheric Administration programs including ocean, 
             coastal and fishery programs;
     A major reduction in Environmental Protection Agency 
             programs including the Environmental Technology 
             Initiative.
     Elimination of environmental programs within the National 
             Aeronautics and Space Administration intended to monitor 
             the Earth and its chemical and physical cycles;

    This budget resolution also eliminates two major cabinet level 
functions that have been critical to our economy over the past decade.  
The Departments of Energy and Commerce have been instrumental in 
bridging the gap between policy and research in order to focus on high 
priority national goals.  Energy security, technology development, and 
building a sustainable future are challenges that will dominate the 
global balance of power over the next several decades.  Success in 
meeting these challenges is a necessary precondition for creating good, 
high-paying jobs for working Americans.  Without a Federal focus on 
these issues, we will fail to keep pace.

    In summary, this budget resolution will undermine economic growth, 
job creation, education, protection of the environment and the basic 
underpinnings of our national R&D infrastructure.  Certainly scientists 
and engineers at universities, national labs, and Federal agencies will 
be victimized by this budget.  But more importantly, every American 
will pay the price for this retreat from our national commitment to 
science and technology.  Of course the true victims of this budget 
resolution are future generations of Americans who count on the 
investments we make today in the ideas, the products, the processes to 
build the world of tomorrow.  This budget resolution breaks faith with 
the future.


---------------------------------   -----------------------------------
Alan B. Mollohan                    John Olver


                                    -----------------------------------
                                    Lynn Rivers


                                    -----------------------------------
                                    Lloyd Doggett






    Dissenting Views - Agriculture:  Earl Pomeroy, Charlie Stenholm

   The Budget Resolution for FY97 again makes a deep cut in agriculture 
spending.  This Congress passed, earlier this year, an extreme overhaul of 
farm programs, setting them on the road to eventual elimination.  Now in this 
Budget Resolution, this Committee has decided to make an extreme reduction in 
the amount of discretionary spending for agriculture.

   The Resolution makes the recommendation to cut total agricultural 
discretionary spending from $3.9 billion in FY97 to $2.1 billion in 2002, a 
staggering reduction in budget authority.  This discretionary cut takes the 
form of unspecified reductions in United States Department of Agriculture 
overhead.  The members of the committee and rural America are left to wonder 
if these cuts will be in the delivery of farm programs, the delivery of 
conservation programs, or the quality of nutrition and food safety programs.  
Clearly each and every function of the Department of Agriculture will be 
impacted by these assumptions.  This committee should question if this is the 
appropriate time to be making these cuts when commodity stocks are at their 
lowest point in a generation, the livestock industry remains in extreme 
distress and new plant diseases continue to spread across the nation's 
heartland.

   The Budget Resolution does specify some specific cuts.  These cuts are 
mainly in USDA research programs.  With commodity support already cut by the 
new farm bill, our producers need quality agricultural research more than ever 
to protect themselves against diseases, insects and changing environmental 
conditions.  The new farm bill addresses many of the concerns related to 
competitive research projects and facilities buildings projects.  The 
Agriculture Committee currently is undertaking a comprehensive review of 
agriculture research programs and will be writing specific legislation to 
address the needs of agricultural research in the future.  The agriculture 
committee should be allowed to do its work without being locked into an 
extremely restrictive budget scenario before it is finished.

   Finally the Budget Resolution phases out both Title I and Title III of the 
PL-480 Food for Peace Program.  Again, the new farm bill promised American 
farmers that their future profitability would be derived from the world 
market.  Now we are witnessing the elimination of one of the most successful 
export enhancement programs ever.  This Committee should remember that 43 of 
the 50 largest buyers of U.S. farm goods are countries that used to receive 
food aid from the United States.

   In this Budget Resolution we see the broken promises of the Freedom to Farm 
Bill.  As the Freedom to Farm bill was being passed, sponsors hailed a new era 
in farm policy, promised strengthened research programs and dangled the riches 
of the world market in front of American farmers.  Now we can see that those 
promises are broken barely two months after the bill was signed.  We are 
willing to do our share to balance the budget, but rural American cannot 
continue to take these extreme and unfair budgetary hits. 




            DISSENTING VIEWS - MEDICAID: EARL POMEROY

   At the outset it is important to recognize that, with respect to Medicaid, 
this budget makes significant progress over last year's effort, at least with 
regard to the commitment of federal funding -- from the proposed reduction of 
$182 billion over seven years last year to $72 billion over seven years this 
year.  It thus appears that after a year of rigorous analysis and intense 
debate, the members of the majority have been persuaded that the federal 
government simply cannot make cuts on the order of those proposed last year 
without jeopardizing the health of some of our nation's most vulnerable 
populations.     

   Despite the progress this budget represents, however, I remain deeply 
concerned that it will undermine the central mission of the Medicaid program, 
which is to provide a minimum level of health care to the children, the 
elderly and the disabled of this nation.  During Committee markup, I offered a 
sense of the House amendment to preserve the basic program elements critical 
to the performance of Medicaid's mission.  The Committee rejected this 
amendment, indicating that the level of progress represented by this budget is 
not as substantial as the reduced federal cuts suggest.  Unfortunately, the 
improved federal funding level in this budget masks a series of policy 
proposals that will jeopardize the health of children, seniors and the 
disabled. 

   Let me be clear that my concerns about this budget stem not from any 
hesitation about whether to reform Medicaid.  Medicaid must be reformed 
through such measures as utilization of managed care, enhanced state 
flexibility, and the streamlining of regulations.  Yet the goal of reform is 
to improve the program's effectiveness, not to undermine it.

   Perhaps the greatest threat to Medicaid's mission contained in this budget 
is the dramatic reduction in state contributions it allows.  In addition to 
limiting federal contributions, the budget caps state contributions to 
Medicaid at 40%, allowing the many states with match rates between 41% and 50% 
to lower their required contributions.  Thus, although the federal cut has 
been reduced to $72 billion, the total potential reduction in Medicaid 
spending is $265 billion.  It is simply not possible to withdraw these vast 
sums from the system without endangering the health safety net that Medicaid 
has historically provided.

   This budget would also permit states to use discredited -- and currently 
illegal -- funding mechanisms to further limit state contributions to 
Medicaid.  Once again, states could establish schemes to ``tax'' providers or 
collect intergovernmental ``transfers'' from state entities, later rebating 
these funds to the payors, labeling the rebates as Medicaid expenditures, and 
claiming federal matching funds for them.  Given that the payment of such 
rebates involves no genuine state outlays for health services, legalizing 
these sham financing systems makes state matching requirements meaningless.

   The majority points with pride to the list of groups and services covered 
under the Medicaid proposal contained in this budget.  Upon review, however, 
several important groups have been excluded and the list of covered services 
is revealed as a largely empty promise.  With respect to covered services, 
this budget merely says that states must offer 
some of the various health services listed, while repealing all of the federal 
standards that speak to the amount, duration, and scope of these services.  As 
a result, people guaranteed coverage under this plan may find the guarantee to 
be a hollow one.  

   One of the groups excluded by this budget is poor children.  This budget 
repeals the guarantee of health care coverage for children over the age of 
twelve living in low-income families, more than half of whom have parents who 
work.  For low-income parents, knowing that the basic health care of their 
children will still be covered if they leave the welfare rolls has been an 
important element in encouraging the transition from government dependence to 
productive employment.  Thus, not only will this repeal endanger the health of 
these vulnerable children, it would provide a strong disincentive for parents 
to move from welfare to work.  With respect to the disabled, this budget 
repeals the federal definition of disability, allowing states to narrow this 
definition as they see fit and thereby exclude many disabled Americans from 
coverage.

   This budget also threatens seniors.  While under the plan states are 
supposed to abide by federal nursing home quality standards, federal 
monitoring of quality is terminated and states will have nearly unfettered 
discretion with regard to the monitoring and enforcement.  We must not forget 
that it was precisely because many states proved incapable of ensuring quality 
nursing home care that Congress was prompted to enact basic quality standards 
in 1987.  In another strike against seniors, this budget substantially reduces 
payment by Medicaid of copayments, premiums, and deductibles for those 
Medicare beneficiaries whose income is below the poverty line.  Given that 
many low-income seniors already devote large portions of their monthly budgets 
to health care costs, this cutback will force seniors into a cruel choice 
between staying healthy and meeting life's other basic expenses.            

   I will work diligently to address the flaws outlined above and I am hopeful 
that the majority will join in this effort.  As we move forward to balance the 
federal budget, we must not abandon the long-standing federal commitment to 
the basic health of the children, seniors and disabled of our nation. 





               Dissenting Views - Energy:  Earl Pomeroy

   The Budget Resolution assumes the elimination of the Department of Energy.  
The committee report provides few details about which functions of the 
Department should be eliminated and which should be disbursed to other federal 
agencies.  I have a particular concern with regard to DOE's oversight 
responsibility of environmental restoration activities at the nation's nuclear 
facilities.

   The Committee report recommends that the authorizing committee consult the 
bill introduced by Congressman Tiahrt to eliminate the DOE.  The Tiahrt bill 
would transfer responsibility for the oversight of environmental clean-up to 
the Department of Defense.  In my view, this is an ill-advised proposal that 
ought to be reconsidered.

   The clean-up of our nation's nuclear facilities is obviously a critical 
environmental priority.  It should not simply be parceled out and fused onto a 
large bureaucracy.  Under the DOE, the responsibility for nuclear cleanup 
falls to the Assistant Secretary for Environmental Management who is visible 
and accountable to the public and Congress.  Moreover, because defense-related 
cleanup constitutes one-third of the DOE budget, the nation is assured that 
nuclear clean-up receives the focused attention of a cabinet level official.

   If, on the other hand, oversight responsibility is transferred to the 
Department of Defense, the program will be just one more cog in the massive 
DOD bureaucracy.  In addition, if transferred, funding for environmental 
clean-up of nuclear facilities would constitute a mere 2 percent of the 
defense budget -- little more than a rounding error in the Pentagon.  This 
should give little comfort to Americans concerned about the safe and adequate 
clean-up of our nuclear facilities.


ï¿½RM71ï¿½
                        DISSENTING VIEWS OF
                     HON. LOUISE M. SLAUGHTER

    The republican Budget resolution assumes deep and radical savings 
in the Medical program.  What will the impact of these reductions be 
and who will suffer?  I do not believe that we have received an 
appropriate answer to this question.  I do not dispute the need to 
slow the growth in order to maintain the solvency of the system, 
but the proposed reductions and changes go well beyond this objective. 

    According to the Chairman of the House Budget Committee, seniors 
will not be forced to bare the financial burden of the proposed 
reductions in Medicare spending.  He stated that there will be no 
significant cost shifting from the federal government to seniors.  
However, I am afraid that this will not be the case.  I am pleased 
that the Chairman recognizes the potential for harm, but the level 
of cuts and the radical departure from the current structure leave 
seniors vulnerable.

    It is claimed that many insurance companies will work to ``coerce'' 
seniors into managed care by offering benefits not currently under 
Medicare. Seniors will be enticed to opt into these restrictive managed 
care plans without being fully aware of the financial obligations and 
their limited ability to choose their own physician.  The Republicans 
proposal will remove the current prohibition on balanced billing. For 
the first time in many years, participating physicians and health care 
providers will be allowed to charge above the Medicare reimbursable 
rate. Who will be charged the difference? Senior citizens who have 
little discretionary income.

    Because States have the primary responsibility for regulating 
insurance companies, we are in effect turning over the care of seniors 
to the States with little or no guarantee that the same level of health 
care will be provided and the same financial protections maintained. 
Quality care regulations implemented over the last ten years will be 
gone. I am concerned that the States are simply not capable of adequate 
oversight of the insurance industry as they move into a $100 billion a 
year industry. We have all heard the horror stories of Medigap policies 
that duplicated Medicare fee-for-service plans. What guarantees do we 
have that these horror stories will not be repeated.

    I have listened to my hospitals and my doctors who have made it 
clear that there will be serious ramifications if these proposals are 
acted upon. With little or no Congressional review and limited federal 
oversight, we will be creating a sub-standard level of care for the 
sickest and poorest senior citizens.

    I can only hope that the Chairman is right. But it is difficult to 
understand how they plan on achieving a total of $168 billion in 
savings over the next six years without radically altering the Medicare 
program and increasing premiums, copayments and deductibles as well as 
limiting the health care choice of Medicare beneficiaries.  I believe 
that these issues warrant further hearings and that many of these 
changes must be implemented slowly and with great care.  Medicare has 
been a successful supplemental insurance plan for our Nation's senior 
citizens and the disabled.  We should not jeopardize this success in 
the name of tax breaks targeted to the most affluent.



                  DISSENTING VIEWS - TRANSPORTATION
                 CONGRESSWOMAN LUCILLE ROYBAL-ALLARD

The Republican budget resolution is fatally short-sighted and 
fundamentally flawed, specifically as it relates to policy 
assumptions and priorities made on transportation spending.  
The resolution singles out mass transit for an excessive share 
of cuts in transportation programs and retreats from the 
carefully crafted agreement to balance transportation modes 
established in the Intermodal Surface Transportation 
Infrastructure Act of 1991 (ISTEA).  

I am particularly concerned with the following transit funding 
cuts as contained in the Republican FY 1997 Budget Resolution:

 Cuts transit disproportionately.  Mass transit represents 
         approximately 10 percent of the FY 1996 transportation 
         budget, but is singled out to bear nearly 50 percent of the 
         cuts in the seven year outlays assigned to this function.  
         This raises the fundamental quesion of fairness and balance 
         in the effort to reduce the deficit.
  
 Lowers the federal share for all transit capital expenditures 
         from 80 to 50 percent.  Lowering the federal match on mass 
         transit to 50 percent while maintaining the federal match on 
         highway projects at 80% will sharply tilt the playing field 
         and bias decision-making at the local level established under 
         ISTEA.  Given the choice between two projects, local officials 
         and planners will inevitably choose the project with the 
         higher federal match.
   
 Phases out all operating assistance.  This proposal will 
         affect urban and rural areas and will lead to fare increases, 
         service cuts, and layoffs.  Operating assistance is needed to 
         help carry out federal mandates related to serving people with 
         disabilities and enhancing air quality.  Operating cutbacks 
         would disconnect thousands of low-income workers from their 
         jobs, isolate many elderly from their daily business and 
         health care, and force the elimination of transit service in 
         many small towns and rural areas.
  
 Terminates funding for new starts.  The new starts program is 
         an important piece of a national strategy to provide a 
         balanced transportation system in many of the nation's fastest 
         growing communities.  These projects provide transportation 
         alternatives to commuters while freeing up highway capacity 
         for the movement of goods in interstate commerce both within 
         and through the nation's metropolitan areas.  Elimination of 
         the new starts program is a short-sighted policy that fails to 
         recognize the important roles played by these projects in 
         providing additional transportation capacity in communities, 
         stimulating economic development, and promoting a sense of 
         community.  Furthermore, states hardest hit will be those west 
         of the Mississippi who have the greatest share of new starts 
         projects.
  
 Eliminates funding for all transit planning and research. 
         Without transit planning funds, transit agencies will have a 
         difficult time complying with the planning provisions 
         contained in ISTEA.  The Republican majority cuts transit 
         planning and research, but leaves funding for highway planning 
         intact.  Again, this would upset the current modal balance and 
         put transit planning at a serious disadvantage in the local 
         decision-making process.

The federal one cent gasoline tax for mass transit was approved to 
complement the much larger expenditure for highways.  It was enacted 
to achieve federal goals that recognized the need to address inner 
city congestion, clean air mitigation, and urban revitalization.

The Majority's report is right in saying that the ``federal involvement 
in transportation has occurred over decades and it cannot and should 
not be reversed overnight.''  However, it is wrong to pull federal 
support of transit planning and programs until the needs of urban 
America are fully met.



                           DISSENTING VIEWS
                     Representative Carrie P. Meek

    The old song, ``Ain't We Got Fun,'' which contains the line 
``there's nothing surer, teh rich get rich and the poor get poorer,'' 
was intended to be entertainment. The Republican Majority apparently 
liked it so much, however, that they used it as the guiding policy of 
the fiscal year 1997 budget resolution.
    This year's Republican budget resolution repeats last year's ill-
conceived proposal by quietly raising Federal taxes on hard working 
 low-income families. At the same time, this year's budget resolution, 
like last year's, cuts Federal taxes for wealthy Americans through a 
reduction in the tax on capital gains.
    The ``Talking Points'' on the fiscal year 1997 budget resolution, 
issued on May 8 by the Republican Members of the Committee on the 
Budget, declares that one of the ``highlights'' of this year's budget 
resolution is a reduction in the capital gains tax rate.
    By contrast, the Republican leadership's plan to increase taxes on 
those who have chosen work over welfare is buried in two different 
parts of the budget resolution: function 699 (Income Security contains 
a $11 billion reduction in spending through ``Reform [of] The Earned 
Income Credit,'' and there is a $9 billion increase in tax revenues 
because of ``Reform [of] The Earned Income Credit.'' The Majority does 
not explain why this $20 billion tax increase is located in two 
different parts of its budget.  Indeed, the Majority, in the draft 
report by the Committee on the Budget, offers no discussion whatsoever 
of their proposed ``reform'' of the Eanred Income Tax Credit 
(``EITC'').
    At the Committee's markup, however, the Majority said that this 
year's proposal on the EITC is essentially the same as the EITC 
proposal contained in the conference report on H.R. 2491, the so-called 
Balanced Budget Act of 1995. That bill was, of course, wisely vetoed by 
President Clinton last December.
    A month after passage by the House of Representatives of the 
conference report on H.R. 2491, the staff of the bipartisan Joint 
Committee on Taxation released an analysis of the impact on working 
Americans of the Majority's EITC proposal as set forth in that 
conference report. The Joint Committee on Taxation found that 6.3 
million families with annual incomes below $30,000 would have faced 
higher taxes because of the proposed changes in the EITC.
    The Joint Committee on Taxation further found that the Republican 
plan would have raised taxes on many working Americans even after 
taking account of the $500 per child tax credit in H.R. 2491. The Joint 
Committee on Taxation's report concludes that 2.8 million families with 
children and with annual incomes below $30,000 would be worse off under 
last year's proposal even after taking account of the $500 per child 
tax credit.
    The current Republican attack on the EITC is somewhat surprising 
because the EITC has historically had bipartisan support as a way to 
encourage people to choose work over welfare.  The EITC was originally 
enacted under President Ford in 1975, when the maximum annual credit 
was set at $400.  Five times -- under each of the next four Presidents 
-- the maximum credit was raised, and in 1986 the schedule for the EITC 
was also indexed to keep pace with inflation.  This year the maximum 
annual credit for a family with two or more children is $3,564.
    But on a party-line vote the Committee on the Budget rejected my 
amendment to limit the changes in the EITC to those designed to reduce 
errors and fraud. According to the Congressional Budget Office, the 
effect of the changes in my amendment -- which would fight fraud but 
still protect the working poor -- would save about $2 billion over 
seven years.  The Republican Majority was primarily interested not in 
reducing fraud, but in balancing the budget on the backs of the poor.
    My amendment should have appealed to the many Members of the 
Majority who are using the existence of the current EITC to justify 
their opposition to an increase in the Federal minimum wage. For 
example, on April 23, the Majority Whip made that argument to the House 
of Representatives.  He relied on a Congressional Research Service 
(``CRS'') study he had requested.  For each state, CRS added government 
payments for the EITC, Food Stamps, Aid to Families with Dependent 
Children (``AFDC''), and day care to the wages of a single person 
working full time at the minimum wage.  For example, CRS finds that a 
single parent with two small children living in Florida and working 
full time at the minimum wage would have annual gross wages of $8,840 
and would pay social security payroll taxes of $676.  This parent's 
wages would be supplemented, according to CRS, by an EITC payment of 
$3,536, Food Stamps worth $2,992, and an AFDC payment of $1,258. So 
this parent's total annual income after Federal taxes is $15,950.
    Living in Miami, a single parent with two small children can't 
provide food, shelter, full time day care, and clothing for $16,000 a 
year.  If the Republican majority really wants people to choose work 
over welfare, they would support both an increase in the minimum wage 
and the current level of EITC.
    During the Committee debate on my amendment, the Republicans asked 
how I proposed paying for the $20 billion in EITC spending (over six 
years) that my amendment would have protected. The answer to their 
question is contained in their own discussion on ``Reducing Corporate 
Tax Subsidies.''  In explaining how the Republicans would pay for their 
proposed cut in the tax on capital gains, the Majority's draft report 
on the budget resolution states that the resolution ``assumes a 
reduction in provisions in the tax code that can be clearly identified 
as benefiting one industry or a limited number of corporations and 
derive no public benefits.''  The draft report goes on to say that the 
Committee on Ways and Means has identified such changes in the tax code 
that ``raise approximately $26 billion.''
    The Republicans have clearly stated their preference: to use this 
$26 billion to pay for tax cuts for wealthy Americans rather than to 
avoid raising taxes on working Americans.
    There are almost one million hard-working families in Florida who 
will be affected by the Republicans' proposal to cut the EITC by $20 
billion over six years; 46,000 of these families are in my 
Congressional district.
    I dissent from the Republicans' effort to cut taxes for the wealthy 
while raising taxes on low-income working Americans.  Under this budget 
proposal, surely the rich will get richer, and the poor will pay for 
it.



       DISSENTING VIEWS ON U.S. REPRESENTATIVE JERRY F. COSTELLO

    The FY 1997 budget resolution represents a continued attack on the 
health, safety and well-being of the majority of the American people.  
While not as drastic as the budget proposed by the Republican majority 
last year, this budget also is too extreme.  By cutting Medicare and 
Medicaid, the safety net for vulnerable populations -- the elderly, 
disabled and poor children and families -- will be in jeopardy.  I 
cannot support a budget that includes massive federal spending for new 
tax breaks while other critical programs, including Medicare, Medicaid, 
and the Earned Income Tax Credit -- are greatly weakendd.  This is not 
a realistic budget.  We cannot, and should not, enact a budget such as 
this that promises to cut spending and cut taxes. If we are serious 
about reducing the deficit -- as I am -- we should make t he hard 
choices to bring our federal spending in line.  This budget, however, 
promises to make life easier for the affluent, while balancing the 
budget on the backs of the poor and disadvantaged.
    I support a balanced budget.  In fact, I have cosponsored and voted 
in favor of amending the U.S. Constitution to mandate a balanced 
federal budget. However, while the FY 1997 budget resolution passed by 
this Committee achieves balance on paper, I cannot support the callous 
and irresponsible policy assumptions it uses to achieve these savings. 
The implications have very real consequences to the citizens of this 
nation.
     I am especially concerned about the deep cuts in discretionary 
spending included in this budget. Certainly, we must take serious steps 
to carefully scrutinize every portion of our federal budget in order to 
control federal spending and bring our deficit under control. However, 
the cuts in discretionary spending included here are too harsh and will 
have a serious impact on millions of Americans, most notably the 
vulnerable populations that continue to be left behind as we change our 
federal priorities.
    For example, the cuts in education leave me very concerned about 
the future of this nation. The education of our children must be a top 
priority. The education our children receive should be adequate in 
keeping the U.S. economy competitive as we move into the next century. 
American children rank dismally in math and science achievement 
compared with students from other nations. The proportion of young 
people completing high school has remained stagnant for a decade, 
despite the ever-increasing demands for education in the job market. 
National education reforms under President George Bush's Goals 2000 
program pointed our nation in the right direction. This budget, 
however, eliminates Goals 2000. Having all our students starting school 
ready to learn, increasing the high school graducation rate, teaching 
every adult to read and keeping drugs and violence out of schools are 
not goals we should abandon. While our deficit needs to be eliminated, 
we must not decimate the education of future generations.
    Under this budget, the Legal Services Corporation is cut 
drastically in FY 1997 - a large step toward the total elimination of 
the program by 1999. The Legal Services Corporation is a good example 
of a federal program that is effectively being administered at the 
local level. The Leadership of this House claims to want to expand the 
role of state and local authority while shrinking the size of the 
federal government. The Legal Services Corporation is a prime example 
of how local control of a federal program is working. The creators of 
the LSC recognized that decisions about how legal services should be 
allocated are best made not by officials in Washington, but at a local 
level, by the people who understand the problems that face their 
communities. The LSC provides funds to 323 programs operating over 1200 
heighborhood law offices. Together they serve every county in the 
nation. LSC programs provice services to more than 1.7 million clients 
a year, benefitting approximately five million individuals, the 
majority of them children living in poverty. The phase-out of the LSC 
represented in this budget eliminates a much-needed program and 
threatens the life and well-being of every poor or near-poor person in 
this country.
    A well-maintained transportation network is essential for economic 
development. If highways cannot be maintained, our goods cannot move in 
commerce. Similarly, without continued attention to our nation's 
airports, delays and other difficulties will slow our economy's growth. 
In addition, transit funding provides immediate benefits for economic 
development, carrying low-income people to their place of work and 
reducing congestion in metropolitan areas.
    Transportation should not bear higher cuts than other programs. 
This budget phases out federal assistance the operation of mass transit 
systems. Operating assistance is essential to transit systems across 
the nation. Transit systems are already taking serious steps to cope 
with federal operating cuts of nearly 50 percent in FY 1996 and 12 
percent in FY 1995. Transit systems, by necessity, are operating more 
efficiently yet still must cut services and increase fares. The 
complete elimination of operating assistance would have a drastic 
impact and could eliminate necessary public transportation in 
communities across our nation.
    The elimination of funding for mass transit is just one example of 
the hypocrisy of this budget. As this budget pushes people into the 
workforce it takes away their means of getting to work. This budget is 
unfair and should not be passed by this House.



                                Addendum
                              ----------                              


SECTION 1. CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997.

    The Congress determines and declares that the concurrent 
resolution on the budget for fiscal year 1997 is hereby 
established and that the appropriate budgetary levels for 
fiscal years 1998 through 2002 are hereby set forth.

SEC. 2. RECOMMENDED LEVELS AND AMOUNTS.

    The following budgetary levels are appropriate for the 
fiscal years 1997, 1998, 1999, 2000, 2001, and 2002:
            (1) Federal revenues.--For purposes of the 
        enforcement of this resolution:
                    (A) The recommended levels of Federal 
                revenues are as follows:
                            Fiscal year 1997: 
                        $1,085,363,000,000.
                            Fiscal year 1998: 
                        $1,130,426,000,000.
                            Fiscal year 1999: 
                        $1,176,236,000,000.
                            Fiscal year 2000: 
                        $1,229,666,000,000.
                            Fiscal year 2001: 
                        $1,288,998,000,000.
                            Fiscal year 2002: 
                        $1,358,219,000,000.
                    (B) The amounts by which the aggregate 
                levels of Federal revenues should be changed 
                are as follows:
                            Fiscal year 1997: -$15,031,000,000.
                            Fiscal year 1998: -$17,817,000,000.
                            Fiscal year 1999: -$21,488,000,000.
                            Fiscal year 2000: -$21,291,000,000.
                            Fiscal year 2001: -$21,114,000,000.
                            Fiscal year 2002: -$14,466,000,000.
            (2) New budget authority.--For purposes of the 
        enforcement of this resolution, the appropriate levels 
        of total new budget authority are as follows:
                    Fiscal year 1997: $1,311,284,000,000.
                    Fiscal year 1998: $1,357,208,000,000.
                    Fiscal year 1999: $1,386,338,000,000.
                    Fiscal year 2000: $1,428,397,000,000.
                    Fiscal year 2001: $1,450,450,000,000.
                    Fiscal year 2002: $1,497,756,000,000.
            (3) Budget outlays.--For purposes of the 
        enforcement of this resolution, the appropriate levels 
        of total budget outlays are as follows:
                    Fiscal year 1997: $1,306,921,000,000.
                    Fiscal year 1998: $1,350,905,000,000.
                    Fiscal year 1999: $1,379,428,000,000.
                    Fiscal year 2000: $1,413,490,000,000.
                    Fiscal year 2001: $1,428,809,000,000.
                    Fiscal year 2002: $1,463,504,000,000.
            (4) Deficits.--For purposes of the enforcement of 
        this resolution, the amounts of the deficits are as 
        follows:
                    Fiscal year 1997: $221,558,000,000.
                    Fiscal year 1998: $220,479,000,000.
                    Fiscal year 1999: $203,192,000,000.
                    Fiscal year 2000: $183,824,000,000.
                    Fiscal year 2001: $139,811,000,000.
                    Fiscal year 2002: $105,285,000,000.
            (5) Public debt.--The appropriate levels of the 
        public debt are as follows:
                    Fiscal year 1997: $5,434,400,000,000.
                    Fiscal year 1998: $5,697,600,000,000.
                    Fiscal year 1999: $5,938,900,000,000.
                    Fiscal year 2000: $6,159,000,000,000.
                    Fiscal year 2001: $6,332,800,000,000.
                    Fiscal year 2002: $6,464,900,000,000.
            (6) Direct Loan Obligations.--The appropriate 
        levels of total new direct loan obligations are as 
        follows:
                    Fiscal year 1997: $41,353,000,000.
                    Fiscal year 1998: $39,179,000,000.
                    Fiscal year 1999: $42,287,000,000.
                    Fiscal year 2000: $43,200,000,000.
                    Fiscal year 2001: $44,359,000,000.
                    Fiscal year 2002: $45,532,000,000.
            (7) Primary Loan Guarantee Commitments.--The 
        appropriate levels of new primary loan guarantee 
        commitments are as follows:
                    Fiscal year 1997: $266,271,000,000.
                    Fiscal year 1998: $264,761,000,000.
                    Fiscal year 1999: $261,793,000,000.
                    Fiscal year 2000: $261,676,000,000.
                    Fiscal year 2001: $262,429,000,000.
                    Fiscal year 2002: $262,131,000,000.

SEC. 3. MAJOR FUNCTIONAL CATEGORIES.

    The Congress determines and declares that the appropriate 
levels of new budget authority, budget outlays, new direct loan 
obligations, and new primary loan guarantee commitments for 
fiscal years 1997 through 2002 for each major functional 
category are:
            (1) National Defense (050):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $267,183,000,000.
                            (B) Outlays, $264,846,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $800,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $268,958,000,000.
                            (B) Outlays, $263,618,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $200,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $271,677,000,000.
                            (B) Outlays, $267,049,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $192,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $274,377,000,000.
                            (B) Outlays, $270,841,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $187,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $277,121,000,000.
                            (B) Outlays, $270,025,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $185,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $280,101,000,000.
                            (B) Outlays, $270,122,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $183,000,000.
            (2) International Affairs (150):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $13,732,000,000.
                            (B) Outlays, $14,963,000,000.
                            (C) New direct loan obligations, 
                        $4,333,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,110,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $11,551,000,000.
                            (B) Outlays, $13,484,000,000.
                            (C) New direct loan obligations, 
                        $4,342,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,262,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $10,576,000,000.
                            (B) Outlays, $12,467,000,000.
                            (C) New direct loan obligations, 
                        $4,358,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,311,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $11,089,000,000.
                            (B) Outlays, $11,025,000,000.
                            (C) New direct loan obligations, 
                        $4,346,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,311,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $10,890,000,000.
                            (B) Outlays, $10,584,000,000.
                            (C) New direct loan obligations, 
                        $4,395,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,409,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $11,009,000,000.
                            (B) Outlays, $10,281,000,000.
                            (C) New direct loan obligations, 
                        $4,387,000,000.
                            (D) New primary loan guarantee 
                        commitments $18,409,000,000.
            (3) General Science, Space, and Technology (250):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $16,537,000,000.
                            (B) Outlays, $16,697,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $16,428,000,000.
                            (B) Outlays, $16,494,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $16,313,000,000.
                            (B) Outlays, $16,224,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $16,159,000,000.
                            (B) Outlays, $16,111,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $15,934,000,000.
                            (B) Outlays, $15,943,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $15,602,000,000.
                            (B) Outlays, $15,673,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (4) Energy (270):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $2,380,000,000.
                            (B) Outlays, $2,729,000,000.
                            (C) New direct loan obligations, 
                        $1,033,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $2,441,000,000.
                            (B) Outlays, $2,078,000,000.
                            (C) New direct loan obligations, 
                        $1,039,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $2,034,000,000.
                            (B) Outlays, $1,327,000,000.
                            (C) New direct loan obligations, 
                        $1,045,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $1,697,000,000.
                            (B) Outlays, $815,000,000.
                            (C) New direct loan obligations, 
                        $1,036,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $1,782,000,000.
                            (B) Outlays, $740,000,000.
                            (C) New direct loan obligations, 
                        $1,000,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $1,430,000,000.
                            (B) Outlays, $231,000,000.
                            (C) New direct loan obligations, 
                        $1,031,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
            (5) Natural Resources and Environment (300):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $20,529,000,000.
                            (B) Outlays, $21,322,000,000.
                            (C) New direct loan obligations, 
                        $37,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $18,902,000,000.
                            (B) Outlays, $19,654,000,000.
                            (C) New direct loan obligations, 
                        $41,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $19,713,000,000.
                            (B) Outlays, $20,409,000,000.
                            (C) New direct loan obligations, 
                        $38,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $18,399,000,000.
                            (B) Outlays, $18,950,000,000.
                            (C) New direct loan obligations, 
                        $38,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $18,994,000,000.
                            (B) Outlays, $19,205,000,000.
                            (C) New direct loan obligations, 
                        $38,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $18,860,000,000.
                            (B) Outlays, $18,910,000,000.
                            (C) New direct loan obligations, 
                        $38,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
            (6) Agriculture (350):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $11,840,000,000.
                            (B) Outlays, $10,238,000,000.
                            (C) New direct loan obligations, 
                        $7,794,000,000.
                            (D) New primary loan guarantee 
                        commitments $5,870,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $11,750,000,000.
                            (B) Outlays, $9,855,000,000.
                            (C) New direct loan obligations, 
                        $9,346,000,000.
                            (D) New primary loan guarantee 
                        commitments $6,637,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $11,367,000,000.
                            (B) Outlays, $9,483,000,000.
                            (C) New direct loan obligations, 
                        $10,743,000,000.
                            (D) New primary loan guarantee 
                        commitments $6,586,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $10,714,000,000.
                            (B) Outlays, $8,843,000,000.
                            (C) New direct loan obligations, 
                        $10,736,000,000.
                            (D) New primary loan guarantee 
                        commitments $6,652,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $9,497,000,000.
                            (B) Outlays, $7,730,000,000.
                            (C) New direct loan obligations, 
                        $10,595,000,000.
                            (D) New primary loan guarantee 
                        commitments $6,641,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $8,964,000,000.
                            (B) Outlays, $7,181,000,000.
                            (C) New direct loan obligations, 
                        $10,570,000,000.
                            (D) New primary loan guarantee 
                        commitments $6,709,000,000.
            (7) Commerce and Housing Credit (370):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $7,838,000,000.
                            (B) Outlays, -$2,319,000,000.
                            (C) New direct loan obligations, 
                        $1,856,000,000.
                            (D) New primary loan guarantee 
                        commitments $197,340,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $9,464,000,000.
                            (B) Outlays, $5,752,000,000.
                            (C) New direct loan obligations, 
                        $1,787,000,000.
                            (D) New primary loan guarantee 
                        commitments $196,750,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $10,476,000,000.
                            (B) Outlays, $6,043,000,000.
                            (C) New direct loan obligations, 
                        $1,763,000,000.
                            (D) New primary loan guarantee 
                        commitments $196,253,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $12,448,000,000.
                            (B) Outlays, $7,320,000,000.
                            (C) New direct loan obligations, 
                        $1,759,000,000.
                            (D) New primary loan guarantee 
                        commitments $195,883,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $11,268,000,000.
                            (B) Outlays, $7,283,000,000.
                            (C) New direct loan obligations, 
                        $1,745,000,000.
                            (D) New primary loan guarantee 
                        commitments $195,375,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $11,598,000,000.
                            (B) Outlays, $7,218,000,000.
                            (C) New direct loan obligations, 
                        $1,740,000,000.
                            (D) New primary loan guarantee 
                        commitments $194,875,000,000.
            (8) Transportation (400):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $41,737,000,000.
                            (B) Outlays, $39,007,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $43,541,000,000.
                            (B) Outlays, $37,635,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $43,961,000,000.
                            (B) Outlays, $36,111,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $44,103,000,000.
                            (B) Outlays, $35,236,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $44,531,000,000.
                            (B) Outlays, $34,526,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $45,045,000,000.
                            (B) Outlays, $34,042,000,000.
                            (C) New direct loan obligations, 
                        $15,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
            (9) Community and Regional Development (450):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $6,672,000,000.
                            (B) Outlays, $10,149,000,000.
                            (C) New direct loan obligations, 
                        $1,231,000,000.
                            (D) New primary loan guarantee 
                        commitments $2,133,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $6,605,000,000.
                            (B) Outlays, $8,640,000,000.
                            (C) New direct loan obligations, 
                        $1,257,000,000.
                            (D) New primary loan guarantee 
                        commitments $2,133,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $6,559,000,000.
                            (B) Outlays, $7,820,000,000.
                            (C) New direct loan obligations, 
                        $1,287,000,000.
                            (D) New primary loan guarantee 
                        commitments $1,171,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $6,595,000,000.
                            (B) Outlays, $7,040,000,000.
                            (C) New direct loan obligations, 
                        $1,365,000,000.
                            (D) New primary loan guarantee 
                        commitments $1,171,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $6,243,000,000.
                            (B) Outlays, $6,655,000,000.
                            (C) New direct loan obligations, 
                        $1,404,000,000.
                            (D) New primary loan guarantee 
                        commitments $2,202,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $6,153,000,000.
                            (B) Outlays, $6,161,000,000.
                            (C) New direct loan obligations, 
                        $1,430,000,000.
                            (D) New primary loan guarantee 
                        commitments $2,202,000,000.
            (10) Education, Training, Employment, and Social 
        Services (500):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $46,965,000,000.
                            (B) Outlays, $49,504,000,000.
                            (C) New direct loan obligations, 
                        $16,219,000,000.
                            (D) New primary loan guarantee 
                        commitments $15,469,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $47,416,000,000.
                            (B) Outlays, $48,112,000,000.
                            (C) New direct loan obligations, 
                        $19,040,000,000.
                            (D) New primary loan guarantee 
                        commitments $14,760,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $48,046,000,000.
                            (B) Outlays, $47,817,000,000.
                            (C) New direct loan obligations, 
                        $21,781,000,000.
                            (D) New primary loan guarantee 
                        commitments $13,854,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $48,696,000,000.
                            (B) Outlays, $48,209,000,000.
                            (C) New direct loan obligations, 
                        $22,884,000,000.
                            (D) New primary loan guarantee 
                        commitments $14,589,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $49,410,000,000.
                            (B) Outlays, $48,704,000,000.
                            (C) New direct loan obligations, 
                        $23,978,000,000.
                            (D) New primary loan guarantee 
                        commitments $15,319,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $50,092,000,000.
                            (B) Outlays, $49,335,000,000.
                            (C) New direct loan obligations, 
                        $25,127,000,000.
                            (D) New primary loan guarantee 
                        commitments $16,085,000,000.
            (11) Health (550):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $129,918,000,000.
                            (B) Outlays, $130,276,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $187,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $137,726,000,000.
                            (B) Outlays, $138,064,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $94,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $144,995,000,000.
                            (B) Outlays, $145,168,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $152,961,000,000.
                            (B) Outlays, $152,890,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $161,114,000,000.
                            (B) Outlays, $160,789,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $167,926,000,000.
                            (B) Outlays, $167,476,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (12) Medicare (570):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $193,165,000,000.
                            (B) Outlays, $191,481,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $207,183,000,000.
                            (B) Outlays, $205,458,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $217,250,000,000.
                            (B) Outlays, $214,978,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $229,309,000,000.
                            (B) Outlays, $227,560,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $241,641,000,000.
                            (B) Outlays, $239,907,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $255,121,000,000.
                            (B) Outlays, $252,720,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (13) Income Security (600):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $232,612,000,000.
                            (B) Outlays, $240,107,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $241,254,000,000.
                            (B) Outlays, $244,185,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $244,842,000,000.
                            (B) Outlays, $251,716,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $262,510,000,000.
                            (B) Outlays, $263,060,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $262,260,000,000.
                            (B) Outlays, $265,271,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $281,100,000,000.
                            (B) Outlays, $277,213,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (14) Social Security (650):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $7,812,000,000.
                            (B) Outlays, $10,543,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $8,476,000,000.
                            (B) Outlays, $11,213,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $9,219,000,000.
                            (B) Outlays, $11,922,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $9,979,000,000.
                            (B) Outlays, $12,662,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $10,775,000,000.
                            (B) Outlays, $13,458,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $11,607,000,000.
                            (B) Outlays, $14,290,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (15) Veterans Benefits and Services (700):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $39,117,000,000.
                            (B) Outlays, $39,654,000,000.
                            (C) New direct loan obligations, 
                        $935,000,000.
                            (D) New primary loan guarantee 
                        commitments $26,362,000,000.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $38,458,000,000.
                            (B) Outlays, $39,321,000,000.
                            (C) New direct loan obligations, 
                        $962,000,000.
                            (D) New primary loan guarantee 
                        commitments $25,925,000,000.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $37,712,000,000.
                            (B) Outlays, $38,063,000,000.
                            (C) New direct loan obligations, 
                        $987,000,000.
                            (D) New primary loan guarantee 
                        commitments $25,426,000,000.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $37,713,000,000.
                            (B) Outlays, $39,427,000,000.
                            (C) New direct loan obligations, 
                        $1,021,000,000.
                            (D) New primary loan guarantee 
                        commitments $24,883,000,000.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $38,002,000,000.
                            (B) Outlays, $36,882,000,000.
                            (C) New direct loan obligations, 
                        $1,189,000,000.
                            (D) New primary loan guarantee 
                        commitments $24,298,000,000.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $39,713,000,000.
                            (B) Outlays, $39,912,000,000.
                            (C) New direct loan obligations, 
                        $1,194,000,000.
                            (D) New primary loan guarantee 
                        commitments $23,668,000,000.
            (16) Administration of Justice (750):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $22,125,000,000.
                            (B) Outlays, $19,930,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $22,302,000,000.
                            (B) Outlays, $21,162,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $23,186,000,000.
                            (B) Outlays, $22,241,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $23,235,000,000.
                            (B) Outlays, $22,944,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $20,746,000,000.
                            (B) Outlays, $20,704,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $20,740,000,000.
                            (B) Outlays, $20,700,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (17) General Government (800):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $11,372,000,000.
                            (B) Outlays, $11,747,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $13,314,000,000.
                            (B) Outlays, $13,640,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $12,592,000,000.
                            (B) Outlays, $12,928,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $12,987,000,000.
                            (B) Outlays, $13,364,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $12,549,000,000.
                            (B) Outlays, $12,454,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $13,020,000,000.
                            (B) Outlays, $12,321,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (18) Net Interest (900):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $282,653,000,000.
                            (B) Outlays, $282,653,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, 
                        $288,947,000,000.
                            (B) Outlays, $288,947,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, 
                        $292,607,000,000.
                            (B) Outlays, $292,607,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, 
                        $294,004,000,000.
                            (B) Outlays, $294,004,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, 
                        $298,041,000,000.
                            (B) Outlays, $298,041,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, 
                        $302,443,000,000.
                            (B) Outlays, $302,443,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (19) Allowances (920):
                    Fiscal year 1997:
                            (A) New budget authority, 
                        $2,671,000,000.
                            (B) Outlays, -$1,032,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, -
                        $1,934,000,000.
                            (B) Outlays, -$833,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, -
                        $2,025,000,000.
                            (B) Outlays, -$183,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, -
                        $2,038,000,000.
                            (B) Outlays, -$271,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, -
                        $2,026,000,000.
                            (B) Outlays, -$1,770,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, -
                        $2,182,000,000.
                            (B) Outlays, -$2,139,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
            (20) Undistributed Offsetting Receipts (950):
                    Fiscal year 1997:
                            (A) New budget authority, -
                        $45,574,000,000.
                            (B) Outlays, -$45,574,000,000.
                            (C) New direct loan obligations, 
                        $7,900,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1998:
                            (A) New budget authority, -
                        $35,574,000,000.
                            (B) Outlays, -$35,574,000,000.
                            (C) New direct loan obligations, 
                        $1,350,000,000.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 1999:
                            (A) New budget authority, -
                        $34,762,000,000.
                            (B) Outlays, -$34,762,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2000:
                            (A) New budget authority, -
                        $36,540,000,000.
                            (B) Outlays, -$36,540,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2001:
                            (A) New budget authority, -
                        $38,322,000,000.
                            (B) Outlays, -$38,322,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.
                    Fiscal year 2002:
                            (A) New budget authority, -
                        $40,586,000,000.
                            (B) Outlays, -$40,586,000,000.
                            (C) New direct loan obligations, 
                        $0.
                            (D) New primary loan guarantee 
                        commitments $0.

SEC. 4. RECONCILIATION.

    (a) Submissions.--
            (1) Welfare and medicaid reform.--Not later than 
        May 24, 1996, the House committees named in subsection 
        (b) shall submit their recommendations to provide 
        direct spending for welfare and medicaid reform to the 
        House Committee on the Budget. After receiving those 
        recommendations, the House Committee on the Budget 
        shall report to the House a reconciliation bill 
        carrying out all such recommendations without any 
        substantive revision.
            (2) Medicare preservation.--Not later than June 14, 
        1996, the House committees named in subsection (c) 
        shall submit their recommendations to provide direct 
        spending for medicare preservation to the House 
        Committee on the Budget. After receiving those 
        recommendations, the House Committee on the Budget 
        shall report to the House a reconciliation bill 
        carrying out all such recommendations without any 
        substantive revision.
            (3) Tax relief and miscellaneous direct spending 
        reforms.--Not later than July 12, 1996, the House 
        committees named in subsection (d) shall submit their 
        recommendations to provide direct spending, deficit 
        reduction, and revenues to the House Committee on the 
        Budget. After receiving those recommendations, the 
        House Committee on the Budget shall report to the House 
        a reconciliation bill carrying out all such 
        recommendations without any substantive revision.
            (4) Contingent instruction.--In addition to any 
        bill described in paragraph (1), (2), or (3), if the 
        chairman of the House Committee on the Budget submits a 
        letter to the Speaker which sets forth an additional 
        submission date for an omnibus reconciliation bill 
        carrying out all instructions under subsections (b), 
        (c), and (d) and that letter is printed in the 
        Congressional Record, then the House committees named 
        in those subsections shall promptly submit (or 
        resubmit) recommendations to carry out those 
        subsections to the House Committee on the Budget. After 
        receiving those recommendations, the House Committee on 
        the Budget shall report to the House a reconciliation 
        bill carrying out all such recommendations without any 
        substantive revision.
    (b) Instructions for Welfare and Medicaid Reform.--
            (1) Committee on agriculture.--The House Committee 
        on Agriculture shall report changes in laws within its 
        jurisdiction that provide direct spending for welfare 
        reform such that the total level of direct spending for 
        that committee does not exceed: $35,604,000,000 in 
        outlays for fiscal year 1997, $36,597,000,000 in 
        outlays for fiscal year 2002, and $216,199,000,000 in 
        outlays in fiscal years 1997 through 2002.
            (2) Committee on commerce.--The House Committee on 
        Commerce shall report changes in laws within its 
        jurisdiction that provide direct spending for medicaid 
        reform such that the total level of direct spending for 
        that committee does not exceed: $324,314,000,000 in 
        outlays for fiscal year 1997, $476,428,000,000 in 
        outlays for fiscal year 2002, and $2,392,181,000,000 in 
        outlays in fiscal years 1997 through 2002.
            (3) Committee on economic and educational 
        opportunities.--The House Committee on Economic and 
        Educational Opportunities shall report changes in laws 
        within its jurisdiction that provide direct spending 
        for welfare reform such that the total level of direct 
        spending for that committee does not exceed: 
        $15,812,000,000 in outlays for fiscal year 1997, 
        $19,677,000,000 in outlays for fiscal year 2002, and 
        $105,343,000,000 in outlays in fiscal years 1997 
        through 2002.
            (4) Committee on ways and means.--The House 
        Committee on Ways and Means shall report changes in 
        laws within its jurisdiction that provide direct 
        spending for welfare reform such that the total level 
        of direct spending for that committee does not exceed: 
        $382,631,000,000 in outlays for fiscal year 1997, 
        $563,077,000,000 in outlays for fiscal year 2002, and 
        $2,810,370,000,000 in outlays in fiscal years 1997 
        through 2002.
    (c) Instructions for Medicare Preservation.--
            (1) Committee on commerce.--The House Committee on 
        Commerce shall report changes in laws within its 
        jurisdiction that provide direct spending for medicare 
        preservation such that the total level of direct 
        spending for that committee does not exceed: 
        $317,514,000,000 in outlays for fiscal year 1997, 
        $425,828,000,000 in outlays for fiscal year 2002, and 
        $2,234,080,000,000 in outlays in fiscal years 1997 
        through 2002.
            (2) Committee on ways and means.--The House 
        Committee on Ways and Means shall report changes in 
        laws within its jurisdiction that provide direct 
        spending for medicare preservation such that the total 
        level of direct spending for that committee does not 
        exceed: $375,831,000,000 in outlays for fiscal year 
        1997, $512,477,000,000 in outlays for fiscal year 2002, 
        and $2,652,269,000,000 in outlays in fiscal years 1997 
        through 2002.
    (d) Instructions for Tax Relief and Miscellaneous Direct 
Spending Reforms.--
            (1) Committee on banking and financial services.--
        (A) The House Committee on Banking and Financial 
        Services shall report changes in laws within its 
        jurisdiction that provide direct spending such that the 
        total level of direct spending for that committee does 
        not exceed: -$12,249,000,000 in outlays for fiscal year 
        1997, -$6,116,000,000 in outlays for fiscal year 2002, 
        and -$42,310,000,000 in outlays in fiscal years 1997 
        through 2002.
            (B) The House Committee on Banking and Financial 
        Services shall report changes in laws within its 
        jurisdiction that would reduce the deficit by: $0 in 
        fiscal year 1997, $115,000,000 for fiscal year 2002, 
        and $305,000,000 in fiscal years 1997 through 2002.
            (2) Committee on commerce.--The House Committee on 
        Commerce shall report changes in laws within its 
        jurisdiction that provide direct spending such that the 
        total level of direct spending for that committee does 
        not exceed: $316,013,000,000 in outlays for fiscal year 
        1997, $419,609,000,000 in outlays for fiscal year 2002, 
        and $2,213,093,000,000 in outlays in fiscal years 1997 
        through 2002.
            (3) Committee on economic and educational 
        opportunities.--The House Committee on Economic and 
        Educational Opportunities shall report changes in laws 
        within its jurisdiction that provide direct spending 
        such that the total level of direct spending for that 
        committee does not exceed: $14,968,000,000 in outlays 
        for fiscal year 1997, $18,818,000,000 in outlays for 
        fiscal year 2002, and $101,044,000,000 in outlays in 
        fiscal years 1997 through 2002.
            (4) Committee on government reform and oversight.--
        (A) The House Committee on Government Reform and 
        Oversight shall report changes in laws within its 
        jurisdiction that provide direct spending such that the 
        total level of direct spending for that committee does 
        not exceed: $65,130,000,000 in outlays for fiscal year 
        1997, $82,548,000,000 in outlays for fiscal year 2002, 
        and $442,000,000,000 in outlays in fiscal years 1997 
        through 2002.
            (B) The House Committee on Government Reform and 
        Oversight shall report changes in laws within its 
        jurisdiction that would reduce the deficit by: 
        $255,000,000 in fiscal year 1997, $575,000,000 for 
        fiscal years 2002, and $2,886,000,000 in fiscal years 
        1997 through 2002.
            (5) Committee on international relations.--The 
        House Committee on International Relations shall report 
        changes in laws within its jurisdiction that provide 
        direct spending such that the total level of direct 
        spending for that committee does not exceed: 
        $13,025,000,000 in outlays for fiscal year 1997, 
        $10,311,000,000 in outlays for fiscal year 2002, and 
        $67,953,000,000 in outlays in fiscal years 1997 through 
        2002.
            (6) Committee on the judiciary.--The House 
        Committee on the Judiciary shall report changes in laws 
        within its jurisdiction that provide direct spending 
        such that the total level of direct spending for that 
        committee does not exceed: $2,784,000,000 in outlays 
        for fiscal year 1997, $4,586,000,000 in outlays for 
        fiscal year 2002, and $24,982,000,000 in outlays in 
        fiscal years 1997 through 2002.
            (7) Committee on national security.--The House 
        Committee on National Security shall report changes in 
        laws within its jurisdiction that provide direct 
        spending such that the total level of direct spending 
        for that committee does not exceed: $39,787,000,000 in 
        outlays for fiscal year 1997, $49,551,000,000 in 
        outlays for fiscal year 2002, and $270,749,000,000 in 
        outlays in fiscal years 1997 through 2002.
            (8) Committee on resources.--The House Committee on 
        Resources shall report changes in laws within its 
        jurisdiction that provide direct spending such that the 
        total level of direct spending for that committee does 
        not exceed: $2,132,000,000 in outlays for fiscal year 
        1997, $2,057,000,000 in outlays for fiscal year 2002, 
        and $11,739,000,000 in outlays in fiscal years 1997 
        through 2002.
            (9) Committee on science.--The House Committee on 
        Science shall report changes in laws within its 
        jurisdiction that provide direct spending such that the 
        total level of direct spending for that committee does 
        not exceed: $40,000,000 in outlays for fiscal year 
        1997, $46,000,000 in outlays for fiscal year 2002, and 
        $242,000,000 in outlays in fiscal years 1997 through 
        2002.
            (10) Committee on transportation and 
        infrastructure.--The House Committee on Transportation 
        and Infrastructure shall report changes in laws within 
        its jurisdiction that provide direct spending such that 
        the total level of direct spending for that committee 
        does not exceed: $18,254,000,000 in outlays for fiscal 
        year 1997, $17,890,000,000 in outlays for fiscal year 
        2002, and $106,903,000,000 in outlays in fiscal years 
        1997 through 2002.
            (11) Committee on veterans' affairs.--The House 
        Committee on Veterans' Affairs shall report changes in 
        laws within its jurisdiction that provide direct 
        spending such that the total level of direct spending 
        for that committee does not exceed: $21,375,000,000 in 
        outlays for fiscal year 1997, $22,217,000,000 in 
        outlays for fiscal year 2002, and $130,468,000,000 in 
        outlays in fiscal years 1997 through 2002.
            (12) Committee on ways and means.--(A) The House 
        Committee on Ways and Means shall report changes in 
        laws within its jurisdiction that provide direct 
        spending such that the total level of direct spending 
        for that committee does not exceed: $373,764,000,000 in 
        outlays for fiscal year 1997, $509,912,000,000 in 
        outlays for fiscal year 2002, and $2,638,286,000,000 in 
        outlays in fiscal years 1997 through 2002.
            (B) The House Committee on Ways and Means shall 
        report changes in laws within its jurisdiction such 
        that the total level of revenues for that committee is 
        not less than: $1,050,476,000,000 in revenues for 
        fiscal year 1997, $1,319,852,000,000 in revenues for 
        fiscal year 2002, and $7,047,865,000,000 in revenues in 
        fiscal years 1997 through 2002.
    (e) Definition.--For purposes of this section, the term 
``direct spending'' has the meaning given to such term in 
section 250(c)(8) of the Balanced Budget and Emergency Deficit 
Control Act of 1985.

SEC. 5. SALE OF GOVERNMENT ASSETS.

    (a) Budgetary Treatment.--For purposes of the Congressional 
Budget Act of 1974, amounts realized from sales of assets shall 
be scored with respect to the level of budget authority, 
outlays, or revenues.
    (b) Definition.--For purposes of this section, the term 
``sale of an asset'' shall have the same meaning as under 
section 250(c)(21) of the Balanced Budget and Emergency Deficit 
Control Act of 1985.
    (c) Treatment of Loan Assets.--For purposes of this 
section, the sale of loan assets or the prepayment of a loan 
shall be governed by the terms of the Federal Credit Reform Act 
of 1990.

SEC. 6. CREDIT REFORM AND DIRECT STUDENT LOANS.

    For the purposes of any concurrent resolution on the budget 
and the Congressional Budget Act of 1974, the cost of a direct 
loan under the Federal direct student loan program shall be the 
net present value, at the time when the direct loan is 
disbursed, of the following cash flows for the estimated life 
of the loan--
            (1) loan disbursements;
            (2) repayments of principal;
            (3) payments of interest and other payments by or 
        to the Government over the life of the loan after 
        adjusting for estimated defaults, prepayments, fees, 
        penalties, and other recoveries; and
            (4) direct expenses, including--
                    (A) activities related to credit extension, 
                loan origination, loan servicing, management of 
                contractors, and payments to contractors, other 
                government entities, and program participants;
                    (B) collection of delinquent loans; and
                    (C) writeoff and closeout of loans.

SEC. 7. SENSE OF CONGRESS ON BASELINES.

    (a) Findings.--Congress finds that:
            (1) Baselines are projections of future spending if 
        existing policies remain unchanged.
            (2) Under baseline assumptions, spending 
        automatically rises with inflation even if such 
        increases are not mandated under existing law.
            (3) Baseline budgeting is inherently biased against 
        policies that would reduce the projected growth in 
        spending because such policies are depicted as spending 
        reductions from an increasing baseline.
            (4) The baseline concept has encouraged Congress to 
        abdicate its constitutional obligation to control the 
        public purse for those programs which are automatically 
        funded.
    (b) Sense of Congress.--It is the sense of Congress that 
baseline budgeting should be replaced with a budgetary model 
that requires justification of aggregate funding levels and 
maximizes congressional accountability for Federal spending.

SEC. 8. SENSE OF CONGRESS ON EMERGENCIES.

    (a) Findings.--Congress finds that:
            (1) The Budget Enforcement Act of 1990 exempted 
        from the discretionary spending limits and the Pay-As-
        You-Go requirements for entitlement and tax legislation 
        funding requirements that are designated by Congress 
        and the President as an emergency.
            (2) Congress and the President have increasingly 
        misused the emergency designation by--
                    (A) designating as emergencies funding 
                requirements that are predictable and do not 
                pose a threat to life, property, or national 
                security,
                    (B) designating emergencies with the sole 
                purpose of circumventing statutory and 
                congressional spending limitations and
                    (C) adding to emergency legislation 
                controversial items that would not otherwise 
                withstand public scrutiny.
    (b) Sense of Congress.--It is the sense of Congress that in 
order to balance the Federal budget Congress should consider 
alternative approaches to budgeting for emergencies, including 
codifying the definition of an emergency, establishing 
contingency funds to pay for emergencies, and fully offsetting 
the costs of emergencies with rescissions of spending authority 
that would have been obligated but for the rescission.

SEC. 9. SENSE OF CONGRESS ON LOAN SALES.

    (a) Findings.--Congress finds that:
            (1) The House and Senate Appropriations 
        Subcommittees on Treasury, Postal Service, and General 
        Government have stated that ``more consideration should 
        be given to the sale of nonperforming loans held not 
        only by HUD, but by all Federal agencies that provide 
        credit programs'' and directed the Office of Management 
        and Budget to direct Federal agencies to evaluate the 
        value of their credit programs and develop a plan for 
        the privatization of such credit programs.
            (2) The Senate Appropriations Subcommittee on 
        Commerce, Justice, State, the Judiciary, and Related 
        Agencies has directed that the Small Business 
        Administration should study and report to Congress on 
        the feasibility of private servicing of SBA loan 
        activities.
            (3) The House Appropriations Subcommittee on 
        Agriculture, Rural Development, Food and Drug 
        Administration, and Related Agencies previously 
        directed the Farmers Home Administration to ``explore 
        the potential savings that might occur from contract 
        centralized servicing.''
            (4) The Committee on Agriculture of the House has 
        consistently urged the Secretary of Agriculture to 
        explore contracting out loan servicing operations.
            (5) The General Accounting Office has found that 
        ``Allowing the public and private sectors to compete 
        for the centralized servicing (of loans) could mean 
        reaping the benefits of the competitive marketplace - 
        greater efficiency, increased focus on customer needs, 
        increased innovation, and improved morale.''
            (6) The House Committee on Small Business has 
        recommended ``that 40 percent of the loan servicing 
        portfolio (for Disaster Loans) be privatized.''
            (7) The President's Budget for Fiscal Year 1997 
        proposes to review options for improving the quality of 
        loan portfolio management including contracting to the 
        private sector.
    (b) Sense of Congress.--It is the sense of Congress that 
the appropriate committees of the House and the Senate should 
report legislation authorizing the sale of such loan assets as 
they deem appropriate in order to contribute to Government 
downsizing, administrative cost savings, and improved services 
to borrowers.

SEC. 10. SENSE OF CONGRESS ON CHANGES IN MEDICAID.

    It is the sense of Congress that any legislation changing 
the medicaid program pursuant to this resolution should--
            (1) guarantee coverage for low-income children, 
        pregnant women, the elderly, and the disabled as 
        described in the National Governors' Association 
        February 6, 1996, policy on reforming medicaid, which 
        was endorsed unanimously by our Nation's governors;
            (2) maintain the medicaid program as a matching 
        program while providing a fairer and more equitable 
        formula for calculating the matching rate;
            (3) reject any illusory financing schemes;
            (4) continue Federal minimum standards for nursing 
        homes;
            (5) continue Federal rules that prevent wives or 
        husbands from being required to impoverish themselves 
        in order to obtain and keep medicaid benefits for their 
        spouse requiring nursing home care; and
            (6) provide coverage of medicare premiums and cost-
        sharing payments for low-income seniors consistent with 
        the unanimous National Governors' Association medicaid 
        policy.

SEC. 11. SENSE OF CONGRESS ON DOMESTIC VIOLENCE AND FEDERAL ASSISTANCE.

    (a) Findings.--Congress finds that--
            (1) domestic violence is the leading cause of 
        physical injury to women; the Department of Justice 
        estimates that over one million violent crimes against 
        women are committed by intimate partners annually;
            (2) domestic violence dramatically affects the 
        victim's ability to participate in the workforce; a 
        University of Minnesota survey reported that one-
        quarter of battered women surveyed had lost a job 
        partly because of being abused and that over half of 
        these women had been harassed by their abuser at work;
            (3) domestic violence is often intensified as women 
        seek to gain economic independence through attending 
        school or training programs; batterers have been 
        reported to prevent women from attending these programs 
        or sabotage their efforts at self-improvement;
            (4) nationwide surveys of service providers 
        prepared by the Taylor Institute of Chicago, document, 
        for the first time, the interrelationship between 
        domestic violence and welfare by showing that between 
        50 percent and 80 percent of AFDC recipients are 
        current or past victims of domestic violence;
            (5) over half of the women surveyed stayed with 
        their batterers because they lacked the resources to 
        support themselves and their children; the surveys also 
        found that the availability of economic support is a 
        critical factor in poor women's ability to leave 
        abusive situations that threaten them and their 
        children; and
            (6) proposals to restructure the welfare programs 
        may impact the availability of the economic support and 
        the safety net necessary to enable poor women to flee 
        abuse without risking homelessness and starvation for 
        their families.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) no welfare reform provision shall be enacted by 
        Congress unless and until Congress considers whether 
        such welfare reform provisions will exacerbate violence 
        against women and their children, further endanger 
        women's lives, make it more difficult for women to 
        escape domestic violence, or further punish women 
        victimized by violence; and
            (2) any welfare reform measure enacted by Congress 
        shall require that any welfare-to-work, education, or 
        job placement programs implemented by the States will 
        address the impact of domestic violence on welfare 
        recipients.

SEC. 12. SENSE OF CONGRESS ON IMPACT OF LEGISLATION ON CHILDREN.

    (a) Sense of Congress.--It is the sense of Congress that 
Congress should not adopt or enact any legislation that will 
increase the number of children who are hungry, homeless, poor, 
or medically uninsured.
    (b) Legislative Accountability for Impact on Children.--In 
the event legislation enacted to comply with this resolution 
results in an increase in the number of hungry, homeless, poor, 
or medically uninsured by the end of fiscal year 1997, Congress 
shall revisit the provisions of such legislation which caused 
such increase and shall, as soon as practicable thereafter, 
adopt legislation which would halt any continuation of such 
increase.

SEC. 13. SENSE OF HOUSE OF REPRESENTATIVES ON DEBT REPAYMENT.

    It is the sense of the House of Representatives that--
            (1) Congress has a basic moral and ethical 
        responsibility to future generations to repay the 
        Federal debt;
            (2) Congress should enact a plan that balances the 
        budget, and then also develops a regimen for paying off 
        the Federal debt;
            (3) after the budget is balanced, a surplus should 
        be created which can be used to begin paying off the 
        debt; and
            (4) such a plan should be formulated and 
        implemented so that this generation can save future 
        generations from the crushing burdens of the Federal 
        debt.

SEC. 14. SENSE OF CONGRESS ON COMMITMENT TO A BALANCED BUDGET BY FISCAL 
                    YEAR 2002.

    It is the sense of Congress that the President and Congress 
should continue to adhere to the statutory commitment made by 
both parties on November 20, 1995, to enact legislation to 
achieve a balanced budget not later than fiscal year 2002 as 
estimated by the Congressional Budget Office.

                                
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