[House Report 105-100]
[From the U.S. Government Publishing Office]



                                                  Union Calendar No. 61
105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-100
_______________________________________________________________________


 
         CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1998


                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 84

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

                             together with

                    ADDITIONAL AND DISSENTING VIEWS




  May 18, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



                                                  Union Calendar No. 61
105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-100
_______________________________________________________________________


         CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1998


                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 84

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

                             together with

                    ADDITIONAL AND DISSENTING VIEWS




  May 18, 1997.--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
DAVID L. HOBSON, Ohio                JOHN M. SPRATT, Jr., South 
CHRISTOPHER SHAYS, Connecticut           Carolina
WALLY HERGER, California             JIM McDERMOTT, Washington
JIM BUNNING, Kentucky                ALAN B. MOLLOHAN, West Virginia
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
DAN MILLER, Florida                  PATSY T. MINK, Hawaii
BOB FRANKS, New Jersey               EARL POMEROY, North Dakota
NICK SMITH, Michigan                 LYNN C. WOOLSEY, California
BOB INGLIS, South Carolina           LUCILLE ROYBAL-ALLARD, California
SUSAN MOLINARI, New York             LYNN N. RIVERS, Michigan
JIM NUSSLE, Iowa                     LLOYD DOGGETT, Texas
PETER HOEKSTRA, Michigan             BENNIE G. THOMPSON, Mississippi
JOHN B. SHADEGG, Arizona             BENJAMIN L. CARDIN, Maryland
GEORGE P. RADANOVICH, California     SCOTTY BAESLER, Kentucky
CHARLES F. BASS, New Hampshire       DAVID MINGE, Minnesota
MARK W. NEUMANN, Wisconsin           KEN BENTSEN, Texas
MIKE PARKER, Mississippi             JIM DAVIS, Florida
ROBERT L. EHRLICH, Jr., Maryland     BRAD SHERMAN, California
GIL GUTKNECHT, Minnesota             ROBERT A. WEYGAND, Rhode Island
VAN HILLEARY, Tennessee              EVA M. CLAYTON, North Carolina
KAY GRANGER, Texas
JOHN E. SUNUNU, New Hampshire
JOSEPH R. PITTS, Pennsylvania

                           Professional Staff

                     Richard E. May, Staff Director
                  Thomas Kahn, Minority Staff Director



                            C O N T E N T S

                              ----------                              
                                                                   Page
Introduction.....................................................     3
Budget Resolution Tables.........................................     3
    Function 050: National Defense...............................    11
    Function 150: International Affairs..........................    12
    Function 250: General Science, Space and Technology..........    13
    Function 270: Energy.........................................    14
    Function 300: Natural Resources and Environment..............    15
    Function 350: Agriculture....................................    17
    Function 370: Commerce and Housing Credit....................    18
    Function 400: Transportation.................................    20
    Function 450: Community and Regional Development.............    21
    Function 500: Education, Training, Employment, and Social 
      Services...................................................    22
    Function 550: Health.........................................    24
    Function 570: Medicare.......................................    26
    Function 600: Income Security................................    28
    Function 650: Social Security................................    32
    Function 700: Veterans' Benefits and Services................    33
    Function 750: Administration of Justice......................    35
    Function 800: General Government.............................    36
    Function 900: Net Interest...................................    37
    Function 920: Allowances.....................................    38
    Function 950: Undistributed Offsetting Receipts..............    39
Revenues.........................................................    40
Economic Assumptions.............................................    50
The Congressional Budget Process.................................    54
    Spending Allocations.........................................    54
    Reconciliation Instructions..................................    67
    Enforcing the Budget Resolution..............................    71
Statutory Controls Over the Budget...............................    72
FY 1998 Budget Resoltuion vs. President's Budget Totals..........    73
Sense of Congress................................................    74
Rollcall Votes and Related Matter................................    74
    Additional and Dissenting Views..............................    87
Appendix A: Bipartisan Budget Agreement..........................   130
Appendix B: Budget Resolution....................................   148


105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-100
_______________________________________________________________________


         CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1998

                                _______
                                

  May 18, 1997.--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 Budget, submitted the following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                     [To accompany H. Con. Res. 84]

                              Introduction

                              ----------                              

    The budget resolution described in this report was 
developed over the past 2 months through intensive 
deliberations involving the congressional leadership and the 
President and officials of his administration. The overall 
framework of the plan--which is intended to balance the Federal 
budget by 2002 and provide various forms of tax relief--was 
agreed to on May 2, 1997. Agreements concerning numerous policy 
components of the plan, in both discretionary and mandatory 
spending, subsequently have been developed, sealing this 
bipartisan agreement.
    On May 16, 1997, the House Committee on the Budget, in a 
31-7 vote, favorably reported this resolution to the House.
    Attached as Appendix A to this report is the Bipartisan 
Budget Agreement, dated May 15, 1997. The parties to the 
Agreement have pledged to engage in a coordinated effort to 
enact its provisions into law. This report and the budget 
resolution represent a good faith effort to reflect the 
contents of the Agreement.

                         FISCAL YEAR 1998 BUDGET RESOLUTION--TOTAL SPENDING AND REVENUES                        
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
                                                                                                                
Total Spending:                                                                                                 
    BA............................    1,703.995    1,766.155    1,825.407    1,874.010    1,921.084    9,090.652
    O.............................    1,692.189    1,753.645    1,811.140    1,858.381    1,888.811    9,004.167
Revenues..........................    1,601.784    1,664.181    1,728.128    1,805.143    1,890.389    8,689.625
Deficit (-)/SURPLUS(+)............      -90.405      -89.464      -83.012      -53.238        1.578     -314.542
Debt Subject to Limit.............    5,593.500    5,836.000    6,082.400    6,301.100    6,473.200  ...........
----------------------------------------------------------------------------------------------------------------
                                                   BY FUNCTION                                                  
                                                                                                                
National Defense (050):                                                                                         
    BA............................      268.197      270.784      274.802      281.305      289.092    1,384.180
    O.............................      265.978      265.771      268.418      270.110      272.571    1,342.848
International Affairs (150):                                                                                    
    BA............................       15.909       14.918       15.782       16.114       16,353       79.076
    O.............................       14.558       14.569       14.981       14.751       14.812       73.671
General Science, Space, &                                                                                       
 Technology (250):                                                                                              
    BA............................       16.237       16.203       15.947       15.800       15.604       79.791
    O.............................       16.882       16.528       16.013       15.682       15.668       80.953
Energy (270):                                                                                                   
    BA............................        3.123        3.469        3.186        2.939        2.846       15.563
    O.............................        2.247        2.446        2.293        2.048        1.867       15.563
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................       23.877       23.227       22.570       22.151       22.086      113.911
    O.............................       22.405       22.702       22.963       22.720       22.313      113.103
Agriculture (350):                                                                                              
    BA............................       13.133       12.790       12.215       10.978       10.670       59.786
                                                                                                                
    O.............................       11.892       11.294       10.664        9.494        9.108       52.452
Commerce & Housing Credit (370):                                                                                
    BA............................        9.296       10.127       13.921       15.546       16.902       65.792
    O.............................        1.769        3.344        8.559       11.601       12.765       38.038
Transportation (400):                                                                                           
    BA............................       46.402       46.556       47.114       48.135       49.184      237.391
    O.............................       40.933       41.256       41.357       41.303       41.247      206.096
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................        8.768        8.489        7.810        7.764        7.790       40.621
    O.............................       10.387       10.902       10.986       11.350        7.790       40.621
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................       60.020       60.450       61.703       62.959       63.339      308.471
    O.............................       56.062       59.335       60.728       61.931       62.316      300.372
Health (550):                                                                                                   
    BA............................      137.799      144.968      154.068      163.412      172,171      772.418
    O.............................      137.767      144.944      153.947      163.135      171.727      771.520
Medicare (570):                                                                                                 
    BA............................      201.620      212.073      225.540      239.636      251.548    1,130.417
    O.............................      201.764      211.548      225.537      238.781      250.769    1,128.399
Income Security (600):                                                                                          
    BA............................      239.032      254.090      269.566      275.145      286.945    1,324.778
    O.............................      247.758      258.064      268.161      277.264      285.239    1,336.486
Social Security (650):                                                                                          
    BA............................      380.781      399.389      419.400      440.113      463.505    2,103.188
    O.............................      384.102      402.811      422.770      443.893      466.786    2,120.362
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................       40.545       41.466       41.740       42.093       42.282      208.126
    O.............................       41.337       41.700       41.908       42.215       42.436      209.596
Administration of Justice (750):                                                                                
    BA............................       24.765       25.120       24.178       24.354       24.883      123.300
    O.............................       22.609       24.476       25.240       25.901       24.879      123.105
General Government (800):                                                                                       
    BA............................       14.711       14.444       13.977       13.675       13.105       69.912
    O.............................       13.959       14.363       14.727       14.131       13.100       70.280
Net Interest (900):                                                                                             
    BA............................      248.578      252.029      247.884      241.899      236.877    1,227.268
    O.............................      248.578      252.029      247.884      241.899      236.877    1,227.268
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsetting Receipts                                                                               
 (950):                                                                                                         
    BA............................      -48.798      -44.437      -45.996      -50.008      -64.098     -253.337
    O.............................      -48.798      -44.437      -45.996      -50.008      -64.098     -253.337
----------------------------------------------------------------------------------------------------------------


                               FISCAL YEAR 1998 BUDGET RESOLUTION--TOTAL ON-BUDGET                              
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
                                                                                                                
Total Spending:                                                                                                 
    BA............................    1,386.875    1,439.798    1,486.311    1,520.242    1,551.563    7,384.790
    O.............................    1,371.848    1,424.002    1,468.748    1,500.854    1,516.024    7,281.477
Revenues..........................    1,198.979    1,241.859    1,285.559    1,343.591    1,407.564    6,477.552
Deficit...........................     -172.869     -182.143     -183.189     -157.263     -108.460     -803.925
----------------------------------------------------------------------------------------------------------------
                                                   BY FUNCTION                                                  
                                                                                                                
National Defense (050):                                                                                         
    BA............................      268.197      270.784      274.802      281.305      289.092    1,384.180
    O.............................      265.978      265.771      268.418      270.110      272.571    1,342.848
International Affairs (150):                                                                                    
    BA............................       15.909       14.918       15.782       16.114       16.353       79.076
    O.............................       14.558       14.569       14.981       14.751       14.812       73.671
General Science, Space, &                                                                                       
 Technology (250):                                                                                              
    BA............................       16.237       16.203       15.947       15.800       15.604       79.791
    O.............................       16.882       16.528       16.013       15.862       15.668       80.953
Energy (270):                                                                                                   
    BA............................        3.123        3.469        3.186        2.939        2.846       15.563
    O.............................        2.247        2.446        2.293        2.048        1.867       10.901
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................       23.877       23.227       22.570       22.151       22.086      113.911
    O.............................       22.405       22.702       22.963       22.720       22.313      113.103
Agriculture (350):                                                                                              
    BA............................       13.133       12.790       12.215       10.978       10.670       59.786
    O.............................       11.892       11.294       10.664        9.494        9.108       52.452
Commerce & Housing Credit (370):                                                                                
    BA............................        6.607       11.082       15.183       16.078       16.678       65.628
    O.............................       -0.920        4.299        9.821       12.133       12.541       37.874
Transportation (400):                                                                                           
    BA............................       46.402       46.556       47.114       48.135       49.184      237.391
    O.............................       40.933       41.256       41.357       41.303       41.247      206.096
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................        8.768        8.489        7.810        7.764        7.790       40.621
    O.............................       10.387       10.902       10.986       11.350        8.429       52.054
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................       60.020       60.450       61.703       62.959       63.339      308.471
    O.............................       56.062       59.335       60.728       61.931       62.316      300.372
Health (550):                                                                                                   
    BA............................      137.799      144.968      154.068      163.412      172.171      772.418
    O.............................      137.767      144.944      153.947      163.135      171.727      771.520
Medicare (570):                                                                                                 
    BA............................      201.620      212.073      225.540      239.636      251.548    1,130.417
    O.............................      201.764      211.548      225.537      238.781      250.769    1,128.399
Income Security (600):                                                                                          
    BA............................      239.032      254.090      269.566      275.145      286.945    1,324.778
    O.............................      247.758      258.064      268.161      277.264      285.239    1,336.486
Social Security (650):                                                                                          
    BA............................       11.424       12.060       12.792       13.022       14.383       63.681
    O.............................       11.524       12.196       12.866       13.043       14.398       64.027
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................       40.545       41.466       41.740       42.093       42.282      208.126
    O.............................       41.337       41.700       41.908       42.215       42.436      209.596
Administration of Justice (750):                                                                                
    BA............................       24.765       25.120       24.178       24.354       24.883      123.300
    O.............................       22.609       24.476       25.240       25.901       24.879      123.105
General Government (800):                                                                                       
    BA............................       14.711       14.444       13.977       13.675       13.105       69.912
    O.............................       13.959       14.363       14.727       14.131       13.100       70.280
Net Interest (900):                                                                                             
    BA............................      296.547      304.558      305.075      303.833      303.728    1,513.742
    O.............................      296.547      304.558      305.075      303.833      303.728    1,513.742
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsetting Receipts                                                                               
 (950):                                                                                                         
    BA............................      -41.841      -36.949      -36.937      -39.151      -51.124     -206.002
    O.............................      -41.841      -36.949      -36.937      -39.151      -51.124     -206.002
----------------------------------------------------------------------------------------------------------------


                              FISCAL YEAR 1998 BUDGET RESOLUTION--TOTAL OFF-BUDGET                              
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
                                                                                                                
Total Spending:                                                                                                 
    BA............................      317.120      326.357      339.096      353.768      369.521    1,705.862
    O.............................      320.341      329.643      342.392      357.527      372.787    1,722.690
Revenues..........................      402.805      422.322      442.569      461.552      482.825    2,212.073
Deficit...........................       82.464       92.679      100.177      104.025      110.038      489.383
----------------------------------------------------------------------------------------------------------------
                                                   BY FUNCTION                                                  
                                                                                                                
National Defense (050):                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
International Affairs (150):                                                                                    
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
General Science, Space, &                                                                                       
 Technology (250):                                                                                              
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Energy (270):                                                                                                   
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Agriculture (350):                                                                                              
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Commerce & Housing Credit (370):                                                                                
    BA............................        2.689       -0.955       -1.262       -0.532        0.224        0.164
    O.............................        2.689       -0.955       -1.262       -0.532        0.224        0.164
Transportation (400):                                                                                           
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Health (550):                                                                                                   
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Medicare (570):                                                                                                 
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Income Security (600):                                                                                          
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Social Security (650):                                                                                          
    BA............................      369.357      387.329      406.608      427.091      449.122    2,039.507
    O.............................      372.578      390.615      409.904      430.850      452.388    2,056.335
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Administration of Justice (750):                                                                                
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
General Government (800):                                                                                       
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Net Interest (900):                                                                                             
    BA............................      -47.969      -52.529      -57.191      -61.934      -66.851     -286.474
    O.............................      -47.969      -52.529      -57.191      -61.934      -66.851     -286.474
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsettings Receipts                                                                              
 (950):                                                                                                         
    BA............................       -6.957       -7.488       -9.059      -10.857      -12.974      -47.335
    O.............................       -6.957       -7.488       -9.059      -10.857      -12.974      -47.335
----------------------------------------------------------------------------------------------------------------


                           FISCAL YEAR 1998 BUDGET RESOLUTION--DISCRETIONARY SPENDING                           
                                      [By function, in billions of dollars]                                     
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
                                                                                                                
Total Spending:                                                                                                 
    BA............................      526.857      532.999      537.193      542.032      551.074    2,690.155
    O.............................      553.268      559.321      564.265      564.396      560.799    2,802.049
Defense Spending:                                                                                               
    BA............................      269.000      271.500      275.367      281.847      289.610    1,387.324
    O.............................      266.823      266.518      268.995      270.663      273.100    1,346.099
Non-Defense Spending:                                                                                           
    BA............................      257.857      261.499      261.826      260.185      261.464    1,302.831
    O.............................      286.445      292.803      295.270      293.733      287.699    1,455.950
----------------------------------------------------------------------------------------------------------------
                                                   BY FUNCTION                                                  
                                                                                                                
National Defense (050):                                                                                         
    BA............................      269.000      271.500      275.367      281.847      289.610    1,387.324
    O.............................      266.823      266.518      268.995      270.663      273.100    1,346.099
International Affairs (150):                                                                                    
    BA............................       19.038       18.601       18.533       18.348       18.218       92.738
    O.............................       19.179       18.842       18.809       18.505       18.442       93.777
General Science, Space, &                                                                                       
 Technology (250):                                                                                              
    BA............................       16.199       16.172       15.916       15.769       15.573       79.629
    O.............................       16.847       16.493       15.978       15.830       15.637       80.785
Energy (270):                                                                                                   
    BA............................        4.754        4.895        4.587        4.396        4.243       22.875
    O.............................        5.045        5.053        4.827        4.630        4.438       23.993
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................       22.807       22.222       21.566       21.185       21.152      108.932
    O.............................       21.393       21.657       21.944       21.822       21.472      108.288
Agriculture (350):                                                                                              
    BA............................        4.055        3.952        3.864        3.793        3.757       19.421
    O.............................        4.143        4.063        3.943        3.852        3.774       19.775
Commerce & Housing Credit (370):                                                                                
    BA............................        3.133        3.538        4.965        2.963        2.941       17.540
    O.............................        3.066        3.361        4.565        3.201        2.683       16.876
Transportation (400):                                                                                           
    BA............................       13.556       14.974       14.788       15.066       15.347       73.731
    O.............................       38.267       38.933       39.310       39.418       39.418      195.346
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................        8.288        8.204        7.525        7.528        7.553       39.098
    O.............................       10.044       10.879       10.954       11.326        8.419       51.622
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................       46.721       47.015       47.858       48.478       49.199      239.271
    O.............................       43.185       46.107       47.065       47.776       48.559      232.692
Health (550):                                                                                                   
    BA............................       24.896       24.733       24,628       24.432       24.157      122.846
    O.............................       24.612       24.835       24.883       24.614       24.291      123.235
Medicare (570):                                                                                                 
    BA............................        2.715        2.708        2.673        2.649        2.618       13.363
    O.............................        2.724        2.638        2.689        2.666        2.632       13.349
Income Security (600):                                                                                          
    BA............................       32.937       35.734       37.706       38.697       39.589      184.663
    O.............................       41.265       41.591       41.345       41.186       40.794      206.181
Social Security (650):                                                                                          
    BA............................        3.255        3.205        3.180        3.153        3.121       15.914
    O.............................        3.355        3.341        3.254        3.174        3.136       16.260
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................       18.476       18.428       18.335       18.165       17.953       91.357
    O.............................       19.266       18.597       18.346       18.153       17.884       92.246
Administration of Justice (750):                                                                                
    BA............................       24.405       24.795       23.887       24.094       24.675      121.856
    O.............................       22.170       24.191       24.996       25.683       24.713      121.753
General Government (800):                                                                                       
    BA............................       12.622       12.323       11.815       11.469       11.368       59.597
    O.............................       11.884       12.222       12.362       11.897       11.407       59.772
Net Interest (900):                                                                                             
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsetting Receipts                                                                               
 (950):                                                                                                         
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
----------------------------------------------------------------------------------------------------------------


                             FISCAL YEAR 1998 BUDGET RESOLUTION--MANDATORY SPENDING                             
                                      [By function, in billion of dollars]                                      
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
                                                                                                                
Total Spending:                                                                                                 
    BA............................    1,177.138    1,233.156    1,288.214    1,331.978    1,370.010    6,400.497
    O.............................    1,138.921    1,194.324    1,246.875    1,293.985    1,328.012    6,202.118
Defense Spending:                                                                                               
    BA............................       -0.083        -0716       -0.565       -0.542       -0.518       -3.144
    O.............................       -0.845       -0.747       -0.577       -0.553       -0.529       -3.251
Non-Defense Spending:                                                                                           
    BA............................    1,177.941    1,233.872    1,288.779    1,332.520    1,370.528    6,403.641
    O.............................    1,139.766    1,195.071    1,247.452    1,294.538    1,328.541    6,205.369
----------------------------------------------------------------------------------------------------------------
                                                   BY FUNCTION                                                  
                                                                                                                
National Defense (050):                                                                                         
    BA............................       -0.803       -0.716       -0.565       -0.542       -0.518       -3.144
    O.............................       -0.845       -0.747       -0.577       -0.553       -0.529       -3.251
International Affairs (150):                                                                                    
    BA............................       -3.129       -3.683       -2.751       -2.234       -1.865      -13.662
    O.............................       -4.621       -4.273       -3.828       -3.754       -3.630      -20.106
General Science, Space, &                                                                                       
 Technology (250):                                                                                              
    BA............................        0.038        0.031        0.031        0.031        0.031        0.162
    O.............................        0.035        0.035        0.035        0.032        0.031        0.168
Energy (270):                                                                                                   
    BA............................       -1.631       -1.426       -1.401       -1.457       -1.397       -7.312
    O.............................       -2.798       -2.607       -2.534       -2.582       -2.571      -13.092
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................        1.070        1.005        1.004        0.966        0.934        4.979
    O.............................        1.012        1.045        1.019        0.898        0.841        4.815
Agriculture (350):                                                                                              
    BA............................        9.078        8.838        8.351        7.185        6.913       40.365
    O.............................        7.749        7.231        6.721        5.642        5.334       32.677
Commerce & Housing Credit (370):                                                                                
    BA............................        6.163        6.589        8.956       12.583       13.961       48.252
    O.............................       -1.297       -0.017        3.994        8.400       10.082       21.162
Transportation (400):                                                                                           
    BA............................       32.846       31.572       32.326       33.069       33.837      163.660
    O.............................        2.666        2.323        2.047        1.885        1.829       10.750
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................        0.480        0.285        0.285        0.236        0.237        1.523
    O.............................        0.343        0.023        0.032        0.024        0.010        0.432
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................       13.299       13.435       13.845       14.481       14.140       69.200
    O.............................       12.877       13.228       13.663       14.155       13.757       67.680
Health (550):                                                                                                   
    BA............................      112.903      120.235      129.440      138.980      148.014      649.572
    O.............................      113.155      120.109      129.064      138.521      147.436      648.285
Medicare (570):                                                                                                 
    BA............................      198.905      209.365      222.867      236.987      248.930    1,117.054
    O.............................      199.040      208.910      222.848      236.115      248.137    1,115.050
Income Security (600):                                                                                          
    BA............................      206.095      218.356      231.860      236.448      247.356    1,140.115
    O.............................      206.493      216.473      226.816      236.078      244.445    1,130.305
Social Security (650):                                                                                          
    BA............................      377.526      396.184      416.220      436.960      460.384    2,087.274
    O.............................      380.747      399.470      419.516      440.719      463.650    2.104.102
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................       22.069       23.038       23.405       23.928       24.329      116.769
    O.............................       22.071       23.103       23.562       24.062       24.552      117.350
Administration of Justice (750):                                                                                
    BA............................        0.360        0.325        0.291        0.260        0.208        1.444
    O.............................        0.439        0.285        0.244        0.218        0.166        1.352
General Government (800):                                                                                       
    BA............................        2.089        2.121        2.162        2.206        1.737       10.315
    O.............................        2.075        2.141        2.365        2.234        1.693       10.508
Net Interest (900):                                                                                             
    BA............................      248.578      252.029      247.884      241.899      236.877    1,227.268
    O.............................      248.578      252.029      247.884      241.899      236.877    1,227.268
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    O.............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsetting Receipts                                                                               
 (950):                                                                                                         
    BA............................      -48.798      -44.437      -45.996      -50.008      -64.098     -253.337
    O.............................      -48.798      -44.437      -45.996      -50.008      -64.098     -253.337
----------------------------------------------------------------------------------------------------------------


                                FISCAL YEAR 1998 BUDGET RESOLUTION--CREDIT BUDGET                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                  Fiscal year                      1998       1999       2000       2001       2002    1998-2002
----------------------------------------------------------------------------------------------------------------
Direct Loans..................................     33.829     33.378     34.775     36.039     37.099     73.138
Loan Guarantees...............................    315.472    324.749    328.124    332.063    335.141    667.204
050 National Defense:                                                                                           
    Loan Guarantees...........................      0.588      0.757      1.050      1.050      1.050      2.100
150 International Affairs:                                                                                      
    Direct Loans..............................      1.966      2.021      2.077      2.122      2.178      4.300
    Loan Guarantees...........................     12.751     13.093     13.434     13.826     14.217     28.043
270 Energy:                                                                                                     
    Direct Loans..............................      1.050      1.078      1.109      1.141      1.174      2.315
300 Natural Resources and Environment:                                                                          
    Direct Loans..............................      0.030      0.032      0.032      0.034      0.034      0.068
350 Agriculture:                                                                                                
    Direct Loans..............................      9.620     11.047     11.071     10.960     10.965     21.925
    Loan Guarantees...........................      6.365      6.436      6.509      6.583      6.660     13.243
370 Commerce and Housing Credit:                                                                                
    Direct Loans..............................      4.739      1.887      2.238      2.574      2.680      5.254
    Loan Guarantees...........................    245.500    253.450    255.200    257.989    259.897    517.886
400 Transportation:                                                                                             
    Direct Loans..............................      0.155      0.135      0.015      0.015      0.015      0.030
450 Community and Regional Development:                                                                         
    Direct Loans..............................      2.867      2.943      3.020      3.098      3.180      6.278
    Loan Guarantees...........................      2.385      2.406      2.429      2.452      2.475      4.927
500 Education, Training & Social Services:                                                                      
    Direct Loans..............................     12.328     13.092     13.926     14.701     15.426     30.127
    Loan Guarantees...........................     20.665     21.899     23.263     24.517     25.676     50.193
550 Health:                                                                                                     
    Loan Guarantees...........................      0.085      0.000      0.000      0.000      0.000      0.000
600 Income Security:                                                                                            
    Direct Loans..............................      0.045      0.075      0.110      0.145      0.170      0.315
    Loan Guarantees...........................      0.037      0.037      0.037      0.037      0.037      0.074
700 Veterans Benefits and Services:                                                                             
    Direct Loans..............................      1.029      1.068      1.177      1.249      1.277      2.526
    Loan Guarantees...........................     27.096     26.671     26.202     25.609     25.129     50.738
----------------------------------------------------------------------------------------------------------------


                             Function 050:


                            National Defense

                              ----------                              


                                         FUNCTION 050: NATIONAL DEFENSE                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      264,905      268,197      270,784      274,802      281,305      289,092
Outlays...........................      266,582      265,978      265,771      268,418      270,110      272,571
----------------------------------------------------------------------------------------------------------------

    The government's efforts to maintain national security are 
reflected in function 050. Funds in this function are provided 
to develop, maintain, and equip the military forces of the 
United States, and to finance defense-related activities of the 
Department of Energy [DOE]. Major areas of funding include pay 
and benefits for military and civilian personnel; research, 
development, testing, and evaluation; procurement of weapons 
systems; military construction and family housing; and 
operations and maintenance of the defense establishment. This 
budget resolution assumes $268.2 billion in budget authority 
[BA] and $266.0 billion in outlays for fiscal year 1998. Over 
the 5-year period from 1998 through 2002, the resolution 
assumes totals of $1,384.2 billion in BA and $1,342.8 billion 
in outlays.

                         Discretionary Spending

    For discretionary spending in this function, the budget 
resolution assumes $269.0 billion in budget authority [BA] and 
$266.8 billion in outlays in fiscal year 1998. Over 5 years, it 
assumes $1,387.3 billion in BA and $1,346.1 billion in outlays.

                      Major Mandatory Assumptions

    The budget resolution makes no assumptions concerning 
mandatory spending in this function.


                             Function 150:


                         International Affairs

                              ----------                              


                                       FUNCTION 150: INTERNATIONAL AFFAIRS                                      
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       15,281       15,909       14,918       15,782       16,114       16,353
Outlays...........................       14,534       14,558       14,569       14,981       14,751       14,812
----------------------------------------------------------------------------------------------------------------

    In this area of the budget, funds are provided to finance 
the foreign affairs establishment, including embassies and 
other diplomatic missions abroad; humanitarian assistance; 
foreign aid in less developed countries; international security 
assistance; U.S. contributions to the international financial 
institutions; foreign information and exchange activities; 
Export-Import Bank activities; and refugee assistance. The 
major departments and agencies in this function include the 
Department of State, the Department of the Treasury, the Agency 
for International Development, the United States Information 
Agency, and the Export-Import Bank. The budget resolution 
assumes $15.9 billion in budget authority [BA] in fiscal year 
1998 and $14.6 billion in outlays. Over the 5-year period from 
1998 through 2002, the resolution assumes totals $79.1 in 
budget authority and $73.7 billion in outlays.

                         Discretionary Spending

    The budget resolution assumes that budget authority for 
discretionary programs will be $19.0 billion in 1998 and total 
$92.7 billion over the next 5 years. Likewise, outlays are 
estimated to be $19.2 billion in 1998 and $93.8 billion over 
the next 5 years. The budget resolution assumes a cap 
adjustment is available for exchanges of monetary assets and 
for international organization arrears.

                      Major Mandatory Assumptions

    No changes are envisioned concerning mandatory programs.


                             Function 250:


                 General Science, Space, and Technology

                              ----------                              


                              FUNCTION 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       16,667       16,237       16,203       15,947       15,800       15,604
Outlays...........................       17,038       16,882       16,528       16,013       15,862       15,668
----------------------------------------------------------------------------------------------------------------

    Funds in this function are provided for space flight and 
research, general science, and basic research not specifically 
covered by other functional areas. The programs in this 
function are the primary source of funding for the physical and 
engineering sciences. The budgets for the National Science 
Foundation [NSF], the high energy and nuclear physics research 
programs of the Department of Energy [DOE], and the National 
Aeronautics and Space Administration [NASA]--except for its air 
transportation programs which are included in Function 400--are 
within this category. The budget resolution assumes $16.2 
billion in budget authority [BA] and $16.9 billion in outlays 
for fiscal year 1998. Over the 5-year period from 1998 through 
2002, the resolutions assumes totals of $79.8 billion in BA and 
$81.0 billion in outlays.

                         Discretionary Spending

    The budget resolution assumes that budget authority will be 
$16.2 billion in 1998 and total $79.6 billion over the next 5 
years. Likewise, outlays are estimated to be $16.8 billion in 
1998 and $80.8 billion over the next 5 years.

                      Major Mandatory Assumptions

    No changes are envisioned concerning mandatory programs.


                             Function 270:


                                 Energy

                              ----------                              


                                              FUNCTION 270: ENERGY                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................        2,562        3,123        3,469        3,186        2,939        2,846
Outlays...........................        1,864        2,247        2,446        2,293        2,048        1,867
----------------------------------------------------------------------------------------------------------------

    The function includes the civilian activities in the 
Department of Energy, rural electrification and 
telecommunications loans within the Department of Agriculture, 
the power programs of the Tennessee Valley Authority [TVA], and 
the Nuclear Regulatory Commission [NRC]. The budget resolution 
assumes $3.1 billion in budget authority [BA] and $2.2 billion 
in outlays for fiscal year 1998. Over the 5-year period from 
1998 through 2002, the resolution assumes totals of $15.6 
billion in BA and $10.9 billion in outlays.

                         Discretionary Spending

    The budget resolution is consistent with the budget 
agreement. The budget resolution assumes that budget authority 
for discretionary programs will be $4.8 billion in 1998 and 
total $22.9 over the next 5 years. Likewise, outlays are 
estimated to be $5.0 billion in 1998 and $24.0 billion over the 
next 5 years.

                           Mandatory Spending

    Consistent with the budget agreement, it is assumed that 
the Department of Energy [DOE] will be authorized to lease 
excess storage capacity in the Strategic Petroleum Reserve.


                             Function 300:


                   Natural Resources and Environment

                              ----------                              


                                 FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       22,199       23,877       23,227       22,570       22,151       22,086
Outlays...........................       22,359       22,405       22,702       22,963       22,720       22,313
----------------------------------------------------------------------------------------------------------------

    Programs in this function are designed to develop, manage, 
and maintain the Nation's natural resources, and protect public 
health by ensuring a clean environment. Funding is provided for 
water resources, conservation and land management, recreational 
resources, pollution control and abatement, and other natural 
resources. The major departments and agencies in this function 
include the Department of the Interior; the Department of 
Agriculture; the Army Corps of Engineers; the Environmental 
Protection Agency; and the National Oceanic and Atmospheric 
Administration [NOAA], within the Department of Commerce. The 
budget resolution assumes $23.9 billion in budget authority 
[BA] and $22.4 billion in outlays for fiscal year 1998. Over 
the 5-year period, from 1998 through 2002, the total BA is 
$113.9 billion and $113.1 billion in outlays.

                         Discretionary Spending

    The budget resolution assumes that budget authority for 
discretionary programs will be $22.8 billion in 1998 and total 
$108.9 billion over the next 5 years. Likewise, outlays are 
estimated to be $21.4 billion in 1998 and $108.3 billion over 
the next 5 years.
    The budget resolution assumes that up to $700 million will 
be available for Federal land acquisitions and to finalize 
priority Federal land exchanges, and that Superfund 
appropriations will be at the President's level if policies can 
be worked out.
    The EPA Operating Program, the Operation of the National 
Park System, Land Acquisition and State Assistance, and 
Everglades Restoration Fund (including Corps of Engineers) are 
considered protected domestic, discretionary priorities, 
consistent with the Bipartisan Budget Agreement.
    The resolution also assumes that the amounts provided are 
sufficient to accommodate $143 million in fiscal year 1998 to 
implement the California Bay-Delta Environmental Enhancement 
and Water Security Act.

                      Major Mandatory Assumptions

    The resolution assumes that $200 million will be reserved 
annually for an Environmental Reserve Fund, contingent upon 
Superfund reform.


                             Function 350:


                              Agriculture

                                            FUNCTION 350: AGRICULTURE                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       11,819       13,133       12,790       12,215       10,978       10,670
Outlays...........................        9,910       11,892       11,294       10,664        9,494        9,108
----------------------------------------------------------------------------------------------------------------

    Programs in this function include direct assistance and 
loans to food and fiber producers, export assistance, market 
information and inspection services, and agricultural research. 
The budget resolution assumes $13.1 billion in budget authority 
[BA] and $11.9 billion in outlays for fiscal year 1998. Over 
the 5-year period from 1998 through 2002, the resolution 
assumes totals of $59.8 billion in BA and $52.5 billion in 
outlays.

                         Discretionary Spending

    The budget resolution assumes that budget authority for 
discretionary programs will be $4.1 billion in 1998 and total 
$19.4 over the next 5 years. Likewise, outlays are estimated to 
be $4.1 billion in 1998 and $19.8 billion over the next 5 
years.

                      Major Mandatory Assumptions

    The resolution makes no assumptions concerning mandatory 
programs in this function.


                             Function 370:


                      Commerce and Housing Credit

                                    FUNCTION 370: COMMERCE AND HOUSING CREDIT                                   
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................        5,981        9,296       10,127       13,921       15,546       16,902
Outlays...........................       -9,571        1,769        3,344        8,559       11,601       12,765
----------------------------------------------------------------------------------------------------------------

    Function 370 includes certain discretionary housing 
programs, such as subsidies for single and multifamiliy housing 
in rural areas; net spending by the Postal Service; 
discretionary funding for commerce programs, such as 
international trade and exports, science and technology, the 
periodic census, and small business; and mandatory spending for 
deposit insurance activities related to banks, thrifts, and 
credit unions; and mortgage insurance provided by the Federal 
Housing Administration. The budget resolution assumes $9.3 
billion in budget authority [BA] and $1.8 billion in outlays in 
fiscal year 1998. Over the 5-year period from 1998 through 
2002, the resolution assumes $65.8 billion in BA and $38.0 
billion in outlays.

                         Discretionary Spending

    The budget resolution assumes $3.1 billion in budget 
authority [BA] and $3.1 billion in outlays in fiscal year 1998. 
Over the 5-year period, from 1998 to 2002, the resolution 
assumes $17.5 billion in BA and $16.9 billion in outlays over 5 
years.

                      Major Mandatory Assumptions

    The Federal Housing Administration provides mortgage 
insurance to Americans who otherwise might not be able to 
obtain the financing to buy a house. When a home buyer defaults 
on a federally insured mortgage, the FHA must pay the balance 
on the mortgage to the lender, and foreclose on the house. By 
giving the FHA more flexibility to work with homeowners who are 
in default on their mortgages, costs to the FHA insurance fund 
can be avoided. The budget resolution assumes continuation of 
current law policy to provide FHA with tools to encourage 
lenders to forbear for only up to 1 year. This would improve 
the targeting and efficiency of HUD's current program, and 
allow the FHA homeowners experiencing temporary economic 
distress to stay in their homes.

                   postal service transition payments

    The budget resolution assumes shifting to the Postal 
Service the cost of financing workers compensation benefits for 
pre-1971 postal employees. This produces net savings of $121 
million over 5 years.


                             Function 400:


                             Transportation

                              ----------                              


                                          FUNCTION 400: TRANSPORTATION                                          
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       43,869       46,402       46,556       47,114       48,135       49,184
Outlays...........................       39,544       40,933       41,256       41,357       41,303       41,247
----------------------------------------------------------------------------------------------------------------

    This function includes Federal funding for highway, 
transit, railroad, aviation, maritime, and Coast Guard 
programs. The budget resolution assumes budget authority of 
$46.4 billion for fiscal year 1998, $49.2 billion for fiscal 
year 2002, and $237.4 billion for the 5-year period of fiscal 
years 1998-2002. The budget resolution assumes outlays of $40.9 
billion for fiscal year 1998, $41.2 billion for fiscal year 
2002, and $206.1 billion for the 5-year period of fiscal years 
1998-2002.

                         Discretionary Spending

    The budget resolution assumes budget authority of $13.6 
billion for fiscal year 1998, $15.3 billion for fiscal year 
2002, and $73.7 billion for the 5-year period of fiscal years 
1998-2002. The budget resolution assumes outlays of $38.3 
billion for fiscal year 1998, $39.4 billion for fiscal year 
2002, and $195.3 billion for the 5-year period of fiscal years 
1998-2002.

                      Major Mandatory Assumptions

    In mandatory spending, the budget resolution assumes the 
permanent extension of vessel tonnage fees.


                             Function 450:


                   Community and Regional Development

                              ----------                              


                                FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT                                
                                            [in millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       10,199        8,768        8,489        7,810        7,764        7,790
Outlays...........................       12,137       10,387       10,902       10,986       11,350        8,429
----------------------------------------------------------------------------------------------------------------

    Function 450 includes programs that provide Federal funding 
for economic and community development in both urban and rural 
areas. It includes programs such as Community Development Block 
Grants, the Tennessee Valley Authority, the Appalachian 
Regional Commission and the Federal Emergency Management 
Agency. The budget resolution assumes $8.8 billion in budget 
authority [BA] and $10.4 billion in outlays for fiscal year 
1998. Over the 5-year period, 1998 through 2002, the budget 
resolution assumes $40.6 billion in BA and $52.1 in outlays.

                         Discretionary Spending

    The budget resolution assumes $8.3 billion in discretionary 
budget authority [BA] and $10.0 billion in outlays in fiscal 
year 1998. Over the 5-year period, it assumes $39.1 billion in 
BA and $51.6 billion in outlays. The resolution assumes the 
Community Development Financial Institution [CDFI] Fund as a 
domestic discretionary priority, as defined in the Bipartisan 
Budget Agreement.

                      Major Mandatory Assumptions

    The resolution makes no assumptions concerning mandatory 
spending in this function.


                             Function 500:


          Education, Training, Employment, and Social Services

                              ----------                              


                       FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       54,199       60,020       60,450       61,703       62,959       63,339
Outlays...........................       50,466       56,062       59,335       60,728       61,931       62,316
----------------------------------------------------------------------------------------------------------------

    Function 500 includes programs designed to promote general 
knowledge and skills and help assist individuals become self-
supporting members of society: elementary and secondary 
education programs, vocational and higher education, employment 
and job training programs and grants to States for general 
social services and rehabilitation services.
    The budget resolution provides $60.0 billion in budget 
authority for function 500 in fiscal year 1998 and $56.1 
billion in outlays. Over 5 years, the resolution provides 
$308.5 billion in budget authority and $300.4 billion in 
outlays.

                         Discretionary Spending

    For fiscal year 1998, this budget resolution assumes $46.7 
billion in budget authority [BA] and $43.2 billion in outlays. 
Over 5 years, it assumes $239.3 billion in BA and $232.7 
billion in outlays.
    The resolution assumes funding levels sufficient to meet 
the education priorities of Congress and the President. Among 
these priorities are Education Reform--including the Technology 
Literacy Challenge Fund--Bilingual and Immigrant Education, 
Pell Grant ($300 increase in 1998 maximum award amount to 
$3,000), child literacy initiatives consistent with the goals 
and the concepts of the President's America Reads program, Head 
Start and Training and Employment Services--including Job 
Corps.

                      Major Mandatory Assumptions

    The largest mandatory program in Function 500 is the 
student loan program. The budget resolution assumes savings of 
$1.8 billion in student loans by reducing excess guaranty 
agency reserves in the guaranteed loan program and reducing 
administrative costs in the direct loan program. Students will 
not be affected by these changes. The same number of loans will 
be available to students at no additional cost to the students 
or their parents. The volume of student loans will grow from 
$27 billion in 1997 to $36 billion in 2002. The number of 
student loans will increase from 7,463,000 to 8,605,000.
    The specific policy assumptions are as follows:

--Reduce Section 458 (Direct Loan Administrative Account). The 
    plan saves $603 million in outlays from the administration 
    of the Direct Loan program. The proposal does not cap the 
    direct lending.

--Eliminate $10 Direct Loan Fee. The plan eliminates the $10-
    per-loan subsidy to schools and alternate originators 
    participating in the direct loan program.

--Reclaim Excess Guaranty Agency Reserves. This is a modified 
    version of the President's proposal to recall excess 
    guaranty agency reserves. This proposal would recall $1 
    billion and maintain 98 percent reinsurance levels for 
    guaranty agencies. The administration's proposal would 
    recall $2.5 billion and have the Federal Government pay 100 
    percent of all default claims though direct Federal 
    payments.


                             Function 550:


                                 Health

                              ----------                              


                                              FUNCTION 550: HEALTH                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      125,271      137,799      144,968      154,068      163,412      172,171
Outlays...........................      127,421      137,767      144,944      153,947      163,135      171,727
----------------------------------------------------------------------------------------------------------------

    This function is composed of the biomedical research 
services, and health education activities of the United States, 
including the National Institutes of Health, substance abuse 
prevention and treatment, and women's health issues. It also 
includes Medicaid, the Nation's major program to pay for 
medical and long-term care services for low-income people.
    For fiscal year 1998, the budget resolution assumes total 
function 550 budget authority [BA] of $137.8 billion and 
outlays of $137.8 billion. Over the 5-year period 1998-2002, it 
assumes budget authority of $772.4 billion and outlays or 
$771.5 billion.

                         Discretionary Spending

    The budget resolution provides $24.9 billion in budget 
authority and $24.6 billion in outlays in fiscal year 1998 for 
the Federal Government's discretionary health programs. Over 
the 5-year period 1998-2002, for function 550 discretionary 
programs it assumes budget authority of $122.8 billion and 
outlays of $123.2 billion.

                      Major mandatory Assumptions

    Under the Medicaid reform assumed in the budget resolution, 
Medicaid outlays would be $105.3 billion in fiscal year 1998 
and $604.7 billion over 5 years. There would be no per-capita 
cap on Federal Medicaid spending. The plan calls for $13.6 
billion in Federal Medicaid net savings over 5 years. Savings 
are derived from reduced disproportionate share hospital 
payments and flexibility provisions.
    Key components of the Medicaid reform assumptions are the 
following:

--Disproportionate Share Hospital Payments. Medicaid 
    disproportionate share hospital [DSH] payments are 
    additional payment adjustments made to hospitals serving a 
    relatively large (disproportionate) volume of Medicaid or 
    low-income patients. In fiscal year 1997, estimated 
    Medicaid DSH payments are $9.8 billion. DSH payments vary 
    greatly across the States, with some spending more than 
    $1,000 per low-income resident, and others spending much 
    less. This proposal would achieve Medicaid savings through 
    DSH reform.

--State Medicaid Flexibility. The plan incorporates an 
    unprecedented increase in State Medicaid flexibility. Key 
    elements include provisions to allow States more 
    flexibility in managing the Medicaid program, including 
    repeal of the Boren Amendment, converting managed care and 
    home/community based care waiver process to State Plan 
    Amendment, and elimination of unnecessary administrative 
    requirements.

--Net Medicaid savings include $919 million for a higher 
    Federal Medicaid match rate for the District of Columbia; 
    $250 million for an inflation adjustment for programs in 
    Puerto Rico and other territories; $1.5 billion to cover 
    increased Medicaid cost under existing law due to the shift 
    of home health care from Part A to Part B of Medicare and 
    due to the maintenance of the Medicare Part B premium at 25 
    percent; and $1.5 billion to ease the impact of increasing 
    Medicare premiums on low-income beneficiaries.

--The resolution assumes no per-capita cap limits.

    Additional components of mandatory spending include the 
following:

--Children's Health Insurance Initiatives. Under the Bipartisan 
    Budget Agreement, Federal financial support to increase 
    health insurance coverage for children who are uninsured 
    will be provided. The resolution assumes that authorizing 
    committees will draft legislation to use the Federal funds 
    assumed in this resolution in the most cost-effective 
    manner possible. Options for their consideration would 
    include: (a) modifications to existing programs, such as 
    Medicaid, including outreach activities to identify and 
    enroll eligible children and providing 12-month continuous 
    eligibility; and also to restore Medicaid for current 
    disabled children losing SSI because of the new, more 
    strict definitions of childhood eligibility; (b) a capped 
    mandatory spending program, such as grants to the States; a 
    combination of (a) and (b); or other approaches. The 
    resolution assumes that $16 billion will be spent over the 
    next 5 years to provide up to 5 million additional children 
    with health insurance coverage by 2002. These resources 
    will be used in the most cost-effective manner possible to 
    expand coverage and services for low-income and uninsured 
    children with a goal of up to 5 million currently uninsured 
    children being served. These funds may not be used to 
    decrease required savings.


                             Function 570:


                                Medicare

                              ----------                              


                                             FUNCTION 570: MEDICARE                                             
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      190,792      201,620      212,073      225,540      239,636      251,548
Outlays...........................      191,266      201,764      211,548      225,537      238,781      250,769
----------------------------------------------------------------------------------------------------------------

    This budget function includes the Medicare Part A Hospital 
Insurance [HI] program, Part B Supplementary Medical Insurance 
[SMI] program, and premiums paid by qualified aged and disabled 
beneficiaries.
    The budget resolution assumes that spending for this 
function total $201.6 billion in budget authority and $201.8 
billion in outlays for fiscal year 1998. The budget resolution 
assumes that spending for this function total $1,130.4 billion 
in budget authority and $1,128.4 billion in outlays for fiscal 
years 1998-2002.

                         Discretionary Spending

    Function 570 discretionary spending consists of the 
administrative costs of the Medicare Part A and Part B 
programs. The budget resolution assumes that discretionary 
spending for this function total $2.7 billion in budget 
authority and $2.7 billion in outlays for fiscal year 1998. The 
budget resolution assumes that discretionary spending for this 
function total $13.4 billion in budget authority and $13.3 
billion in outlays for fiscal years 1998-2002.

                      Major Mandatory Assumptions

    In accordance with the budget agreement between the 
administration and the congressional negotiators, this budget 
resolution assumes the following:

--Reduce projected Medicare spending by $115 billion over 5 
    years.

--Extend the solvency of the Part A Trust Fund for at least 10 
    years through a combination of savings and structural 
    reforms (including the home health reallocation).

--Structural reforms will include provisions to give 
    beneficiaries more choices among competing health plans, 
    such as provider sponsored organizations and preferred 
    provider organizations.

--The Medicare program reforms provide beneficiaries with 
    comparative information about their options, such as now 
    provided Federal employees and annuitants in the FEHB 
    program.

--Maintain the Part B premium at 25 percent of program costs 
    and phase in over 7 years the inclusion in the calculation 
    of the Part B premium the portion cost of home health 
    expenditures reallocated to Part B.

--Reform managed care payment methodology to address geographic 
    disparities that has limited HMO access in rural areas.

--Reform payment methodology by establishing prospective 
    payment systems for areas such as home health providers, 
    skilled nursing facilities, and outpatient departments.

--Funding for new health benefits including: (1) expanded 
    mammography coverage; (2) coverage for colorectal 
    screenings; (3) coverage for diabetes self-management; and 
    (4) higher payments to providers for preventive 
    vaccinations to the extent it will lead to greater use by 
    beneficiaries. Invest $4 billion over 5 years (and $20 
    billion over 10 years) to limit beneficiary copayments for 
    outpatient services, unless there is a more cost-effective 
    way to provide such services to beneficiaries as mutually 
    agreed.


                             Function 600:


                            Income Security

                              ----------                              


                                          FUNCTION 600: INCOME SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      228,802      239,032      254,090      269,566      275,145      286,945
Outlays...........................      237,822      247,758      258,064      268,161      277,264      285,239
----------------------------------------------------------------------------------------------------------------

    Most of the Federal Government's income support programs 
fall in function 600. This function includes benefits to 
Federal retirees and railroad retirees; unemployment benefits; 
low-income housing; food-stamps; school lunch subsidies; and 
financial assistance to low-income groups including families 
with children, the disabled, the elderly, refugees, and 
households with high energy costs. The budget resolution 
assumes $239.0 billion in budget authority [BA] and $247.8 
billion in outlays for fiscal year 1998. Over the 5-year 
period, from 1998 through 2002, the resolution assumes a total 
of $1.3 trillion in BA and $1.4 trillion in outlays.

                         Discretionary Spending

    The budget resolution assumes that budget authority for 
discretionary programs will be $32.9 billion in 1998 and total 
$184.7 over the next 5 years. Likewise, outlays are estimated 
to be $41.3 billion in 1998 and $206.2 billion over the next 5 
years. Included in these figures is the assumption that the 
requested level in the President's budget ($89 million) is 
provided for Unemployment Insurance [UI] integrity activities 
in addition to continuing integrity activities already funded 
in the base UI administrative grants to obtain these savings.

                       assisted housing contracts

    The present Section 8 Housing program will require large 
increases in resources just to maintain the system as it is now 
structured. The budget resolution assumes adequate funding so 
these obligations can be met. This will entail renewing 
contracts on almost two million apartments for 1998 alone. By 
doing so, the Federal Government will be able to continue to 
provide assistance to those tenants who now receive it. The 
nature of the problem over time worsens, and long term 
structural reforms are needed. The budget resolution assumes 
the maintenance of Section 8 assisted housing units at the 1997 
level. Though this will entail an increase in resources, the 
resolution assumes this additional funding for renewals will 
not be used for a net increase in subsidized apartments, except 
for assistance extended to tenants displaced by the demolition 
of a dilapidated building or for other reasons. The budget 
resolution also anticipates reforms will be passed by the House 
Banking Committee allowing rents on Section 8 projects to be 
reduced to market levels by reducing mortgages on many of these 
projects. Since these projects have federally insured mortgages 
reducing the rents associated with subsidized apartments, 
mortgage restructuring is essential to avert widespread 
defaults. The budget resolution recognizes the need to address 
concerns related to the tax consequences of reducing many of 
these mortgages. When reducing the mortgage amount, many 
project owners may face large tax liabilities. Also, there may 
be a need for reforms of the bankruptcy code related to these 
particular projects. The resolution assumes the necessary 
committees of jurisdiction will work together to produce the 
appropriate legislative language.

                      Major Mandatory Assumptions

                                welfare

    The budget resolution assumes several modifications to the 
Personal Responsibility and Work Opportunity Act of 1996, 
welfare reform enacted last year by Congress and the President. 
It restores eligibility for Supplemental Security Income [SSI] 
disability and Medicaid benefits for those noncitizens who 
entered the United States prior to August 23, 1996, or who 
entered after that date but were enrolled in the program by 
June 1, 1997. These individuals will be eligible to receive SSI 
disability benefits if they are now disabled, or if they become 
disabled in the future. The budget resolution also assumes 
lengthening the period during which refugees and asylees may 
qualify for public benefits from 5 to 7 years after attaining 
their immigration status. But the balanced budget plan retains 
the ban on noncitizen eligibility for SSI benefits for 
nondisabled noncitizens, and for all noncitizens who entered 
the country after August 22, 1996 and who were not enrolled by 
June 1, 1997. Under the budget resolution, public benefits 
remain available to noncitizens who have worked in the United 
States and paid taxes for at least 10 years, or who are 
veterans of the U.S. military or dependents of veterans, in 
addition to persons who become naturalized citizens.
    The budget resolution also creates additional workfare 
positions within the Food Stamp Employment and Training Program 
for able-bodied adults subject to new work requirementsin the 
Food Stamp law enacted last year. The plan also permits Governors to 
offer hardship exemptions--in addition to other waivers under existing 
law--to 15 percent of those individuals in their States who would 
otherwise lose Food Stamp benefits because of their failure to comply 
with the work requirement. Total costs associated with these work slots 
and additional benefits resulting from them and from the new 15 percent 
exemptions are $1.5 billion over 5 years.
    Although the balanced budget plan provides additional 
opportunities for obtaining workfare and adds an additional 
opportunity for governors to waive the work requirement in 
certain cases, the basic structure of the work requirement 
enacted last year remains intact. Under the welfare reform law, 
able bodied adults with no child care responsibilities must 
work at least 20 hours per week to continue eligibility for 
food stamps after they have received 3 months of benefits in 
any 3-year period. If the individual becomes employed and then 
is laid off during the period, they become eligible for another 
3 months worth of benefits without the required 20 hours per 
week of work activity. Governors may request a waiver of the 
requirement for persons who live in areas of high unemployment, 
where jobs are unavailable.
    The balanced budget plan also provides $3 billion in capped 
mandatory spending through 2001 to the Temporary Assistance to 
Needy Families [TANF] block grant, allocated to States through 
a formula and targeted within a state to areas with poverty and 
unemployment rates at least 20 percent higher than the State 
average. A share of funds would go to cities/counties with 
large poverty populations commensurate with the share of long-
term welfare recipients in those jurisdictions.
    These amounts for low-income restorations may not be used 
to decrease required savings.

                        the earned income credit

    The balanced budget plan accepts several recommendations 
made by the administration to address the problem of an 
estimated $5 billion in annual overpayments within the Earned 
Income Credit. Among these recommendations are reallocating IRS 
resources to police the credit, creating demonstration projects 
in four states will examine alternative methods for providing 
the credit, and requiring ``due diligence'' in the preparation 
of returns claiming the credit on the part of tax preparers. 
Penalties for deliberate fraud will be increased, and a greater 
burden of proof will be required of taxpayers claiming the 
credit who have had their claims denied.
    Together, these reforms are estimated to generate $124 
million in savings over the next 5 years.

                     the federal retirement system

    The resolution does not assume any delay in the payment of 
cost-of-living adjustments. Increased agency and employee 
contributions to the Federal retirement system are discussed in 
Function 950 and Revenues.

                         unemployment insurance

    The budget resolution assumes $624 million in Trust Fund 
savings over 5 years by increasing the ceiling on federal 
administrative Trust Funds to .5 percent of total covered 
benefits. A total of $100 million annually in trust fund 
receipts would still be permitted to flow into State trust fund 
accounts.
    The balanced budget plan also generates $763 million in 
savings over 5 years by conducting more benefit integrity 
activities within the program aimed at detecting fraudulent 
Unemployment Insurance claims and underpayment of Unemployment 
Insurance taxes.

                                housing

    To provide low income Americans with a chance to obtain 
access to housing, the Federal Government contracts with 
private project owners to provide affordable rental units. The 
project owner receives Federal assistance payments as well as 
rent from the tenant, which is capped at 30 percent of the 
tenant's income. Currently, some low-income project owners 
receive subsidies for their units which are in excess of the 
market rates for comparable buildings. By reducing the annual 
adjustments the project owner receives each year for these 
units, the Federal Government can obtain significant savings.
    This proposal is an extension of current law set to expire 
at the end of fiscal year 1997. It would reduce the annual 
adjustment for projects whose rents are currently above 120 
percent of the fair market rent. It would also reduce the 
annual adjustment for those apartments where there has been no 
tenant turnover. The resolution assumes these reforms should be 
made permanent starting in fiscal year 1999.


                             Function 650:


                            Social Security

                              ----------                              


                                          FUNCTION 650: SOCIAL SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      363,175      380,781      399,389      419,400      440,113      463,505
Outlays...........................      366,405      384,102      402,811      422,770      443,893      466,786
----------------------------------------------------------------------------------------------------------------

    The budget resolution assumes no changes in Social Security 
benefits.


                             Function 700:


                    Veterans' Benefits and Services

                              ----------                              


                                  FUNCTION 700: VETERANS' BENEFITS AND SERVICES                                 
                                            [in millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       39,125       40,545       41,466       41,740       42,093       42,282
Outlays...........................       39,445       41,337       41,700       41,908       42,215       42,436
----------------------------------------------------------------------------------------------------------------

    Function 700 provides funding for the Department of 
Veterans Affairs [VA] which provides veterans who meet various 
eligibility rules benefits ranging from medical care, to 
compensation, pensions, education, housing, insurance, and 
burial benefits. There are about 25.9 million veterans and 
about 44 million members of their families.
    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. In 1996, the VA-
operated facilities included 173 medical centers, 130 nursing 
home care units, 375 outpatient clinics, and 39 domiciliaries. 
In recent years, about 2.8 million veterans used the VA health 
care system, representing just over 10 percent of the total 
veteran population.
    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 rating 
(multiples of 10 percentage points) assigned to the veteran. In 
fiscal year 1998, about 2.6 million veterans will receive 
disability compensation, with Federal obligations totaling 
about $16.7 billion. The VA pays monthly cash pension benefits 
to about 714 thousand veterans or their survivors. These 
pension obligations will total about $3.0 billion in fiscal 
year 1998.
    For fiscal year 1998, the budget resolution assumes total 
function 700 budget authority of $40.5 billion and outlays of 
$41.3 billion. Over the 5-year period 1998-2002, it assumes 
budget authority of $208.1 billion and outlays of $209.6 
billion.

                         Discretionary Spending

    The budget resolution assumes funding of $18.5 billion in 
budget authority [BA] and $19.3 billion in outlays in fiscal 
year 1998 for the Federal Government's discretionary veteran's 
programs. Over the 5-year period 1998-2002, for Function 700 
discretionary programs it assumes budget authority of $91.4 
billion and outlays of $92.2 billion.
    In addition to these sums, under the Bipartisan Budget 
Agreement, VA medical care will be able to retain third party 
insurance and user fees to partially offset the cost of care 
provided in VA facilities. CBO estimates that this will 
supplement budget authority by $604 million for fiscal year 
1998.

                      Major Mandatory Assumptions

    The budget resolution assumes funding of $22.1 billion in 
budget authority and $22.1 billion in outlays in fiscal year 
1998 for the Federal Government's mandatory veteran's programs. 
Over the 5-year period 1998-2002, for Function 700 mandatory 
programs it assumes budget authority of $116.8 billion and 
outlays of $117.4 billion. The following policy assumptions are 
made:

--Round down the VA compensation COLA to the nearest whole 
    dollar.

--Extend expiring provisions of current law that sunset in 
    1998. This assumption assumes permanently extending the 
    following provisions of current law that will otherwise 
    expire in 1998: income verification for pension 
    eligibility; the pension limit for persons in Medicaid 
    nursing homes; and the three expiring OBRA provisions of VA 
    housing loan fees and default procedures.

--Other Provisions. The resolution also assumes the acceptance 
    of the administration's legislative proposal to allow VA 
    Medical Care to retain user fees and third party 
    collections to offset the cost of care provided in VA 
    facilities starting October 1, 1997. The resolution also 
    assumes repeal of the prohibition on home loan debt 
    collections, extending real estate mortgage investment 
    conduits, and an increase in the fee for non-veterans using 
    VA's vendee loan program.


                             Function 750:


                       Administration of Justice

                              ----------                              


                                     FUNCTION 750: ADMINISTRATION OF JUSTICE                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       23,506       24,765       25,120       24,178       24,354       24,883
Outlays...........................       20,744       22,609       24,476       25,240       25,901       24,879
----------------------------------------------------------------------------------------------------------------

    To implement the Federal Government's role in protecting 
American families, function 750 assumes funding for Federal law 
enforcement activities, including criminal investigations by 
the Federal Bureau of Investigation [FBI] and the Drug 
Enforcement Administration [DEA], border enforcement and the 
control of illegal immigration by the Customs Service and 
Immigration and Naturalization Service [INS], as well as 
funding for prison construction, drug treatment, crime 
prevention programs, and the Federal Judiciary.
    The budget resolution assumes $24.8 billion in budget 
authority and $22.6 billion in outlays will be provided in 
fiscal year 1998, and $123.3 billion in budget authority and 
$123.1 billion in outlays for 1998-2002. This amount assumes 
the balance budget agreement.

                         Discretionary Spending

    For discretionary programs, the budget resolution assumes 
$24.4 billion in budget authority and $22.2 billion in outlays 
for fiscal year 1998, and $121.9 billion in budget authority 
and $121.8 billion in outlays for 1998-2002.
    Included in the total discretionary funding for this 
function is the Violent Crime Reduction Trust Fund which, the 
budget resolution assumes $5.500 billion in budget authority 
and $3.592 billion in outlays for fiscal year 1998, and $24.7 
billion in budget authority and $24.6 billion in outlays for 
1998-2002. The Bipartisan Budget Agreement assumes the 
President's level for the trust fund.

                      Major Mandatory Assumptions

    The budget resolution makes no mandatory assumptions in 
this function.


                             Function 800:


                           General Government

                              ----------                              


                                        FUNCTION 800: GENERAL GOVERNMENT                                        
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................       13,987       14,711       14,444       13,977       13,675       13,105
Outlays...........................       13,881       13,959       14,363       14,727       14,131       13,100
----------------------------------------------------------------------------------------------------------------

    Function 800 consists of the activities of the Legislative 
Branch, the Executive Office of the President, U.S. Treasury 
fiscal operations (including Internal Revenue Service), 
personnel and property management, and general purpose fiscal 
assistance to states, localities, and U.S. territories.
    The budget resolution assumes $14.7 billion in total budget 
authority and $14.0 billion in outlays in fiscal year 1998. 
Over 5 years, it assumes $69.9 billion in total budget 
authority and $70.3 billion in outlays.

                         Discretionary Spending

    The budget resolution assumes $12.6 billion in budget 
authority [BA] and $11.9 billion in outlays in fiscal year 
1998. Over 5 years, it assumes $59.6 billion in BA and $59.8 
billion in outlays.

                      major mandatory assumptions

    The budget resolution assumes $2.1 billion in mandatory 
budget authority [BA] and $2.1 billion in mandatory outlays in 
fiscal year 1998. Over 5 years, it assumes $10.3 billion in 
mandatory budget authority [BA] and $10.5 billion in outlays. 
The resolution assumes unspecified asset sales of $540 million 
in 2002.


                             Function 900:


                              Net Interest

                              ----------                              


                                           FUNCTION 900: NET INTEREST                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      247,639      248,578      252,029      247,884      241,899      236,877
Outlays...........................      247,639      248,578      252,029      247,884      241,899      236,877
----------------------------------------------------------------------------------------------------------------

    Net interest is the interest paid on the Federal public 
debt, minus the interest income received. Function 900 is a 
mandatory payment, with no discretionary components.


                             Function 920:


                               Allowances

                              ----------                              


                                            FUNCTION 920: ALLOWANCES                                            
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      000,000      000,000      000,000      000,000      000,000      000,000
Outlays...........................      000,000      000,000      000,000      000,000      000,000      000,000
----------------------------------------------------------------------------------------------------------------

    Function 920 displays the budgetary effects of proposals or 
assumptions that cannot be easily distributed across other 
budget functions. There are no assumptions in this function.


                             Function 950:


                   Undistributed Offsetting Receipts

                              ----------                              


                                 FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                     1997 est.       1998         1999         2000         2001         2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority..................      -47,436      -48,798      -44,437      -45,996      -50,008      -64,098
Outlays...........................      -47,436      -48,798      -44,437      -45,996      -50,008      -64,098
----------------------------------------------------------------------------------------------------------------

    This function records offsetting receipts that are too 
large to record in other budget functions. Such receipts are 
either intrabudgetary (a payment from one federal agency to 
another, such as agency payments to the retirement trust funds) 
or proprietary (a payment from the public for some type of 
business transaction with the government). The main types of 
receipts recorded as ``undistributed'' in this function are: 
the payments federal agencies make to retirement trust funds 
for their employees, payments made by companies for the right 
to explore and produce oil and gas on the Outer Continental 
Shelf, and payments by those who bid for the right to buy or 
use public property or resources, such as the electromagnetic 
spectrum.
    The budget agreement calls for $26.3 billion in additional 
receipts through actions involving the electromagnetic 
spectrum.
    The budget agreement assumes an increase in Federal agency 
contributions for the Civil Service Retirement System [CSRS] 
(except for the Postal Service and District of Columbia) of 
1.51 percentage points effective October 1, 1997 through 
September 30, 2002.


                                Revenues

                              ----------                              


                                                    Revenues                                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
   1997 (est.)            1998               1999               2000               2001               2002      
----------------------------------------------------------------------------------------------------------------
1,554,894........       1,601,784          1,664,181          1,728,128          1,805,143          1,890,389   
----------------------------------------------------------------------------------------------------------------

    Under the budget resolution, $1,602 billion in total 
revenues in 1998 will grow by 18.0 percent to $1,890 billion in 
2002, totaling $288 billion over 4 years as determined by the 
Bipartisan Budget Agreement. Absent changes in law, revenues 
will grow instead by 18.7 percent.
    The budget resolution assumes that the cost of the tax 
relief package will be offset partially with revenues from 
excise taxes on aviation services. The Committee is aware that 
various options for alternative tax structures in part or all 
of the current aviation excise taxes are being studied. The 
Committee further is aware that the Committee on Ways and Means 
will have to determine any future tax structure. To ensure that 
the underlying assumptions of the budget resolution are met, 
revenues resulting from any modification of the current 
aviation excise taxes should be no less than the Federal 
revenue that would be produced by an extension, without change, 
of the current taxes.
    The revenue assumptions in this budget resolution also 
incorporate the agreements spelled out in the following two 
letters.

                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Hon. William J. Clinton,
President of the United States, The White House,
Washington, DC.
    Dear Mr. President: We would like to take this opportunity 
to confirm important aspects of the Balanced Budget Agreement. 
It was agreed that the net tax cut shall be $85 billion through 
2002 and not more than $250 billion through 2007. We believe 
these levels provide enough room for important reforms, 
including broad-based permanent capital gains tax reductions, 
significant death tax relief, $500 per child tax credit, and 
expansion of IRAs.
    In the course of drafting the legislation to implement the 
balanced budget plan, there are some additional areas that we 
want to be sure the committees of jurisdiction consider. 
Specifically, it was agreed that the package must include tax 
relief of roughly $35 billion over five years for post-
secondary education, including a deduction and a tax credit. We 
believe this package should be consistent with the objectives 
put forward in the HOPE scholarship and tuition tax proposals 
contained in the Administration's FY 1998 budget to assist 
middle-class parents.
    Additionally, the House and Senate Leadership will seek to 
include various proposals in the Administration's FY 1998 
budget (e.g., the welfare-to-work tax credit, capital gains tax 
relief for home sales, the Administration's EZ/EC proposals, 
brownfields legislation, FSC software, and tax incentives 
designed to spur economic growth in the District of Columbia), 
as well as various pending congressional tax proposals.
    In this context, it should be noted that the tax-writing 
committees will be required to balance the interests and 
desires of many parties in crafting tax legislation within the 
context of the net tax reduction goals which have been adopted, 
while at the same time protecting the interests of taxpayers 
generally.
    We stand to work with you toward these ends. Thank you very 
much for your cooperation.
            Sincerely,
                                             Newt Gingrich,
                                                           Speaker.
                                                Trent Lott,
                                            Senate Majority Leader.
                                ------                                

                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Mr. Erskine Bowles,
Chief of Staff to the President, The White House, Washington, DC.
    Dear Mr. Bowles: We are writing to express our desire for 
continued cooperation between Congressional staff and the staff 
of the various Administration agencies during the development 
of the current budget agreement.
    Much of the most difficult work in connection with the 
budget agreement will involve the development of the revenue 
provisions that will satisfy the parameters of the agreement. 
Historically, the staff of the Joint Committee on Taxation has 
provided technical legal and quantitative support to the House 
and Senate. The Budget Act requires the use of Joint Committee 
on Taxation revenue estimates. Ken Kies and his staff are 
committed to facilitating our work on the tax provisions of 
this budget agreement. You can be assured that they will 
cooperate with Administration counterparts in receiving 
Administration input as they carry out their statutory 
responsibilities.
    The revenue estimating staffs of the Joint Committee on 
Taxation and the Office of Tax Analysis at Treasury have a long 
history of cooperation and communication among analysts. It is 
our understanding that steps have already been taken to insure 
that the cooperative efforts of these two staffs will be 
intensified during the current budget process. It is also our 
understanding that the professional staffs at the Office of Tax 
Analysis at Treasury and the Joint Committee on Taxation will 
consult and share information necessary to understand fully the 
basis of their revenue estimates and to minimize revenue 
estimating differences. The proposal shall not cause costs to 
explode in the outyears.
    Now that we have agreed upon the overall parameters of this 
significant agreement, an inordinate number of details 
concerning specific provisions must be drafted and analyzed by 
the JCT and the committees of jurisdiction. We look forward to 
working with the Administration.
            Sincerely,
                                             Newt Gingrich,
                                                           Speaker.
                                                Trent Lott,
                                            Senate Majority Leader.

           Recommended Policy Changes to the Revenue Baseline

    The committee's recommended baseline revenues are based on 
CBO's March 1997 baseline, corrected for a additions to revenue 
to reflect increased actual fiscal year 1997 income tax 
collections, and assumptions on technical price measure 
corrections. (As explained in the section on economic 
assumptions, these are not legislated changes in the CPI).
    The recommended revenues reflect policy changes which are a 
net tax cut package revenue stream, as provided by the Joint 
Committee on Taxation [JCT], offset by revenues from the 
Airport and Airway Trust Fund taxes (which include taxes on 
tickets, departures, cargo and fuel) in current law; a 0.5 
percentage point increase in Federal employee retirement 
contributions phased in over three years and beginning in 
fiscal year 1999; and the revenue portion of Earned Income 
Credit compliance reforms. The last assumption is described 
more fully in Function 600.

                           REVENUE COMPARISONS

              Table 1.--Comparison of Total Budget Revenues

[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................   1,055.0
    1992 actual...............................................   1,091.3
    1993 actual...............................................   1,154.4
    1994 actual...............................................   1,258.6
    1995 actual...............................................   1,351.8
    1996 actual...............................................   1,453.0
Fiscal year 1997:
    Administration's request (February 1997)..................   1,505.4
    Committee level...........................................   1,554.9
Fiscal year 1998:
    Administration's request (February 1998)..................   1,566.8
    Committee level...........................................   1,601.8
Fiscal year 1999:
    Administration's request (February 1999)..................   1,643.3
    Committee level...........................................   1,664.2
Fiscal year 2000:
    Administration's request (February 2000)..................   1,727.3
    Committee level...........................................   1,728.1
Fiscal year 2001:
    Administration's request (February 2001)..................   1,808.3
    Committee level...........................................   1,805.1
Fiscal year 2002:
    Administration's request (February 2002)..................   1,896.7
    Committee level...........................................   1,890.4

               Table 2.--Comparison of On-Budget Revenues

[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................     761.2
    1992 actual...............................................     788.9
    1993 actual...............................................     842.5
    1994 actual...............................................     923.6
    1995 actual...............................................   1,000.8
    1996 actual...............................................   1,085.6
Fiscal year 1997:
    Administration's request (February 1997)..................   1,116.5
    Committee level...........................................   1,166.9
Fiscal year 1998:
    Administration's request (February 1998)..................   1,161.9
    Committee level...........................................   1,199.0
Fiscal year 1999:
    Administration's request (February 1999)..................   1,218.1
    Committee level...........................................   1,241.9
Fiscal year 2000:
    Administration's request (February 2000)..................   1,280.4
    Committee level...........................................   1,285.6
Fiscal year 2001:
    Administration's request (February 2001)..................   1,340.7
    Committee level...........................................   1,343.6
Fiscal year 2002:
    Administration's request (February 2002)..................   1,406.8
    Committee level...........................................   1,407.6

                      TABLE 3.--CBO BASELINE 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         1998   
----------------------------------------------------------------------------------------------------------------
Individual income tax.............         15.8         40.7         90.4        244.1        466.9        708.0
Corporate income tax..............         10.4         21.5         32.8         64.6         93.5        184.0
Social Insurance tax and                                                                                        
 contributions....................          4.3         14.7         44.4        157.8        380.0        553.0
Excises...........................          7.6         11.7         15.7         24.3         35.3         52.0
Estate and gift taxes.............          0.7          1.6          3.6          6.4         11.5         21.0
Custom duties.....................          0.4          1.1          2.4          7.2         16.7         19.0
Miscellaneous receipts............          0.2          1.2          3.4         12.7         28.0         31.0
                                   -----------------------------------------------------------------------------
      Total \1\...................         39.4         92.5        192.8        517.1       1032.0       1567.0
                                   =============================================================================
On-budget revenues................         37.3         81.9        159.3        403.9        750.3       1164.0
Off-budget revenues \2\...........          2.1         10.6         33.5        113.2        281.7       403.0 
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                                                                           
                                                                                                                
Source: CBO March 1997 baseline revenues.                                                                       


               TABLE 4.--CBO BASELINE 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         1998   
----------------------------------------------------------------------------------------------------------------
Individual income tax.............          5.8          7.9          9.0          9.0          8.2          8.6
Corporate income tax..............          3.8          4.1          3.3          2.4          1.6          2.2
Social Insurance tax and                                                                                        
 contributions....................          1.6          2.8          4.4          5.8          6.7          6.8
Excises...........................          2.8          2.3          1.6          0.9          0.6          0.6
Estate and gift taxes.............          0.2          0.3          0.4          0.2          0.2          0.3
Custom duties.....................          0.1          0.2          0.2          0.3          0.3          0.2
Miscellaneous receipts............          0.1          0.2          0.3          0.4          0.5          0.4
                                   -----------------------------------------------------------------------------
      Total \1\...................         14.5         17.8         19.1         19.0         18.2         19.1
                                   =============================================================================
On-budget revenues................         13.7         15.8         15.8         14.9         13.2         14.2
Off-budget revenues \2\...........          0.8          2.1          3.3          4.2          5.0         4.9 
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                                                                           
                                                                                                                
Source: CBO March 1997 baseline revenues.                                                                       


                                     TABLE 1.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 1997-2001                                     
                                                                  [Billions of Dollars]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Corporations                             Individuals                       
                           Function                            --------------------------------------------------------------------------------   Total 
                                                                 1997    1998    1999    2000    2001    1997    1998    1999    2000    2001    1997-01
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense                                                                                                                                        
    Exclusion of benefits and allowances to Armed Forces                                                                                                
     personnel................................................  ......  ......  ......  ......  ......     2.1     2.1     2.2     2.2     2.3      10.9
    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........  ......  ......  ......  ......  ......     1.7     1.8     1.9     1.9     2.0       9.3
    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     1.6     1.6     1.7  ......  ......  ......  ......  ......       7.9
    Deferral of income of controlled foreign corporations.....     1.0     1.1     1.1     1.2     1.2  ......  ......  ......  ......  ......       5.6
    Inventory property sales source rule exception............     3.7     3.7     3.8     3.8     3.8  ......  ......  ......  ......  ......      18.8
General Science, Space, and Technology                                                                                                                  
    Tax credit for qualified research expenditures............     0.3     0.9     0.2     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)  ......       1.6
    Expensing of research and experimental expenditures.......     2.4     2.6     2.8     3.0     3.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)      14.0
Energy                                                                                                                                                  
    Expensing of exploration and development costs:                                                                                                     
        Oil and gas...........................................     0.2     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\)       0.2
    Excess of percentage over cost depletion:                                                                                                           
        Oil and gas...........................................     0.5     0.5     0.5     0.5     0.5     0.1     0.1     0.1     0.1     0.1       3.0
        Other fuels...........................................     0.2     0.2     0.2     0.2     0.2   (\1\)     0.1     0.1     0.1     0.1       1.4
    Tax credit for enhanced oil recovery costs................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.4
    Tax credit for production of non-conventional fuels.......     1.0     1.0     1.0     1.0     1.0     0.3     0.3     0.3     0.3     0.3       6.5
    Tax credits for alcohol fuels \2\.........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......     (\1\)
    Exclusion of interest on State and local government                                                                                                 
     industrial development bonds for energy production                                                                                                 
     facilities...............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.1       0.9
    Expensing of tertiary injectants..........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       1.0
    Exclusion of energy conservation subsidies provided by                                                                                              
     public utilities.........................................  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.2
    Tax credit for investments in solar and geothermal energy                                                                                           
     facilities...............................................     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.5
    Tax credits for electricity production from wind and                                                                                                
     biomass..................................................   (\1\)   (\1\)     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.6
    Tax credit for electric vehicles..........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
    Deductions for clean-fuel vehicles and refueling property.   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
Natural Resources and Environment                                                                                                                       
    Expensing of exploration and development costs, nonfuel                                                                                             
     minerals.................................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.3
    Excess of percentage over cost depletion, nonfuel minerals     0.2     0.2     0.2     0.2     0.2   (\1\)     0.1     0.1     0.1     0.1       1.5
    Tax 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.............     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       1.0
    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       3.2
    Tax credit for rehabilitation of historic structures......     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......       0.5
    Special rules for mining reclamation reserves.............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.2
    Exclusion of contributions in aid of construction for                                                                                               
     water and sewer utilities................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......       0.2
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     0.2     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   (\1\)   (\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...........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......       0.1
        Exemption of credit union income......................     0.9     0.9     0.9     1.0     1.0  ......  ......  ......  ......  ......       4.7
    Insurance companies:                                                                                                                                
        Exclusion of investment income of life insurance and                                                                                            
         annuity contracts....................................     1.2     1.2     1.2     1.3     1.3    20.4    21.1    21.9    22.7    23.4     115.8
        Small life insurance company taxable income adjustment     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......       0.5
        Special treatment of life insurance company reserves..     1.8     1.9     2.0     2.2     2.3  ......  ......  ......  ......  ......      10.3
        Deducation of unpaid property loss reserves for                                                                                                 
         property and casually insurance companies............     2.5     2.8     3.1     3.4     3.7  ......  ......  ......  ......  ......      15.5
        Special deduction for Blue Cross and Blue Shield                                                                                                
         companies............................................     0.4     0.4     0.4     0.4     0.4  ......  ......  ......  ......  ......       2.0
    Housing:                                                                                                                                            
        Deductibility of mortgage interest on owner-occupied                                                                                            
         residences...........................................  ......  ......  ......  ......  ......    41.3    42.6    43.9    45.4    47.0     220.2
        Deductibility of property tax on owner-occupied                                                                                                 
         residences...........................................  ......  ......  ......  ......  ......    15.6    16.4    17.2    17.9    18.8      86.0
        Deferral of capital gains sales of principal                                                                                                    
         residences...........................................  ......  ......  ......  ......  ......    18.6    18.8    19.0    19.2    19.4      95.0
        Exclusion of capital gains on sales of principal                                                                                                
         residences for persons age 55 and over ($125,000                                                                                               
         exclusion)...........................................  ......  ......  ......  ......  ......     4.9     5.1     5.2     5.4     5.6      26.3
        Exclusion of interest on State and local government                                                                                             
         bonds for owner-occupied housing.....................     0.5     0.5     0.5     0.5     0.5     1.5     1.5     1.5     1.6     1.6      10.4
        Exclusion of interest on State and local government                                                                                             
         bonds for rental housing.............................     0.3     0.3     0.3     0.3     0.3     0.7     0.7     0.8     0.8     0.8       5.1
        Depreciation of rental housing in excess of                                                                                                     
         alternative depreciation system......................     1.2     1.1     1.0     1.0     1.0     0.8     0.8     0.7     0.7     0.7       9.0
        Tax credit for low-income housing.....................     1.0     1.1     1.2     1.4     1.6     1.8     2.1     2.3     2.5     2.9      17.9
    Other business and commerce:                                                                                                                        
        Maximum 28% tax rate on long-term capital gains.......  ......  ......  ......  ......  ......    10.5    11.5    12.8    14.5    16.2      65.5
        Depreciation of buildings other than rental housing in                                                                                          
         excess of alternative depreciation system............     3.2     2.6     1.9     1.5     1.2     1.4     1.1     0.9     0.7     0.5      15.0
        Depreciation of equipment in excess of alternative                                                                                              
         depreciation system..................................    22.8    23.2    24.2    25.0    25.3     5.9     6.1     6.5     6.9     7.0     152.9
        Expensing of depreciable business property............     0.6     0.6     0.6     0.6     0.8     0.4     0.3     0.3     0.3     0.4       4.9
        Exclusion of capital gains at death...................  ......  ......  ......  ......  ......    15.5    17.2    18.4    19.6    20.8      91.5
        Carryover basis of capital gains on gifts.............  ......  ......  ......  ......  ......     1.5     1.6     1.6     1.7     1.7       8.1
        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     4.2     4.3     4.4     4.5  ......  ......  ......  ......  ......      21.5
        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     0.5     0.5     0.5     0.5     0.3     0.4     0.4     0.4     0.4       4.3
        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\)     0.1     0.1     0.1     0.1     0.1       0.6
        Exclusion of interest on State and local government                                                                                             
         small-issue industrial development bonds.............     0.1     0.1     0.1     0.1     0.1     0.3     0.2     0.2     0.2     0.2       1.4
        Deferral of gain on like-kind exchanges...............     0.5     0.5     0.6     0.6     0.6     0.3     0.3     0.4     0.4     0.4       4.6
        Exception from net operating loss limitations for                                                                                               
         corporations in bankruptcy proceedings...............     0.5     0.5     0.5     0.5     0.5  ......  ......  ......  ......  ......       2.5
        Tax credit for employer-paid FICA taxes on tips.......     0.1     0.1     0.2     0.2     0.2     0.1     0.1     0.1     0.1     0.1       1.3
        Deferral of gain on involuntary conversions resulting                                                                                           
         from Presidentially-declared disasters...............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
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........  ......  ......  ......  ......  ......     3.1     3.1     3.2     3.2     3.2      15.8
    Exclusion of interest on State and local government bonds                                                                                           
     for high-speed rail......................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.3
Community and Regional Development                                                                                                                      
    Tax credit for rehabilitation of structures, 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     0.3     0.7     0.8     0.8     0.9     0.9       5.6
    Regional economic development tax incentives: empowerment                                                                                           
     zones, enterprise communities, and Indian investment                                                                                               
     incentives...............................................     0.1     0.2     0.2     0.2     0.3     0.1     0.2     0.2     0.3     0.3       2.1
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     0.9     0.9     1.0       4.4
        Exclusion of interest on State and local government                                                                                             
         student loan bonds...................................     0.1     0.1     0.1     0.1      .1     0.2     0.2     0.2     0.2     0.2       1.4
        Exclusion of interest on State and local government                                                                                             
         bonds for private nonprofit educational facilities...     0.2     0.2     0.2     0.3     0.3     0.6     0.7     0.7     0.7     0.8       4.7
        Deductibility of charitable contributions for                                                                                                   
         educational institutions.............................     0.9     0.9     1.0     1.1     1.2     2.1     2.3     2.4     2.5     2.6      17.0
        Exclusion of interest on educational savings bonds....  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
        Deferral of tax on earnings of qualified State tuition                                                                                          
         programs.............................................  ......  ......  ......  ......  ......     0.1     0.2     0.2     0.2     0.3       1.0
    Employment:                                                                                                                                         
        Exclusion of employee meals and lodging (other than                                                                                             
         military)............................................  ......  ......  ......  ......  ......     0.7     0.7     0.7     0.8     0.8       3.7
        Special tax provisions for employee stock ownership                                                                                             
         plans (ESOPs)........................................     0.7     0.8     0.9     1.0     1.0   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       4.4
        Exclusion of benefits provided under cafeteria plans                                                                                            
         \3\..................................................  ......  ......  ......  ......  ......     5.0     5.7     6.5     7.2     7.9      32.2
        Exclusion of rental allowances for ministers' homes...  ......  ......  ......  ......  ......     0.3     0.3     0.3     0.3     0.4       1.6
        Exclusion of miscellaneous fringe benefits............  ......  ......  ......  ......  ......     5.5     5.8     6.2     6.5     6.9      30.9
        Exclusion of employee awards..........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1       0.7
        Exclusion of income earned by voluntary employees'                                                                                              
         beneficiary associations.............................  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.6       2.7
        Work opportunity tax credit...........................     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......       0.4
    Social services:                                                                                                                                    
        Deductibility of charitable contributions, other than                                                                                           
         for education and health.............................     0.8     0.9     1.0     1.1     1.2    15.3    16.0    16.7    17.5    18.4      88.8
        Tax credit for child and dependent care expenses......  ......  ......  ......  ......  ......     2.8     2.9     2.9     3.0     3.0      14.5
        Exclusion of employer-provided child care \4\.........  ......  ......  ......  ......  ......     0.8     0.9     1.0     1.2     1.3       5.2
        Exclusion of certain foster care payments.............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
        Adoption tax credit and employee adoption benefits                                                                                              
         exclusion............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.4     0.4     0.4     0.4     0.4       1.5
        Expensing of costs for removing architectural barriers   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
        Tax credit for disabled access expenditures...........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
Health                                                                                                                                                  
    Exclusion of employer contributions for medical care,                                                                                               
     health insurance premiums, and long-term care insurance                                                                                            
     premiums \5\.............................................  ......  ......  ......  ......  ......    51.5    55.3    59.4    63.6    68.2     298.0
    Exclusion of medical care and CHAMPUS medical insurance                                                                                             
     for military dependents, retirees, and retiree dependents  ......  ......  ......  ......  ......     0.6     0.6     0.6     0.6     0.6       3.0
    Deductibility of health insurance premiums and long-term                                                                                            
     care insurance premiums by the self-employed.............  ......  ......  ......  ......  ......     0.7     0.9     1.1     1.2     1.3       5.2
    Deductibility of medical expenses and long-term care                                                                                                
     expenses.................................................  ......  ......  ......  ......  ......     4.3     5.0     5.5     6.1     6.7      27.6
    Medical savings accounts..................................  ......  ......  ......  ......  ......     0.1     0.2     0.3     0.3     0.3       1.2
    Exclusion of interest on State and local government bonds                                                                                           
     for private nonprofit hospital facilities................     0.4     0.5     0.5     0.5     0.6     1.3     1.3     1.4     1.5     1.6       9.6
    Deductibility of charitable contributions to health                                                                                                 
     organizations............................................     0.6     0.7     0.7     0.8     0.9     1.6     1.6     1.7     1.8     1.9      12.3
Medicare                                                                                                                                                
    Exclusion of untaxed medicare benefits:                                                                                                             
        Hospital insurance....................................  ......  ......  ......  ......  ......    12.2    13.6    15.2    16.9    18.9      76.8
        Supplementary medical insurance.......................  ......  ......  ......  ......  ......     5.5     6.3     7.2     8.3     9.5      36.8
Income Security                                                                                                                                         
    Exclusion of workers' compensation benefits...............  ......  ......  ......  ......  ......     3.8     3.9     4.0     4.1     4.2      20.0
    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     0.5     0.5     0.5       2.5
    Net exclusion of pension contributions and earnings:                                                                                                
        Employer plans........................................  ......  ......  ......  ......  ......    70.5    73.6    76.7    79.9    80.0     380.7
        Individual retirement plans...........................  ......  ......  ......  ......  ......     9.3     9.8    10.3    10.9    11.5      51.8
        Keogh plans...........................................  ......  ......  ......  ......  ......     3.7     3.9     4.2     4.4     4.7      20.9
    Exclusion of other employee benefits:                                                                                                               
        Premiums on group term life insurance.................  ......  ......  ......  ......  ......     1.7     1.7     1.8     1.8     1.9       8.9
        Premiums on accident and disability insurance.........  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2       1.0
    Exclusion of employer-provided death benefits.............  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2       1.0
    Additional standard deduction for the blind and the                                                                                                 
     elderly..................................................  ......  ......  ......  ......  ......     1.9     2.0     2.2     2.3     2.5      10.9
    Tax credit for the elderly and disabled...................  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       0.1
    Deductibility of casually and theft losses................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1       0.5
    Earned income credit (EIC) \6\............................  ......  ......  ......  ......  ......     3.5     3.7     3.9     3.9     4.5      19.5
Social Security and Railroad Retirement                                                                                                                 
    Exclusion of untaxed social security and railroad                                                                                                   
     retirement benefits......................................  ......  ......  ......  ......  ......    25.3    26.5    27.8    29.2    30.6     139.4
Veterans' Benefits and Services                                                                                                                         
    Exclusion of veterans' disability compensation............  ......  ......  ......  ......  ......     1.8     1.8     1.8     1.8     1.9       9.1
    Exclusion of veterans' pensions...........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1       0.6
    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       0.4
General Purpose Fiscal Assistance                                                                                                                       
    Exclusion of interest on public purpose State and local                                                                                             
     government debt..........................................     3.6     3.8     4.0     4.3     4.5    10.5    11.1    11.6    12.4    13.1      78.9
    Deduction of nonbusiness State and local government income                                                                                          
     and personal property taxes..............................  ......  ......  ......  ......  ......    27.3    28.6    30.0    31.5    33.0     150.4
    Tax credit for Puerto Rico and possession income..........     3.2     3.4     3.7     3.9     4.0  ......  ......  ......  ......  ......      18.2
Interest                                                                                                                                                
    Deferral of interest on savings bonds.....................  ......  ......  ......  ......  ......     1.4     1.5     1.6     1.7     1.8       8.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Positive tax expenditure of less than $50 million.                                                                                                  
\2\ In addition, the 54-cents-per-gallon exemption from excise tax for alcohol fuels results in a reduction in excise tax receipts, net of income tax   
  effect, of $0.5 billion per year in fiscal years 1997 through 2000, and $0.6 billion in fiscal year 2002.                                             
\3\ Estimate includes amounts of employer-provider health insurance purchased through cafeteria plans and employer-provided child care purchased        
  dependent care 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 EIC on receipts. The increase in outlays is: $21.6 billion in 1997, $22.4 billion in 1998, $23.2    
  billion in 1999, $24.4 billion in 2000, and $25.4 billion in 2001.                                                                                    
                                                                                                                                                        
Note.--Details may not add to totals due to rounding.                                                                                                   
                                                                                                                                                        
Source: Joint Committee on Taxation.                                                                                                                    



                          Economic Assumptions

                              ----------                              


             Economic Assumptions of the Budget Resolution

    The Committee's budget resolution is built upon economic 
assumptions developed by the Congressional Budget Office [CBO]. 
These figures are ``post-policy,'' as they assume policies that 
will balance the Federal budget by 2002 (see Table 1). The 
economic assumptions comprise a short-term forecast for 1997 
and 1998, which reflects the current state of the economy 
relative to the business cycle, and a longer-term projection 
for 1999 through 2002. CBO's technical revenue updating, to 
reflect the consequences of extra revenue collected in fiscal 
year 1997, is incorporated. Slight adjustments to CBO's price 
measures to reflect new information on potential non-legislated 
technical changes on the CPI from the BLS, announced after CBO 
had published its economic forecast, as well as corrections due 
to reassessments by CBO of recent CPI technical changes, are 
incorporated.

                Review of Economic Developments in 1996

    The modest growth of the current expansion started in 1992 
continued in 1996, at a rate close to the economy's potential 
real growth rate. The most significant economic events during 
1996 have been that price inflation seems subdued despite of 
tight labor markets, monetary policy did not change its 
moderately restrictive stance, the Federal deficit for fiscal 
year 1996 came in much lower than projected, and the stock 
market continued its surge.
    The tight labor markets of the past few years do not 
typically persist, as they have, without leading to bottlenecks 
in the economy. Shortages of skill should tend to push up 
compensation, at least faster than the experience thus far in 
this business cycle. Even the limited rises so far in labor 
cost have not led to adverse price behavior. Many analysts have 
cited widespread job anxiety as a key factor significantly 
holding down wage growth.
    Monetary policy in 1996, aided by bond market reaction, 
continued to be restrictive. 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 contrast to 1994 when the FED raised 
rates several times in response to fairly brisk economic growth 
to preemptively lower inflationary pressures, the FED held 
rates steady for 1996 (after a mild cut in January) even as 
growth accelerated.
    This was possible without adverse consequences because in 
the first half of 1996, long-term interest rates were bid up by 
the bond market in anticipation that strong growth in 
employment would lead to inflationary pressures. In addition, 
special factors held down inflationary pressures. These factors 
include: a continuation of the world-wide trend towards lower 
inflation, so that import prices declined; continued sharp 
slowdown in medical care costs, unusually rapid declines in 
computer prices; and technical revisions by the Bureau of Labor 
Statistics [BLS] on the CPI. The absence of these temporary 
factors at some point over the next two years will likely 
increase inflationary pressures.
    During the year, a low-inflation environment, continued 
high corporate profits and momentum continued to boost the 
stock market, 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.) Many analysts, 
including the Chairman of the Federal Reserve, Alan Greenspan, 
warned of a possible speculative bubble in the stock market, or 
``irrational exuberance,'' as the gains in the stock market (if 
sustained) would far outstripped what reasonable economic 
fundamentals would imply.
    In spite of a largely stable economic environment, concerns 
have been raised about the risk exposure and balance sheets for 
households. Household debt burdens are increasingly heavy, 
rising to historically high levels. Personal bankruptcies rates 
have risen to new levels. So far, the growth in debt has been 
offset by the rise in household financial assets, of which an 
increasingly larger portion is based on equities. In addition, 
the personal savings rate, even after a modest rise over the 
last two years, continued to be well below the historical 
average of more than a decade ago. Consumption growth continue 
to lag as it did in 1995, even though personal incomes rose.
    The Federal budget deficit dropped sharply lower for 1996 
to a level half of that projected two years ago. This drop is 
also reflected in lower future deficit levels. Personal tax 
receipts increased more than expected, due to growth in the 
economy and legislative changes over the last few years, 
raising the prospect that the national income statistics have 
been mismeasuring incomes, or that projected tax receipts are 
not picking up trend changes in the composition of tax 
payments. If the former is true, the potential growth rate of 
the economy may be higher than commonly assumed, perhaps 
because capacity measures have underestimated the slack 
available in the economy.

                  Short-Term Outlook for 1997 and 1998

    CBO estimates the growth rate of real GDP to be 2.1 percent 
in 1997 and 1998. The short-term forecast also shows that 
during 1997 and 1998 both growth and inflation will remain 
unchanged, but that the unemployment rate of 5.4 percent at the 
end of 1996 is expected to rise to 5.6 percent by 1998. The 
inflation rate will also rise slightly to about 3.0 percent a 
year (after 1999, the assumed CPI growth rate is adjusted 
downwards by 0.3 percent to reflect correction in measurement, 
as described below). Both short-term and long-term interest 
rates (3 month and 10-year Treasury rates) did not change from 
their levels in 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 continues 
to acknowledge the view expressed by some analysts that 
consumer spending may be inhibited by household indebtedness 
and slow wage growth over the short term horizon.

                     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 and reflects the 
likihood of a recession at some time in the projection period. 
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, adjusted for inflation.
    This assessment is held by most analysts, that 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 have lowered this 
estimate to between 2.1 percent and 2.3 percent currently. This 
lower than post-war average growth in the economy's potential 
growth rate is explained by two factors. First, national 
economic statistics have changed to using ``chain-weights'' 
measures to correct serious over-bias in recent rates of real 
growth. Previously, rapid decreases in the prices of computers 
and other electronic items grossly overstated the importance of 
such expenditure. Second, average labor supply growth is 
expected to be slower than average, due to demographic trends 
and lower expected labor force participation rates. 
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 generally 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 0.7 percentage points and cause a slight increase in 
productivity and real GDP by 2002. Including the debt-service 
savings due to these effects allows for a fiscal dividend of 
$77 billion over the 5 years 1997-2002. This figure is much 
lower than the figure projected last year of $254 billion, 
because of a lower fiscal year 1996 deficit, having one year 
less in the period for balance, and a slower response of 
interest rates.

                           Revenue Correction

    In April, CBO estimated a total of $45 billion in extra 
revenues for 1997, $35 billion of which were already collected. 
For the remainder of this fiscal year, $10 billion was 
projected, giving a total of $45 billion for this year, and 
reducing the fiscal year 1997 deficit to $67 billion. This 
would be much lower than anticipated (CBO previous estimate was 
$112 billion, which was lowered from $124 billion in January; 
OMB estimate is $128 billion). Previous to this change, private 
estimates of the federal deficit, using national economic 
statistics, had been consistently much lower than official and 
CBO projections, which are based on tax receipts, by typically 
$20-30 billion.
    CBO judged--as did some private forecasters--that the 
higher taxable incomes recorded than expected is most likely to 
persist, hence future deficits will be lower. This is reflected 
in later years as a level reduction in the deficit of $45 
billion each year from 1998 to 2002. The additional revenue is 
steadily smaller every year while debt service savings from a 
lower deficit become ever larger.
    CBO balanced off factors arguing for a continuing trend for 
higher revenues and the possibility that these might be 
temporary factors. These factors include:

                  Technical Changes on Price Measures

    CBO's assumptions on inflation do not incorporate new 
information on proposed technical changes on the CPI from the 
Bureau of Labor Statistics [BLS], announced after CBO had 
published its economic forecast, as well as corrections due to 
reassessments by CBO of recent CPI technical changes. The BLS 
has announced further plans to reduce the bias from the CPI 
after the CBO finished its forecast and baseline. These include 
actions as part, and in addition, to its plans for the 1998 
revision. These are technical changes by BLS on the CPI as part 
of their normal activities which do not require legislative 
action by the Congress.
    Since these actions can be expected to have some effect on 
reducing the bias in the CPI, CBO's estimates of these actions 
are incorporated. (CBO has often reflected upcoming technical 
changes on the CPI by BLS in their baseline.) The net changes 
on CPI due to technical changes, as estimated by CBO and 
assumed by the Committee, is 3 tenths of a percent annually 
starting in 1999, so that effectively, outlays are affected 
starting in 2000. Since these are measurement changes to 
correct errors, they will not have any impact on real variables 
or their relationships.
    BLS has announced plans to decide on which categories of 
prices it will use a ``geometric means'' method of weighting 
prices on the lower level aggregation of price collection. 
There is little doubt that this change will occur, and that 
although not all items categories would be used, such a change 
would reduce the ``substitution bias'' in the CPI. The BLS has 
estimated that such action would likely have the effect of 
lowering the CPI by between 0 to 0.25 percent going forward in 
time from 1999, where 0 would occur if there was no adoption of 
this change, and 0.25 would occur if all items categories were 
so adjusted.
    As part of the 1998 CPI rebenchmarking, the BLS has 
announced plans to change in 1999 the way they choose outlets 
for sampling items by switching from geographic to commodity 
group criteria. The new sample design will allow more frequent 
rotation allowing new goods to be included more rapidly. Doing 
so is expected to reduce the growth in the CPI because the CPI 
will then include earlier in the product cycle the prices of 
new goods which typically decline after they are introduced. 
CBO had estimated that this effect would lower the ``new goods 
bias'' in the CPI by between 0 and 0.2 percent.
    CBO also adjusted its existing estimates for two more 
technical BLS actions: an increase in the CBO estimate of bias 
reduction due to the January 1997 change in hospital pricing 
and a decrease in the CBO estimate of the effect of the 1998 
CPI rebenchmarking. These two revisions roughly cancel each 
other out.
    The Committee has made a technical adjustment to reflect 
another technical correction by the BLS in July 1996. This 
action reduces the ``formula bias'' in the CPI and is estimated 
by the BLS as reducing the CPI by 0.1 percent. While the 
Administration adopted this figure, and assumed that the CPI 
would be depressed by 0.04 percent, net of the GDP deflator, 
CBO did not assume any additional change to the CPI, asserting 
that the CPI it uses after that date reflects some of the 
effects of such an adjustment. CBO allows that their estimates 
of taxable incomes may be 0.04 percent too low each year. The 
Committee has made the assumption that to be consistent, 
taxable incomes should be slightly adjusted.

                                         COMMITTEE ECONOMIC ASSUMPTIONS                                         
                                           [Calendar years 1996-2002]                                           
----------------------------------------------------------------------------------------------------------------
                                                          Actual     Forecast                Projected          
                                                         -------------------------------------------------------
                                                           1996    1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
Percent change (year over year):                                                                                
    Real GDP............................................     2.4     2.3     2.1     2.2     2.2     2.2     2.1
    GDP Price Index.....................................     2.1     2.3     2.5     2.6     2.6     2.6     2.6
    Inflation, CPI-U....................................     3.0     2.9     2.9     2.7     2.7     2.7     2.7
Annual rate:                                                                                                    
    Unemployment Rate...................................     5.4     5.3     5.6     5.8     5.9     6.0     6.0
    3-month Treasury Bill rate..........................     5.1     5.0     5.0     4.6     4.2     3.9     3.9
    10-year Treasury Note rate..........................     6.4     6.2     6.1     5.8     5.5     5.5     5.5
Nominal Income (percentage of GDP):                                                                             
    Wage and Salary Disbursements:......................    47.9    48.0    47.7    47.6    47.4    47.3    47.3
    Corporate (book) Profits............................     8.4     8.2     8.1     7.9     7.8     7.9     7.8
----------------------------------------------------------------------------------------------------------------
Note: Forecast assumes balanced-budget fiscal policies. CPI after 1999 adjusted to reflect non-legislated       
  measurement changes.                                                                                          

                    THE CONGRESSIONAL BUDGET PROCESS

    The spending and revenue levels set forth in the budget 
resolution are executed through two parallel, but separate, 
mechanisms: allocations to the appropriations and authorizing 
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. The accompanying 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 authorizing committees 
with mandatory 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 
for programs authorized out of the Violent Crime Reduction 
Trust Fund.
    Current Law Versus Discretionary Action. Pursuant to 
section 302(a) of the Budget Act, the allocations are divided 
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.

Committee on Appropriations

    The report accompanying the budget resolution allocates a 
lump sum of discretionary budget authority and corresponding 
outlays to the Committee on Appropriations.
    Term. The allocations to the Appropriations Committee are 
for the fiscal year commencing on October 1 1997.
    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.
    Continuing Disability Reviews. Public Law 104-121 
established a process to provide additional funding for 
continuing disability reviews for specified entitlement 
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].
    Section 304 of the resolution provides a separate 
allocation to the Committee on Appropriations for land 
acquisitions and exchanges, to be available only if used for 
that purpose.
    Section 301 of the resolution establishes a deficit-neutral 
reserve fund for increased transportation spending from the 
Highway Trust Fund. The chairman of the Budget Committee is 
directed to increase the allocation of new transportation 
budget authority, subject to obligation limitations, to 
accommodate legislation reported by the Committee on 
Transportation and Infrastructure that provides contract 
authority above the levels assumed in the resolution for 
specified highway, transit, and highway safety accounts. The 
chairman will make a similar adjustment for the Appropriations 
Committee when it reports a bill setting the obligation 
limitations for the increased transportation spending that 
effectively determine the level of outlays. In order to be 
considered deficitneutral and hence eligible for an adjustment, 
the increased transportation spending authorized by the Committee on 
Transportation and Infrastructure must be offset in the same bill or 
previously enacted direct spending or revenue legislation.

Authorizing committees

    The authorizing committees are allocated a lump sum of new 
budget authority and, in some cases, 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 mandatory 
program or a reduction in an existing 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 year 1998 through 
fiscal year 2002.
    The Budget Act does not require the authorizing committees 
to 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 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.
    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.
    The allocations for fiscal year 1998, and fiscal years 1998 
through 2002, are as follows:

              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]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               1998         1999         2000         2001         2002       1998-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appropriations Committee:                                                                                                                               
    Current level:                                                                                                                                      
            Budget authority.............................................      274,392      304,803      330,585      342,433      373,040     1,625,253
            Outlays......................................................      276,420      297,566      324,972      334,475      366,766     1,600,199
    Discretionary action, general purpose:                                                                                                              
        Defense:                                                                                                                                        
            Budget authority.............................................      269,000      271,500      275,367      281,847      289,610     1,387,324
            Outlays......................................................      266,823      266,518      268,995      270,663      273,100     1,346,099
        Nondefense:                                                                                                                                     
            Budget authority.............................................      251,657      255,699      257,326      255,785      256,964     1,277,431
            Outlays......................................................      282,553      287,700      289,566      287,652      283,169     1,430,640
        Land Acquisition and exchanges:                                                                                                                 
            Budget authority.............................................          700            0            0            0            0           700
            Outlays......................................................          300          150          150          100            0           700
    Subtotal                                                                                                                                            
            Budget authority.............................................      521,357      527,199      532,693      537,632      546,574     2,665,455
            Outlays......................................................      549,676      554,368      558,711      558,415      556,269     2,777,439
    Violent Crime Reduction Trust Fund:                                                                                                                 
            Budget authority.............................................        5,500        5,800        4,500        4,400        4,500        24,700
            Outlays......................................................        3,592        4,953        5,554        5,981        4,530        24,610
    Total discretionary action:                                                                                                                         
            Budget authority.............................................      526,857      532,999      537,193      542,032      551,074     2,690,155
            Outlays......................................................      553,268      559,321      564,265      564,396      560,799     2,802,049
    Discretionary action by other committees:                                                                                                           
            Budget authority.............................................        7,860        7,702        7,634        7,269        5,389        35,854
            Outlays......................................................        7,245        7,300        3,355       11,376        5,309        34,585
    Committee total:                                                                                                                                    
            Budget authority.............................................      809,109      845,504      875,412      891,734      929,503     4,351,262
            Outlays......................................................      836,933      864,187      892,592      910,247      932,874     4,436,833
Agriculture Committee:                                                                                                                                  
    Current level (enacted law):                                                                                                                        
            Budget authority.............................................        9,824        9,646        9,113        7,852        7,559        43,994
            Outlays......................................................        7,512        7,136        6,663        5,474        5,111        31,896
National Security Committee:                                                                                                                            
    Current level (enacted law):                                                                                                                        
            Budget authority.............................................       48,155       50,016       51,885       53,779       55,740       259,575
            Outlays......................................................       48,005       49,864       51,761       53,660       55,625       258,915
Banking and Financial Services Committee:                                                                                                               
    Current level (enacted law):                                                                                                                        
            Budget authority.............................................        4,406        5,049        5,645        5,790        5,979        26,869
            Outlays......................................................       -3,067       -1,654          149          868        1,289        -2,415
    Discretionary action:                                                                                                                               
            Budget authority.............................................         -136         -145         -147         -128         -110          -666
            Outlays......................................................         -136         -233         -365         -422         -434        -1,590
    Committee total:                                                                                                                                    
            Budget authority.............................................       -4,270        4,904        5,498        5,662        5,869        26,203
            Outlays......................................................       -3,203       -1,887         -216          446          855        -4,005
Economic Opportunity Committee                                                                                                                          
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................        4,102        3,761        3,566        3,622        3,741        18,792
        Outlays..........................................................        3,508        3,450        3,291        3,275        3,367        16,891
    Discretionary action:                                                                                                                               
        Budget authority.................................................         -248         -247         -158          -88       -1,057        -1,798
        Outlays..........................................................         -242         -247         -158          -88       -1,057        -1,792
    Committee total:                                                                                                                                    
        Budget authority.................................................        3,854        3,514        3,408        3,534        2,684        16,994
        Outlays..........................................................        3,266        3,203        3,133        3,187        2,310        15,099
    New entitlement authority............................................        1,726        2,544        2,776        2,871        2,970        12,887
Commerce Committee                                                                                                                                      
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................        2,729        6,329        9,120       12,112       12,802        43,092
        Outlays..........................................................        2,732        6,331        9,121       12,113       12,802        43,099
    Discretionary action:                                                                                                                               
        Budget authority.................................................            0       -3,501       -3,502       -4,504      -14,806       -26,313
        Outlays..........................................................            0       -3,501       -3,502       -4,504      -14,806       -26,313
    Committee total:                                                                                                                                    
        Budget authority.................................................        2,729        2,828        5,618        7,608       -2,004        16,779
        Outlays..........................................................        2,732        2,830        5,619        7,609       -2,004        16,786
    New entitlement authority............................................        2,463        1,229          849           99       -2,265         2,375
International Relations Committee:                                                                                                                      
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................       13,142       11,676       11,284       11,506       11,647        59,255
        Outlays..........................................................       12,952       12,527       11,931       11,774       11,758        60,942
Government Reform and Oversight Committee:                                                                                                              
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................       56,916       59,155       61,544       64,095       66,878       308,588
        Outlays..........................................................       55,822       57,745       59,920       62,393       65,069       300,949
    Discretionary action:                                                                                                                               
        Budget authority.................................................         -632         -625         -619         -614         -608        -3,098
        Outlays..........................................................         -632         -625         -619         -614         -608        -3,098
    Committee total:                                                                                                                                    
        Budget authority.................................................       56,284       58,530       60,925       63,481       66,270       305,490
        Outlays..........................................................       55,190       57,120       59,301       61,779       64,461       297,851
Oversight Committee:                                                                                                                                    
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................           93           97           94           93           94           471
        Outlays..........................................................           27           64          247           81           25           444
Public Lands and Resources Committee:                                                                                                                   
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................        2,252        2,328        2,337        2,346        2,389        11,652
        Outlays..........................................................        2,152        2,334        2,339        2,315        2,313        11,453
Judiciary Committee:                                                                                                                                    
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................        4,084        4,162        4,278        4,373        4,456        21,353
        Outlays..........................................................        4,142        4,015        4,130        4,236        4,279        20,802
    Discretionary action:                                                                                                                               
        Budget authority.................................................          146          183          188          193          189           908
        Outlays..........................................................          177          214          219          223          230         1,063
    Committee total:                                                                                                                                    
        Budget authority.................................................        4,230        4,345        4,466        4,566        4,654        22,261
        Outlays..........................................................        4,319        4,229        4,349        4,459        4,509        21,865
Transportation and Infrastructure Committee:                                                                                                            
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................       18,040       15,883       16,051       16,197       16,387        82,558
        Outlays..........................................................       17,350       16,906       16,613       16,470       16,457        83,796
    Discretionary action:                                                                                                                               
        Budget authority.................................................       29,895       30,932       31,642       32,349       32,538       157,356
        Outlays..........................................................           65          243          398          490           13         1,209
    Committee total:                                                                                                                                    
        Budget authority.................................................       47,935       46,815       47,693       48,546       48,925       239,914
        Outlays..........................................................       17,415       17,149       17,011       16,960       16,470        85,005
Science Committee:                                                                                                                                      
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................           39           32           32           32           32           167
        Outlays..........................................................           36           36           36           33           32           173
Small Business Committee:                                                                                                                               
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................          250            0            0            0            0           250
        Outlays..........................................................         -100         -263         -142         -110          -84          -699
Veterans' Affairs Committee:                                                                                                                            
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................        1,358        1,291        1,264        1,196        1,107         6,216
        Outlays..........................................................        1,440        1,456        1,431        1,409        1,373         7,109
    Discretionary action:                                                                                                                               
        Budget authority.................................................         -224         -356         -360         -362         -363        -1,665
        Outlays..........................................................         -224         -356         -360         -362         -363        -1,665
    Committee total:                                                                                                                                    
        Budget authority.................................................        1,134          935          904          834          744         4,551
        Outlays..........................................................        1,216        1,100        1,071        1,047        1,010         5,444
    New entitlement authority............................................          327          656         -575        3,269        2,096         5,773
Ways and Means Committee:                                                                                                                               
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................      672,255      705,953      730,987      755,233      782,020     3,646,448
        Outlays..........................................................      671,092      704,498      734,175      749,280      780,125     3,639,170
    Discretionary action:                                                                                                                               
        Budget authority.................................................       -5,918      -16,268      -22,088      -28,799      -40,073      -113,146
        Outlays..........................................................       -5,918      -16,268      -26,065      -24,822      -40,076      -113,149
    Committee total:                                                                                                                                    
        Budget authority.................................................      666,337      689,685      708,899      726,434      741,947     3,533,302
        Outlays..........................................................      665,174      688,230      708,110      724,458      740,049     3,526,021
    New entitlement authority............................................          400          390       -1,007        1,550          270         1,603
Unassigned to Committee:                                                                                                                                
    Current level (enacted law):                                                                                                                        
        Budget authority.................................................     -282,623     -290,881     -301,076     -307,579     -324,299    -1,506,458
        Outlays..........................................................     -281,839     -283,881     -295,076     -302,579     -319,299    -1,482,674
    Discretionary action:                                                                                                                               
        Budget authority.................................................         -139         -176         -181         -186         -191          -873
        Outlays..........................................................         -139         -176         -181         -186         -191          -873
    Committee total:                                                                                                                                    
        Budget authority.................................................     -282,762     -291,057     -301,257     -307,765     -324,490    -1,507,331
        Outlays..........................................................     -281,978     -284,057     -295,257     -302,765     -319,490    -1,483,547
    Total current level:                                                                                                                                
        Budget authority.................................................      829,414      889,300      936,709      973,080    1,019,572     4,648,075
        Outlays..........................................................      818,184      878,130      931,561      955,167    1,007,008     4,590,050
    Total discretionary action:                                                                                                                         
        Budget authority.................................................      557,461      550,498      549,602      547,162      531,991     2,736,714
        Outlays..........................................................      553,664      545,872      537,187      545,687      509,016     2,691,426
    Grand totals:                                                                                                                                       
        Budget authority.................................................    1,386,875    1,439,798    1,486,311    1,520,242    1,551,563     7,384,789
        Outlays..........................................................    1,371,848    1,424,002    1,468,748    1,500,854    1,516,024     7,281,476
    Total new entitlement authority......................................        4,916        4,819        2,043        7,789        3,071        22,638
--------------------------------------------------------------------------------------------------------------------------------------------------------


  ALLOCATION OF SPENDING RESPONSIBILITY TO HOUSE COMMITTEES PURSUANT TO 
      SEC. 602(a) OF THE CONGRESSIONAL BUDGET ACT--FISCAL YEAR 1998     
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                      Budget                 Entitlement
                                    authority     Outlays      authority
------------------------------------------------------------------------
     APPROPRIATIONS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    050--National defense........          197          197            0
    150--International affairs...          174          174            0
    300--Natural resources and                                          
     environment.................           68          109            0
    350--Agriculture.............        2,370        1,709            0
    370--Commerce and housing                                           
     credit......................           35       -1,155            0
    400--Transportation..........          637          634            0
    500--Education, training,                                           
     employment and social                                              
     services....................        7,029        7,777            0
    550--Health..................      109,760      109,795            0
    570--Medicare................       62,297       62,297            0
    600--Income security.........       61,828       64,935            0
    650--Social Security.........           21           21            0
    700--Veterans benefits and                                          
     services....................       20,950       20,901            0
    750--Administration of                                              
     Justice.....................          400          393            0
    800--General government......        8,618        8,625            0
    900--Net interest............            8            8            0
                                  --------------------------------------
      Subtotals..................      274,392      276,420            0
                                  ======================================
Discretionary appropriations                                            
 action (assumed legislation)                                           
    050  National defense........      269,000      266,823            0
    150  International affairs...       19,038       19,179            0
    250  General science, space,                                        
     and technology..............       16,199       16,847            0
    270  Energy..................        4,754        5,045            0
    300  Natural resources and                                          
     environment.................       22,107       21,093            0
    350  Agriculture.............        4,055        4,143            0
    370  Commerce and housing                                           
     credit......................        3,133        3,066            0
    400  Transportation..........       13,556       38,267            0
    450  Community and regional                                         
     development.................        8,288       10,044            0
    500  Education, training,                                           
     employment and social                                              
     services....................       46,721       43,185            0
    550  Health..................       24,896       24,612            0
    570  Medicare................        2,715        2,724            0
    600  Income security.........       32,937       41,265            0
    650  Social Security.........        3,255        3,355            0
    700  Veterans benefits and                                          
     services....................       18,476       19,266            0
    750  Administration of                                              
     Justice.....................       18,905       18,578            0
    800  General government......       12,622       11,884            0
                                  --------------------------------------
      Subtotals..................      520,657      549,376            0
                                  ======================================
Land Acquisition & exchanges:                                           
    300  Natural resources and                                          
     environment.................          700          300            0
                                  --------------------------------------
      Subtotal, general purpose                                         
       discretionary.............      521,357      549,676            0
                                  --------------------------------------
Violent crime reduction trust                                           
 fund:                                                                  
    750  Administration of                                              
     Justice.....................        5,500        3,592            0
                                  --------------------------------------
      Total, discretionary                                              
       actions...................      526,857      553,268            0
                                  ======================================
Discretionary action by other                                           
 committees (assumed entitlement                                        
 legislation):                                                          
    500  Education, training,                                           
     employment, and social                                             
     services....................        2,538        1,955            0
    550  Health..................        2,863        2,863            0
    600  Income Security.........        2,100        2,100            0
    700  Veterans benefits and                                          
     services....................          359          327            0
                                  --------------------------------------
      Subtotals..................        7,860        7,245            0
                                  --------------------------------------
      Committee totals...........      809,109      836,933            0
                                  ======================================
                                                                        
      AGRICULTURE COMMITTEE                                             
                                                                        
Current level (enacted law):                                            
    150  International affairs...         -483         -483            0
    270  Energy..................            0       -1,036            0
    300  Natural resources and                                          
     environment.................        2,502        2,570            0
    350  Agriculture.............        7,635        6,183        7,447
    370  Commerce and housing                                           
     credit......................            0            4            0
    400  Transportation..........           30           30            0
    450  Community and regional                                         
     development.................           27          126            0
    800  General government......          113          118            0
    900  Net interest............            0            0            8
                                  --------------------------------------
      Subtotals..................        9,824        7,512        7,455
                                  --------------------------------------
      Committee totals...........        9,824        7,512        7,455
                                  ======================================
                                                                        
   NATIONAL SECURITY COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    050  National defense........       16,704       16,662            0
    300  Natural resources and                                          
     environment.................            3            3            0
    400  Transportation..........           -2          -22            0
    500  Education, training,                                           
     employment, and social                                             
     services....................            5            3            0
    600  Income security.........       31,265       31,178            0
    700  Veterans benefits and                                          
     services....................          180          181          180
                                  --------------------------------------
      Subtotals..................       48,155       48,005          180
                                  --------------------------------------
      Committee totals...........       48,155       48,005          180
                                  ======================================
                                                                        
  BANKING AND FINANCIAL SERVICES                                        
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    150  International affairs...       -1,059       -2,363            0
    370  Commerce and housing                                           
     credit......................        1,375       -4,686            0
    450  Community and regional                                         
     development.................            0         -147            0
    600  Income security.........           46           85            0
    800  General government......            2            2            0
    900  Net interest............        4,042        4,042            0
                                  --------------------------------------
      Subtotals..................        4,406       -3,067            0
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................         -136         -136            0
                                  --------------------------------------
      Subtotals..................         -136         -136            0
                                  --------------------------------------
      Committee totals...........        4,270       -3,203            0
                                  ======================================
                                                                        
  COMMITTEE ON EDUCATION AND THE                                        
            WORKFORCE                                                   
                                                                        
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................        3,957        3,365        3,288
    600  Income security.........          145          143        9,866
                                  --------------------------------------
      Subtotals..................        4,102        3,508       13,154
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    500  Education, training,                                           
     employment, and social                                             
     services....................         -248         -242        1,726
                                  --------------------------------------
      Subtotals..................         -248         -242        1,726
                                  --------------------------------------
      Committee totals...........        3,854        3,266       14,880
                                  ======================================
                                                                        
        COMMERCE COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    300  Natural resources and                                          
     environment.................           31           31            0
    370  Commerce and housing                                           
     credit......................        2,078        2,078        1,700
    500  Education, training,                                           
     employment, and social                                             
     services....................            1            1            0
    550  Health..................          611          614      105,536
    800  General government......            8            8            0
                                  --------------------------------------
      Subtotals..................        2,729        2,732      107,236
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    550  Health..................            0            0        2,463
                                  --------------------------------------
      Subtotals..................            0            0        2,463
                                  --------------------------------------
      Committee totals...........        2,729        2,732      109,699
                                  --------------------------------------
Current level (enacted law):                                            
    150  International affairs...       12,595       12,407            0
    400  Transportation..........            7            7            0
    600  Income security.........          534          532          522
    800  General government......            6            6            0
                                  --------------------------------------
      Subtotals..................       13,142       12,952          522
                                  --------------------------------------
      Committee totals...........       13,142       12,952          522
                                  --------------------------------------
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................           10            9            0
    550  Health..................            0          225        4,165
    600  Income security.........       43,850       42,532       42,532
    750  Administration of                                              
     justice.....................           50           50           50
    800  General government......       12,986       12,986            0
    900  Net interest............           20           20            0
                                  --------------------------------------
      Subtotals..................       56,916       55,822       46,747
                                  --------------------------------------
Discretionary action (assumed                                           
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................          -35          -35            0
    950  Undistributed offsetting                                       
     receipts....................         -597         -597            0
                                  --------------------------------------
      Subtotals..................         -632         -632            0
                                  --------------------------------------
      Committee totals...........       56,284       55,190       46,747
                                  --------------------------------------
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................           25           26            0
    800  General governnment.....           68            1           93
                                  --------------------------------------
      Subtotals..................           93           27           93
                                  --------------------------------------
      Committee totals...........           93           27           93
                                  --------------------------------------
                                                                        
       RESOURCES COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    270  Energy..................          -44          -71            0
    300  Natural resources and                                          
     environment.................          929          794           27
    370  Commerce and housing                                           
     credit......................           66           36            0
    450  Community and regional                                         
     development.................          445          499            0
    550  Health..................            4            4            0
    800  General government......          852          890          182
                                  --------------------------------------
      Subtotals..................        2,252        2,152          209
                                  --------------------------------------
      Committee totals...........        2,252        2,152          209
                                  ======================================
                                                                        
       JUDICIARY COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................          245          273            0
    600  Income security.........           62           25           24
    750  Administration of                                              
     justice.....................        1,659        1,726          215
    800  General government......        2,118        2,118           17
                                  --------------------------------------
      Subtotals..................        4,084        4,142          256
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    750  Administration of                                              
     justice.....................          146          177            0
                                  --------------------------------------
      Subtotals..................          146          177            0
                                  --------------------------------------
      Committee totals...........        4,230        4,319          256
                                  ======================================
                                                                        
TRANSPORTATION AND INFRASTRUCTURE                                       
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    270  Energy..................            0         -104            0
    300  Natural resources and                                          
     environment.................          189          157            0
    400  Transportation..........        2,578        2,051          634
    450  Community and regional                                         
     development.................            5            2            0
    600  Income security.........       15,270       15,246           80
    800  General government......           -2           -2            0
                                  --------------------------------------
      Subtotals..................       18,040       17,350          714
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    300  Natural resources and                                          
     environment.................          200          200            0
    400  Transportation..........       29,695           65            0
                                  --------------------------------------
      Subtotals..................       29,895          265            0
                                  --------------------------------------
      Committee totals...........       47,935       17,615          714
                                  ======================================
                                                                        
        SCIENCE COMMITTEE                                               
                                                                        
Current level (enacted law):                                            
    250  General science, space,                                        
     and technology..............           38           35            0
    500  Education, training,                                           
     employment, and social                                             
     services....................            1            1            0
                                  --------------------------------------
      Subtotals..................           39           36            0
                                  --------------------------------------
      Committee totals...........           39           36            0
                                  ======================================
                                                                        
     SMALL BUSINESS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................            0         -210            0
    450  Community and regional                                         
     development.................          250          110            0
                                  --------------------------------------
      Subtotals..................          250         -100            0
                                  --------------------------------------
      Committee totals...........          250         -100            0
                                  ======================================
   VETERANS' AFFAIRS COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    700  Veterans benefits and                                          
     services....................        1,358        1,440       22,196
                                  --------------------------------------
      Subtotals..................        1,358        1,440       22,196
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    700  Veterans benefits and                                          
     services....................         -224         -224          327
                                  --------------------------------------
      Subtotals..................         -224         -224          327
                                  --------------------------------------
      Committee totals...........        1,134        1,216       22,523
                                  ======================================
     WAYS AND MEANS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................            0            0        6,935
    550  Health..................           50           39            0
    570  Medicare................      231,519      231,654      226,966
    600  Income security.........       65,068       63,790       23,509
    650  Social security.........        8,148        8,148            0
    750  Administration of                                              
     Justice.....................          493          481            0
    800  General government......          450          453            0
    900  Net interest............      366,612      366,612      366,612
    950  Undistributed offsetting                                       
     receipts....................          -85          -85            0
                                  --------------------------------------
      Subtotals..................      672,255      671,092      624,022
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    550  Health..................            0            0          400
    570  Medicare................       -6,500       -6,500            0
    600  Income security.........          582          582            0
                                  --------------------------------------
      Subtotals..................       -5,918       -5,918          400
                                  --------------------------------------
      Committee totals...........      666,337      665,174      624,422
                                  ======================================
                                                                        
            UNASSIGNED                                                  
                                                                        
Current level (enacted law):                                            
    050  National defense........      -17,704      -17,704            0
    150  International affairs...      -14,356       14,356            0
    270  Energy..................       -1,587       -1,587            0
    300  Natural resources and                                          
     environment.................       -2,852        2,582            0
    350  Agriculture.............         -927         -143            0
    370  Commerce and housing                                           
     credit......................         -164         -164            0
    400  Transportation..........          -99          -99            0
    450  Community and regional                                         
     development.................         -247         -247            0
    500  Education, training,                                           
     employment, and social                                             
     services....................           -9           -9            0
    550  Health..................         -385         -385            0
    570  Medicare................      -88,411      -88,411            0
    600  Income security.........      -14,655      -14,655            0
    700  Veterans benefits and                                          
     services....................         -554         -554            0
    750  Administration of                                              
     justice.....................       -2,249       -2,249            0
    800  General government......      -23,130      -23,130            0
    900  Net interest............      -74,135      -74,135      -60,736
    950  Undistributed offsetting                                       
     receipts....................      -41,159      -41,159            0
                                  --------------------------------------
        Subtotals................     -282,623     -281,839      -60,736
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    750  Administration of                                              
     justice.....................         -139         -139            0
                                  --------------------------------------
        Subtotals................         -139         -139            0
                                  --------------------------------------
        Committee totals.........     -282,762     -281,978      -60,736
                                  ======================================
      Total--current level.......      829,414      818,184      762,048
                                  ======================================
      Total--discretionary action      557,461      553,664        4,916
                                  ======================================
    Grand totals.................    1,386,875    1,371,848      766,964
------------------------------------------------------------------------

                      RECONCILIATION INSTRUCTIONS

    As provided in Section 310(a) of the Congressional Budget 
Act of 1974, the budget resolution includes reconciliation 
instructions to eight authorizing committees to submit to the 
Budget Committee changes in law necessary to achieve the direct 
spending, revenue, and in one instance, deficit reduction 
targets in the budget resolution. Each of these committees is 
directed to achieve aggregate direct spending, aggregate 
revenue, or deficit reduction levels.
    Two Separate Bills. Title II establishes a process for 
considering two separate reconciliation bills: the first for 
entitlement reform due on June 12; and the second for tax 
relief due on June 13. It is the intention of the leaders that 
Congress shall present the revenue reconciliation bill to the 
President after the spending reduction reconciliation bill. 
This assumes a good faith effort by all parties to enable such 
a legislative process to succeed.
    Policy Assumptions. The spending, revenue, and deficit 
reduction levels reflect the budgetary effects of the direct 
spending and tax policies assumed in the budget resolution and 
the budget agreement. Where two committees share jurisdiction 
over an assumed policy, the reconciliation instructions of both 
committees reflect the budgetary effects of that policy. 
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.
    Children's Health Initiative. Section 204(f) of the 
resolution relates to the children's health initiative, which 
was reconciled to both the Ways and Means and Commerce 
committees. To ensure that the committees do not exceed their 
reconciled targets by both spending the $16 billion, it 
provides that the committees will have been considered as 
having not met their targets if their combined recommendations 
would exceed $16 billion.
    Term. The reconciliation targets are for fiscal year 1998 
and the 5-year total for fiscal years 1998 through 2002 and 
fiscal year 2002. Committees have discretion in the levels they 
would achieve in fiscal years 1999, 2000, and 2001 as long as 
they comply with their targets for the first year, fifth year, 
and 5-year total.
    Direct spending. All eight of the authorizing 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.
    These instructions are described below:

                                        RECONCILIATION BY HOUSE COMMITTEE                                       
                                            [In millions of dollars]                                            
                                     [Entitlement Reforms Due June 12, 1997]                                    
----------------------------------------------------------------------------------------------------------------
                    Committee                        1997 base         1998            2002        1998 to 2002 
----------------------------------------------------------------------------------------------------------------
Agriculture:                                                                                                    
    Direct Spending.............................          31,559          34,571          37,008         211,443
Banking & Financial Services:                                                                                   
    Direct Spending.............................         -17,563          -8,435          -5,091         -50,306
Commerce:                                                                                                       
    Direct Spending.............................         359,601         393,533         506,791       2,617,528
Education and the Workforce:                                                                                    
    Direct Spending.............................          13,581          17,222          17,673         103,109
Government Reform & Oversight:                                                                                  
    Direct Spending.............................          67,339          68,975          81,896         443,061
    Deficit Reduction...........................               0               0             621           1,829
Transportation & Infrastructure:                                                                                
    Direct Spending.............................          17,904          18,087          17,283         106,615
Veterans Affairs:                                                                                               
    Direct Spending.............................          21,175          22,444          24,563         139,134
Ways & Means:                                                                                                   
    Direct Spending.............................         363,970         397,546         506,442       2,621,578
    Revenues....................................       1,139,647       1,176,253       1,386,546       7,517,939
----------------------------------------------------------------------------------------------------------------


                                        RECONCILIATION BY HOUSE COMMITTEE                                       
                                            [In millions of dollars]                                            
                                         [Tax Relief Due June 13, 1997]                                         
----------------------------------------------------------------------------------------------------------------
                    Committee                        1997 base          998            2002        1998 to 2002 
----------------------------------------------------------------------------------------------------------------
Agriculture:                                                                                                    
    Direct Spending.............................          31,559          34,571          37,008         211,443
Banking & Financial Services:                                                                                   
    Direct Spending.............................         -17,563          -8,435          -5,091         -50,306
Commerce:                                                                                                       
    Direct Spending.............................         359,601         393,533         506,791       2,617,528
Education and the Workforce:                                                                                    
    Direct Spending.............................          13,581          17,222          17,673         103,109
Government Reform & Oversight:                                                                                  
    Direct Spending.............................          67,339          68,975          81,896         443,061
    Deficit Reduction...........................               0               0             621           1,829
Transportation & Infrastructure:                                                                                
    Direct Spending.............................          17,904          18,087          17,283         106,615
Veterans Affairs:                                                                                               
    Direct Spending.............................          21,175          22,444          24,563         139,134
Ways & Means:                                                                                                   
    Direct Spending.............................         363,970         397,546         506,442       2,621,578
    Revenues....................................       1,139,647       1,168,853       1,366,046       7,432,939
----------------------------------------------------------------------------------------------------------------
If reconciliation legislation is reported prior to June 13 the amounts contained in that legislation will be    
  scored as part of the recommendations due on June 13.                                                         


                             RECONCILIATION ASSUMPTIONS BY AUTHORIZING COMMITTEE \1\                            
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
               Func./Proposal                    1998       1999       2000       2001       2002     1998-2002 
----------------------------------------------------------------------------------------------------------------
                 AGRICULTURE                                                                                    
                                                                                                                
600  Food Stamps............................      0.300      0.300      0.300      0.300      0.300        1.500
                                             -------------------------------------------------------------------
      Subtotal, Agriculture.................      0.300      0.300      0.300      0.300      0.300        1.500
                                             ===================================================================
       BANKING AND FINANCIAL SERVICES                                                                           
370  FHA single family assignment program...     -0.136     -0.145     -0.147     -0.128     -0.110       -0.666
600  Assisted housing.......................      0.000     -0.088     -0.218     -0.294     -0.324       -0.924
                                             -------------------------------------------------------------------
      Subtotal, Banking and Financial                                                                           
       Services.............................     -0.136     -0.233     -0.365     -0.422     -0.434       -1.590
                                             ===================================================================
                  COMMERCE                                                                                      
270  Lease excess SPR capacity..............       0.00     -0.001     -0.002     -0.004     -0.006       -0.013
270  Extend Nuclear Regulatory Commisson Fee      0.000     -0.325     -0.336     -0.347     -0.359       -0.367
550  Medicaid...............................     -0.237     -1.771     -2.651     -3.901     -6.565      -15.125
550  Medicare low-income assistance.........      0.200      0.300      0.300      0.300      0.400        1.500
550  Children's Health Initiative \2\.......      2.500      2.700      3.200      3.700      3.900       16.000
570  Medicare \2\...........................     -6.500    -16.800    -22.700    -29.000    -40.000     -115.000
300  Environmental reserve fund \2\.........      0.200      0.200      0.200      0.200      0.200        1.000
950  Spectrum Auctions......................      0.000     -3.500     -3.500     -4.500    -14.800      -26.300
                                             -------------------------------------------------------------------
      Subtotal, Commerce....................     -3.837    -19.197    -25.489    -33.552    -57.230     -139.305
                                             ===================================================================
         EDUCATION AND THE WORKFORCE                                                                            
500  Repeal approps. under Smith-Hughes.....     -0.001     -0.007     -0.007     -0.007     -0.007       -0.029
500  Student Loans..........................     -0.241     -0.240     -0.151     -0.081     -1.050       -1.763
600  Welfare-to-Work grants \2\.............      0.700      0.700      1.000      0.600      0.000        3.000
                                             -------------------------------------------------------------------
      Subtotal, Economic and Educational                                                                        
       Opportunity..........................      0.458      0.453      0.842      0.512     -1.057        1.208
                                             ===================================================================
       GOVERNMENT REFORM AND OVERSIGHT                                                                          
               Direct Spending                                                                                  
                                                                                                                
370  FECA reimbursement to Postal Service...     -0.035     -0.034     -0.033     -0.032     -0.031       -0.165
950  Agency contributions to CSRS...........     -0.597     -0.591     -0.586     -0.582     -0.577       -2.933
                                             -------------------------------------------------------------------
      Subtotal, Government Reform and                                                                           
       Oversight............................     -0.632     -0.625     -0.619     -0.614     -0.608       -3.098
                                             ===================================================================
              Deficit Reduction                                                                                 
                                                                                                                
rev  Increase employee retirement                                                                               
 contribution...............................      0.000     -0.214     -0.423     -0.571     -0.621       -1.829
                                             -------------------------------------------------------------------
      Subtotal, Government Reform and                                                                           
       Oversight............................      0.000     -0.214     -0.423     -0.571     -0.621       -1.829
                                             ===================================================================
      TRANSPORTATION AND INFRASTRUCTURE                                                                         
                                                                                                                
400  Asset sales............................      0.000      0.000      0.000      0.000     -0.540       -0.540
300  Environmental reserve fund \2\.........      0.200      0.200      0.200      0.200      0.200        1.000
400  Extend vessel tonnage fees.............      0.000     -0.049     -0.049     -0.049     -0.049       -0.196
                                             -------------------------------------------------------------------
      Subtotal, Transportation and                                                                              
       Infrastructure.......................      0.200      0.151      0.151      0.151     -0.389        0.264
                                             ===================================================================
              VETERANS AFFAIRS                                                                                  
700  Withholding for VA overpaid benefits                                                                       
 \2\........................................     -0.090      0.000      0.000      0.000      0.000        0.090
700  Extend VA income verification                                                                              
 (pensions) \2\.............................      0.000     -0.004     -0.008     -0.012     -0.016       -0.040
700  Extend OBRA home loan provisions.......     -0.011     -0.228     -0.227     -0.224     -0.219       -0.909
700  Extend medical care collections........      0.000     -0.250     -0.260     -0.271     -0.282       -1.063
700  Medical care administrative cost.......     -0.118     -0.123     -0.128     -0.133     -0.139       -0.641
700  Extend nursing home pension provisions.      0.000     -0.129     -0.203     -0.131     -0.174       -0.637
700  Loan sales enhancements................     -0.005     -0.005     -0.005     -0.005     -0.005       -0.025
700  Round Down Compensation COLA...........     -0.023     -0.051     -0.088     -0.101     -0.128       -0.391
                                             -------------------------------------------------------------------
      Subtotal, Veterans Affairs............     -0.247     -0.790     -0.919     -0.877     -0.963       -3.796
                                             ===================================================================
               WAYS AND MEANS                                                                                   
               Direct Spending                                                                                  
                                                                                                                
550  Children's Health Initiative \2\.......      2.500      2.700      3.200      3.700      3.900       16.000
550  Assistance to immigrants (medicaid                                                                         
 portion)...................................      0.400      0.400      0.300      0.300      0.300        1.700
570  Medicare \2\...........................     -6.500    -16.800    -22.700    -29.000    -40.000     -115.000
600  Earned Income Credit (outlays).........      0.000     -0.010     -0.028     -0.029     -0.030       -0.097
600  Raise unemp. ceiling...................      0.000      0.000     -0.200     -0.208     -0.216       -0.624
600  Assistance to immigrants...............      1.800      1.800      1.700      1.400      1.300        8.000
600  Welfare-to-work grants \2\.............      0.700      0.700      1.000      0.600      0.000        3.000
600  Administrative fees on SSI supplements.     -0.035     -0.075     -0.080     -0.090     -0.100       -0.380
700  Withholding for VA overpaid benefits                                                                       
 \2\........................................     -0.090      0.000      0.000      0.000      0.000       -0.090
700  Extend VA income verification                                                                              
 (pensions) \2\.............................      0.000     -0.004     -0.008     -0.012     -0.016       -0.040
                                             -------------------------------------------------------------------
      Subtotal, Ways and Means--Direct                                                                          
       Spending.............................     -1.225    -11.289    -16.816    -23.339    -34.862      -87.531
                                             ===================================================================
                   Revenue                                                                                      
                                                                                                                
rev  Earned Income Credit (revenue).........      0.000     -0.003     -0.008     -0.008     -0.008       -0.027
rev  Net tax relief.........................      7.400     11.300     23.100     23.200     20.000       85.000
                                             -------------------------------------------------------------------
      Subtotal, Ways and Means--Revenue.....      7.400     11.297     23.092     23.192     19.992       84.973
                                             ===================================================================
               Direct Spending                                                                                  
Total.......................................     -5.119    -31.230    -42.915    -57.841    -95.243     -232.348
Dual Assignments............................     -3.190    -13.204    -18.308    -24.512    -35.916      -95.130
Total less dual assignments.................     -1.929    -18.026    -24.607    -33.329    -59.327     -137.218
                                                                                                                
                   Revenue                                                                                      
                                                                                                                
Total.......................................      7.400     11.083     22.669     22.621     19.371       83.144
Dual Assignments............................      0.000      0.000      0.000      0.000      0.000        0.000
Total less dual assignments.................      7.400     11.083     22.669     22.621     19.371       83.144
----------------------------------------------------------------------------------------------------------------
\1\ Only FY 1998, 2002, and 1998-2002 amounts are reconciled.                                                   
\2\ Denotes items reconciled to more than one committee.                                                        



                    ENFORCING THE BUDGET RESOLUTION

                              ----------                              

    The budget resolution is more than a planning document. The 
allocations of spending authority and the aggregate levels of 
both spending authority and revenues are binding on the 
Congress when it considers spending and tax legislation. 
Legislation that would breach the levels set forth in the 
budget resolution is subject to points of order on the floor.
    Asset Sales. Section 302 of the resolution changes the 
budgetary treatment of asset sales for the purposes of 
congressional budgeting. Under the new rule, the proceeds from 
the sale of assets would count against committee allocations 
and reconciliation instructions only if the sale would not 
increase the deficit as measured on a net present value basis. 
Asset sales with a zero or positive net present value would be 
scored on a cash basis. The budget agreement assumes a similar 
scoring change for purposes of PAYGO requirements.
    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 authorizing committees. For 
appropriations bills, however, it applies only to the budget 
year. An exception is provided for legislation that is offset 
by tax increases (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 to budget authority and revenue 
provisions first effective in an outyear, nor to appropriation 
bills after May 15th.
    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 
appropriation bills. Section 311 does not apply to 
appropriation and entitlement or otherwise mandatory spending 
bills that are under their 602(a) or (b) allocations.
    Section 401(a). Prohibits consideration of legislation 
providing 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. Does not apply to trust funds primarily financed 
by earmarked taxes.
    Spending provisions designated by Congress for emergencies 
are effectively exempt from sections 302, 303, and 311.
    Under sections 303(g), 308(b)(2), and 311(c) of the Budget 
Act, the Budget Committee advises 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.

                   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.

                     discretionary spending limits

    OBRA 1990 as amended established 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 cap triggers an across-the-board cut in 
all discretionary programs. Under existing law, the caps are 
automatically adjusted for changes in inflation, 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 Reduction Trust Fund (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.
    Under the budget agreement, the discretionary caps will be 
revised for fiscal year 1998 and extended through fiscal year 
2002 at the levels assumed in the budget agreement. Separate 
limits will be imposed for defense and non-defense in fiscal 
years 1998 and 1999 such that a breach would trigger a 
sequester in the affected category only. These separate caps 
would be combined into a single category in fiscal years 2000, 
2001, and 2002.
    The budget agreement includes adjustments for emergencies, 
outlays estimating differences, arrearages, and exchanges of 
monetary assets.

                       pay-as-you-go requirements

    OBRA 1990 also established a PAYGO requirement for tax and 
entitlement legislation. Under PAYGO, the sum of all tax and 
entitlement (or otherwise mandatory) legislation may not 
increase the net deficit in any fiscal year. PAYGO is enforced 
through a sequester applied to all non-exempt entitlement 
programs.
    The budget agreement assumes the extension of PAYGO 
requirements through fiscal year 2002. It specifically provides 
that any existing balances, including the savings reflected in 
the budget agreement, would be reduced to zero to ensure the 
net savings are locked in for deficit reduction.

                            FY 1998 BUDGET RESOLUTION VS. PRESIDENT'S BUDGET: TOTALS                            
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
            Fiscal year                 1998         1999         2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
                                                     SUMMARY                                                    
Total Spending:                                                                                                 
    BA............................      -22.995      -17.215      -17.671      -21.559      -34.599     -114.038
    O.............................      -10.560      -18.681      -28.085      -15,352      -42.044     -114.721
Revenues..........................       44.528       34.131       24.031       26.399       28.874      157.963
Deficit(-)/SURPLUS(+).............       55.088       52.812       52.116       41.751       70.918      272.684
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½                                                                             
                                                   BY FUNCTION                                                  
National Defense (050):                                                                                         
    BA............................        2.618        1.810        0.000        0.000        0.000        4.428
    OL............................        1.000        2.757        0.001        0.835       -4.787       -0.194
International Affairs (150):                                                                                    
    BA............................       -3.973       -1.497       -0.578       -0.489       -0.567       -7.104
    OL............................       -0.155       -1.098       -0.274       -0.377       -0.504       -2.408
General Science, Space, &                                                                                       
 Technology: (250):                                                                                             
    BA............................       -0.240       -0.255       -0.330       -0.466       -0.653       -1.944
    OL............................       -0.115       -0.172       -0.256       -0.364       -0.578       -1,485
Energy (270):                                                                                                   
    BA............................        0.023       -0.014       -0.089       -0.134        0.578        0.364
    OL............................       -0.034       -0.043       -0.079       -0.084       -0.617       -0.377
Natural Resources & Environment                                                                                 
 (300):                                                                                                         
    BA............................        0.363       -0.188       -0.290       -0.522       -0.704       -1.341
    OL............................        0.370       -0.028       -0.148       -0.393       -0.629       -1.241
Agriculture (350):                                                                                              
    BA............................       -0.102       -0.057       -0.016       -0.091       -0.135       -0.401
    OL............................       -0.007       -0.053       -0.058       -0.061       -0.105       -0.284
Commerce & Housing Credit (370):                                                                                
    BA............................       -0.078       -0.004       -0.062       -0.028       -0.045       -0.217
    OL............................        0.296        0.362        0.346        0.345        0.323        1.672
Transportation (400):                                                                                           
    BA............................        2.222        3.814        4.091        4.842        5.647       20.616
    OL............................        0.755        2.268        2.049        1.942        1.725        8.739
Community & Regional Development                                                                                
 (450):                                                                                                         
    BA............................       -8.475       -0.129       -0.106       -0.223       -0.317       -9.250
    OL............................       -1.030       -1.094       -0.670       -0.250       -0.296       -3.340
Education, Training, Employment, &                                                                              
 Social Services (500):                                                                                         
    BA............................       -4.772       -1.812       -2.250       -1.461       -1.683      -11.978
    OL............................       -1.098       -2.637       -2.922       -2.683       -1.354      -10.694
Health (550):                                                                                                   
    BA............................       -1.986       -3.594       -1.360       -0.514       -2.027       -5.427
    OL............................       -1.698       -3.425       -1.237       -0.346       -2.145       -4.561
Medicare (570):                                                                                                 
    BA............................       -3.776       -6.879       -5.073       -6.768      -11.274      -33.770
    OL............................       -3.755       -6.863       -9.038       -2.774      -11.260      -33.690
Income Security (600):                                                                                          
    BA............................        0.189       -0.278       -1.088       -1.891       -3.689       -6.757
    OL............................       -0.442       -0.803       -3.812        0.645       -3.829       -8.241
Social Security (650):                                                                                          
    BA............................       -0.048       -0.051       -0.066       -0.093       -0.130       -0.388
    OL............................       -0.023       -0.036       -0.052       -0.078       -0.127       -0.316
Veterans Benefits & Services                                                                                    
 (700):                                                                                                         
    BA............................       -0.362        0.044       -0.128       -0.193       -0.442       -1.081
    OL............................       -0.132        0.102       -1.753        1.633       -0.351       -0.501
Administration of Justice (750):                                                                                
    BA............................        0.000       -0.391       -0.495       -0.712       -0.843       -2.441
    OL............................        0.000       -0.252       -0.401       -0.591       -0.722       -1.966
General Government (800):                                                                                       
    BA............................       -0.170       -0.254       -0.411       -0.626       -1.442       -2.903
    OL............................       -0.064       -0.186       -0.361       -0.561       -1.385       -2.557
Net Interest (900):                                                                                             
    BA............................       -4.393       -7.220       -9.263      -11.160      -13.949      -45.984
    OL............................       -4.393       -7.220       -9.263      -11.160      -13.949      -45.984
Allowances (920):                                                                                               
    BA............................        0.000        0.000        0.000        0.000        0.000        0.000
    OL............................        0.000        0.000        0.000        0.000        0.000        0.000
Undistributed Offsetting Receipts                                                                               
 (950):                                                                                                         
    BA............................       -0.035       -0.260       -0.157       -1.030       -6.987       -8.460
    OL............................       -0.035       -0.260       -0.157       -1.030       -6.978       -8.460
----------------------------------------------------------------------------------------------------------------

                      Sense of Congress Provisions

    Title IV of the budget resolution includes the following 5 
Sense of Congress provisions:
    Sec. 401. Sense of Congress on Baselines.
    Sec. 402. Sense of Congress on Repayment of the Federal 
Debt.
    Sec. 403. Sense of Congress on Commission on Long-Term 
Budgetary Problems.
    Sec. 404. Sense of Congress on Corporate Welfare.
    Sec. 405. Sense of Congress on Family Violence Option 
Clarifying Amendment.

                   Rollcall Votes and Related Matter

                            COMMITTEE VOTES

    Clause 2(1)(2)(B) of House Rule XI requires each committee 
report to accompany any bill or resolution of a public 
character, ordered to include the total number of votes cast 
for and against on each rollcall vote on a motion to report and 
any amendments offered to the measure or matter, together with 
the names of those voting for and against. Listed below are the 
rollcall votes taken on the Concurrent Resolution on the Budget 
for Fiscal Year 1998.
    On May 16, 1997, the Committee met in open session, a 
quorum being present. The Committee adopted and ordered 
reported the Concurrent Resolution on the Budget for Fiscal 
Year 1998. The following votes were taken by the Committee:
    1. Mr. Hobson made a motion to authorize the Chairman, 
consistent with clause 4 of Rule XVI of the Rules of the House, 
to declare a recess at any time during the Committee meeting. 
The motion was agreed to by unanimous consent.
    2. Mr. McDermott offered an amendment to the Chairman's 
Mark to insert at the appropriate place in the resolution the 
following language:

SEC.  . SENSE OF CONGRESS TO ENSURE EQUITABLE DISTRIBUTION OF TAX CUTS 
                    PROVIDED FOR IN THE BUDGET.

    It is the sense of the Congress that, pursuant to this 
resolution, Congress ensures tax cuts paid for in the federal 
budget are distributed equitably to American taxpayers, 
acknowledging that--
    (1) The tax cuts contained in the 1995 Balanced Budget Act 
passed by Congress disproportionately would have benefited 
America's wealthiest families and turned its back on low- and 
middle-income Americans by:
          (a) Limiting 85 million American families and 
        individuals with incomes below $75,000 to only one-
        third of the overall tax package benefits; and
          (b) Providing two-thirds of the overall tax package 
        benefits to the wealthiest 24 million American families 
        and individuals with incomes over $75,000.
    (2) Inequitable distribution of tax cuts is regressive and 
unfair to the majority of America's workers; and
    (3) The House Committee on Ways and Means should report a 
tax bill which at the minimum--
          (a) Ensures the distribution of tax benefits is at 
        least evenly split between those Americans earning 
        above and below $75,000; and
          (b) The lowest 4 out of 5 quintiles of American 
        taxpayers receive at least half of the tax benefits 
        provided in the budget resolution and any corresponding 
        reconciliation bill(s).

    The amendment offered by Mr. McDermott was not agreed to by 
a rollcall vote of 19 ayes and 22 noes.

----------------------------------------------------------------------------------------------------------------
                                               Aye        No          Present         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman.........  ...........  ........         X   Mr. Spratt,             X   ........  .........
                                                                  Ranking.                                      
Mr. Hobson...................  ...........  ........         X   Mr. McDermott...        X   ........  .........
Mr. Shays....................  ...........  ........         X   Mr. Mollohan....        X   ........  .........
Mr. Herger...................  ...........  ........         X   Mr. Costello....        X   ........  .........
Mr. Bunning..................  ...........  ........         X   Mrs. Mink.......        X   ........  .........
Mr. Smith of Texas...........  ...........  ........         X   Mr. Pomeroy.....        X   ........  .........
Mr. Miller...................  ...........  ........         X    Ms. Woolsey....        X   ........  .........
Mr. Franks...................  ...........  ........         X    Ms. Roybal-            X   ........  .........
                                                                  Allard.                                       
Mr. Smith of Michigan........  ...........  ........         X    Ms. Rivers.....        X   ........  .........
Mr. Inglis...................  ...........  ........         X   Mr. Doggett.....        X   ........  .........
Ms. Molinari.................  ...........  ........  .........  Mr. Thompson....        X   ........  .........
Mr. Nussle...................  ...........  ........         X   Mr. Cardin......        X   ........  .........
Mr. Hoekstra.................  ...........  ........         X   Mr. Minge.......        X   ........  .........
Mr. Shadegg..................  ...........  ........         X   Mr. Baesler.....        X   ........  .........
Mr. Radanovich...............  ...........  ........  .........  Mr. Bentsen.....        X   ........  .........
Mr. Bass.....................  ...........  ........         X   Mr. Davis.......        X   ........  .........
Mr. Neumann..................  ...........  ........         X   Mr. Sherman.....        X   ........  .........
Mr. Parker...................  ...........  ........         X   Mr. Weygand.....        X   ........  .........
Mr. Ehrlich..................  ...........  ........         X   Ms. Clayton.....        X   ........  .........
Mr. Gutknecht................  ...........  ........         X                                                  
Mr. Hilleary.................  ...........  ........         X                                                  
Ms. Granger..................  ...........  ........         X                                                  
Mr. Sununu...................  ...........  ........         X                                                  
Mr. Pitts....................  ...........  ........         X                                                  
----------------------------------------------------------------------------------------------------------------

    3. Mr. McDermott offered the following amendmentto ensure 
the expansion of premium protections for low-income seniors.
    1. Increase budget authority and outlays for Function 550 
by the following amounts (in billions of dollars), to reflect 
the increase in Medicaid Premium Protection for Specified Low-
Income Medicare Beneficiaries (SLMB) from 120 percent to 150 
percent of poverty with 100 percent federal funds.

                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                       5 years  
                                      FY 1998      FY 1999      FY 2000      FY 2001      FY 2002     1998-2002 
----------------------------------------------------------------------------------------------------------------
Budget authority..................          0.1          0.1          0.2          0.3          0.2          1.0
Outlays...........................          0.1          0.1          0.2          0.3          0.2          1.0
----------------------------------------------------------------------------------------------------------------

    2. Increase aggregate level of revenues by amounts equal to 
the cost of the foregoing changes to Function 550, reflecting 
reduction of the tax cuts assumed in the budget resolution.
    3. Increase the mandatory amount and total amount of budget 
authority and outlays in the Chairman's mark accordingly, and 
conform the reconciliation directive to the appropriate 
committee.
    4. Amend the committee report to reflect the following 
policy assumptions:

          The resolution recognizes that increases in Medicare 
        Part B premiums beyond current law represents a tax 
        increase for America's seniors and offsets those 
        additional increases in Part B premiums for low-income 
        seniors by expanding premium protection for those 
        seniors living below 150 percent of poverty.

    The amendment offered by Mr. McDermott was not agreed to by 
a rollcall vote of 18 ayes and 22 noes.

----------------------------------------------------------------------------------------------------------------
                                      Aye       No     Present                          Aye       No     Present
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman..............  .......        X  ........  Mr. Spratt, Ranking.        X  .......  ........
Mr. Hobson........................  .......        X  ........  Mr. McDermott.......        X  .......  ........
Mr. Shays.........................  .......        X  ........  Mr. Mollohan........        X  .......  ........
Mr. Herger........................  .......  .......  ........  Mr. Costello........        X  .......  ........
Mr. Bunning.......................  .......        X  ........  Mrs. Mink...........        X  .......  ........
Mr. Smith of Texas................  .......        X  ........  Mr. Pomeroy.........        X  .......  ........
Mr. Miller........................  .......        X  ........  Ms. Woolsey.........        X  .......  ........
Mr. Franks........................  .......        X  ........  Ms. Roybal-Allard...        X  .......  ........
Mr. Smith of Michigan.............  .......        X  ........  Ms. Rivers..........        X  .......  ........
Mr. Inglis........................  .......        X  ........  Mr. Doggett.........        X  .......  ........
Ms. Molinari......................  .......  .......  ........  Mr. Thompson........        X  .......  ........
Mr. Nussle........................  .......        X  ........  Mr. Cardin..........        X  .......  ........
Mr. Hoekstra......................  .......        X  ........  Mr. Minge...........        X  .......  ........
Mr. Shadegg.......................  .......        X  ........  Mr. Baesler.........  .......        X  ........
Mr. Radanovich....................  .......  .......  ........  Mr. Bentsen.........        X  .......  ........
Mr. Bass..........................  .......        X  ........  Mr. Davis...........        X  .......  ........
Mr. Neumann.......................  .......        X  ........  Mr. Sherman.........        X  .......  ........
Mr. Parker........................  .......        X  ........  Mr. Weygand.........        X  .......  ........
Mr. Ehrlich.......................  .......        X  ........  Ms. Clayton.........        X  .......  ........
Mr. Gutknecht.....................  .......        X  ........                                                  
Mr. Hilleary......................  .......        X  ........                                                  
Ms. Granger.......................  .......        X  ........                                                  
Mr. Sununu........................  .......        X  ........                                                  
Mr. Pitts.........................  .......        X  ........                                                  
----------------------------------------------------------------------------------------------------------------

    4. Mrs. Clayton offered the following amendment to provide 
food stamp benefits, subject to strict work requirements for needy 
unemployed adults who are willing to work but unable to find a job.
    1. Increase budget authority and outlays for Function 600, 
by the following amounts (in millions of dollars), to reflect 
the Food Stamp Work Requirement for 18 to 50 year old, 
childless adults in the Fiscal Year 1998 President's Budget:
    (a) Extend the time limit for receiving benefits without 
having a job from 3 months in a 36 month period to 6 months in 
a 12 month period;
    (b) Cut individuals off Food Stamps only if the state first 
offers those individuals a job slot, and they refuse it; and
    (c) Provide new funding and a wage supplementation option 
to expand the number of work slots available to the 18 to 50 
group by 380,000.

----------------------------------------------------------------------------------------------------------------
                                                 FY 1998    FY 1999    FY 2000    FY 2001    FY 2002    5-Years 
----------------------------------------------------------------------------------------------------------------
BA............................................        400        365        385        420        335      1,905
OT............................................        400        365        385        420        335      1,905
----------------------------------------------------------------------------------------------------------------

    2. Increase the aggregate level of revenues by amounts 
equal to the cost of the foregoing changes to Function 600, 
reflecting reduction of the tax cuts assumed in the Budget 
Resolution.
    3. Increase the mandatory amount and the total amount of 
budget authority and outlays in the Chairman's Mark, 
accordingly, and conform the Reconciliation Directive to the 
appropriate committee.
    The amendment offered by Mrs. Clayton was not agreed to by 
a rollcall vote of 18 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........  ........        X   .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Mollohan.....        X   ........  .........
Mr. Herger.....................  ........  ........  .........  Mr. Costello.....        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mrs. Mink........        X   ........  .........
Mr. Smith of Texas.............  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................  ........        X   .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................  ........        X   .........  Ms. Roybal-Allard        X   ........  .........
Mr. Smith of Michigan..........  ........        X   .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................  ........        X   .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........  ........  .........  Mr. Baesler......  ........        X   .........
Mr. Radanovich.................  ........  ........  .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Parker.....................  ........        X   .........  Mr. Weygand......        X   ........  .........
Mr. Ehrlich....................  ........        X   .........  Ms. Clayton......        X   ........  .........
Mr. Gutknecht..................  ........        X   .........                                                  
Mr. Hilleary...................  ........        X   .........                                                  
Ms. Granger....................  ........        X   .........                                                  
Mr. Sununu.....................  ........        X   .........                                                  
Mr. Pitts......................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    5. Mr. Doggett and Mr. Weygand offered an amendment to the 
Chairman's Mark to add at the end of the resolution the 
following language:

SEC.   . PROTECTION OF BALANCED BUDGET.

    It is the sense of the Congress that, to assure that 
neither the tax cuts nor the spending increases in this 
resolution explode in cost, endangering the balanced budget 
promised in 2002 or the ability to maintain balance thereafter, 
no provision of law affecting revenues or authorizing spending 
for new entitlement initiatives assumed in this resolution 
should be effective for more than five years, unless 
subsequently reauthorized by law.

    The amendment offered by Mr. Doggett and Mr. Weygand was 
not agreed to by a rollcall vote of 17 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........  ........        X   .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Mollohan.....  ........  ........  .........
Mr. Herger.....................  ........  ........  .........  Mr. Costello.....        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mrs. Mink........        X   ........  .........
Mr. Smith of Texas.............  ........  ........  .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................  ........        X   .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................  ........        X   .........  Ms. Roybal-Allard        X   ........  .........
Mr. Smith of Michigan..........  ........        X   .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................  ........        X   .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........  ........  .........  Mr. Baesler......        X   ........  .........
Mr. Radanovich.................  ........        X   .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................  ........        X   .........  Mr. Sherman......  ........        X   .........
Mr. Parker.....................  ........        X   .........  Mr. Weygand......        X   ........  .........
Mr. Ehrlich....................  ........        X   .........  Ms. Clayton......        X   ........  .........
Mr. Gutknecht..................  ........        X   .........                                                  
Mr. Hilleary...................  ........        X   .........                                                  
Ms. Granger....................  ........        X   .........                                                  
Mr. Sununu.....................  ........        X   .........                                                  
Mr. Pitts......................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    6. Mr. Bentsen offered an amendment to the Chairman's Mark 
to add at the end of the resolution the following language:

SEC.   . TREATMENT OF REVENUE SHORTFALLS.

    It is the sense of Congress that, if the actual revenues 
resulting from the enactment of tax cuts and revenue offsets in 
a reconciliation bill, as required by this concurrent 
resolution, are less than projected on the date of enactment 
for the budget year or any other fiscal year covered by this 
concurrent resolution, then Congress should make up any such 
revenue shortfall solely by enacting further revenue offsets, 
if necessary, to achieve the deficit reduction targets set by 
this resolution.

    The amendment offered by Mr. Bentsen was not agreed to by 
voice vote.
    7. Mrs. Mink and Mr. Costello offered the following 
amendmentfor school construction.
    1. Increase budget authority and outlays in Function 500 by 
the following amounts (in millions of dollars), to reflect 
funding of a school construction program as reflected in the 
President's Budget request.

                                               SCHOOL CONSTRUCTION                                              
----------------------------------------------------------------------------------------------------------------
                                                                                                       Total FY 
                                       FY1998       FY1999        2000         2001         2002      1998-2002 
----------------------------------------------------------------------------------------------------------------
B.A...............................        5,000            0            0            0            0            5
Outlays...........................        1,250        1,250        1,250        1,250            0            5
----------------------------------------------------------------------------------------------------------------

    2. Increase aggregate level of revenues by amount equal to 
the cost of the foregoing change to Function 500, reflecting 
reduction of the capital gains tax cuts assumed in the budget 
resolution.
    3. Increase the discretionary amount and total amount of 
Budget Authority and Outlays in the Chairman's Mark 
accordingly.
    4. Amend the Committee Report to reflect the following 
policy assumption:

          To help school districts address the critical need 
        for renovation and modernization of existing schools, 
        as well as the construction of new school facilities to 
        accommodate the expanding school age population, the 
        resolution assumes $5 billion for a school construction 
        program as reflected in the President's Budget request.

    The amendment offered by Mrs. Mink and Mr. Costello was not 
agreed to by a voice vote.
    8. Ms. Rivers offered an amendment to the Chairman's Mark 
to add the following report language:

          The Committee assumes that revisions in the Medicare 
        program contained in any reconciliation bill shall not 
        include provisions that weaken or eliminate any 
        beneficiary protections under current law that prohibit 
        balance billing. The Committee further assumes that the 
        balance billing prohibitions contained in current law 
        will be applicable to the new health plan options 
        assumed in this resolution, and the providers 
        associated with those plans.

    The amendment offered by Ms. Rivers was not agreed to by a 
rollcall vote of 18 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........  ........        X   .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................  ........        X   .........   Mr. McDermott...        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Mollohan.....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Costello.....        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mrs. Mink........        X   ........  .........
Mr. Smith of Texas.............  ........  ........  .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................  ........        X   .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................  ........  ........  .........  Ms. Roybal-Allard        X   ........  .........
Mr. Smith of Michigan..........  ........        X   .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................  ........        X   .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........        X   .........  Mr. Baesler......  ........        X   .........
Mr. Radanovich.................  ........        X   .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Parker.....................  ........        X   .........  Mr. Weygand......        X   ........  .........
Mr. Ehrlich....................  ........        X   .........  Ms. Clayton......        X   ........  .........
Mr. Gutknecht..................  ........  ........  .........                                                  
Mr. Hilleary...................  ........        X   .........                                                  
Ms. Granger....................  ........        X   .........                                                  
Mr. Sununu.....................  ........        X   .........                                                  
Mr. Pitts......................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

    9. Ms. Woolsey offered the following amendmentfor full 
funding for WIC (Function 600).
    1. Increase budget authority and outlays for Function 600 
by the following amounts (in millions of dollars) to reflect 
the funding for the Special Supplemental Nutrition Program for 
Women, Infants and Children (WIC) at the President's requested 
level.

----------------------------------------------------------------------------------------------------------------
                                                   FY 1998      FY 1999      FY 2000      FY 2001      FY 2002  
----------------------------------------------------------------------------------------------------------------
B.A............................................          378          410          518          628          742
Outlays........................................          353          407          508          618          732
----------------------------------------------------------------------------------------------------------------

    2. Increase the aggregate level of revenues by amounts 
equal to the cost of the foregoing changes to Function 600, 
reflecting reduction of the tax cuts assumed in the budget 
resolution.
    3. Increase the discretionary amount and the total amount 
of budget authority and outlays in the Chairman's mark 
accordingly.
    4. Make any necessary conforming changes to other amounts 
in the Chairman's mark.
    The amendment offered by Ms. Woolsey was not agreed to by a 
rollcall vote of 18 ayes and 22 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........  ........        X   .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Mollohan.....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Costello.....        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mrs. Mink........        X   ........  .........
Mr. Smith of Texas.............  ........  ........  .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................  ........        X   .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................  ........        X   .........  Ms. Roybal-Allard        X   ........  .........
Mr. Smith of Michigan..........  ........        X   .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................  ........        X   .........  Mr. Doggett......  ........  ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................  ........        X   .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........        X   .........  Mr. Baesler......        X   ........  .........
Mr. Radanovich.................  ........        X   .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................  ........  ........  .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Parker.....................  ........        X   .........   Mr. Weygand.....        X   ........  .........
Mr. Ehrlich....................  ........        X   .........   Ms. Clayton.....        X   ........  .........
Mr. Gutknecht..................  ........        X                                                              
Mr. Hilleary...................  ........        X                                                              
Ms. Granger....................  ........        X                                                              
Mr. Sununu.....................  ........        X                                                              
Mr. Pitts......................  ........        X                                                              
----------------------------------------------------------------------------------------------------------------

    10. Mrs. Mink offered an amendment to the Chairman's Mark 
to add the following report language:

          With respect to the HOPE tax credit, the Committee 
        urges the elimination of any dollar-for-dollar 
        reduction in the credit related to a student's Pell 
        Grant.

    The amendment offered by Mrs. Mink was not agreed to on a 
rollcall vote with 18 ayes and 21 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........  ........        X   .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Mollohan.....        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Costello.....        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mrs. Mink........        X   ........  .........
Mr. Smith of Texas.............  ........  ........  .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................  ........        X   .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................  ........        X   .........  Ms. Roybal-Allard        X   ........  .........
Mr. Smith of Michigan..........  ........        X   .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................  ........        X   .........  Mr. Doggett......  ........  ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................  ........        X   .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........  ........  .........  Mr. Baesler......        X   ........  .........
Mr. Radanovich.................  ........        X   .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Parker.....................  ........        X   .........  Mr. Weygand......        X   ........  .........
Mr. Ehrlich....................  ........        X   .........  Ms. Clayton......        X   ........  .........
Mr. Gutknecht..................  ........        X                                                              
Mr. Hilleary...................  ........        X                                                              
Ms. Granger....................  ........        X                                                              
Mr. Sununu.....................  ........        X                                                              
Mr. Pitts......................  ........        X                                                              
----------------------------------------------------------------------------------------------------------------

    11. Mr. Cardin offered the following amendment:
    At the appropriate place in the resolution, add the 
following new section:

SEC.   . MAINTAIN THE BOREN AMENDMENT.

    Strike any reference to the Boren Amendment from the budget 
resolution.

    The amendment offered by Mr. Cardin was not agreed to by 
voice vote.
    12. Ms. Roybal-Allard offered an amendment to the 
Chairman's Mark to insert at the appropriate place the 
following language:

SEC.   . SENSE OF CONGRESS ON FAMILY VIOLENCE OPTION CLARIFYING 
                    AMENDMENT.

    (1) Domestic violence is the leading cause of physical 
injury to women. The Department of Justice estimates that over 
1 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, Illinois, document, for the first 
time, the interrelationship between domestic violence and 
welfare by showing that from 34% to 65% 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.
    (6) The restructuring of 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.
    (7) In recognition of this finding, the Budget Committee 
unanimously passed a Sense of Congress Amendment on Domestic 
Violence and Federal Assistance to the 1997 Budget Resolution. 
Subsequently, Congress passed the Family Violence Option 
Amendment to last year's Welfare Reform Reconciliation Bill.
    (8) The Family Violence Option gives the states the 
flexibility to grant temporary waivers from time limits and 
work requirements for domestic violence victims who would 
suffer extreme hardship from the application of these 
provisions. These waivers were not intended to be included as 
part of the permanent 20% hardship exemption.
    (9) The Department of Health and Human Services has been 
slow to issue regulations regarding this provision. As a 
result, states are hesitant to fully implement the Family 
Violence Option fearing it will interfere with the 20% hardship 
exemption.
    (10) Currently 15 states have opted to include the Family 
Violence Option in their welfare plans, and 13 other states 
have included some type of domestic violence provisions in 
their plans.

SECTION 2. SENSE OF CONGRESS.

    It is the Sense of the Congress that:
          (1) States shall not be subject to any numerical 
        limits in granting domestic violence good cause waivers 
        to individuals receiving assistance for all 
        requirements where compliance with such requirements 
        would make it more difficult for individuals receiving 
        assistance to escape domestic violence.
          (2) Any individuals granted a domestic violence good 
        cause waiver by states shall not be included in the 
        states' 20% hardship exemption.

    The amendment offered by Ms. Roybal-Allard was adopted by 
unanimous consent.
    13. Mr. Sherman offered the following amendment:

SEC. 304. SEPARATE ALLOCATION FOR LAND ACQUISITION AND EXCHANGES.

    (a) Allocation by Chairman.--In the House, upon the 
reporting of a bill by the Committee on Appropriations (or upon 
the filing of a conference report thereon) providing $700 
million in budget authority for fiscal year 1998 for Federal 
land acquisitions and to finalize priority Federal land 
exchanges, the chairman of the Committee on the Budget shall 
allocate that amount of budget authority and the corresponding 
amount of outlays.
    (b) Treatment of Allocations in the House.--In the House, 
for purposes of the Congressional Budget Act of 1974, 
allocations made under subsection (a) shall be deemed to be 
made pursuant to section 602(a)(1) of that Act and shall be 
deemed to be a separate suballocation for purposes of the 
application of section 302(f) of that Act as modified by 
section 602(c) of that Act.

    The amendment offered by Mr. Sherman was adopted by 
unanimous consent.
    14. Mr. Weygand offered an amendment to the Chairman's Mark 
to insert at the appropriate place in the resolution the 
following language:

SEC.   . SENSE OF CONGRESS ON SENIOR SERVICES.

    (a) Findings.--Congress finds that:
          (1) Both the federal and state governments should 
        continue to ensure that seniors and disabled 
        individuals continue to receive quality health care and 
        social services; and
          (2) Investing in preventative health care services, 
        research and medical education is vital to alleviating 
        future high costs of treating illnesses.
    (b) Sense of Congress.--It is the Sense of Congress that 
legislation pursuant to this resolution should--
          (1) Ensure that changes in payments to providers will 
        not adversely affect the access to nor quality of care 
        afforded to our seniors;
          (2) Ensure that Medicare Part B premiums are not 
        increased as a result of transferring Medicare's home 
        health program from Part A to Part B;
          (3) Further invest in preventative benefits and to 
        alleviate the cost of vital health care benefits for 
        seniors and the disabled;
          (4) Effectively serve, protect and advocate for our 
        nation's senior population by maintaining federal 
        minimum nursing home standards and providing sufficient 
        funding within the Older Americans Act for vital 
        congregate and home-delivered meal services, elder 
        abuse prevention programs, the long-term care ombudsman 
        program and the Administration on Aging;
          (5) Continue to invest in medical research and 
        physical training to care for our most disadvantaged 
        and severely ill patients by funding Graduate Medical 
        Education, Indirect Medical Education, and 
        Disproportionate Share payments to academic medical 
        centers and hospitals within the Medicare Hospital 
        Insurance Trust Fund and not shifting future funding 
        for the same to discretionary spending;
          (6) Ensure that reduction in the Indirect Medical 
        Education adjustment rate are fair and appropriate and 
        that said reduction will not adversely affect or reduce 
        the quality of care delivered to our elderly and all 
        consumers;
          (7) Fund the cost of the above provisions by reducing 
        the proposed non-educational tax cuts.

    The amendment offered by Mr. Weygand was not agreed to by 
voice vote.
    15. Mr. Spratt made a motion that members have two days to 
file additional, dissenting and minority views. The motion 
offered by Mr. Spratt was agreed to by unanimous consent.
    16. Mr. Hobson made a motion that the Committee adopt the 
aggregates, function totals, and other appropriate matters 
contained in the Chairman's Mark. The motion offered by Mr. 
Hobson was agreed to by unanimous consent.
    17. Mr. Hobson made a motion that the Committee adopt the 
Chairman's Mark as the Concurrent Resolution on the Budget. The 
motion offered by Mr. Hobson was agreed to by voice vote.
    18. Mr. Hobson made a motion that the Committee report the 
Concurrent Resolution be agreed to and that theConcurrent 
Resolution do pass. The motion offered by Mr. Hobson was agreed to by a 
rollcall vote of 31 ayes and 7 noes.

----------------------------------------------------------------------------------------------------------------
                                    Aye       No      Present                         Aye       No      Present 
----------------------------------------------------------------------------------------------------------------
Mr. Kasich, Chairman...........        X   ........  .........  Mr. Spratt,              X   ........  .........
                                                                 Ranking.                                       
Mr. Hobson.....................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Shays......................        X   ........  .........  Mr. Mollohan.....  ........        X   .........
Mr. Herger.....................        X   ........  .........  Mr. Costello.....  ........        X   .........
Mr. Bunning....................        X   ........  .........  Mrs. Mink........  ........        X   .........
Mr. Smith of Texas.............        X   ........  .........  Mr. Pomeroy......        X   ........  .........
Mr. Miller.....................        X   ........  .........  Ms. Woolsey......        X   ........  .........
Mr. Franks.....................        X   ........  .........  Ms. Roybal-Allard  ........        X   .........
Mr. Smith of Michigan..........        X   ........  .........  Ms. Rivers.......        X   ........  .........
Mr. Inglis.....................        X   ........  .........  Mr. Doggett......  ........  ........  .........
Ms. Molinari...................  ........  ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Nussle.....................        X   ........  .........  Mr. Cardin.......        X   ........  .........
Mr. Hoekstra...................        X   ........  .........  Mr. Minge........        X   ........  .........
Mr. Shadegg....................  ........  ........  .........  Mr. Baesler......        X   ........  .........
Mr. Radanovich.................  ........  ........  .........  Mr. Bentsen......        X   ........  .........
Mr. Bass.......................        X   ........  .........  Mr. Davis........        X   ........  .........
Mr. Neumann....................        X   ........  .........  Mr. Sherman......        X   ........  .........
Mr. Parker.....................        X   ........  .........  Mr. Weygand......  ........        X   .........
Mr. Ehrlich....................        X   ........  .........  Ms. Clayton......        X   ........  .........
Mr. Gutknecht..................        X                                                                        
Mr. Hilleary...................        X                                                                        
Ms. Granger....................        X                                                                        
Mr. Sununu.....................        X                                                                        
Mr. Pitts......................        X                                                                        
----------------------------------------------------------------------------------------------------------------

    19. Mr. Hobson asked for and received unanimous consent 
that the staffs are given authority to make necessary technical 
and conforming changes in the resolution and any committee 
amendments, and calculate any remaining elements required in 
the resolution.
    20. The motion to reconsider was laid on the table by 
unanimous consent.

                  Budget Committee Oversight Findings

    Clause 2(l)(3)(A) of rule XI requires each committee report 
to contain oversight findings and recommendations required 
pursuant to clause 2(b)(1) of rule X. The Committee on the 
Budget has examined its activities over the past year and has 
determined that there are no oversight findings.

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

    Clause 2(l)(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 the 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:

                   NATURAL RESOURCES AND ENVIRONMENT

--Increase funding for Environmental Reserve Fund at Superfund 
    hazardous waste cleanup sites.

--Increase funding for the Land and Water Conservation Fund to 
    finalize priority Federal land acquisitions and exchanges.

--National Park Service: Land Acquisition and State Assistance.

          EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

--Eliminate funding for activities under the Smith-Hughes Act 
    of 1918. Consolidate activities under the Vocational 
    Education Program.

--Increase funding for the GI Bill for America's Workers.

                                 health

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

--Fund State grants for health insurance coverage for uninsured 
    children.

                            income security

--Increase ceilings of the Federal FUTA-funded accounts in the 
    Unemployment Trust Fund to increase trust solvency.

--Increase funding for integrity activities for Unemployment 
    Insurance benefits.

--Increase funding for Transitional Assistance to Needy 
    Families with a formula and targeted within a State to 
    areas with poverty and unemployment rates at least 20 
    percent higher than the State average.

--Redirect existing food stamps employment and training funds 
    and increase funding to create more work slots for 
    individuals subject to the time limits.

--Permit States to exempt 15 percent of the individuals who 
    would lose nutrition assistance benefits because of the 
    time limits.

--Reform eligibility requirements of disabled legal immigrants 
    for public benefits.

                  Miscellaneous Budgetary Information

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of 
Representatives provides that Committee reports shall contain 
the statement required by section 308(a)(1) of the 
Congressional Budget Act of 1974. This report does not contain 
such a statement because as a concurrent resolution setting 
forth a blue print for the Congressional budget, the budget 
resolution does not actually provide new budget authority or 
new spending authority or change revenues

                       Views of Committee Members

    Clause (2)(l)(5) of rule XI requires each committee to 
afford a 2-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 the Chairman on Behalf of the Committee's Majority 
                                Members

                              ----------                              


                              Introduction

    In coastal South Carolina, Dr. Jack McConnell, seeing the 
unmet need for adequate health care among local residents, has 
established a free clinic to care for needy neighbors. The 
clinic--called the Volunteers in Medicine Clinic--is staffed by 
retired doctors, nurses, dentists, and other professionals, and 
had 8,500 patient visits in 1996. Each patient was treated with 
dignity and compassion by people who were providing the service 
solely because they wanted to. During the same period, the 
local hospital emergency room experienced a 35-percent drop in 
non-paying patient visits, resulting in estimated savings of 
$600,000. The Volunteers in Medicine Institute has received 
inquiries from 400 interested communities, and clinics are 
currently being established in several States. Dr. McConnell is 
developing a manual to guide communities and providers in how 
to set up free clinics.
    Dr. McConnell exemplifies a fundamental reason for the 
Budget Committee majority's vision: We trust people. We trust 
people far more than we trust bureaucrats in Washington. It is 
one of the main reasons we have long advocated balancing the 
budget and cutting taxes. These twin strategies restrain 
government and at the same time restore people's control over 
their own lives.
    The bipartisan balanced budget agreement described in this 
budget resolution is an historic event--and not simply because 
of the numbers. It is historic because it ratifies this 
fundamental faith in the American people.
    Even more important than this achievement, however, are the 
people the budget is intended to serve. To assure that we keep 
our minds focused on these people, the following views--
submitted by the Chairman on behalf of the Committee's majority 
members--seek to examine a variety of government issues in 
terms of this human perspective.

                            National Defense

    Every American today--every farmer, every firefighter, 
steelworker, school teacher, hardware shop owner, and everyone 
else who calls America home--shares a blessing won by this 
Nation's strength and stature: freedom from the fear that any 
foreign aggressor could threaten America's security.
    Not so long ago, this claim could not have been made. Many 
Americans today can still recall when Fidel Castro aimed 
nuclear missiles at Miami, families built bomb shelters in 
their homes, and school children were taught how to crawl under 
their desks during a nuclear attack. Americans lived under this 
cloud for nearly 3 decades.
    The United States won the Cold War because--especially 
during the Reagan and Bush administrations--it made the needed 
investments, in funds and conviction, to defend its freedom and 
security.
    But if the end of the Cold War greatly reduced the danger 
of a nuclear holocaust, it did not eliminate the challenges and 
dangers of an unstable world. Indeed, the dissolution of the 
U.S.-Soviet confrontation has unleashed the ambitions of 
radical and unstable regimes throughout the world. Many of 
these regimes are eagerly seeking nuclear, chemical, and 
biological weapons. Maintaining the security that America has 
earned is an ongoing task that is becoming only more complex as 
the millennium approaches.
    National security is an unforgiving task that requires a 
clear vision of America's global role, a resolve to use force 
when vital national interests are threatened, but also a clear-
eyed determination not to squander military resources in areas 
of marginal interest.
    The budget plan reflects the consensus between Congress and 
the President on the need to prudently increase defense 
resources so as to address many of the shortfalls in 
modernization, readiness, and quality of life. It should be 
emphasized, however, that increased funding alone is unlikely 
to solve the Pentagon's long-term imbalance between resources 
and commitments.
    The Department of Defense is reaching a critical juncture 
in its long-range budgetary planning. Even with the additional 
resources made available in the balanced budget plan, the 
Department will still have difficulty in fully meeting the 
demands of the future security environment while remaining 
within expected budgets. Clearly, significant savings must be 
generated within DOD; in turn, those savings must be 
reallocated to high-priority modernization and readiness 
programs.
    It is critical that this transfer from the administrative 
``tail'' to the warfighting ``tooth'' beundertaken immediately. 
While the 104th Congress made some progress in legislating reductions 
in the acquisition workforce and the staff of the Office of the 
Secretary of Defense, and in mandating outsourcing of some 
administrative functions, much more needs to be done. There are four 
principal areas where major reform needs to be undertaken:

--Defense Acquisition: The General Accounting Office has 
    identified persistent problems in the Pentagon's weapons-
    buying system. These include the setting of overly 
    ambitious requirements, unrealistic cost and schedule 
    estimates, outdated and bureaucratically layered management 
    practices, and the unwillingness of DOD to seriously 
    examine cost and performance tradeoffs. While comprehensive 
    reform plans can be implemented, effective Congressional 
    oversight is key to ensuring that reforms remain in place.

--Inventory Management: DOD has wasted billions of dollars on 
    excess supplies. According to GAO, about half of DOD's $70 
    billion in inventory ``spare parts, clothing, medical 
    supplies, and other items'' are either excess to any 
    planned warfighting requirement, obsolete, or otherwise 
    unusable. Modern commercial inventory control practices can 
    and should be implemented.

--Infrastructure: there is a chronic excess capacity problem at 
    DOD facilities, which adds billions of dollars in overhead 
    costs to the Department's operations. For instance, there 
    is a 35-percent excess capacity at DOD laboratories, and a 
    40 percent excess capacity at repair depots. Overhead costs 
    for transportation services are estimated as being two to 
    three times the basic cost of transportation.

--Financial Management: DOD continues to lack an integrated 
    financial management system, leading to serious 
    inefficiencies and accounting failures. As an example, the 
    Department has been unable to match tens of billions of 
    dollars worth of disbursements with valid contracts. Only 
    five of DOD's 249 primary financial systems conform to 
    Federal accounting standards, leaving the Pentagon 
    seriously vulnerable to fraud and abuse.

                         International Affairs

    The couple who run the neighborhood dry cleaning store 
probably has little time to evaluate how the Federal Government 
is pursuing internationals affairs. They probably have never 
received a loan from the Overseas Private Investment 
Corporation [OPIC] or the ExportImport Bank. They may not be 
aware that the United States contributes to the International 
Development Association [IDA]. They may or may not be aware of 
the growing need to reform the United Nations.
    On the other hand, if they are like most Americans, they 
probably support humanitarian assistance. Americans are a 
generous people who historically have taken great pride in 
alleviating human suffering, whether from wars or from national 
disasters. Likewise, they might recall the Iranian hostage 
crisis or some aspects of the Persian Gulf war, and understand 
how important achieving peace in the Middle East is to the 
United States.
    But, as they go about their daily lives, the issues of 
world diplomacy and foreign investment probably seem remote 
from their immediate and tangible concerns of feeding and 
clothing their family. Nevertheless, these issues are 
important, because part of the money they earn is taxed by 
Washington to finance these activities. They deserve to know 
that they are funded wisely and consistent with their values.
    This is especially true when one considers the breathtaking 
changes that are occurring throughout the world. Within the 
last decade, we have witnessed the end of the Cold War and the 
global trend toward greater reliance on markets and open 
trading systems. Increasingly, functions which used to be 
performed by governments or private monopolies, such as power 
generation, are being provided more effectively by the private 
sector. Net private capital flows to developing countries that 
have undertaken economic reforms have expanded dramatically; 
and dramatic advances in information, communications, and 
transportation technology are strengthening the links between 
developed and developing countries, and leading to an 
integrated global economy. To illustrate how dramatic these 
changes are, one need only look to a quote from the December 
29, 1996 issue of The Washington Post:

        More than any government program, more than any aid 
        agency or any international bank, the rapid spread of 
        free trade, free markets and investment across borders 
        by private companies and individual investors'a 
        phenomenon economists are calling ``globalization'' 
        ``is proving to be an effective weapon against poverty 
        in many nations around the world and, in some places, 
        arguably the most effective anti-poverty measure ever 
        known.

    The President and the Congress have begun to respond to 
these changes. Recently, for example, it was announced that the 
Arms Control and Disarmament Agency and the United States 
Information Agency would be consolidated into the Department of 
State. Furthermore, the director of the United States Agency 
for International Development would come under the direct 
authority of the Secretary of State and some of its functions 
would be consolidated within the Department. Members of the 
Budget Committee majority believe that these changes will 
result in significant savings.
    Members of the Budget Committee Majority are concerened, 
however, about the fact that few developing countries have 
achieved self-sustaining growth during the past severaldecades. 
We encourage the authorizing committees to investigate why more has not 
been accomplished.
    President John F. Kennedy once challenged the American 
people to make the 1960's the ``Decade of Development''--the 
period when many less-developed nations would transition into 
self-sustained growth. He envisioned an effort that would help 
``launch the economies of the newly developing countries `into 
orbit'--bringing them to a stage of self-sustained growth where 
extraordinary outside assistance is not required.'' In his 1961 
Foreign Aid Message, he stated: ``It is essential that the 
developing nations set for themselves sensible targets; that 
these targets be based on balanced programs which use their own 
resources to the maximum . . . The first requirement is that 
each recipient government seriously undertake to the best of 
its ability on its own those efforts of resource mobilization, 
self-help, and internal reform . . . which its own development 
requires and which would increase its capacity to absorb 
external capital productively.'' In his April 2, 1963 message 
to the Congress, he stated that foreign assistance should 
ultimately ``achieve a reduction and ultimate elimination of 
U.S. assistance by enabling nations to stand on their own as 
rapidly as possible. Both this nation and the countries we help 
have a stake in their reaching the point of self-sustaining 
growth--the point where they no longer require external aid to 
maintain their independence.''
    Unfortunately, this has not occurred. We urge the 
authorizing committee to examine why.

                             Fighting Crime

    In San Francisco, a family turns on the television set to 
watch the local news. They learn the following:

--A 59-year-old man out on a morning stroll in Lake Tahoe was 
    fatally shot four times by teenagers. The police say the 
    four teenagers, 15 and 16 years old, were ``thrill 
    shooting.''

--A 14-year-old boy was murdered. The witnesses say the five 
    juveniles charged with the crime senselessly beat him to 
    death when the young victim refused to give the juveniles 
    his new sneakers.

--The U.S. Department of Health and Human Services reported 
    today that the number of 12-to-17-year-olds using illegal 
    drugs has almost doubled in past 2 years.

    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 safety and security for American families.
    This is principally the role of State and local law 
enforcement agencies and is best handled by local agencies. The 
Federal Government's involvement should be to enhance the 
ability of State and local police to protect their citizens.

                               Education

    Two teachers in Bradenton, Florida--Monica Corbett and 
Janet Scarboro--were concerned about declining reading scores 
in a local elementary school. They developed an innovative, 
local solution--a program they called'' The Power Hour.'' Ms. 
Corbett and Ms. Scarboro arranged to have students from nearby 
Southeast High School bused to Oneco Elementary School for an 
hour twice a week. There each high schooler was assigned to 
tutor a student to increase his or her academic skills. The 
program has been a success for both the younger students and 
their high school tutors: The younger children have had instant 
role models they can relate to and their scores have improved 
markedly; the high school students have realized the impact 
they can make as volunteers, and are increasing their 
involvement in other areas. Some are contemplating social work 
as a career. The successful ``Power Hour'' is now being 
replicated through other schools systems along Florida's Gulf 
Coast.
    This is only one example of the difference a committed 
group of teachers and volunteers can make in improving academic 
achievement. To the extent that the Federal Government plays a 
role in education, it should seek to enhance and reinforce such 
local efforts.
    The Department of Education has admitted as much. In a 
recent report titled, Prospects: Final Report--concerning the 
Chapter 1 program for disadvantaged students--the Department 
listed several key elements for improving student performance: 
(1) high parental expectations for children, (2) active 
parental participation in schools, (3) emphasis on writing 
skills and advanced math, and, (4) orderly, disciplined schools 
environments. The study also noted that high-achieving, high-
poverty schools received stronger support from the local 
community, parents, and teachers than average high-poverty 
schools. Clearly to reform education we need to empower the 
people that can really make a difference in children's lives 
``parents, teachers, principals, and local communities.
    Another basic component in helping to improve our 
children's education is the need to get more resources to 
teachers and students for classroom learning, and spend less on 
Federal, State, and local bureaucracies. According to the 
Heritage Foundation, only 85 cents of each dollar the U.S. 
Department of Education allocates for elementary and secondary 
programs is sent to school districts. The accounting firm of 
Coopers and Lybrand found that in the New York City public 
schools, only 43 percent of the district's total funds went 
toward direct classroom expenditures.
    The Budget Committee majority believes that Federal 
education policy should be reformedto ensure that at least 90 
percent of Federal spending on education should be earmarked for 
classroom instruction. With anything less, taxpayers lose and--more 
important--the Nation's children lose.

                      the rising costs of college

    College is taking an ever-increasing share of family 
income. In 1980, the average cost of attending a private-
college absorbed 25 percent of median household income. In 
1993, that number had grown to 45 percent of family income. 
While overall inflation has grown by 80 percent since 1980, 
tuition has grown by 253 percent. The reasons why college costs 
have grown at triple the rate of inflation, and how schools can 
cut their costs to make college more affordable, need to be 
examined.

                                Welfare

    For 12 years, Brenda Brown received welfare benefits from 
the Aid to Families with Dependent Children program. Then, her 
state's welfare system changed its orientation from an income 
maintenance program to a program aimed at enabling welfare 
recipients to enter the workforce. Brenda learned some basic 
skills about getting and keeping a job that enabled her to get 
a temporary job driving a van. After that experience, she then 
landed permanent employment as a salesclerk at a pawnshop. 
``People think the pawnshop's nothing, but I'm happy with the 
money I'm making here,'' Brenda told her local newspaper. She 
said that being able to work and pay her bills has done wonders 
for her self-esteem. ``I feel great about myself, and my 
children respect me too,'' she said. ``I heard them saying they 
wanted to get a job because their mama is working . . . It's 
better any day than sitting at home all day waiting on the 
mailman.''
    Brenda Brown is succeeding because the Nation's welfare 
system is being transformed from a check writing program to one 
that emphasizes work and personal responsibility. But beyond 
Brenda's experience, her children's lives are being transformed 
as well. Growing up in a home in which their mother is employed 
will do more than simply improve their material well-being. It 
is changing how they see themselves, and how they think about 
their future role in society. It is teaching them that there is 
room in our economy for them, and that they have something to 
contribute someday. It is making it less likely that they will 
experience teenage pregnancy, drug abuse, or being on welfare 
themselves once they grow up.
    Last year, Congress passed, and the President signed, 
historic welfare reform legislation. These reforms are designed 
to combat poverty and welfare dependency by encouraging work 
and greater personal responsibility among low income families 
and individuals.
    Although this budget resolution assumes certain 
modifications to the welfare reform law, the basic principle of 
the law remains: people are better off when they rely mainly on 
their own resources rather than those of the government. 
Therefore, when public assistance is given, it should be given 
in a manner that encourages the recipients toward 
responsibility and self-sufficiency, not dependency.

                     General Science and Technology

    The New York City taxi driver who wears eyeglasses can now 
buy plastic lenses that are both light and shatterproof--a kind 
of lense that was not available as recently as 20 years ago. 
These lenses are a descendent of the American space program, 
which had to develop this kind of plastic for the visors on 
astronauts' helmets.
    This is just one of hundreds of benefits Americans have 
enjoyed as a result of scientific and technological research. 
The most productive, efficient, and creative of these research 
efforts come from the vast and multifaceted institutions of 
America's private sector--from pharmaceutical companies to the 
makers of better running shoes--precisely because they are 
driven by market incentives. It's an old (but sadly accurate) 
satire that the government will never build a better mousetrap 
because the product would not survive the government's volumes 
of specifications and army of bureaucrats--and besides it would 
not pass inspection by the Occupational Safety and Health 
Administration.
    Still, the Federal Government can advance these efforts--
but only by recognizing its appropriate role and the most 
efficient use of taxpayers' dollars.
    For the technological revolution to continue, a strong 
fundamental science base is needed. Therefore, basic research 
should be re-emphasized. 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. Yet even in space, the private sector should play 
a greater role as risk becomes better understood and more 
controllable. Finding ways to involve industries in space 
activities should be a major priority.

                                 Energy

    In 1974, American drivers waited in lines a dozen vehicles 
long to buy gasoline, because fuel was in short supply. A few 
years later, they watched President Carter on television, 
wearing a cardigan sweater, urging them to turn down their 
thermostats to conserve heatingoil. The shortages supposedly 
resulted from a shortage of natural energy resources. They led to the 
creation of the Department of Energy to address the ``crisis.'' But in 
fact, the shortages were 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 discouraged production from 1954 through the 1980's. 
Price controls encourage consumption and discourage production. 
Those shortages also disappeared as price controls were phased 
out.
    These are examples of how misguided government strategies 
impair the Nation's ability to provide for its energy needs.
    A major focus in this area is research and development. To 
determine what is good fundamental R&D, and to prioritize it, 
members of the Budget Committee majority employ the following 
six criteria:

--Federal R&D efforts should focus on long-term, non-commercial 
    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 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 above criteria. 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 department of energy

    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 policy makers 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.''
    Last year's budget resolution questioned whether the Nation 
had received a full and fair return on its ``investment'' in 
the DOE. It cited a December 15, 1994 article from The Wall 
Street Journal that asked a better question: ``So, What Do 
People At Energy Department Do All Day Long?'' The response: 
``Meetings Are Many and Mail Is Answered: Real Work Is Quickly 
Disappearing.''
    During the 104th Congress, the President promised to 
``aggressively realign'' the Department of Energy. He used 
phrases such as ``restructure,'' ``significantly reduce 
costs,'' and ``improve effectiveness and efficiencies.'' 
Unfortunately, few real changes have occurred within the 
Department. Consider the following examples that have been 
reported by the General Accounting Office [GAO]:

--DOE has historically been unsuccessful in managing its many 
    large projects those that cost $100 million or more and 
    that are important to the success of its mission. . . . 
    Since 1980, DOE has been involved with more than 80 major 
    acquisitions. . . . Our work indicates that many more 
    projects are terminated prior to completion than are 
    actually completed. Many of these projects had large cost 
    overruns and delays. [September 1996]

--GAO has provided four reasons for these problems. The fourth 
    reason is particularly troubling. Specifically, ``DOE 
    continues to lack a sufficient number of employees in some 
    areas with the necessary technical expertise to oversee the 
    design, construction, and operation of its major system 
    acquisitions. A 1981 DOE task force and a 1987 report by 
    the National Research Council noted DOE's lack of technical 
    capabilities and expertise. A March 1996 report by the 
    Defense Nuclear Facilities Safety Board echoed those same 
    concerns.'' [November 1996]

--``DOE has a long history of management problems. At the core 
    of many of these problems is its weak oversight of more 
    than 110,000 contractor employees. . . . Historically, 
    these contractors worked largely without any financial 
    risk, they got paid even if they performed poorly, and DOE 
    oversaw them under a policy of least interference. DOE is 
    now reforming its contracting practices to make them more 
    business-like and results-oriented. While we believe that 
    these reforms . . . are generally a step in the right 
    direction, . . . we are unsure whether the Department is 
    truly committed to fully implementing some of its own 
    recommendations. For example, in May 1996, the Secretary 
    announced the extension of . . . three laboratory contracts 
    [currently valued at about $3 billion]. DOE's decision to 
    extend, rather than compete these enormous contracts . . . 
    violates two basic tenets of the Department's philosophy of 
    contract reform.'' [September 1994]

--``DOE's laboratories do not have clearly defined missions . . 
    . DOE has underutilized the laboratories special talents to 
    tackle complex, cross-cutting issues, and the laboratories 
    may not be prepared to meet future expectations. Although 
    government advisory groups have recommended in the past 
    that DOE redefine the laboratories' missions to meet 
    changes in conditions and national priorities, DOE has not 
    acted on these recommendations.'' [January 1995]

    How has the Department responded to these types of 
criticisms? On May 22, 1995, the Department released a document 
titled Success Stories: The Energy Mission in the Marketplace, 
which profiled ``60 highly successful Department of Energy-
supported energy technologies.'' According to the Secretary, 
these technologies ``are generating billions of dollars worth 
of gross sales, profits, energy savings and productivity 
gains.'' After reviewing the document, GAO stated:'' Although 
Success Stories makes some valid claims about the benefits of 
DOE's applied research, we found problems with the analysis DOE 
used to support the benefits cited in 11 out of the 15 cases we 
reviewed. These problems include basic math errors, problems in 
the supporting economic analyses, and unsupported links between 
the benefits cited and DOE's role or the technology. These 
problems make DOE's estimates of the benefits for these cases 
questionable.''
    DOE's problems, however, are not limited to domestic 
programs. According to the Inspector General [IG] of the U.S. 
Agency for International Development [USAID], USAID transferred 
about $10 million to DOE to retrofit a commercial power plant 
in the Krakow region of Poland with an advanced clean coal 
technology that had been demonstrated in the United States. 
Although the construction of the system was completed in 1993, 
the IG recently reported that it ``has not been successfully 
tested nor was it operational at the end of May 1996. Also, the 
projects delays and problems have had a negative impact on the 
U.S. Government's reputation and may affect future business 
opportunities for U.S. firms operating in Central and Eastern 
Europe.''
    As such, the Budget Committee majority members still 
believe 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. 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. These programs, 
however, are funded in Function 050, National Defense.
    The President has indicated that ``The Era of Big 
Government is Over.'' Given the questionable origin of the 
Department and its poor track record, this is an ideal place to 
start downsizing government.

                   Environment and Natural Resources

    In fiscal year 1994, the Congress directed the 
Environmental Protection Agency [EPA] to ask the National 
Academy of Public Administration [NAPA] to review EPA's role in 
setting the nation's environmental priorities. In its report, 
NAPA indicated that much has been accomplished concerning the 
environment. Specifically, NAPA stated: ``In the past two 
decades, the United States has made extraordinary progress in 
reducing pollution from the biggest and most obvious sources.'' 
Indeed, this progress is enabling people to lead longer, 
healthier lives. There has also been significant progress 
concerning resource utilization. As was recently pointed out in 
an article titled New Environmentalism: ``[M]arketplace 
competition has resulted in resource conservation. The 
telecommunications industry requires only 65 pounds of silica 
to make cable that carries 1,000 times more messages thancable 
made from 2,000 pounds of copper. In the 1960s, soda can producers 
required 164 pounds of metal to produce 1,000 cans; today, they need 
only 35 pounds of metal. These inconspicuous efforts to use fewer 
resources make up the unglamourous and unnoticed building blocks of 
environmentalism.''
    The NAPA study, however, also contained a warning. 
Specifically, to ``continue to make environmental progress, the 
nation will have to develop a more rational, less costly 
strategy for protecting the environment, one that achieves its 
goals more efficiently, using more creativity and less 
bureaucracy. . . . The rate of environmental progress will 
slacken considerably unless there are profound changes in the 
legal foundation and management structure of EPA, a continued 
devolution of responsibility for administering environmental 
programs, and a serious attempt to integrate programs to combat 
pollution.''
    The American people overwhelmingly desire a healthier 
environment and increasingly see it as critical to their 
future.
    To maintain the pace of environmental progress, Federal 
environmental policy should be guided by a set of seven 
fundamental principles. If followed, these principles will 
produce a cleaner, healthier, and safer environment for 
ourselves and our children:

--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 non-
    environmental 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 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.

--To illustrate why this is important, one need only look at 
    the so-called Amoco-Yorktown refinery study. In 1993, The 
    Wall Street Journal reported on the results of the study in 
    an article titled: ``What Really Polluted? Study of a 
    Refinery Proves an Eye-Opener.'' The NAPA report also 
    referred to the study.

          The Amoco-Yorktown refinery study, and similar 
        experiments in the integrated pollution management 
        designed for specific plants or industrial sectors, 
        have shown that EPA's traditional regulations produce 
        fewer environmental benefits at higher costs than would 
        alternative approaches. Under the current regulatory 
        framework, Amoco's Yorktown, VA, refinery is required 
        to reduce about 7,300 tons of airborne hydrocarbon 
        emissions per year at a cost of $2,400 per ton. The 
        refinery found that by using different control 
        strategies from those required by the regulations, 
        however, it could eliminate 7,500 tons of hydrocarbons 
        and listed hazardous waste each year at an average cost 
        of $500 per ton.

--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 5th 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 the Best Stewards of Environmental Resources 
    Are PrivateStewards: 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.
  For example, 60 years ago, Ruth Edge purchased, along with 
    others, a mountain in Pennslyvania that was a major hawk 
    flyover. It has been reported that ``[n]either politicians 
    nor major conservation organizations shared her dream of 
    protecting the hawks, so she pursued her dream through 
    personal initiative.''

    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.

                           superfund program

    The Superfund program is seriously flawed. As such, the 
authorizing committees should correct the program's problems in 
a manner that will reform the high cleanup and legal costs, 
correct any 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.
    Although that task is the responsibility of the 
Appropriations Committee, the Budget Committee majority members 
believe that funding for the National Park System should be 
such a priority. In addition, we believe that strong Clean 
Water State Revolving Funds and Drinking Water State Revolving 
Funds should be maintained. The Budget Committee majority also 
encourages 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 possible. Finally, the 
Budget Committee recognizes that Congress authorized 
participation in the CALFED Bay-Delta Program.

                                Commerce

    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.
    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. 
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 U.S. can best 
enhance its competitiveness by eliminating deficit spending and 
the national debt; by modernizing outmoded antitrust laws to 
recognize global competition; 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.

                  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 view was also echoed by T.J. Rodgers, the President 
and CEO of Cyprus Semiconductor. Writing in Investor's Business 
Daily, he called much of the Department's spending ``corporate 
techno-pork.'' Because of this, he argued: ``The Department of 
Commerce should be dismantled. Its loose collection of pork-
barrel programs for industry (`corporate welfare') does not 
remotely justify its $4.4 billion yearly cost. Vital functions, 
such as the Patent Office, have more suitable homes elsewhere 
in the government.''
    Furthermore, he stated: ``The Department of Commerce has 
only one coherent theme connecting its scattered activities: 
the delivery of political funds and favors to widespread 
constituencies.'' He concluded by noting that businesses [even 
small Mom and Pop businesses] are paying higher taxes to 
support this additional spending, but that this is actually 
destroying wealth. Specifically, ``[t]hey take money from 
successful corporationsand individuals who are professionals at 
investing and move that money to Washington so that the investment can 
be done by bureaucrats. The investments in technology will be made: tax 
rates determine only who the investor will be.''
    The Budget Committee majority again urges the committees of 
jurisdiction to once again examine the next means of 
terminating the Department of Commerce and reallocating those 
functions that need to be maintained.

                             Transportation

    American history is, to a great extent, the story of the 
successive development of innovative transportation systems 
that have opened up our nation to settlement and development. 
Because of the importance of transportation to our nation's 
economy, the level of investment in our transportation system 
is crucial. Although historically most transportation has been 
regulated at the State or local level, Federal, State, local, 
and private resources have all been instrumental to the 
establishment and maintenance of the Nation's transportation 
infrastructure. The Federal Government has traditionally 
ensured the creation or maintenance of transportation systems 
of a national nature: such as the transcontinental railroad; 
maritime trade; aviation safety; and the interstate highway 
system. It is the subject of this function, which includes 
Federal funding for highway, transit, railroad, aviation, 
maritime, and Coast Guard programs.
    Although the Federal role was instrumental to the creation 
of the national interstate system, today it has often become an 
obstacle to improved transportation services. As much as 25 
percent of the tax revenue dedicated to the Highway Trust Fund 
is spent on maintaining the Federal bureaucracy and complying 
with burdensome Federal mandates and regulations. Also, much 
Federal highway spending is misdirected toward programs with 
limited or no relationship to transportation, such as bicycle, 
pedestrian and horse paths, landscaping, tourism brochures, and 
commercial development, including the subsidizing of a saloon.
    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. But costly Federal mandates 
and restrictions limit how airports raise and spend their 
revenues, despite the fact that Federal funding is only a 
fraction of most airport budgets. Indeed, the nature of the 
Federal Aviation Administration's Airport Improvement Program, 
combined with Federal restrictions on other sources of 
potential revenue, prevents many airports from meeting their 
development needs. In 1970, because of the inability of 
overextended railroads, many of which were mandated by Federal 
law to maintain unprofitable lines, to compete against the 
private automobile and modern jet transportation, the 
nationalization of passenger rail was undertaken as a 2-year, 
federally-assisted experiment. After 27 years this experiment 
has delivered a near bankrupt corporation, Amtrak, running on a 
dilapidated infrastructure and desperate for Federal aid every 
day to survive. In fact, despite over $19 billion in Federal 
assistance, Amtrak has cumulatively lost over $13 billion ($764 
million in net losses during fiscal year 1996 alone), a level 
of losses more than twice as much per year as trains were 
losing under private ownership.
    The GAO testified in March 1997 that ``Amtrak is still in 
financial crisis despite the fact that its financial 
performance (as measured by net losses) has improved over the 
last two years.'' Furthermore, ``. . . it is likely Amtrak will 
continue to require Federal financial support--both operating 
and capital--well into the future.'' As a government-owned 
corporation, Amtrak finds it difficult to conduct the long-
range planning and organizational changes that a private 
company could and would take to maintain a competitive and 
profitable service, such as modernizing capital equipment and 
closing unprofitable routes. Amtrak's statutory monopoly on 
passenger rail also prevents the establishment of private 
competitors, which must gain Amtrak's approval to operate. 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. The 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 Committee majority urges the committees of 
jurisdiction to explore 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. Several such ideas are presented below.

                            highway funding

    The United States' highway financing mechanism is a relic 
of the 1950's. It was created at a time when lawmakers were 
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 more than forty years and cost more than $130 
billion. The Federal-Aid Highways program was also expanded 
during that time to include more than $240 billion in other 
programs and projects.
    But even with this massive level of Federal spending, 
according to many ``experts,'' highway construction and 
maintenance remains woefully underfunded. But the real problem 
is not the level of federal spending, but the federal system 
itself. This is because of the waste ofbillions of tax dollars 
on the inefficient Federal bureaucracy, Congressional demonstration 
projects, and burdensome Federal regulations and mandates that eat up 
as much as 25 percent of the tax revenue dedicated to the Highway Trust 
Fund.
    In addition, much Federal spending is misdirected toward 
programs with limited or no relationship to improving 
transportation such as bicycle, pedestrian and horse paths, 
landscaping, tourism brochures, and commercial development, 
including the subsidizing of a saloon.
    One solution to addressing future infrastructure needs 
would be reducing the Federal gasoline excise tax and highway 
trust fund outlays by an equivalent amount beginning in 2002. 
States could then raise their taxes a commensurate amount. 
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 $7 billion a year.
    The key to improving the Nation's infrastructure is re-
empowering 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.

                     the air traffic control system

    The Air Traffic Control system is obsolete. According to a 
March 1997 GAO report, ``since the early 1980's, FAA's 
modernization efforts have experienced lengthy schedule delays 
and substantial cost overruns.'' But although the FAA has taken 
some steps to solve these problems, the risk of cost overruns 
and program delays continues to bedevil the modernization 
program. The FAA has also been criticized for general 
mismanagement. The antiquated technology and 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.
    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 modernization, and would enable the corporation 
to raise private capital for modernization. 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 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.

            THE ST. LAWRENCE SEAWAY DEVELOPMENT CORPORATION

    Another area that warrants examination is the St. Lawrence 
Seaway. The seaway was opened in 1959 and operated by two 
separate national organizations, the U.S. St. Lawrence Seaway 
Development Corporation and Canada's St. Lawrence Seaway 
Authority. The Canadian system of 13 canals is funded through 
the collection of tolls, whereas the two canals of the U.S. 
system are funded by revenues generated by the Harbor 
Maintenance Fee. However, the Harbor Maintenance Fee may be 
ruled unconstitutional by Federal courts, and may also be 
challenged by the World Trade Organization. Thus, a new 
financing scheme needs to be identified.
    The Canadian government has proposed legislation that would 
establish a bi-national not-for-profit corporation to take over 
operation of the Seaway. The corporation would be composed of 
Seaway users, who are the parties most interested in the 
successful management and operation of the system. This 
proposal would also return oversight of Great Lakes Pilotage to 
the Coast Guard.

                                Housing

    The American Dream starts with a safe decent place to live. 
As Americans work to fulfill their dream, they move up the 
housing ladder--from transitional housing, to long term rental, 
to rent/purchase, and finally to home ownership. Nearly two-
thirds of Americans own their home with fully 90 percent 
aspiring to home ownership--a nearly 25-percent difference.
    The private sector is the best mechanism for meeting the 
housing needs of most of the Nation's citizens. Governments, 
however, should play narrow, targeted roles in housing because 
decent and safe housing provides positive economic, social, and 
political benefits that stabilize neighborhoods and communities 
and benefit all members of society. Thus, Federal, State, and 
local governments should supplement private sector resources 
only when necessary, remove unnecessary and costly regulations 
that relate to building, selling and financing housing, and 
work in partnership with the private sector to ensure an 
adequate supply of affordable housing for all and raise the 
home ownership rate in the United States.
    Today there is a need for at least 10.5 million affordable 
housing units--a third are in the central city, a third in the 
suburbs, and third are in rural areas. Who needs 
affordablehousing? Low income households and individuals. Elderly 
populations with special needs will explode over the next few years as 
the baby boomers move to retirement. American Indians continue to be 
housing poor.
    Paul S. Grogan, the president and chief executive, Local 
Initiatives Support Corporation finds: ``It's time to stop 
kidding ourselves and finish the job of making affordable 
housing available to every American.'' A special focus should 
be on the poor, elderly, disabled, homeless, and those wishing 
to own their own home.
    The Federal Government spends about $35 billion on housing 
initiatives which serve just under one-third of those in need. 
The cost per family of 4 is about $900 per month. In most of 
America, $900 a month is enough to buy a nice home with 
hundreds of dollars left over. Democrats, Republicans, 
conservatives, and liberals agree ``that much of the Federal 
housing ``cash flow'' is being wasted.'' Milliard Fuller, the 
president and founder of Habitat for Humanity, says that it is 
``ridiculous, shameful, and disgraceful'' that government has 
not done more.
    The Federal Government should support community efforts to 
assist low-income individuals and families to move up the 
housing ladder and provide more Americans the opportunity to 
participate in the American Dream of home ownership. Community-
based solutions will need Federal support along with assistance 
from states and the private sector. Realtors, mortgage bankers/
brokers, builders, developers, rental housing owners, housing 
not for profits such as Habitat for Humanity and public housing 
authorities, and many others will need to work together.
    The Federal housing ``cash flow'' is a substantial 
commitment that should be redirected to highly leveraged 
community based housing initiatives and home ownership 
programs. Community-based organizations often combine 
government dollars and tax credits with private contributions, 
loans, and other resources to ``leverage'' government housing 
dollars by 2, 3, 4, 5, or even 6 times or more to build 
affordable housing.
    Many Americans want to own a home but can't. A family 
living in their own home can build their future one month at a 
time by making mortgage payments and accumulating equity. 
Today, 44 percent of Americans' net worth is in their homes. 
Home equity is an important saving mechanism for old age. In 
addition, home equity may be used to fund education expenses 
and pay emergency health bills. A community house focus brings 
renewed responsibility to state and local governments as well 
as the private for profit and not for profit housing 
corporations. In many communities, teachers, police, 
firefighters and others who work to support the community 
cannot afford to live there. Affordable housing is often at the 
mercy of existing restrictions on development and fees and the 
entrepreneurial spirit of housing corporations. Few not for 
profit housing corporations have built units in large numbers. 
New business associations between for profit and not profit 
housing organizations could increase dramatically affordable 
housing units. World class construction companies--Bechtel, 
Brown and Root--as well as local and regional builders and 
manufacturers must work with local communities to build 
millions of housing units.
    Federal housing dollars must be used better. Targeted 
Federal dollars can help communities to dramatically increase 
affordable rental housing and home ownership.
    Housing objectives at all levels should include the 
following:

--Preservation: Effective policies to help preserve, maintain, 
    and improve what lowcost, decent housing already exists.

--Production: Creative, cost-effective, and flexible programs 
    that will increase the supply of quality housing for low-
    income families, the elderly and other vulnerable people.

--Participation: Encourage the active and sustained involvement 
    and empowerment of the homeless, tenants, neighborhood 
    residents, and housing consumers. We need to build on the 
    American traditions of home ownership, self-help, and 
    neighborhood participation.

--Partnership: Ongoing support for effective and creative 
    partnerships among nonprofit community groups, churches, 
    private developers, and government at all levels, Realtors, 
    home builders, mortgage bankers/brokers, and financial 
    institutions to build and preserve affordable housing.

--Affordability: Efforts to help families and individuals to 
    obtain decent housing at costs that do not require neglect 
    of other basic necessities. Opportunity: Stronger efforts 
    to combat discrimination in housing against racial and 
    ethnic minorities, women, those with handicapping 
    conditions, and families with children.

--Justice: There is no better provision for justice than the 
    opportunity to own a home. Social justice is often 
    dependent on the economic condition of individuals and 
    families. Homes are by far the major family asset. Home 
    ownership is the foundation of the American Dream and a 
    prime condition for justice.

                                          John R. Kasich, Chairman.
ADDITIONAL VIEWS OF HON. GIL GUTKNECHT REGARDING GEOGRAPHIC INEQUITY IN 
                PAYMENTS TO MEDICARE RISK CONTRACT PLANS

    The current practice of basing Medicare payments to risk 
contract plans on fee-for-service costs has resulted in a wide 
disparity in Medicare payments from region to region. For 
example, some counties receive 2.5 times more in Medicare 
payments under the adjusted-average-per-capita-cost (AAPCC) 
than others. This inequity in Medicare payments deprives rural 
beneficiaries of quality Medicare services and penalizes the 
most efficient and effective Medicare service providers. The 
geographic variation in Medicare payments must be reduced over 
time to raise the lower payment areas closer to the average. 
The geographic inequity in Medicare payments should be 
corrected by delinking payments to Medicare risk contract plans 
from fee-for-service spending while taking into account actual 
differences in input costs that exist from region to region. 
Providing an adequate minimum payment rate will allow Medicare 
health plans to offer a high quality Medicare package to rural 
beneficiaries.

                                                     Gil Gutknecht.
   ADDITIONAL VIEWS OF HON. LUCILLE ROYBAL-ALLARD REGARDING HISPANIC 
                          SERVING INSTITUTIONS

    It is my hope as this budget moves through the committee 
process that Hispanic Service Institutions (HSI) will receive 
appropriations at the authorized level of $45 million to 
support access to higher education opportunities for Hispanic 
students. Currently, there are approximately 125 colleges and 
universities, including four-year institutions and community 
colleges, with Hispanic student enrollments above 25 percent 
that are eligible for Federal Title III, Section 316, Part A 
(Strengthening Institutions) funding. These funds are used to 
support infrastructure development and staff and faculty 
development by allowing these institutions to provide a 
culturally relevant and academically supportive environment.
    I am concerned that funding for HSIs has never achieved the 
funding levels first authorized by the 1992 Reauthorization of 
the Higher Education Act. In fact FY 1995 was the first year 
that a $12 million appropriation was made for HSIs. In 
subsequent fiscal years, HSIs received annual appropriations of 
$10.8 million, an amount that is only one-tenth of those made 
available to similarly situated institutions serving minority 
students.
    I believe increasing funds to HSIs is critically important 
in supporting the recruitment and retention of Hispanic 
students in higher education. Increased funding to support the 
growing enrollment of Hispanic students in HSIs is essential to 
the continuing development of the educational programs of these 
institutions.

                                             Lucille Roybal-Allard.
            ADDITIONAL VIEWS OF HON. KENNETH E. BENTSEN, JR.

    I voted for the budget agreement, as embodied in the budget 
resolution, because I believe, on balance, that it sets the 
right priorities and places the federal budget on a reasonable 
and achievable path to being in balance for the first time 
since 1969. It is by no means a perfect agreement; few are. But 
it is a bipartisan agreement that gets us to balance and that 
will help restore the confidence of the American people that 
their elected leaders can work together to confront the 
challenges facing our nation. These are important 
Accomplishments.
    I am especially pleased that this agreement places such a 
high priority on the education and health of our children. We 
must expand access to college because more and better education 
is needed to succeed in the information age economy. And we 
must end the national shame that 10 million children lack 
health insurance and access to basic health care. Texas, which 
leads the nation in uninsured children, will benefit greatly 
from this initiative.
    However, as we transform this framework into specific 
legislation, I will be working hard to ensure that the tax cuts 
and Medicare changes in this agreement are implemented fairly 
and responsibly.
    The Medicare changes should be fair to senior citizens and 
maintain our investment in graduate medical education at the 
nation's teaching hospitals. Teaching hospitals are linchpins 
of our entire health care system. They train future physicians 
and other health care professionals; they conduct clinical 
research that helps America first in the world in medical 
research and technological development; and they often bear the 
responsibility of treating patients who lack health insurance 
and cannot find care anywhere else. Because of this special 
mission, the federal government has long considered it in the 
national interest to help underwrite the extra cost of 
operating these hospitals. Through traditional Medicare plans, 
the federal government provides a subsidy to these institutions 
based upon the number of traditional Medicare patients they 
treat. However, as the number of Medicare patients enrolled in 
managed care has grown steadily and these patients have been 
sent to other locations, there has been a steady erosion in 
this federal subsidy.
    I believe that the Medicare reforms enacted as part of the 
reconciliation bill should establish stable, mandatory funding 
for graduate medical education. This legislation could include 
the option recommended by the Administration's Fiscal Year 1997 
Budget, which is similar to legislation I have introduced, H.R. 
106, to establish a trust fund by recapturing a portion of the 
Adjusted Average Per Capita Cost (AAPCC) payment to Medicare 
managed care plans. This approach would not increase federal 
spending; rather it would recapture funds from the current 
Medicare managed care reimbursement formula so that all 
Medicare plans help pay for the cost of graduate medical 
education.
    I am also concerned that this agreement meet the goal of 
balancing the budget. It is assumed that the tax cuts will be 
contained and not result in excessive revenue losses in the 
future. Such losses would increase the deficit and put pressure 
on necessary mandatory spending such as Medicare and Medicaid. 
That is why I offered an amendment to ensure that any excess 
losses from the tax bill be offset not by additional cuts in 
mandatory spending, but rather from the revenue side of the 
ledger. This is within the scope of the original agreement, but 
unfortunately the Committee failed to accept this enforcement 
mechanism. We must remember the lesson of the early 1980s when 
tax cuts did explode in cost and resulted in the huge deficits 
we are still dealing with today. If Congress takes that 
approach again, the result will be either the return of huge 
deficits or deep cuts to Medicare, Medicaid, education, and 
other priorities we are about. Neither outcome is acceptable. I 
will continue to fight for enforcement mechanisms as we write 
the legislation implementing this agreement. This is a good 
agreement, but it will not live up to its promise unless we 
ensure the tax cuts remain responsible and affordable.

                                            Kenneth E. Bentsen, Jr.
              ADDITIONAL VIEWS OF HON. BENJAMIN L. CARDIN

    I want to make the Committee aware of two issues of 
particular concern to me.
    The first issue is the repeal of the Boren amendment, a 
protection in the Medicaid program that simply states that 
payment rates for hospitals and nursing facilities must be 
``reasonable and adequate to meet the costs of efficiently and 
economically operated facilities.'' This provision is a vitally 
important Medicaid component because it helps assure access to 
quality health care for our nation's poor mothers, children, 
and seniors.
    The Boren amendment was enacted in 1981 at the request of 
our governors because they were then concerned about their 
ability to continue providing adequate access to Medicaid 
beneficiaries. Access was becoming limited due to the continued 
downward spiral in Medicaid reimbursement rates. These low 
rates were leading providers to refuse to participate in the 
program.
    What was a problem in 1981 would become a problem again 
today if we repeal the Boren Amendment. Such action will free 
the hands of states to pay whatever reimbursement rates they 
choose to hospitals and nursing homes. This will gravely impact 
the access and quality of health care for the majority of our 
country's elderly nursing home residents and for millions of 
poor mothers and children.
    Today, many states are moving their Medicaid populations 
into managed care. This move is raising its own set of 
questions about access to health care and quality of care. 
Adding the elimination of the Boren Amendment to this already 
rapidly changing health care system could truly devastate the 
federal government's commitment to provide access to quality 
health care for America's seniors in nursing homes and poor 
mothers and children. Congress should not repeal this important 
protection.
    The second issue is an amendment I offered in the committee 
to create a Congressional Commission on budget process reform. 
This commission's membership would be appointed by the Speaker 
of the House and the majority and minority leaders of each 
chamber. It would be made up of members with financial and 
accounting expertise as well as knowledge of congressional 
practices.
    The commission would be charged with revisiting the work of 
the 1967 commission which produced a comprehensive examination 
of federal budget accounting practices. Many of the issues 
reviewed at that time need to be considered again in light of 
numerous changes that have occurred in the congressional budget 
process and the difficult budget problems facing us with 
respect to the treatment of trust funds, the effects of a cash 
accounting system, and a host of other issues. The commission 
would also review the reforms instituted in the Congressional 
Budget Act of 1974, as well as changes enacted since then.
    More specifically, the commission will make recommendations 
regarding what items of federal spending should be ``on 
budget'' and which ``off budget'', including focussing on the 
treatment of trust funds and government sponsored enterprises; 
cash versus accrual accounting; the potential uses of a capital 
budget, and the proper limits on what constitutes a capital 
expenditure; the classification of different categories of 
federal receipts, such as revenues, offsetting receipts, user 
fees, and the method of scoring changes in federal tax or 
spending policy; the budgetary treatment of emergency funding 
resolutions; and the calculation of the baseline for federal 
budget purposes.
    The current budget process system has many unintended 
consequences for federal government policies. Dedicated taxes 
are paid into trust funds, only to be left there, frequently to 
the frustration of the public. Spending decisions are distorted 
by scoring policies that make prudent long-term planning nearly 
impossible. Concentration on five-year scoring windows for 
revenue changes ignores long-term consequences that threaten 
future fiscal stability. The adverse impact of these and other 
problems affects Social Security, limits federal capital 
investment, and creates confusion among the American public 
with respect to the federal budget.
    I want to thank the Chairman for his expression of support 
for this proposal. I also appreciate his recommendation that 
the Committee proceed with developing a task force and holding 
hearings on this important topic. I look forward to our 
continued work on reforming the budget process.

                                                Benjamin L. Cardin.
                            ADDITIONAL VIEWS

    It is our view that Function 270 of the Budget Resolution 
should assume full funding of the President's request for the 
Department of Energy's Energy Efficiency and Renewable Energy 
Programs ($1.05 billion). The Budget Resolution provides an 
opportunity to assess national priorities within our overall 
budget parameters as we help prepare our country and its 
citizens for the future. To that end, we strongly urge our 
colleagues in the Congress to fully fund the renewable energy 
and energy efficiency budget request. There are numerous 
reasons to do so, any one of which is reason enough, and put 
together they present a compelling case.
    These programs represent a sound, cost-effective investment 
for a better, healthier, more competitive American future. 
Seldom do we have the opportunity to meet so many objectives at 
the same time:

--Development of our abundant renewable energy (biomass, solar, 
    wind and geothermal) and energy efficiency resources which 
    exist all over our great country. This fosters solid job 
    creation, new manufacturing and products and sustainable 
    economic development in every single one of our states.

--Technological leadership and excellence as we face an 
    increasingly competitive global marketplace. We should not 
    sacrifice our leadership to our major trading competitors 
    because we do not carry through the important R&D advances 
    and promising future our investments have already yielded. 
    That would be penny-wise and pound-foolish and would 
    jeopardize our ability to have healthy, cutting-edge 
    technologies, products and industrial processes that can 
    capture the burgeoning international markets as well as our 
    domestic markets which should not be ceded to other 
    countries. Our renewable energy and energy efficiency 
    investments serve as a catalyst to stimulate and leverage 
    much greater investments because the investments are, at a 
    minimum, 50-50 cost-shared.

--Pollution prevention through the use of more efficient 
    process technologies and clean energy sources, which 
    results in less conventional air pollutants and greenhouse 
    gas emissions. The renewable energy and energy efficiency 
    budget is the largest federal pollution prevention program 
    and should be heralded as a superior approach.

--These investments are the cornerstone of a sound global 
    climate change mitigation strategy. The international 
    scientific community and more than 150 nations have 
    recognized the serious threat posed by human-induced 
    climate change and called for action to reduce greenhouse 
    gas emissions (produced primarily by the combustion of 
    fossil fuels). Enormous efficiency gains can be made in 
    every sector. In addition, our wealth of renewable energy 
    resources positions us to address this important issue and 
    take international leadership. This can result in our 
    technologies having great international market potential as 
    other countries also take action and see sustainable energy 
    technologies as an important route for their energy and 
    economic development.

--Reduced reliance on oil imports which swell our trade 
    deficit, take dollars away from reinvestment in our economy 
    and add to our national security costs and risks.

    Furthermore, support for a strong renewable energy and 
energy efficiency budget has the solid support of the public, 
which has been borne out in poll after poll on budget 
priorities over the last decade.
    As we think about the future of our country, it is clear 
that our investment in sustainable energy resources is a smart, 
reasoned, effective way to address the enormous, critical 
challenges and opportunities facing us. We can afford to do no 
less.

                                   David Minge.
                                   Lynn Woolsey.
                                   Lynn Rivers.
             ADDITIONAL VIEWS OF REPRESENTATIVE DAVID MINGE

    I am pleased that this budget resolution reflects a 
bipartisan agreement to balance the budget by 2002. As the 
Cochair of the Budget Task Force of the Blue Dog Coalition, I, 
like many Members of Congress, have been a strong advocate of 
balancing the budget. Many of the numbers in this resolution 
reflect policies and priorities that were highlighted in the 
Coalition Budget. However, I am disappointed that the 
resolution falls short of the benchmark established in the 
Coalition Budget for fiscal responsibility, particularly in the 
following respects:
          (1) Absence of strong budget enforcement mechanisms.
          (2) Deferring most of the deficit reduction needed to 
        achieve balance until the years 2001 and 2002.
          (3) Inclusion of new and expanded programs and tax 
        cuts prior to eliminating the deficit.
          (4) Using budget gimmicks to achieve balance in the 
        last year.
          (5) Reliance on Social Security Trust Fund and 
        failure to improve its long-term, integrity.
    Indeed what has happened is that Americans are being denied 
a golden opportunity to balance the budget promptly. This is 
tragic. In recent weeks, first the Treasury Department and then 
the Congressional Budget Office (CBO) found projected tax 
revenues running well ahead of earlier projections. By May 1, 
the CBO projected that over the five year budget period of 1998 
through 2002 there would be $225 billion more in revenue. The 
fiscal 1997 deficit is not expected to be $70 million--a $45 
billion drop from the last estimate.
    We should use this newly found resource to eliminate the 
deficit as quickly as possible, put Social Security on a path 
to recovery, correct some glaring inequities in 1996 
legislation, and then embark on tax reduction efforts, improve 
educational opportunities, and invest in our crumbling highway 
system. Unfortunately, the politics of finding a majority that 
shares a vision for America has turned the effort to balance 
the budget into frenzied competition for tax cuts and programs. 
The tough decisions and the heavy lifting are at best delayed. 
At worst, these tough decisions will not be made until an 
imminent crisis overwhelms us and then the required action will 
be harsh.
    Unfortunately, in these happy fiscal times we are not 
reporting out a budget balancing resolution. In reality it 
should be called the ``Tax Cut and Program Augmentation 
Resolution.'' Balancing the budget is more a footnote. If we 
are to eliminate the deficit in this setting, strong budget 
enforcement language is needed.

                              enforcement

    Reaching an agreement to balance the budget by 2002 does 
not guarantee that the budget will actually be balanced in 
2002. We need only to look to the Gramm-Rudman-Hollings 
experiences of the 1980s and the 1990 budget summit to be 
reminded how quickly a balanced budget plan can fall off course 
(see Chart 1). Americans are tired of us making unfulfilled 
promises about balancing our budget. In order to avoid a repeat 
of the failures of past budget agreements, legislation 
implementing this resolution must include a strong enforcement 
mechanism locking the projected deficit path into statute. 
Unfortunately, no enforcement language is contained in the 
Committee's resolution. Thankfully, the extension of PAYGO 
rules and discretionary spending caps is included in the report 
language, but it is not enough to keep this deficit reduction 
plan on a glide path to balance.
    The Coalition budget proposed strong budget enforcement 
provisions to lock in the deficit reduction through hard 
deficit targets enforced by sequestation. 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 targeted 
to the part of the budget that caused the deficit to increase 
above projections.
    It is critical that an enforcement mechanism include all 
portions of the budget--spending and revenues--without 
exceptions to ensure that everyone has a stake in keeping the 
deficit on a declining path. One of the lessons of our 
experience with Gramm-Rudman is that exempting any area of the 
budget from enforcement will encourage certain groups to sit on 
the sidelines while balanced-budget plans unravel. In order to 
be effective, an enforcement mechanism must provide 
consequences for a failure to keep the budget on a path to 
balance that cannot be evaded by Congress, the executive 
branch, or the efforts of any interest group. A comprehensive 
enforcement mechanism such as was included in the Coalition 
Budget will provide accountability for all of us to ensure that 
the budget is actually balanced by 2002.
    The importance of strong enforcement language is reinforced 
by the risk of the exploding cost of tax cuts in out years, 
back-loaded deficit reduction and the existence of certain 
shortcomings in this resolution. The failure of this agreement 
to meet the standard established by the Coalition Budget for 
fiscal responsibility makes the enactment of enforcement 
language crucial to this plan successful in actually achieving 
a balanced budget.

          deferred deficit reduction--where is the glidepath?

    The resolution fails to meet the criteria established by 
former CBO Director Robert Reischauer for a credible deficit 
reduction plan. The Reischauer test requires at least 32% of 
the deficit reduction to be achieved in the first three years 
of a five year plan. Under this resolution, less than 29% of 
the deficit reduction occurs in the first three years. In fact, 
the deficit in fiscal year 1998 proposed in this resolution is 
higher than CBO projects it would be under current law. More 
than half of the deficit reduction is postponed until the final 
year. By contrast, the Coalition Budget (which was developed 
without the recent $225 billion budget windfall) met the 
Reischauer test path by achieving more than 38% of the deficit 
reduction in the first three years. With the new $225 billion, 
the Coalition Budget could achieve balance by 2000. Given the 
newly found $225 billion of revenue and the significant 
reduction in the deficit in recent years, the Committee 
Resolution should have a better glidepath.

                   dessert--new programs and tax cuts

    Any politically viable proposal that begins with 
substantial tax cuts and new spending will almost inevitably 
result in back-loaded deficit reductions. I applaud the 
decision of the negotiators to agree with the recommendation of 
the Coalition to provide for separate consideration of tax cuts 
after we have passed the spending cuts necessary to balance the 
budget. However, I am concerned that this resolution will allow 
Congress to enact tax cuts and spending increases that will 
take effect before we know if the spending cuts we enact will 
actually achieve the savings necessary to put the budget on a 
glidepath to balance.
    The Coalition Budget postponed tax cuts and new spending 
programs until we completed the tough work of balancing the 
budget. I did not oppose tax cuts. In fact, I support many of 
the tax cut proposals and education programs that have been 
discussed as part of this agreement. However, I believe that 
our first priority should be to put our fiscal house in order. 
I do not believe that a tax cut dessert or new programs paid 
for with borrowed money makes sense. Although I enjoy dessert 
as much as everyone else, I believe that we should eat our 
spinach before dessert.

                                gimmicks

    I am concerned that this resolution relies on one-time 
savings and other such strategies to achieve balance. The 
strategies included in the resolution such as the one-time 
savings from the spectrum auction in 2002 and the provisions 
allowing use of future assets sales to meet budgetary targets 
make me skeptical that this budget will actually achieve a 
balanced budget by 2002 and thereafter. I am particularly 
concerned about the provision on pages 52 and 53 of the Budget 
Resolution dealing with the budgetary scoring of future assets 
sales.

                       social security and colas

    I am also disappointed that the budget agreement fails to 
deal with the long-term problems facing the Social Security 
system. The Coalition Budget demonstrated that it is possible 
to balance the budget without relying on the Social Security 
trust fund or any other trust fund surpluses and strengthen the 
long-term solvency of the Social Security system if we are 
willing to honestly deal with the growth of entitlement 
spending and guard against tax cuts that explode in costs after 
2002. Unfortunately, when it comes to Social Security, the 
negotiators succumbed to the tactics used by members of both 
parties and ducked many of the tough choices that were in the 
Coalition Budget.
    I am particularly disappointed by our lack of leadership on 
the issue of the inaccuracy in the Consumer Price Index (CPI). 
There is broad agreement among economists that the CPI 
overstates inflation. Estimates of the CPI's overstatement 
range from 0.5% to 2.0% annually. The Bureau of Labor 
Statistics (BLS) has taken limited actions to address the 
problem and it is hoped that BLS will take further action. 
However, the future adjustment is expected to be only 0.2% 
which is on the low end of the estimates of overstatements. All 
experts--including BLSstaff--recognize that the adjustments 
that have been made are just a small step in correcting the 
overstatement. Legislation reducing indexation based on CPI as an 
interim step will allow BLS to make corrections in CPI without facing 
the political pressure for a quick change in the calculations in order 
to achieve savings.
    The Coalition budget did not propose to change the CPI. It 
would allow the experts at the BLS to continue to work to 
improve the CPI, but would reduce indexation based on CPI to 
compensate for the overstatement so that all federal Cost of 
Living Adjustments (COLAs) and indexation more closely reflect 
changes in the cost of living. Private sector use of the CPI 
would be unchanged. COLAs were created to hold beneficiaries of 
government programs and taxpayers harmless from changes in cost 
of living--no more and no less. It is irresponsible for us to 
continue to place an unnecessary drain on the Social Security 
system and other indexed programs by providing COLAs that 
virtually everyone acknowledges are higher than Congress 
intended.
    The accuracy adjustment to programs indexed to CPI would 
give this nation the chance to rehabilitate the Social Security 
Trust Fund, as well as other trust funds. We would start to 
prepare for the retirement of the baby boomers. The Social 
Security Administration has estimated that a 0.8% accuracy 
correction to the CPI would extend the solvency of the Social 
Security Trust Fund by 13 years, pushing the date of that trust 
fund's depletion back to 2042. A small adjustment to correct 
for the overstatement of inflation in the current CPI would 
have a modest impact on current beneficiaries, but would be a 
major step toward preserving the integrity of the Social 
Security system for future beneficiaries. If we are not willing 
to take this relatively small step today, we will be forced to 
take much more drastic steps in the future to preserve the 
Social Security system.
    The accuracy adjustment in the CPI figure would also save 
substantial amounts in other areas where the index is used. 
This includes automatic indexation of tax brackets. Although 
all certainly want tax cuts, we should simply strive for 
accuracy in the CPI. Together with the reduced borrowing due to 
reduced outlays, the savings from a 0.8% accuracy correction 
would total over $500 billion over ten years. In the later 
years, a significant portion of the savings is due to a 
reduction in projected debt service which results from 
reductions in outlays and borrowing.
    It is critical to note that the CPI correction combined 
with other fiscally responsible steps urged in the Coalition 
Budget would result in our being able to stop using the Social 
Security Trust Fund surplus to balance the budget by 2005. This 
is critically important. By contrast, the resolution that the 
Budget Committee is reporting relies on the current cash 
surplus in the annual Social Security operations to balance the 
budget by 2002. Projected Social Security surpluses are huge: 
$79 billion in fiscal year 1997, $81 billion in fiscal year 
1998, $88 billion in fiscal year 1999, $94 billion in fiscal 
year 2000, $98 billion in fiscal year 2001, and $104 billion in 
fiscal year 2002. The use of these surpluses dramatically masks 
the true size of the deficit. It is disgraceful that this huge 
amount is being transferred from the Social Security Trust Fund 
to the United States Treasury for current expenditures. Our 
Committee ought to take responsible steps to end this practice. 
Given the bleak actuarial prospects and the cynicism of 
Americans about the future of Social Security, taking the 
surplus out of the budget is both badly needed and long 
overdue. The CPI accuracy correction and the postponement of 
tax cuts and new programs would enable us to take the Social 
Security Trust Fund surplus out of the budget calculations by 
2005 or earlier.
    I recognize that for our lowest income retirees, a limit on 
the rate of future Social Security benefit increases or 
retirement COLAs, even those resulting from accuracy 
corrections, is stiff medicine. For this reason, the Coalition 
Budget proposed a flat COLA for retirees within the same 
categories. Thus all individuals who have paid into Social 
Security for the maximum period--whether the mail room staff or 
the Chief Executive Officer--would have the same annual COLA in 
terms of dollar amount. The flat COLA proposal would end the 
percentage adjustment that widens the gap between high and low-
benefit level retirees in the same categories. This would more 
than offset the impact of the accuracy adjustment on low-income 
retirees.

                               conclusion

    In closing, I wish to emphasize that this Committee is 
taking several responsible steps to address the deficit. There 
is a commitment to use conservative, Congressional Budget 
Office estimates of income, the economy, and interest rates. 
Entitlement spending on health care is being contained. Other 
entitlement reforms are also being made. The regional 
disparities in reimbursement for health care and for managed 
care at long last are being addressed. Some of the harshest, 
most unfair aspects of welfare reform are being corrected. 
These are important features of the Committee's budget 
resolution and I support them.
    Finally, I support this resolution because it reflects a 
sincere commitment to move forward in a bipartisan process to 
balance the budget. We hope that the bipartisan cooperation 
that produced this agreement will continue as the agreement 
moves through the legislative process. This resolution is 
simply the beginning of the process. The real test will come 
with the reconciliation and appropriations bills implementing 
this resolution. I hope that we can improve the glidepath and 
credibility of the deficit reduction in this resolution and 
enact strong budget enforcement language. I will find it 
extremely difficult to support reconciliation legislation that 
does not address these issues.

                                                       David Minge.


            ADDITIONAL VIEWS OF CONGRESSWOMAN PATSY T. MINK

    As a member of the House Budget Committee, I am duty bound 
to advocate for a Resolution that reflects the priorities I 
believe are essential for the future of this nation. The 
process this year of closed-door negotiations between the 
Congressional Republicans and the White House, gave us no 
opportunity for such input. Even amendments offered by 
Democrats were summarily dismissed, not on their merit, but 
simply because they did not conform to the agreement.
    We cannot be expected to rubber stamp an agreement of this 
magnitude and importance when we were not party to the 
negotiations and only learned of the bare outlines in the 
agreement a little more than 12 hours prior to the markup. And 
we had no written report to review prior to this submission.
    This agreement will govern the future of federal spending 
over the next five years and includes provisions which will 
impact our budget far longer (i.e. tax cuts). I am not 
convinced at this point that it reflects the priorities 
necessary to keep our economy strong and assure the overall 
health and well being of our population.
    I have many concerns regarding this agreement. Foremost is 
the decision to pursue $50 billion in unspecified tax cuts over 
five years. This requires the Congress to include an additional 
$50 billion in spending cuts to off-set the tax breaks. The 
insistence of the Majority to include these tax breaks in this 
document is no different than efforts last year to provide tax 
breaks for the rich at the expense of the elderly and the poor 
in this nation, primarily through reductions in Medicare and 
Medicaid.
    I am deeply concerned about the impact of the $115 billion 
cuts in Medicare and $13.5 billion from Medicaid. It is 
difficult to see how these cuts can be accomplished without 
increasing costs to beneficiaries or reducing services.
    Also of concern is the overall restrictions on non-defense 
discretionary spending. Under this resolution non-defense 
discretionary spending will be $64 billion less than the 
current level of projected spending over the next five years. 
This part of the budget is, in my opinion, the most important 
in our overall effort for a strong and secure future for this 
nation. It represents our investment in education, health care 
and research employment and training, crime prevention, 
protection of the environment, housing, transportation and 
other infrastructure development.
    While some programs are protected at the President's 
requested funding level, many programs essential to the 
education, health and well-being of our children, the elderly, 
low-income individuals, as well as the general population are 
not. Such items include Title I Education for the 
disadvantaged, special; education, TRIO, WIC, health research 
and many others. As pressure mounts to fund the protected items 
under the restrictive spending cap, funding for the other areas 
will suffer.
    The agreement does not go far enough in restoring benefits 
to legal immigrants. It falls far short of the President's 
promise to fix this injustice resulting from the enactment of 
the welfare bill. While SSI and Medicaid will be restored for 
disabled individuals, legal immigrants will continue to be 
denied Food Stamps, and the frail elderly will loss SSI.
    Finally, of grave concern is the lack of any mechanism to 
enforce the tax cuts. History proves that economic projections 
are simply that--projections. They are forecasts and have often 
been wrong. For instance, CBO forecasts of the FY96 deficit was 
wrong. They were wrong for FY97. They were wrong in their 5-
year budget forecast by $245 billion which was suddenly 
announced just days before the end of these negotiations. We 
should not base our budget on unpredictable forecasts.
    What happens if the projections on the tax cuts are wrong 
and they result in even deeper revenue losses to this country, 
as we saw happen after the Reagan Tax cut in the 1980's 
plunging us into a $4 trillion debt in 10 years.
    Spending can be enforced through the annual appropriations 
process, but restoring taxes or eliminating tax breaks is not 
as simple. The resolution should include some kind of 
enforcement mechanism in the event the tax breaks cost this 
nation more than the projected $85 billion in five years or 
$250 billion in 10 years.

                                                     Patsy T. Mink.
                 ADDITIONAL VIEWS OF REP. EARL POMEROY

    I want to commend the Chairman and Ranking Member of the 
Committee for their outstanding efforts in forging this 
bipartisan balanced budget agreement. I am pleased to support 
this agreement that balances the federal budget in five years 
while protecting important national priorities including the 
education of our children and quality health care for our 
senior citizens. Importantly, the agreement also provides tax 
relief for middle income working families.
    While I support this budget resolution, I am seriously 
concerned about the lack of funding allocated to the 
discretionary account for agriculture, function 350. The 
resolution assumes a cut of $1.4 billion below a freeze for 
agriculture over the next five years. Without adjusting for 
inflation, agriculture spending will be $400 million lower in 
2002 than in 1997. In real dollar terms, discretionary funds 
for agriculture will be cut by more than 22 percent under this 
budget agreement. Unfortunately, several additional factors 
will constrain agriculture investment even further.
    In 1994, Congress enacted sweeping reforms of the federal 
crop insurance program by providing catastrophic crop failure 
coverage to all producers and deleting the authority for 
congressional provision of ad hoc disaster assistance. As part 
of this crop insurance agreement, the federal reimbursement to 
private companies for the sales and service of crop insurance 
was to be provided for three years from the crop insurance 
fund, a mandatory expenditure account in the federal budget. 
Previously, half of the reimbursement had been provided in the 
agriculture appropriations bill as a discretionary expenditure.
    Under the 1994 agreement, provision of the traditionally 
discretionary half of the delivery cost reimbursement was to be 
resumed by the Agriculture Appropriations Subcommittee in the 
1998 appropriations bill. The problem we now face is that the 
Congressional Budget Office baseline contains no projection for 
this delivery cost reimbursement because it was not provided in 
the 1997 appropriations act.
    The Agriculture Appropriations Subcommittee is further 
burdened in 1998 with requirements to offset $350 million of 
expenditures in the food stamp program that was displaced by 
prior enactment of last year's welfare reform bill. In 
addition, there is an expectation that $375 million more will 
be required for the WIC program.
    Adding together the $350 million for foods stamps, $375 
million for WIC and $200 million needed to provide the sales 
and service of crop insurance, the Agriculture Subcommittee is 
expected to be $900 million over their 1997 allocation, which 
would be the basis for establishing the 1998 allocation. To 
reflect the 1994 crop insurance agreement, the discretionary 
expenditure in function 350 would have to be increased by $200 
million in FY98 and by $1.1 billion through FY02.
    Agriculture programs have already been reduced more than 
any other function of government. I would like to remind my 
colleagues that American agriculture provides this nation with 
the safest, most abundant, and most affordable food supply in 
the world. In addition, agriculture exports contribute more 
toward a positive trade balance than any other sector of the 
economy. It is vitally important that we not abandon federal 
investment in agriculture research, trade and other programs to 
the detriment of American farmers, consumers and our national 
economy.

                                                      Earl Pomeroy.
                 ADDITIONAL VIEWS OF REP. LYNN WOOLSEY

    It is my view that Function 600 of the Budget Resolution 
should be increased to assume funding for the Special 
Supplemental Food Program for Women, Infants, and Children 
(WIC) at the level specified in the President's FY98 Budget. I 
would pay for this increase by reducing the size of the tax 
cuts assumed in the Budget Resolution.
    While I voted for this Budget Resolution, I think it would 
be improved if it assured full funding for WIC. WIC provides 
nutrition and health assistance to lower income, nutritionally 
at-risk women, infants and children. Even though a GAO report 
showed that every dollar spent on pregnant women in WIC saves 
$3.50 in Medicaid, SSI and other programs, hundreds of 
thousands of eligible pregnant women, new mothers and children 
are going unserved by WIC because of inadequate funding.
    I strongly urge my colleagues in Congress to ensure that 
WIC is fully funded.
                                                      Lynn Woolsey.
               DISSENTING VIEWS OF LUCILLE ROYBAL-ALLARD

    I commend Chairman John Kasich and Ranking Member John 
Spratt for their hard work in bringing this current Budget 
Resolution before the Budget Committee. This current budget is 
a dramatic improvement over the budget resolutions that the 
Committee considered in the 104th Congress.
    Their are many favorable items in this budget resolution, 
such as the increase in education expenditures. However, I am 
particularly concerned with two items contained in the FY 1998 
budget resolution. First, despite the attempts to correct some 
of the past ills of last year's budget welfare reconciliation 
bill, this budget package falls short of fully restoring aid to 
one of the most vulnerable populations in our nation, the 
elderly and disabled legal immigrants. Second, I am concerned 
that the cuts to the Medicaid Disproportionate Share Hospital 
program (DSH) would harm the nearly 7 million uninsured in my 
State of California.

              restoration of benefits to legal immigrants

    The budget resolution proposes to restore $9.7 billion 
primarily in Supplemental Security Income (SSI) and Medicaid 
eligibility to disabled legal immigrants who entered the U.S. 
prior to August 23, 1996. Although this is a needed improvement 
over the original welfare reform bill, it falls short of the 
$13.3 billion needed to fully restore SSI eligibility to 
elderly and disabled immigrants who have no other means of 
support.
    Under current law, SSI only goes to people who are elderly 
or disabled. 75% of the SSI population are over 60 years of 
age, with 31% being over 75 years of age. This means that the 
SSI population is made up of the people who are not 
productively employable. If removed from this aid program, the 
federal responsibility of caring for these vulnerable groups 
will be shifted to state and local governments.
    In my state California, Republican and Democratic 
legislators have urged the federal government to reconsider 
this ill conceived policy and to fully restore funds for these 
impoverished legal immigrants who are elderly or disabled and 
generally unemployable. This budget resolution does not 
adequately restore aid to these unprotected populations.

                                medicaid

    The budget resolution is silent on the distribution of the 
cuts to the Medicaid Disproportionate Share (DSH). The sizable 
cut of roughly $16.2 billion or 27% lower than current law in 
the DSH program is of great concern. If the cuts are not 
proportionately distributed, my state of California, which is a 
low-cost, high efficiency state, would be penalized. California 
has implemented a properly targeted DSH program as originally 
envisioned under Federal Medicaid law and has not exploited 
loopholes.
    Only those hospitals meeting the highest standards of 
eligibility are allowed to participate. This contrasts with the 
practices in many states of designating virtually all hospitals 
as eligible to receive DSH payments.
    Federal DSH spending in California, when compared to the 
size of the State's uninsured population, is among the lowest 
in the country. The federal share of California's DSH program 
averages $211 per uninsured person, while spending in other 
states can reach as high as $1,079 per uninsured resident. At 
nearly 7 million, California has one of the highest rates of 
uninsured persons in the nation. The DSH program is 
instrumental in ensuring access to care for these families.
    If the DSH cuts are not distributed proportionately or 
properly targeted, states such as California that have played 
by rules will stand to lose billions of needed dollars.

                                             Lucille Roybal-Allard.
                            DISSENTING VIEWS

    I voted against the resolution today because I feel there 
was not sufficient time to review the tax cuts and budgetary 
assumptions involved. For months now, negotiations have been 
taking place between our committee leadership and the 
Administration; yet, the proposal as it is known today was only 
available to members of this committee this morning.
    I have been a supporter of a Balanced Budget Amendment 
since being elected to Congress in 1988 and have consistently 
voted for a Constitutional amendment providing for a balanced 
budget. I am pleased that the current budget efforts revolve 
around balancing the budget in 2002. Enacting balanced budget 
will ensure that as we begin the 21st Century, we rid our 
country of our deficit and move in the direction of national 
growth and prosperity. However, there are a few areas of 
concern about the agreement which I wish to address.
    The first is transportation spending. While I was pleased 
to hear that this budget resolution would include funding for 
transportation above the President's level, I still have some 
very strong concerns that this budget does not allow for 
adequate resources for our transportation and infrastructure 
needs. We can ill-afford to continue to neglect our crumbling 
infrastructure. The current level of assumed spending is 
insufficient to deal with the increasing needs of our 
transportation infrastructure. I hope we can improve on the 
transportation budget when we bring this bill to the floor. I 
intend to work with my colleagues to see that our 
transportation and infrastructure needs are met as we move into 
the next century.
    During the markup, I offered an amendment to provide $5 
billion for school construction and renovation. Much emphasis 
has been placed throughout this budget process on various 
educational initiatives--increased funding for Head Start and 
the inclusion of tuition tax credits. However, the basic needs 
for additional classroom space or physical renovations has gone 
ignored. Many school districts throughout our nation are in a 
severe budget crisis and need to make major improvements to 
their physical building structure. I believe that providing 
assistance for constructing and renovating physical school 
structures is a critical initiative as we work to improve 
educational opportunities for American students.
    I am concerned about the ramifications of tax cuts on 
balancing this budget by 2002. Projections by government 
agencies are somewhat debatable, and I believe we should focus 
first on balancing the budget before tax cuts are offered. Past 
deficit reduction packages made big promises in reducing the 
deficit, yet fell short in actual terms. I feel that cutting 
taxes in the immediate future could prevent us from balancing 
this budget in 2002.
    It is my hope that some of these issues can be resolved as 
we move forward in the budget process. I still believe we can 
do better. I will work with my colleagues in this effort as we 
move toward floor consideration of the budget in the House.

                                                 Jerry F. Costello.
                               APPENDIX A



Bipartisan Budget Agreement Between the President and the Leadership of 
                                Congress

    1. The elements of this Bipartisan Budget Agreement provide 
for deficit reduction amounts that are estimated to result in a 
Balanced Budget by fiscal year 2002.
    2. The Bipartisan Agreement is approved by the President, 
the Speaker of the House of Representatives, the Senate 
Majority Leader, and the Senate Minority Leader. The President 
and the Congressional leadership agree to engage in a 
coordinated effort seeking to enact the Bipartisan Budget 
Agreement. Their coordinated effort shall seek to produce 
support for the Agreement by a majority of Democrats and 
Republicans in both the House and the Senate. This agreement 
represents commitments to good faith efforts; it does not 
purport to amend or suspend rules of the House or Senate. If 
bills, resolutions, or conference reports are deemed to be 
inconsistent, remedial efforts shall be made by all parties to 
assure consistency. Such efforts shall include bipartisan 
Leadership consultation and concurrence on amendments and 
scheduling as necessary.
    3. Agreed upon budget levels are shown on the tables 
included in this agreement, including deficit reduction levels, 
major category levels for discretionary, mandatory, and tax and 
receipt changes.
    4. Discretionary priority spending will be protected by the 
amounts set forth in this Agreement.
    5. Agreed budget process items will be included in the 
budget resolution (as appropriate) and reconciliation, and are 
set forth in the budget process description included in this 
Agreement.
    6. An increase in the debt limit sufficient to extend the 
limit at least to December 15, 1999 will be included in a 
reconciliation bill carrying out this Agreement.
    7. Both Houses shall pass the 1998 budget resolution with 
reconciliation instructions fully reflecting the Bipartisan 
Budget Agreement. Such budget resolution shall contain 602(a) 
allocations consistent with this Agreement and shall instruct 
appropriate Committees to report, with or without a 
recommendation, legislation necessary to implement this 
Agreement. Conference reports on the reconciliation bills and 
appropriations bills that reflect the Bipartisan Budget 
Agreement shall be voted in both houses of Congress.
    8. It is the intention of the leaders that Congress shall 
present the revenue reconciliation bill to the President after 
the spending reduction reconciliation bill. This assumes a good 
faith effort by all parties to enable such a legislative 
process to succeed.
    9. If during the reconciliation process it is determined 
that the target of a balanced budget in fiscal year 2002 cannot 
be achieved, all parties to the agreement commit to seeking 
additional savings necessary to achieve balance.
    10. To the extent possible, efforts will be exercised to 
exclude other mandatory savings and appropriations riders 
unacceptable to the Congressional Leadership or the 
Administration, as so identified in official Administration 
announcements, letters, Statements of Administration Policy, or 
other communications.

                             SUMMARY OF DEFICIT REDUCTION IN BUDGET RESOLUTION MARK                             
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                          5-Yr  
                                              1997      1998      1999      2000      2001      2002      total 
----------------------------------------------------------------------------------------------------------------
Baseline deficitsa........................        67        89       109       121        95       105  ........
Discretionary:                                                                                                  
    Defense...............................  ........        -3       -10       -18       -18       -28       -77
    Nondefense............................  ........        -1        -3        -8       -17       -32       -61
Mandatory:                                                                                                      
    Presidential initiatives..............  ........         6         6         7         7         6        31
    Medicare..............................  ........        -7       -17       -23       -29       -40      -115
    Medicaid..............................  ........  ........        -2        -2        -4        -6       -14
    Other mandatory.......................  ........        -1        -6       -14         1       -19       -40
Revenues:                                                                                                       
    Net tax relief........................  ........         7        11        22        23        21        85
    Total policy changes..................  ........         1       -19       -36       -37       -99      -190
    Debt service..........................  ........         0        -0        -2        -4        -7       -14
    Total deficit reduction...............  ........         1       -19       -38       -41      -106      -204
    Resulting deficit/surplus.............        67        90        90        83        53        -1  ........
----------------------------------------------------------------------------------------------------------------
Note.--Details may not add to totals due to rounding. All totals shown on a unified budget basis. Revenue       
  reduction shown as positive because it increases the deficit.                                                 
a Baseline includes fiscal dividend, CBO revenue update, and assumes discretionary spending increases at the    
  rate of inflation.                                                                                            


                                                                                  LONG RANGE SUMMARY, 1997-2007                                                                                 
                                                                                    [In billions of dollars]                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Agreement                                              Proactions                               Totals        
                                                          --------------------------------------------------------------------------------------------------------------------------------------
                                                             1997     1998     1999     2000     2001      2002       2003       2004       2005       2006       2007     1998-2002   1998-2007
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Current Services Deficit.................................     67.2     89.0    109.1    12.13     94.5      104.9      103.2      108.6      133.3      127.8      117.0  ..........  ..........
Discretionary savings:                                                                                                                                                                          
    Defense..............................................  .......     -3.0     -9.9     -179    -18.3      -27.7      -32.1      -33.0      -34.0      -35.0      -36.1       -76.8      -247.0
    Nondefense...........................................  .......     -1.0     -2.5     -8.0    -17.4      -32.3      -36.5      -39.9      -42.6      -45.1      -47.5       -61.2      -272.8
                                                          --------------------------------------------------------------------------------------------------------------------------------------
Subtotal, discretionary savings..........................  .......     -4.0    -12.5    -25.9    -35.7      -59.9      -68.6      -72.9      -76.6      -80.1      -83.6      -138.0      -519.9
                                                          ======================================================================================================================================
Mandatory savings:                                                                                                                                                                              
    Medicare, net........................................  .......     -6.5    -16.8    -22.7    -29.0      -40.0      -50.0      -60.0      -65.0      -70.0      -74.0      -115.0      -434.0
    Medicaid, net........................................  .......  .......     -1.5     -2.4     -3.6       -6.2       -7.1       -8.6      -10.2      -12.0      -13.9       -13.7       -65.5
Other mandatory:                                                                                                                                                                                
    Spectrum.............................................  .......  .......     -3.5     -3.5     -4.5      -14.8       -1.9       -1.0       -1.0       -1.0       -1.0       -26.3       -32.2
    Other................................................  .......     -1.3     -2.1    -10.9      5.5       -4.4       -1.6       -3.2      -17.7       -4.9      -12.3       -13.3       -28.2
                                                          --------------------------------------------------------------------------------------------------------------------------------------
Subtotal, mandatory savings..............................  .......     -7.8    -23.9    -39.5    -31.6      -65.4      -60.6      -72.8      -93.9      -87.9      -76.6      -168.3      -559.9
                                                          ======================================================================================================================================
Debt service, net........................................  .......      0.0     -0.5     -2.0     -3.8       -7.4      -12.5      -18.2      -25.0      -32.5      -39.9       -13.6       -14.6
Subtotal, savings proposals..............................  .......    -11.8    -36.8    -67.4    -71.1     -132.8     -141.6     -163.9     -195.5     -200.5     -200.0      -319.9    -1,221.4
Domestic Initiatives.....................................  .......      5.9      6.1      6.7      6.5        6.0        6.6        7.0        7.0        7.0        7.0       -31.2       -65.8
Net tax cut..............................................  .......      7.4     11.3     22.4     23.4       20.5       27.2       28.5       31.4       36.2       41.6        85.0       249.9
                                                          --------------------------------------------------------------------------------------------------------------------------------------
Total changes............................................  .......      1.5    -19.4    -38.3    -41.2     -106.3     -107.8     -128.4     -157.1     -157.3     -151.4      -203.7      -905.7
                                                          ======================================================================================================================================
Resulting deficit/surplus (-)............................     67.2     90.4     89.7     83.0     53.3       -1.3       -4.6      -19.8      -23.9      -29.5      -34.4  ..........  ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--2000 and 2005 have 13 benefit payments and 2001 and 2007 have 11. The baseline has been adjusted to effect normalization to 12 benefit payments in each year.                            


                               DOMESTIC INITIATIVES AND RESTORATIONS IN AGREEMENT                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                        5-year  
                                        1998         1999         2000         2001         2002        total   
----------------------------------------------------------------------------------------------------------------
Assistance to immigrants:                                                                                       
    Elderly/Disabled:                                                                                           
        Medicaid..................          0.4          0.4          0.3          0.3          0.3          1.7
    SSI...........................          1.7          1.6          1.6          1.2          1.2          7.5
    Disabled kids (SSI only) \1\..          0.1          0.1          0.1          0.1          0.1          0.3
Refugee/asylees...................          0.0          0.0          0.0          0.0          0.0          0.2
                                   -----------------------------------------------------------------------------
      Subtotal, immigrants........          2.2          2.2          2.0          1.7          1.6          9.7
                                   =============================================================================
Nutrition assistance:                                                                                           
    Add work slots for 18-50's....          0.2          0.2          0.2          0.2          0.2          1.0
    15% exemption for 18-50's.....          0.1          0.1          0.1          0.1          0.1          0.5
                                   -----------------------------------------------------------------------------
      Subtotal, nutrition                                                                                       
       assistance.................          0.3          0.3          0.3          0.3          0.3          1.5
                                   =============================================================================
Welfare to work add to TANF.......          0.7          0.7          1.0          0.6  ...........          3.0
                                   -----------------------------------------------------------------------------
    Subtotal, immigrants,                                                                                       
     nutrition, and work..........          3.2          3.3          3.4          2.4          2.0         14.2
                                   =============================================================================
Children's Health.................          2.3          2.7          3.2          3.7          3.9         16.0
Federal land acquisition &                                                                                      
 exchange \2\.....................          0.3          0.2          0.2          0.1  ...........          0.7
Environmental reserve.............          0.2          0.2          0.2          0.2          0.2          1.0
Offset low-income Medicare                                                                                      
 premiums.........................          0.2          0.3          0.3          0.3          0.4          1.5
                                   -----------------------------------------------------------------------------
      Total, Domestic Initiatives                                                                               
       and restorations...........          6.3          6.6          7.3          7.0          6.5        33.6 
----------------------------------------------------------------------------------------------------------------
\1\ Medicaid costs reflected in elderly/disabled medicaid line.                                                 
\2\ Discretionary.                                                                                              


                                                           AGREEMENT ON DISCRETIONARY FUNDING                                                           
                                                                [In millions of dollars]                                                                
                                For functions specified below, implementing legislation will protect the function levels.                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            FY 1998             FY 1999             FY 2000             FY 2001             FY 2002     
                                                     ---------------------------------------------------------------------------------------------------
                                                         BA        OL        BA        OL        BA        OL        BA        OL        BA        OL   
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense....................................   289,000   266,823   271,500   266,518   175,367   268,995   281,847   270,661   289,610   273,100
Defense Discretionary...............................   257,857   286,445   261,499   292,803   161,826   295,270   260,185   293,731   261,484   287,699
                                                     ---------------------------------------------------------------------------------------------------
Total Discretionary.................................   526,857   553,268   532,999   559,321   337,193   564,265   542,032   564,392   551,074   560,799
                                                     ===================================================================================================
Protected Functions:                                                                                                                                    
    150--International Affairs......................    19,038    19,179    18,601    18,842    18,533    18,809    18,348    18,500    18,218    18,442
    300--Natural Resources Environment..............    22,807    21,393    22,222    21,657    21,566    21,944    21,185    21,822    21,152    21,472
    400--Transportation.............................    13,556    38,267    14,974    38,933    14,788    39,310    15,066    39,418    15,347    39,418
    500--Education, Training, Employment and Social                                                                                                     
     Services.......................................    46,721    43,185    47,015    46,107    47,858    47,065    48,478    47,773    49,199    48,599
    750--Administrator of Justice...................    24,405    22,170    24,795    24,191    23,887    24,996    24,094    25,613    24,675    24,713
                                                     ---------------------------------------------------------------------------------------------------
        Subtotal, Protected Functions...............   126,527   144,194   127,607   149,730   126,032   152,125   127,170   183,214   120,501   152,004
                                                     ---------------------------------------------------------------------------------------------------
    All Other.......................................   400,330   409,074   405,392   409,591   410,561   412,140   414,652   411,112   422,483   408,195
                                                     ---------------------------------------------------------------------------------------------------
        Total Discretionary Spending................   526,657   553,268   532,999   559,321   537,193   554,265   542,032   564,398   561,074   500,799
                                                     ===================================================================================================
Anomalies Included Above:                                                                                                                               
    Subsidized Housing (Function 600)...............     5,682  ........     9,652  ........    12,047  ........    13,295  ........    14,504  ........
    Fixed Assets (Upfront Funding and Advance                                                                                                           
     Appropriations):                                                                                                                                   
        050--Defense................................     2,218  ........  ........  ........  ........  ........  ........  ........  ........  ........
        250--General Science, Space, and Technology.  ........  ........     2,735  ........     2,226  ........     1,817  ........     1,271  ........
        270--Energy.................................       110  ........        52  ........         8  ........  ........  ........  ........  ........
        300--Environment............................        51  ........       581  ........       458  ........       253  ........        84  ........
        370--Commerce and Housing Credit............  ........  ........       724  ........       551  ........       480  ........       375  ........
        400--Transportation.........................  ........  ........       675  ........       724  ........       424  ........       206  ........
        550--Health.................................  ........  ........       129  ........        71  ........  ........  ........  ........  ........
        750--Administration of Justice..............  ........  ........        48  ........  ........  ........  ........  ........  ........  ........
        800--General Government.....................  ........  ........       500  ........  ........  ........  ........  ........  ........  ........
                                                     ---------------------------------------------------------------------------------------------------
            Total, Anomalies........................     8,061  ........    15,096  ........    16,085  ........    16,289  ........    16,440  ........
                                                     ---------------------------------------------------------------------------------------------------
Total Discretionary Less Anomalies..................   518,798   553,268   517,903   559,321   521,108   564,265   525,763   564,316   534,634   580,799
--------------------------------------------------------------------------------------------------------------------------------------------------------

              Protected Domestic Discretionary Priorities

     (Funded at levels proposed in the President's FY 1998 budget.)

Department of Commerce

--National Institute of Standards and Technology (NIST).

Department of Education

--Education Reform (includes Technology Literacy Challenge 
    Fund).

--Bilingual and Immigrant Education.

--Pell ($300 increase in 1998 maximum award amount, to $3,000).

--Child literacy initiatives consistent with the goals and the 
    concepts of the President's America Reads program.

Department of Health and Human Services

--Head Start.

Department of the Interior

--National Park Service: Operation of the National Park System, 
    Land Acquisition and State Assistance, and Everglades 
    Restoration Fund (including Corps of Engineers).

--Bureau of Indian Affairs, Tribal Priority Allocations.

Department of Labor

--Training and Employment Services, including Job Corps.

Department of Treasury

--Community Development Financial Institution Fund.

Environmental Protection Agency

--EPA Operating Program.

--Superfund appropriations will be at the President's level if 
    policies can be worked out.

Violent Crime Reduction Trust Fund, including COPS

                                                SPECTRUM AUCTIONS                                               
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Spectrum.....................................  .......     -3.5     -3.5     -4.5    -14.8      -26.3      -32.3
----------------------------------------------------------------------------------------------------------------
Note: Estimates for 1998-2002 were developed by the Congressional Budget Office (CBO). CBO has not formally     
  provided estimates for 2003-2007. Tentative estimates for 2003-2007 are provided.                             

    Four auction proposals and a penalty fee are assumed with 
expected receipts totaling $26.3 billion over five years and 
$32.3 billion over ten years (CBO scoring).
    1. Auction of 78 Megahertz (MHz) of spectrum currently 
allocated to analog broadcasting: Codify current Federal 
Communications Commission (FCC) plans to reclaim surplus 
``analog'' broadcast spectrum after broadcasters have migrated 
to new digital channels.
    2. Auction of 36 MHz of spectrum currently allocated to 
television channels 60-69: 24 MHz will be reserved for public 
safety uses (e.g. police and emergency vehicle communications).
    3. Broaden and Extend FCC Auction Authority: Expand the 
FCC's current authority to auction non-broadcast spectrum and 
extend FCC auction authority beyond 1998, when it currently 
expires. This proposal continues a policy to allocate spectrum 
via auctions.
    4. Auction ``Vanity'' Toll Free Telephone Numbers: 
Authorize the FCC to award new generations of toll-free vanity 
telephone numbers (e.g., 1-888-BALANCE) through an auction.
    5. Spectrum Penalty: As authorized by current law, a 
penalty fee would be levied against those entities who received 
``free'' spectrum for advanced, advertiser-based television 
services, but failed to utilize it fully.

                                                  STUDENT LOANS                                                 
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                               1998     1999     2000     2001      2002     savings    savings 
----------------------------------------------------------------------------------------------------------------
Total, student loan savings................     -241     -240     -151      -81     -1,050     -1,763     -1,996
----------------------------------------------------------------------------------------------------------------

    The Agreement provides for outlay savings of $1.763 billion 
over five years and $1.996 billion over ten years from the 
student loan programs:
--Savings will be achieved without increasing costs, reducing 
    benefits, or limiting access to loans for students and 
    their families.

--Savings will be derived as follows:

          (a) $1,000 million over five years from guaranty 
        agency reserves.
          (b) $603 million over five years, and $606 million 
        over ten years, from section 458.
          (c) $160 million over five years and $390 million 
        over ten years from elimination of the $10 per loan fee 
        paid to institutions participating in the direct loan 
        program.

                                            CIVIL SERVICE RETIREMENT                                            
                                   [Deficit reduction in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Increased agency contributions...............     -597     -591     -586     -582     -577     -2,933     -2,933
Increased employee contributions.............  .......     -214     -423     -571     -621     -1,829     -1,985
----------------------------------------------------------------------------------------------------------------

--Increase agency contributions (except Postal Service and 
    D.C.) for Civil Service Retirement System (CSRS) by 1.51 
    percentage points effective October 1, 1997 through 
    September 30, 2002.

--Phase in increased employee contributions to the Civil 
    Service Retirement System (CSRS) and Federal Employees 
    Retirement System (FERS).

--Employee contributions would increase 0.25 percentage points 
    January 1, 1999; an additional 0.15 percentage points 
    January 1, 2000; and a final 0.10 percentage points for a 
    total cumulative increase of 0.50 percentage points January 
    1, 2001. Increased contributions remain in effect through 
    December 31, 2002.

--Legislation provides that agency contributions to FERS would 
    remain unaffected by this change.

--The CBO March Baseline is explicitly assumed for all Civil 
    Service Retirement options, including any potential FEHB 
    options.

                                               U.S. POSTAL SERVICE                                              
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
End transitional payment for worker's                                                                           
 compensation................................  .......      -25      -33      -32      -31       -121       -261
----------------------------------------------------------------------------------------------------------------

--The proposal would repeal the payment to the U.S. Postal 
    Service (USPS) to finance workers compensation benefits for 
    employees injured before the USPS was created in 1971. USPS 
    would be required to pay these costs out of the Postal 
    Fund.

                                         VETERANS HOME LOAN BENEFIT FUND                                        
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Allow VA to use refund offset to collect                                                                        
 deficiency balances.........................      -90        0        0        0        0        -90        -90
----------------------------------------------------------------------------------------------------------------

--This provision would allow VA to collect outstanding VA loan 
    guaranty debts by Federal salary offset or Federal income 
    tax offset. Currently VA is prohibited from using non-VA 
    Federal offsets to satisfy debts unless the debtor consents 
    in writing, or if a court has determined that the debtor is 
    liable to VA for the deficiency.

--This will save the program $90 million in outlays in the 
    first year of implementation.

                                          VETERANS COMPENSATION PROGRAM                                         
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Round down monthly compensation benefits                                                                        
 after applying COLA.........................      -23      -51      -88     -101     -128       -391     -1,469
----------------------------------------------------------------------------------------------------------------

--Authorizes VA to permanently round-down monthly compensation 
    benefit payments to the nearest dollar after applying the 
    annual COLA in each year, an extension of current law.

--The practice of rounding down monthly benefit checks is 
    consistent with all other major pension programs including 
    veterans pensions and military and civilian retirement 
    benefits.

                                           MEDICAL CARE COST RECOVERY                                           
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Mandatory admin. savings from moving receipts                                                                   
 to discretionary............................     -118     -123     -128     -133     -139       -641     -1,427
----------------------------------------------------------------------------------------------------------------

--This proposal allows Medical Care to retain user fees to 
    offset the cost of care provided in VA facilities. 
    Currently, all receipts in excess of administrative costs 
    are returned to Treasury. Under this structure, the 
    administrative costs of debt collection are mandatory 
    spending. Allowing the discretionary VA Medical Care 
    account to retain all of these receipts and fund the cost 
    of this activity out of its collections will result in a 
    mandatory savings of $641 million over five years and 
    $1,427 million over ten years.

                                            VETERANS PENSION PROGRAM                                            
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Extension of OBRA provisions for VA Pensions                                                                    
 \1\.........................................  .......     -133     -211     -143     -190       -677     -1,866
----------------------------------------------------------------------------------------------------------------
\1\ The savings reflected in the table are net of Medicaid costs.                                               

    There are two OBRA savings provisions related to the 
veterans pension program. The overwhelming majority of the 
above savings are attributed to the $90 benefit limit described 
below.

--This provision extends the current limitation on VA pension 
    benefits to Medicaid-eligible recipients in nursing homes. 
    Under this provision veterans get to keep a great monthly 
    benefit (the $90 VA benefit). The full cost of the 
    beneficiaries, nursing home care would be paid by the 
    Medicaid program, where costs are shared with the states.

--This provision extends the authorization for VA to match 
    income information submitted by beneficiaries with IRS and 
    SSA records.

                                          VETERANS HOUSING BENEFIT FUND                                         
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Extend loan asset sale authority.............       -5       -5       -5       -5       -5        -25        -50
----------------------------------------------------------------------------------------------------------------

--This provision would extend VA's authority to guarantee VA 
    securities issued in the secondary market directly, thereby 
    enhancing their value.

--To cover obligations of VA's home loan program, VA secures 
    its direct or ``vendee'' loans and guarantees the 
    certificates sold to investors. VA has its own 
    securitization vehicle which issues multiple-class pass-
    through securities and is taxed as a Real-Estate Mortgage 
    Investment Conduit (REMIC). VA's REMIC currently carries 
    the full faith and credit of the United States.

----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Extend higher loans fees/resale loss                                                                            
 provisions (OBRA) & increase home loan fees                                                                    
 for non-veterans............................      -11     -228     -227     -224     -219       -909     -1,993
----------------------------------------------------------------------------------------------------------------

    This includes two proposals--extend OBRA provisions and 
increase the fee for non-veterans financing through ``vendee'' 
loans

--The OBRA provisions permanently extend three provisions that 
    sunset September 30, 1998. This extends VA's authority to: 
    (1) charge borrowers using VA's home loan guaranty program 
    a 2% instead of a 1.25% fee, (2) charge veterans who use 
    the loan guarantee benefit more than once a funding fee of 
    3 percent of reduce losses, and (3) include expected losses 
    on the resale of foreclosed properties.

--Second, this provision increases the fee for non-veterans 
    using VA's vendee loan program to match FHA fees. When VA 
    takes possession of properties resulting from defaulted 
    veterans loans, the homes are ultimately sold to the 
    general public. VA finances these properties through its 
    vendee loan program, charging fees that are lower than 
    those offered to veterans. This provision would raise these 
    fees to 2.25%--the same up-front funding fee that the 
    general public pays for FHA loans.

                                             FHA ASSIGNMENT PROGRAM                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Extend FHA Assignment........................     -136     -145     -147     -128     -110       -666     -1,126
----------------------------------------------------------------------------------------------------------------

--This assumes continuation of current law policy to provide 
    FHA with tools to encourage lenders to forbear for only up 
    to 1 year. This would improve the targeting and efficiency 
    of HUD's current program, and allow FHA homeowners 
    experiencing temporary economic distress to stay in their 
    homes.

                                              VESSEL TONNAGE DUTIES                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Extend Vessel Tonnage Fees...................  .......      -49      -49      -49      -49       -196       -441
----------------------------------------------------------------------------------------------------------------

--This proposal would extend vessel tonnage duties at their 
    current levels through 2002. These duties, which would 
    otherwise be reduced after 1998, are collected by the U.S. 
    Customs Service from commercial vessels entering U.S. ports 
    from foreign ports, based on their cargo-carrying capacity.

                              LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY                              
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Lease Excess SPR Capacity....................  .......       -1       -2       -4       -6        -13        -43
----------------------------------------------------------------------------------------------------------------

--Proposal would lease excess Strategic Petroleum Reserve 
    storage capacity to foreign nations for storage of their 
    crude oil.

Proposal assumes that a total of five million barrels of oil 
    are stored with a fee of $1.20 per barrel.

                                             UNEMPLOYMENT TRUST FUND                                            
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Raise UTF ceilings...........................  .......  .......     -200     -208     -216       -624       -624
----------------------------------------------------------------------------------------------------------------

--Increases the ceilings of the Federal FUTA-funded accounts in 
    the Unemployment Trust Fund to increase trust fund 
    solvency.

                                              UNEMPLOYMENT BENEFITS                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
UI benefits integrity........................     -118     -158     -160     -162     -165       -763     -1,658
----------------------------------------------------------------------------------------------------------------

--Provides savings in mandatory unemployment insurance (UI) 
    benefits due to increased discretionary spending on UI 
    integrity activities (e.g., increased eligibility reviews, 
    tax audits).

--Assumes President's Budget requested level of funding for UI 
    integrity ($89 million in 1998) is provided in addition to 
    continuing integrity activities already funded in the base 
    UI administrative grants to obtain these savings.

                                 VA MEDICAL CARE COST RECOVERY AND SSA USER FEES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Estimated spending associated with the VA user fee proposal:                                                    
    BA.......................................      604      628      654      681      710      3,277      7,282
    OL.......................................      544      620      651      678      707      3,200      7,788
                                                                                                                
 Estimated spending associated with the SSA user fee proposal:                                                  
    BA.......................................       35       75       80       90      100        380      1,065
    OL.......................................       33       73       80       89       99        374      1,054
----------------------------------------------------------------------------------------------------------------

    The proposals described below are included in the 1998 
Budget and are assumed in the Budget's Agreement.

VA Medical Care Cost Recovery Fees

--The 1998 Budget included a proposal to shift existing 
    offsetting receipts from the mandatory side to the 
    discretionary side. The Agreement assumes that Medical Care 
    Cost Recovery fees are available to support domestic 
    discretionary spending associated with VA Medical Care.

--The shift of the offsetting receipts from mandatory spending 
    to discretionary spending has been incorporated into the 
    Budget Committee's adjusted baseline.

SSA Fees

--The Agreement assumes a proposal to increase existing fees to 
    offset SSA-related spending.

                                            EARNED INCOME TAX CREDIT                                            
                               [Deficit reduction savings in millions of dollars]                               
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Earned income tax credit.....................       --      -13      -36      -37      -38       -124       -332
----------------------------------------------------------------------------------------------------------------

--Treasury announced a package of legislative initiatives in 
    April concurrent with the release of an IRS study on EITC 
    noncompliance levels. Final scoring is not available.

--Other mutually acceptable EITC reforms targeted to reducing 
    noncompliance and fraud may also be considered within these 
    total savings targets.

                                          THE SMITH-HUGHES ACT OF 1918                                          
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Repeal appropriations under Smith-Hughes.....       -1       -7       -7       -7       -7        -29        -64
----------------------------------------------------------------------------------------------------------------

--Eliminate the mandatory appropriation under the Smith-Hughes 
    Act of 1918 in favor of increased discretionary spending on 
    job training and vocational education in the 
    Administration's GI Bill for America's Workers.

--Eliminating this program would save $29 million over five 
    years and $64 million over ten years.

--Activities funded under the Smith-Hughes Act can be supported 
    by the Department of Education's vocational education 
    program.

                                           ENVIRONMENTAL RESERVE FUND                                           
                                    [Outlay increases in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                              5-year    10-year 
                                                 1998     1999     2000     2001     2002    spending   spending
----------------------------------------------------------------------------------------------------------------
Orphan share spending........................      200      200      200      200      200      1,000      2,028
----------------------------------------------------------------------------------------------------------------

--The proposal would provide new mandatory spending for orphan 
    shares at Superfund hazardous waste cleanup sites. Orphan 
    shares are portions of financial liability at Superfund 
    sites allocated to non-Federal parties with limited or no 
    ability to pay.

--The funds will be reserved for this purpose based on the 
    assumption of a policy agreement on orphan share spending.

                                PRIORITY FEDERAL LAND ACQUISITIONS AND EXCHANGES                                
                                    [Outlay increases in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    spending   spending
----------------------------------------------------------------------------------------------------------------
Priority Federal land acquisitions and                                                                          
 exchanges...................................      300      150      150      100       --        700        700
----------------------------------------------------------------------------------------------------------------

--Under this proposal, up to $315 million would be available 
    from the Land and Water Conservation Fund (LWCF) to 
    finalize priority Federal land exchanges in FY 1998 and FY 
    1999.

--Funding from the LWCF for other high priority Federal land 
    acquisitions and exchanges (totaling $385 million) would be 
    available in fiscal year 1999 through 2001.

--The funding will be allocated to function 300 as a reserve 
    fund exclusively for this purpose.

                        Major Mandatory Programs

                                                    MEDICARE                                                    
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                              5-year    10-year 
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Medicare, net................................     -6.5    -16.8    -22.7    -29.0    -40.0     -115.0     -434.2
----------------------------------------------------------------------------------------------------------------

--Reduce projected Medicare spending by $115 billion over five 
    years.

--Extend solvency of the Part A Trust Fund for at least 10 
    years through a combination of savings and structural 
    reforms (including the home health reallocation).

--Structural reforms will include provisions to give 
    beneficiaries more choices among competing health plans, 
    such as provider sponsored organizations and preferred 
    provider organizations.

--The Medicare program reforms provide beneficiaries with 
    comparative information about their options, such as now 
    provided Federal employees and annuitants in the FEHB 
    program.

--Maintain the Part B premium at 25 percent of program costs 
    and phase in over seven years the inclusion in the 
    calculation of the Part B premium the portion of home 
    health expenditures reallocated to Part B.

--Reform managed care payment methodology to address geographic 
    disparities.

--Reform payment methodology by establishing prospective 
    payment systems for areas such as home health providers, 
    skilled nursing facilities, and outpatient departments.

--Funding for new health benefits including: (1) expanded 
    mammography coverage; (2) coverage for colorectal 
    screenings; (3) coverage for diabetes self-management; and 
    (4) higher payments to providers for preventive 
    vaccinations to the extent it will lead to greater use by 
    beneficiaries. Invest $4 billion over five years (and $20 
    billion over ten years) to limit beneficiary copayments for 
    outpatient services, unless there is a more cost-effective 
    way to provide such services to beneficiaries as mutually 
    agreed.

                                                    MEDICAID                                                    
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                              5-year    10-year 
                                                 1998     1999     2000     2001     2002    savings    savings 
----------------------------------------------------------------------------------------------------------------
Medicaid, net................................      0.0     -1.5     -2.4     -3.6     -6.2      -13.6      -65.5
----------------------------------------------------------------------------------------------------------------

--Include net Medicaid savings of $13.6 billion over five 
    years.

--Net Medicaid savings include a higher match for D.C., an 
    inflation adjustment for programs in Puerto Rico and other 
    territories, Part B premium interactions, and $1.5 billion 
    to ease the impact of increasing Medicare premiums on low-
    income beneficiaries.

--The $13.6 billion in Medicaid savings do not reflect the 
    health care investments for children's coverage, 
    protections for legal immigrants under welfare reform, or 
    the extension of veterans' Medicaid income protections.

--Savings derived from reduced disproportionate share payments 
    and flexibility provisions.

--Include provisions to allow States more flexibility in 
    managing the Medicaid program, including repeal of the 
    Boren amendment, converting current managed care and home/
    community-based care waiver process to State Plan 
    Amendment, and elimination of unnecessary administrative 
    requirements.

                                   IMMIGRATION, NUTRITION ASSISTANCE AND WORK                                   
                                    [Outlay increases in billions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    spending   spending
----------------------------------------------------------------------------------------------------------------
Immigrants...................................      2.2      2.1      2.0      1.6      1.6        9.7       16.5
Nutrition Assistance.........................      0.3      0.3      0.3      0.3      0.3        1.5        3.1
Welfare to Work..............................      0.7      0.7      1.0      0.6  .......        3.0        3.0
                                              ------------------------------------------------------------------
      Total..................................      3.2      3.3      3.4      2.5      2.0       14.2       22.5
----------------------------------------------------------------------------------------------------------------

Immigrants

--Eligibility for legal immigrants. Restore SSI and Medicaid 
    eligibility for all disabled legal immigrants who are or 
    become disabled and who entered the U.S. prior to August 
    23, 1996. Those disabled legal immigrants who entered the 
    U.S. after August 22, 1996, and are on the rolls before 
    June 1, 1997 shall not be removed.

--Refugees and asylees. Lengthen the exemption for refugees and 
    asylees from the first 5 years in the country to 7 years in 
    order to provide SSI and Medicaid.

Nutrition Assistance

--Redirect existing food stamps employment and training funds 
    and add $750 million in new capped mandatory funding to 
    create additional work slots for individuals subject to the 
    time limits.

--Permit States to exempt 15 percent of the individuals who 
    would lose benefits because of the time limits (beyond the 
    current waiver policy), at a total cost of $0.5 billion.

Welfare to Work

--Add $3.0 billion in capped mandatory spending through 2001 to 
    TANF, allocated to States through a formula and targeted 
    within a State to areas with poverty and unemployment rates 
    at least 20 percent higher than the State average. A share 
    of funds would go to cities/counties with large poverty 
    populations commensurate with the share of long-term 
    welfare recipients in those jurisdictions.

                                                CHILDREN'S HEALTH                                               
                                    [Outlay increases in billions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                                 1998     1999     2000     2001     2002    spending   spending
----------------------------------------------------------------------------------------------------------------
Children's health............................      2.3      2.7      3.2      3.7      3.9       16.0       38.9
----------------------------------------------------------------------------------------------------------------

--Spend $16 billion over five years (to provide up to 5 million 
    additional children with health insurance coverage by 
    2002).

--The funding could be used for one or both of the following, 
    and for other possibilities if mutually agreeable: 1. 
    Medicaid, including outreach activities to identify and 
    enroll eligible children and providing 12-month continuous 
    eligibility; and also to restore Medicaid for current 
    disabled children losing SSI because of the new, more 
    strict definition of childhood eligibility; and 2. A 
    program of capped mandatory grants to States to finance 
    health insurance coverage for uninsured children.

--The resources will be used in the most cost-effective manner 
    possible to expand coverage and services for low-income and 
    uninsured children with a goal of up to 5 million currently 
    uninsured children being served.

                             Budget Process

--Extend discretionary caps to 2002.

        --Extend and revise discretionary caps for 1998-2002 at 
        agreed levels shown in tables included in this 
        agreement, and extend current law sequester enforcement 
        mechanism.
        --Within discretionary caps, establish separate 
        categories (firewalls) for Defense and Non-Defense 
        Discretionary (NDD) at agreed levels shown in agreement 
        tables for each year 1998-1999 with associated 
        sequester firewall enforcement as provided in BEA for 
        1990-93.
        --Retain current law on separate crime caps (VCRTF) at 
        levels shown in agreement tables.
        --Extend and update special allowance for outlays; 
        extend existing adjustment for emergencies.
        --Cap adjustment for exchanges of monetary assets, such 
        as New Arrangements to Borrow, and for international 
        organization arrears.

--Extend PAYGO to 2002.

--Revise the asset sales rule, which prohibits scoring the 
    proceeds of asset sales, to score if net present value of 
    all associated cash flows would not increase the deficit; 
    scoring, if allowed, based on cash effect, not NPV.

--The Superfund tax shall not be used as a revenue offset.

--Reduce PAYGO balances to zero, including those derived from 
    budget agreement.

--Provide for debt limit increase sufficient to extend limit to 
    December 15, 1999.

                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Hon. William J. Clinton,
President of the United States,
The White House, Washington, DC.
    Dear Mr. President: We would like to take this opportunity 
to confirm important aspects of the Balanced Budget Agreement. 
It was agreed that the net tax cut shall be $85 billion through 
2002 and not more than $250 billion through 2007. We believe 
these levels provide enough room for important reforms, 
including broad-based permanent capital gains tax reductions, 
significant death tax relief, $500 per child tax credit, and 
expansion of IRAs.
    In the course of drafting the legislation to implement the 
balanced budget plan, there are some additional areas that we 
want to be sure the committees of jurisdiction consider. 
Specifically, it was agreed that the package must include tax 
relief of roughly $35 billion over five years for post-
secondary education, including a deduction and a tax credit. We 
believe this package should be consistent with the objectives 
put forward in the HOPE scholarship and tuition tax proposals 
contained in the Administration's FY 1998 budget to assist 
middle-class parents.
    Additionally, the House and Senate Leadership will seek to 
include various proposals in the Administration's FY 1998 
budget (e.g., the welfare-to-work tax credit, capital gains tax 
relief for home sales, the Administration's EZ/EC proposals, 
brownfields legislation, FSC software, and tax incentives 
designed to spur economic growth in the District of Columbia), 
as well as various pending congressional tax proposals.
    In this context, it should be noted that the tax-writing 
committees will be required to balance the interests and 
desires of many parties in crafting tax legislation within the 
context of the net tax reduction goals which have been adopted, 
while at the same time protecting the interests of taxpayers 
generally.
    We stand to work with you toward these ends. Thank you very 
much for your consideration.
            Sincerely,
                                             Newt Gingrich,
                                                           Speaker.
                                                Trent Lott,
                                            Senate Majority Leader.
                                ------                                

                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Mr. Erskine Bowles,
Chief of Staff to the President,
The White House,
Washington, DC.
    Dear Mr. Bowles: We are writing to express our desire for 
continued cooperation between Congressional staff and the staff 
of the various Administration agencies during the development 
of the current budget agreement.
    Much of the most difficult work in connection with the 
budget agreement will involve the development of the revenue 
provisions that will satisfy the parameters of the agreement. 
Historically, the staff of the Joint Committee on Taxation has 
provided technical legal and quantitative support to the House 
and Senate. The Budget Act requires the use of Joint Committee 
on Taxation revenue estimates. Ken Kies and his staff are 
committed to facilitating our work on the tax provisions of 
this budget agreement. You can be assured that they will 
cooperate with Administration counterparts in receiving 
Administration input as they carry out their statutory 
responsibilities.
    The revenue estimating staffs of the Joint Committee on 
Taxation and the Office of Tax Analysis at Treasury have a long 
history of cooperation and communication among analysts. It is 
our understanding that steps have already been taken to insure 
that the cooperative efforts of these two staffs will be 
intensified during the current budget process. It is also our 
understanding that the professional staffs at the Office of Tax 
Analysis at Treasury and the Joint Committee on Taxation will 
consult and share information necessary to understand fully the 
basis of their revenue estimates and to minimize revenue 
estimating differences. The proposal shall not cause costs to 
explode in the outyears.
    Now that we have agreed upon the overall parameters of this 
significant agreement an inordinate number of details 
concerning specific provisions must be drafted and analyzed by 
the JCT and the committees of jurisdiction. We look forward to 
working with the Administration.
            Sincerely,
                                             Newt Gingrich,
                                                           Speaker.
                                                Trent Lott,
                                            Senate Majority Leader.
                               APPENDIX B

                            H. Con. Res. 84

                         concurrent resolution

Establishing the congressional budget for the United States Government 
for fiscal year 1998 and setting forth appropriate budgetary levels for 
                fiscal years 1999, 2000, 2001, and 2002.

  Resolved by the House of Representatives (the Senate 
concurring), 

SECTION 1. CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1998.

  The Congress declares that the concurrent resolution on the 
budget for fiscal year 1998 is hereby established and that the 
appropriate budgetary levels for fiscal years 1999 through 2002 
are hereby set forth.

                      TITLE I--LEVELS AND AMOUNTS

SEC. 101. RECOMMENDED LEVELS AND AMOUNTS.

  The following budgetary levels are appropriate for the fiscal 
years 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 1998: $1,198,979,000,000.
                          Fiscal year 1999: $1,241,859,000,000.
                          Fiscal year 2000: $1,285,559,000,000.
                          Fiscal year 2001: $1,343,591,000,000.
                          Fiscal year 2002: $1,407,564,000,000.
                  (B) The amounts by which the aggregate levels 
                of Federal revenues should be changed are as 
                follows:
                          Fiscal year 1998: -$7,400,000,000.
                          Fiscal year 1999: -$11,083,000,000.
                          Fiscal year 2000: -$21,969,000,000.
                          Fiscal year 2001: -$22,821,000,000.
                          Fiscal year 2002: -$19,871,000,000.
          (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 1998: $1,386,875,000,000.
                  Fiscal year 1999: $1,439,798,000,000.
                  Fiscal year 2000: $1,486,311,000,000.
                  Fiscal year 2001: $1,520,242,000,000.
                  Fiscal year 2002: $1,551,563,000,000.
          (3) Budget outlays.--For purposes of the enforcement 
        of this resolution, the appropriate levels of total 
        budget outlays are as follows:
                  Fiscal year 1998: $1,371,848,000,000.
                  Fiscal year 1999: $1,424,002,000,000.
                  Fiscal year 2000: $1,468,748,000,000.
                  Fiscal year 2001: $1,500,854,000,000.
                  Fiscal year 2002: $1,516,024,000,000.
          (4) Deficits.--For purposes of the enforcement of 
        this resolution, the amounts of the deficits are as 
        follows:
                  Fiscal year 1998: $172,869,000,000.
                  Fiscal year 1999: $182,143,000,000.
                  Fiscal year 2000: $183,189,000,000.
                  Fiscal year 2001: $157,263,000,000.
                  Fiscal year 2002: $108,460,000,000.
          (5) Public debt.--The appropriate levels of the 
        public debt are as follows:
                  Fiscal year 1998: $5,593,500,000,000.
                  Fiscal year 1999: $5,836,000,000,000.
                  Fiscal year 2000: $6,082,400,000,000.
                  Fiscal year 2001: $6,301,100,000,000.
                  Fiscal year 2002: $6,473,200,000,000.
          (6) Direct loan obligations.--The appropriate levels 
        of total new direct loan obligations are as follows:
                  Fiscal year 1998: $33,829,000,000.
                  Fiscal year 1999: $33,378,000,000.
                  Fiscal year 2000: $34,775,000,000.
                  Fiscal year 2001: $36,039,000,000.
                  Fiscal year 2002: $37,099,000,000.
          (7) Primary loan guarantee commitments.--The 
        appropriate levels of new primary loan guarantee 
        commitments are as follows:
                  Fiscal year 1998: $315,472,000,000.
                  Fiscal year 1999: $324,749,000,000.
                  Fiscal year 2000: $328,124,000,000.
                  Fiscal year 2001: $332,063,000,000.
                  Fiscal year 2002: $335,141,000,000.

SEC. 102. 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 1998 through 2002 for each major functional 
category are:
          (1) National Defense (050):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $268,197,000,000.
                          (B) Outlays, $265,978,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $588,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $270,784,000,000.
                          (B) Outlays, $265,771,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $757,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $274,802,000,000.
                          (B) Outlays, $268,418,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $1,050,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $281,305,000,000.
                          (B) Outlays, $270,110,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $1,050,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $289,092,000,000.
                          (B) Outlays, $272,571,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $1,050,000,000.
          (2) International Affairs (150):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $15,909,000,000.
                          (B) Outlays, $14,558,000,000.
                          (C) New direct loan obligations, 
                        $1,966,000.
                          (D) New primary loan guarantee 
                        commitments $12,751,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $14,918,000,000.
                          (B) Outlays, $14,569,000,000.
                          (C) New direct loan obligations, 
                        $2,021,000,000.
                          (D) New primary loan guarantee 
                        commitments $13,093,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $15,782,000,000.
                          (B) Outlays, $14,981,000,000.
                          (C) New direct loan obligations, 
                        $2,077,000,000.
                          (D) New primary loan guarantee 
                        commitments $13,434,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $16,114,000,000.
                          (B) Outlays, $14,751,000,000.
                          (C) New direct loan obligations, 
                        $2,122,000,000.
                          (D) New primary loan guarantee 
                        commitments $13,826,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $16,353,000,000.
                          (B) Outlays, $14,812,000,000.
                          (C) New direct loan obligations, 
                        $2,178,000,000.
                          (D) New primary loan guarantee 
                        commitments $14,217,000,000.
          (3) General Science, Space, and Technology (250):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $16,237,000,000.
                          (B) Outlays, $16,882,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $16,203,000,000.
                          (B) Outlays, $16,528,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $15,947,000,000.
                          (B) Outlays, $16,013,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $15,800,000,000.
                          (B) Outlays, $15,862,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $15,604,000,000.
                          (B) Outlays, $15,668,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (4) Energy (270):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $3,123,000,000.
                          (B) Outlays, $2,247,000,000.
                          (C) New direct loan obligations, 
                        $1,050,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $3,469,000,000.
                          (B) Outlays, $2,446,000,000.
                          (C) New direct loan obligations, 
                        $1,078,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $3,186,000,000.
                          (B) Outlays, $2,293,000,000.
                          (C) New direct loan obligations, 
                        $1,109,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $2,939,000,000.
                          (B) Outlays, $2,048,000,000.
                          (C) New direct loan obligations, 
                        $1,141,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $2,846,000,000.
                          (B) Outlays, $1,867,000,000.
                          (C) New direct loan obligations, 
                        $1,174,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
          (5) Natural Resources and Environment (300):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $23,877,000,000.
                          (B) Outlays, $22,405,000,000.
                          (C) New direct loan obligations, 
                        $30,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $23,227,000,000.
                          (B) Outlays, $22,702,000,000.
                          (C) New direct loan obligations, 
                        $32,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $22,570,000,000.
                          (B) Outlays, $22,963,000,000.
                          (C) New direct loan obligations, 
                        $32,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $22,151,000,000.
                          (B) Outlays, $22,720,000,000.
                          (C) New direct loan obligations, 
                        $34,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $22,086,000,000.
                          (B) Outlays, $22,313,000,000.
                          (C) New direct loan obligations, 
                        $34,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
          (6) Agriculture (350):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $13,133,000,000.
                          (B) Outlays, $11,892,000,000.
                          (C) New direct loan obligations, 
                        $9,620,000,000.
                          (D) New primary loan guarantee 
                        commitments $6,365,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $12,790,000,000.
                          (B) Outlays, $11,294,000,000.
                          (C) New direct loan obligations, 
                        $11,047,000,000.
                          (D) New primary loan guarantee 
                        commitments $6,436,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $12,215,000,000.
                          (B) Outlays, $10,664,000,000.
                          (C) New direct loan obligations, 
                        $11,071,000,000.
                          (D) New primary loan guarantee 
                        commitments $6,509,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $10,978,000,000.
                          (B) Outlays, $9,494,000,000.
                          (C) New direct loan obligations, 
                        $10,960,000,000.
                          (D) New primary loan guarantee 
                        commitments, $6,583,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $10,670,000,000.
                          (B) Outlays, $9,108,000,000.
                          (C) New direct loan obligations, 
                        $10,965,000,000.
                          (D) New primary loan guarantee 
                        commitments, $6,660,000,000.
          (7) Commerce and Housing Credit (370):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $6,607,000,000.
                          (B) Outlays, -$920,000,000.
                          (C) New direct loan obligations, 
                        $4,739,000,000.
                          (D) New primary loan guarantee 
                        commitments, $245,500,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $11,082,000,000.
                          (B) Outlays, $4,299,000,000.
                          (C) New direct loan obligations, 
                        $1,887,000,000.
                          (D) New primary loan guarantee 
                        commitments, $253,450,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $15,183,000,000.
                          (B) Outlays, $9,821,000,000.
                          (C) New direct loan obligations, 
                        $2,238,000,000.
                          (D) New primary loan guarantee 
                        commitments, $255,200,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $16,078,000,000.
                          (B) Outlays, $12,133,000,000.
                          (C) New direct loan obligations, 
                        $2,574,000,000.
                          (D) New primary loan guarantee 
                        commitments, $257,989,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $16,678,000,000.
                          (B) Outlays, $12,541,000,000.
                          (C) New direct loan obligations, 
                        $2,680,000,000.
                          (D) New primary loan guarantee 
                        commitments, $259,897,000,000.
          (8) Transportation (400):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $46,402,000,000.
                          (B) Outlays, $40,933,000,000.
                          (C) New direct loan obligations, 
                        $155,000,000.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $46,556,000,000.
                          (B) Outlays, $41,256,000,000.
                          (C) New direct loan obligations, 
                        $135,000,000.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $47,114,000,000.
                          (B) Outlays, $41,357,000,000.
                          (C) New direct loan obligations, 
                        $15,000,000.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $48,135,000,000.
                          (B) Outlays, $41,303,000,000.
                          (C) New direct loan obligations, 
                        $15,000,000.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $49,184,000,000.
                          (B) Outlays, $41,247,000,000.
                          (C) New direct loan obligations, 
                        $15,000,000.
                          (D) New primary loan guarantee 
                        commitments, $0.
          (9) Community and Regional Development (450):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $8,768,000,000.
                          (B) Outlays, $10,387,000,000.
                          (C) New direct loan obligations, 
                        $2,867,000,000.
                          (D) New primary loan guarantee 
                        commitments, $2,385,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $8,489,000,000.
                          (B) Outlays, $10,902,000,000.
                          (C) New direct loan obligations, 
                        $2,943,000,000.
                          (D) New primary loan guarantee 
                        commitments, $2,406,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $7,810,000,000.
                          (B) Outlays, $10,986,000,000.
                          (C) New direct loan obligations, 
                        $3,020,000,000.
                          (D) New primary loan guarantee 
                        commitments, $2,429,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $7,764,000,000.
                          (B) Outlays, $11,350,000,000.
                          (C) New direct loan obligations, 
                        $3,098,000,000.
                          (D) New primary loan guarantee 
                        commitments, $2,452,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $7,790,000,000.
                          (B) Outlays, $8,429,000,000.
                          (C) New direct loan obligations, 
                        $3,180,000,000.
                          (D) New primary loan guarantee 
                        commitments, $2,475,000,000.
          (10) Education, Training, Employment, and Social 
        Services (500):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $60,020,000,000.
                          (B) Outlays, $56,062,000,000.
                          (C) New direct loan obligations, 
                        $12,328,000,000.
                          (D) New primary loan guarantee 
                        commitments, $20,665,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $60,450,000,000.
                          (B) Outlays, $59,335,000,000.
                          (C) New direct loan obligations, 
                        $13,092,000,000.
                          (D) New primary loan guarantee 
                        commitments $21,899,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $61,703,000,000.
                          (B) Outlays, $60,728,000,000.
                          (C) New direct loan obligations, 
                        $13,926,000,000.
                          (D) New primary loan guarantee 
                        commitments $23,263,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $62,959,000,000.
                          (B) Outlays, $61,931,000,000.
                          (C) New direct loan obligations, 
                        $14,701,000,000.
                          (D) New primary loan guarantee 
                        commitments $24,517,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $63,339,000,000.
                          (B) Outlays, $62,316,000,000.
                          (C) New direct loan obligations, 
                        $15,426,000,000.
                          (D) New primary loan guarantee 
                        commitments $25,676,000,000.
          (11) Health (550):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $137,799,000,000.
                          (B) Outlays, $137,767,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $85,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $144,968,000,000.
                          (B) Outlays, $144,944,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $154,068,000,000.
                          (B) Outlays, $153,947,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $163,412,000,000.
                          (B) Outlays, $163,135,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $172,171,000,000.
                          (B) Outlays, $171,727,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (12) Medicare (570):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $210,620,000,000.
                          (B) Outlays, $201,764,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $212,073,000,000.
                          (B) Outlays, $211,548,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $225,540,000,000.
                          (B) Outlays, $225,537,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $239,636,000,000.
                          (B) Outlays, $238,781,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $251,548,000,000.
                          (B) Outlays, $250,769,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (13) Income Security (600):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $239,032,000,000.
                          (B) Outlays, $247,758,000,000.
                          (C) New direct loan obligations, 
                        $45,000,000.
                          (D) New primary loan guarantee 
                        commitments $37,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $254,090,000,000.
                          (B) Outlays, $258,064,000,000.
                          (C) New direct loan obligations, 
                        $75,000,000.
                          (D) New primary loan guarantee 
                        commitments $37,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $269,566,000,000.
                          (B) Outlays, $268,161,000,000.
                          (C) New direct loan obligations, 
                        $110,000,000.
                          (D) New primary loan guarantee 
                        commitments $37,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $275,145,000,000.
                          (B) Outlays, $277,264,000,000.
                          (C) New direct loan obligations, 
                        $145,000,000.
                          (D) New primary loan guarantee 
                        commitments $37,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $286,945,000,000.
                          (B) Outlays, $285,239,000,000.
                          (C) New direct loan obligations, 
                        $170,000,000.
                          (D) New primary loan guarantee 
                        commitments $37,000,000.
          (14) Social Security (650):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $11,424,000,000.
                          (B) Outlays, $11,524,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $12,060,000,000.
                          (B) Outlays, $12,196,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $12,792,000,000.
                          (B) Outlays, $12,866,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $13,022,000,000.
                          (B) Outlays, $13,043,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $14,383,000,000.
                          (B) Outlays, $14,398,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (15) Veterans Benefits and Services (700):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $40,545,000,000.
                          (B) Outlays, $41,337,000,000.
                          (C) New direct loan obligations, 
                        $1,029,000,000.
                          (D) New primary loan guarantee 
                        commitments $27,096,000,000.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $41,466,000,000.
                          (B) Outlays, $41,700,000,000.
                          (C) New direct loan obligations, 
                        $1,068,000,000.
                          (D) New primary loan guarantee 
                        commitments $26,671,000,000.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $41,740,000,000.
                          (B) Outlays, $41,908,000,000.
                          (C) New direct loan obligations, 
                        $1,177,000,000.
                          (D) New primary loan guarantee 
                        commitments $26,202,000,000.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $42,093,000,000.
                          (B) Outlays, $42,215,000,000.
                          (C) New direct loan obligations, 
                        $1,249,000,000.
                          (D) New primary loan guarantee 
                        commitments $25,609,000,000.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $42,282,000,000.
                          (B) Outlays, $42,436,000,000.
                          (C) New direct loan obligations, 
                        $1,277,000,000.
                          (D) New primary loan guarantee 
                        commitments $25,129,000,000.
          (16) Administration of Justice (750):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $24,765,000,000.
                          (B) Outlays, $22,609,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $25,120,000,000.
                          (B) Outlays, $24,476,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $24,178,000,000.
                          (B) Outlays, $25,240,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $24,354,000,000.
                          (B) Outlays, $25,901,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $24,883,000,000.
                          (B) Outlays, $24,879,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (17) General Government (800):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $14,711,000,000.
                          (B) Outlays, $13,959,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $14,444,000,000.
                          (B) Outlays, $14,363,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $13,977,000,000.
                          (B) Outlays, $14,727,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $13,675,000,000.
                          (B) Outlays, $14,131,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $13,105,000,000.
                          (B) Outlays, $13,100,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
          (18) Net Interest (900):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        $296,547,000,000.
                          (B) Outlays, $296,547,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        $304,558,000,000.
                          (B) Outlays, $304,558,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        $305,075,000,000.
                          (B) Outlays, $305,075,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        $303,833,000,000.
                          (B) Outlays, $303,833,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        $303,728,000,000.
                          (B) Outlays, $303,728,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
          (19) Allowances (920):
                  Fiscal year 1998:
                          (A) New budget authority, $0.
                          (B) Outlays, $0.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 1999:
                          (A) New budget authority, $0.
                          (B) Outlays, $0.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments, $0.
                  Fiscal year 2000:
                          (A) New budget authority, $0.
                          (B) Outlays, $0.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, $0.
                          (B) Outlays, $0.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, $0.
                          (B) Outlays, $0.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
          (20) Undistributed Offsetting Receipts (950):
                  Fiscal year 1998:
                          (A) New budget authority, 
                        -$41,841,000,000.
                          (B) Outlays, -$41,841,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 1999:
                          (A) New budget authority, 
                        -$36,949,000,000.
                          (B) Outlays, -$36,949,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2000:
                          (A) New budget authority, 
                        -$36,937,000,000.
                          (B) Outlays, -$36,937,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2001:
                          (A) New budget authority, 
                        -$39,151,000,000.
                          (B) Outlays, -$39,151,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.
                  Fiscal year 2002:
                          (A) New budget authority, 
                        -$51,124,000,000.
                          (B) Outlays, -$51,124,000,000.
                          (C) New direct loan obligations, $0.
                          (D) New primary loan guarantee 
                        commitments $0.

                 TITLE II--RECONCILIATION INSTRUCTIONS

SEC. 201. RECONCILIATION.

  (a) Purpose.--The purpose of this section is to provide for 
two separate reconciliation bills: the first for entitlement 
reforms and the second for tax relief. In the event Senate 
procedures preclude the consideration of two separate bills, 
this section would permit the consideration of one omnibus 
reconciliation bill.
  (b) Submissions.--
          (1) Entitlement reforms.--Not later than June 12, 
        1997, the House committees named in subsection (c) 
        shall submit their recommendations 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) Tax relief and miscellaneous reforms.--Not later 
        than June 13, 1997, the House committees named in 
        subsection (d) shall submit their recommendations 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.
  (c) Instructions Relating to Entitlement Reforms.--
          (1) Committee on agriculture.--The House Committee on 
        Agriculture 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: $34,571,000,000 in outlays for fiscal year 
        1998, $37,008,000,000 in outlays for fiscal year 2002, 
        and $211,443,000,000 in outlays in fiscal years 1998 
        through 2002.
          (2) Committee on banking and financial services.--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: 
        -$8,435,000,000 in outlays for fiscal year 1998, 
        -$5,091,000,000 in outlays for fiscal year 2002, and 
        -$50,306,000,000 in outlays in fiscal years 1998 
        through 2002.
          (3) 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: $393,533,000,000 in outlays for fiscal year 
        1998, $506,791,000,000 in outlays for fiscal year 
2002,and $2,617,528,000,000 in outlays in fiscal years 1998 through 
2002.
          (4) Committee on education and the workforce.--The 
        House Committee on Education and the Workforce 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: 
        $17,222,000,000 in outlays for fiscal year 1998, 
        $17,673,000,000 in outlays for fiscal year 2002, and 
        $103,109,000,000 in outlays in fiscal years 1998 
        through 2002.
          (5) 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: $68,975,000,000 in outlays for fiscal year 
        1998, $81,896,000,000 in outlays for fiscal year 2002, 
        and $443,061,000,000 in outlays in fiscal years 1998 
        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: $0 in 
        fiscal year 1998, $621,000,000 in fiscal year 2002, and 
        $1,829,000,000 in fiscal years 1998 through 2002.
          (6) 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: $18,087,000,000 in outlays for fiscal year 
        1998, $17,283,000,000 in outlays for fiscal year 2002, 
        and $106,615,000,000 in outlays in fiscal years 1998 
        through 2002.
          (7) 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: $22,444,000,000 in 
        outlays for fiscal year 1998, $24,563,000,000 in 
        outlays for fiscal year 2002, and $139,134,000,000 in 
        outlays in fiscal years 1998 through 2002.
          (8) Committee on ways and means.--(A) The House 
        Committee on Ways and Means shall report changes in 
        laws within its jurisdiction such that the total level 
        of direct spending for that committee does not exceed: 
        $397,546,000,000 in outlays for fiscal year 1998, 
        $506,442,000,000 in outlays for fiscal year 2002, and 
        $2,621,578,000,000 in outlays in fiscal years 1998 
        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: $1,176,253,000,000 in revenues for 
        fiscal year 1998, $1,386,546,000,000 in revenues for 
        fiscal year 2002, and $7,517,939,000,000 in revenues in 
        fiscal years 1998 through 2002.
  (d) Instructions Relating to Tax Relief and Miscellaneous 
Reforms.--
          (1) Committee on agriculture.--The House Committee on 
        Agriculture 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: $34,571,000,000 in outlays for fiscal year 
        1998, $37,008,000,000 in outlays for fiscal year 2002, 
        and $211,443,000,000 in outlays in fiscal years 1998 
        through 2002.
          (2) Committee on banking and financial services.--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: 
        -$8,435,000,000 in outlays for fiscal year 1998, 
        -$5,091,000,000 in outlays for fiscal year 2002, and 
        -$50,306,000,000 in outlays in fiscal years 1998 
        through 2002.
          (3) 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: $393,533,000,000 in outlays for fiscal year 
        1998, $506,791,000,000 in outlays for fiscal year 2002, 
        and $2,617,528,000,000 in outlays in fiscal years 1998 
        through 2002.
          (4) Committee on education and the workforce.--The 
        House Committee on Education and the Workforce 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: 
        $17,222,000,000 in outlays for fiscal year 1998, 
        $17,673,000,000 in outlays for fiscal year 2002, and 
        $103,109,000,000 in outlays in fiscal years 1998 
        through 2002.
          (5) 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: $68,975,000,000 in outlays for fiscal year 
        1998, $81,896,000,000 in outlays for fiscal year 2002, 
        and $443,061,000,000 in outlays in fiscal years 1998 
        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: $0 in 
        fiscal year 1998, $621,000,000 in outlays for fiscal 
        year 2002, and $1,829,000,000 in fiscal years 1998 
        through 2002.
          (6) 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: $18,087,000,000 in outlays for fiscal year 
        1998, $17,283,000,000 in outlays for fiscal year 2002, 
        and $106,615,000,000 in outlays in fiscal years 1998 
        through 2002.
          (7) 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: $22,444,000,000 in 
        outlays for fiscal year 1998, $24,563,000,000 in 
        outlays for fiscal year 2002, and $139,134,000,000 in 
        outlays in fiscal years 1998 through 2002.
          (8) Committee on ways and means.--(A) The House 
        Committee on Ways and Means shall report changes in 
        laws within its jurisdiction such that the total level 
        of direct spending for that committee does not exceed: 
        $397,546,000,000 in outlays for fiscal year 1998, 
        $506,442,000,000 in outlays for fiscal year 2002, and 
        $2,621,578,000,000 in outlays in fiscal years 1998 
        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: $1,168,853,000,000 in revenues for 
        fiscal year 1998, $1,366,046,000,000 in revenues for 
        fiscal year 2002, and $7,432,939,000,000 in revenues in 
        fiscal years 1998 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.
  (f) Children's Health Initiative.--If the Committees on 
Commerce and Ways and Means report recommendations pursuant to 
their reconciliation instructions that, combined, provide an 
initiative for children's health that would increase the 
deficit by more than $2.3 billion for fiscal year 1998, by more 
than $3.9 billion for fiscal year 2002, and by more than $16 
billion for the period of fiscal years 1998 through 2002, the 
committees shall be deemed to not have complied with their 
reconciliation instructions pursuant to section 310(d) of the 
Congressional Budget Act of 1974.

                     TITLE III--BUDGET ENFORCEMENT

SEC. 301. DEFICIT-NEUTRAL RESERVE FUND FOR SURFACE TRANSPORTATION.

  (a) Purpose.--The purpose of this section is to adjust the 
appropriate budgetary levels to accommodate legislation 
increasing spending from the highway trust fund on surface 
transportation and highway safety above the levels assumed in 
this resolution if such legislation is deficit neutral.
  (b) Deficit Neutrality Requirement.--(1) In order to receive 
the adjustments specified in subsection (c), a bill reported by 
the Committee on Transportation and Infrastructure that 
provides new budget authority above the levels assumed in this 
resolution for programs authorized out of the highway trust 
fund must be deficit neutral.
  (2) A deficit-neutral bill must meet the following 
conditions:
          (A) The amount of new budget authority provided for 
        programs authorized out of the highway trust fund must 
        be in excess of $25.949 billion in new budget authority 
        for fiscal year 1998, $25.464 billion in new budget 
        authority for fiscal year 2002, and $127.973 billion in 
        new budget authority for the period of fiscal years 
        1998 through 2002.
          (B) The outlays estimated to flow from the excess new 
        budget authority set forth in subparagraph (A) must be 
        offset for fiscal year 1998, fiscal year 2002, and for 
        the period of fiscal years 1998 through 2002. For the 
        sole purpose of estimating the amount of outlays 
        flowing from excess new budget authority under this 
        section, it shall be assumed that such excess new 
        budget authority would have an obligation limitation 
        sufficient to accommodate that new budget authority.
          (C) The outlays estimated to flow from the excess new 
        budget authority must be offset by (i) other direct 
        spending or revenue provisions within that 
        transportation bill, (ii) the net reduction in other 
        direct spending and revenue legislation that is enacted 
        during this Congress after the date of adoption of this 
        resolution and before such transportation bill is 
        reported (in excess of the levels assumed inthis 
resolution), or (iii) a combination of the offsets specified in clauses 
(i) and (ii).
          (D) As used in 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.
  (c) Revised Levels.--(1) When the Committee on Transportation 
and Infrastructure reports a bill (or when a conference report 
thereon is filed) meeting the conditions set forth in 
subsection (b)(2), the chairman of the Committee on the Budget 
shall increase the allocation of new budget authority to that 
committee by the amount of new budget authority provided in 
that bill (and that is above the levels set forth in subsection 
(b)(2)(A)) for programs authorized out of the highway trust 
fund.
  (2) After the enactment of the transportation bill described 
in paragraph (1) and upon the reporting of a general, 
supplemental or continuing resolution making appropriations by 
the Committee on Appropriations (or upon the filing of a 
conference report thereon) establishing an obligation 
limitation above the levels specified in subsection (b)(2)(A) 
(at a level sufficient to obligate some or all of the budget 
authority specified in paragraph (1)), the chairman of the 
Committee on the Budget shall increase the allocation and 
aggregate levels of outlays to that committee for fiscal years 
1998 and 1999 by the appropriate amount.
  (d) Revisions.--Allocations and aggregates revised pursuant 
to this section shall be considered for purposes of the 
Congressional Budget Act of 1974 as allocations and aggregates 
contained in this resolution.
  (e) Reversals.--If any legislation referred to in this 
section is not enacted into law, then the chairman of the House 
Committee on the Budget shall, as soon as practicable, reverse 
adjustments made under this section for such legislation and 
have such adjustments published in the Congressional Record.
  (f) Determination of Budgetary Levels.--For the purposes of 
this section, budgetary levels shall be determined on the basis 
of estimates made by the House Committee on the Budget.
  (g) Definition.--As used in this section, the term ``highway 
trust fund'' refers to the following budget accounts (or any 
successor accounts):
          (1) 69-8083-0-7-401 (Federal-Aid Highways).
          (2) 69-8191-0-7-401 (Mass Transit Capital Fund).
          (3) 69-8350-0-7-401 (Mass Transit Formula Grants).
          (4) 69-8016-0-7-401 (National Highway Traffic Safety 
        Administration-Operations and Research).
          (5) 69-8020-0-7-401 (Highway Traffic Safety Grants).
          (6) 69-8048-0-7-401 (National Motor Carrier Safety 
        Program).

SEC. 302. SALE OF GOVERNMENT ASSETS.

  (a) Budgetary treatment.--
          (1) In general.--For the purpose of any concurrent 
        resolution on the budget and the Congressional Budget 
        Act of 1974, no amounts realized from the sale of an 
        asset shall be scored with respect to the level of 
        budget authority, outlays, or revenues if such sale 
        would cause an increase in the deficit as calculated 
        pursuant to paragraph (2).
          (2) Calculation of net present value.--The deficit 
        estimate of an asset sale shall be the net present 
        value of the cash flow from--
                  (A) proceeds from the asset sale;
                  (B) future receipts that would be expected 
                from continued ownership of the asset by the 
                Government; and
                  (C) expected future spending by the 
                Government at a level necessary to continue to 
                operate and maintain the asset to generate the 
                receipts estimated pursuant to subparagraph 
                (B).
  (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 the 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.
  (d) Determination of Budgetary Levels.--For the purposes of 
this section, budgetary levels shall be determined on the basis 
of estimates made by the House Committee on the Budget.

SEC. 303. ENVIRONMENTAL RESERVE FUND.

  (a) Committee Allocations.--In the House, after the Committee 
on Commerce and the Committee on Transportation and 
Infrastructure report a bill (or a conference report thereon is 
filed) to reform the Superfund program to facilitate the 
cleanup of hazardous waste sites, the chairman of the Committee 
on the Budget shall submit revised allocations and budget 
aggregates to carry out this section by an amount not to exceed 
the excess subject to the limitation. These revisions shall be 
considered for purposes of the Congressional Budget Act of 1974 
as the allocations and aggregates contained in this resolution.
  (b) Limitations.--The adjustments made under this section 
shall not exceed:
          (1) $200 million in budget authority for fiscal year 
        1998 and the estimated outlays flowing therefrom.
          (2) $200 million in budget authority for fiscal year 
        2002 and the estimated outlays flowing therefrom.
          (3) $1 billion in budget authority for the period of 
        fiscal years 1998 through 2002 and the estimated 
        outlays flowing therefrom.
  (c) Readjustments.--In the House, any adjustments made under 
this section for any appropriation measure may be readjusted if 
that measure is not enacted into law.

SEC. 304. SEPARATE ALLOCATION FOR LAND ACQUISITIONS AND EXCHANGES.

  (a) Allocation by Chairman.--In the House, upon the reporting 
of a bill by the Committee on Appropriations (or upon the 
filing of a conference report thereon) providing $700 million 
in budget authority for fiscal year 1998 for Federal land 
acquisitions and to finalize priority Federal land exchanges, 
the chairman of the Committee on the Budget shall allocate that 
amount of budget authority and the corresponding amount of 
outlays.
  (b) Treatment of Allocations in the House.--In the House, for 
purposes of the Congressional Budget Act of 1974, allocations 
made under subsection (a) shall be deemed to be made pursuant 
to section 602(a)(1) of that Act and shall be deemed to be a 
separate suballocation for purposes of the application of 
section 302(f) of that Act as modified by section 602(c) of 
that Act.

                 TITLE IV--SENSE OF CONGRESS PROVISIONS

SEC. 401. SENSE OF CONGRESS ON BASELINES.

  (a) Findings.--The 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 portrayed 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 and executive accountability for 
Federal spending.

SEC. 402. SENSE OF CONGRESS ON REPAYMENT OF THE FEDERAL DEBT.

  (a) Findings.--The Congress finds that:
          (1) The Congress and the President have a basic moral 
        and ethical responsibility to future generations to 
        repay the Federal debt, including the money borrowed 
        from the Social Security Trust Fund.
          (2) The Congress and the President should enact a law 
        which creates a regimen for paying off the Federal debt 
        within 30 years.
  (b) Sense of Congress Regarding President's Submission to 
Congress.--It is the sense of Congress that:
          (1) The President's annual budget submission to 
        Congress should include a plan for repayment of Federal 
        debt beyond the year 2002, including the money borrowed 
        from the Social Security Trust Fund.
          (2) The plan should specifically explain how the 
        President would cap spending growth at a level one 
        percentage point lower than projected growth in 
        revenues.
          (3) If spending growth were held to a level one 
        percentage point lower than projected growth in 
        revenues, then the Federal debt could be repaid within 
        30 years.

SEC. 403. SENSE OF CONGRESS ON COMMISSION ON LONG-TERM BUDGETARY 
                    PROBLEMS.

  (a) Findings.--The Congress finds that--
          (1) achieving a balanced budget by fiscal year 2002 
        is only the first step necessary to restore our 
        Nation's economic prosperity;
          (2) the imminent retirement of the baby-boom 
        generation will greatly increase the demand for 
        government services;
          (3) this burden will be borne by a relatively smaller 
        work force resulting in an unprecedented 
        intergenerational transfer of financial resources;
          (4) the rising demand for retirement and medical 
        benefits will quickly jeopardize the solvency ofthe 
medicare, social security, and Federal retirement trust funds; and
          (5) the Congressional Budget Office has estimated 
        that marginal tax rates would have to increase by 50 
        percent over the next 5 years to cover the long-term 
        projected costs of retirement and health benefits.
  (b) Sense of Congress.--It is the sense of Congress that 
legislation should be enacted to create a commission to assess 
long-term budgetary problems, their implications for both the 
baby-boom generation and tomorrow's workforce, and make such 
recommendations as it deems appropriate to ensure our Nation's 
future prosperity.

SEC. 404. SENSE OF CONGRESS ON CORPORATE WELFARE.

  (a) Findings.--The Congress finds that the functional levels 
and aggregates in this budget resolution assume that--
          (1) the Federal Government supports profit-making 
        enterprises and industries through billions of dollars 
        in payments, benefits, and programs;
          (2) many of these subsidies do not serve a clear and 
        compelling public interest;
          (3) corporate subsidies frequently provide unfair 
        competitive advantages to certain industries and 
        industry segments; and
          (4) at a time when millions of Americans are being 
        asked to sacrifice in order to balance the budget, the 
        corporate sector should bear its share of the burden.
  (b) Sense of Congress.--It is the sense of Congress that 
legislation should be enacted to--
          (1) eliminate the most egregious corporate subsidies; 
        and
          (2) create a commission to recommend the elimination 
        of Federal payments, benefits, and programs which 
        predominantly benefit a particular industry or segment 
        of an industry, rather than provide a clear and 
        compelling public benefit, and include a fast-track 
        process for the consideration of those recommendations.

SEC. 405. SENSE OF CONGRESS ON FAMILY VIOLENCE OPTION CLARIFYING 
                    AMENDMENT.

  (a) Findings.--The Congress finds that:
          (1) Domestic violence is the leading cause of 
        physical injury to women. The Department of Justice 
        estimates that over 1,000,000 violent crimesagainst 
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, Illinois, document, 
        for the first time, the interrelationship between 
        domestic violence and welfare by showing that from 34 
        percent to 65 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.
          (6) The restructuring of 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.
          (7) In recognition of this finding, the House 
        Committee on the Budget unanimously passed a sense of 
        Congress amendment on domestic violence and Federal 
        assistance to the fiscal year 1997 budget resolution. 
        Subsequently, Congress passed the family violence 
        option amendment to last year's welfare reform 
        reconciliation bill.
          (8) The family violence option gives States the 
        flexibility to grant temporary waivers from time limits 
        and work requirements for domestic violence victims who 
        would suffer extreme hardship from the application of 
        these provisions. These waivers were not intended to be 
        included as part of the permanent 20 percent hardship 
        exemption.
          (9) The Department of Health and Human Services has 
        been slow to issue regulations regarding this 
        provision. As a result, States are hesitant to fully 
        implement the family violence option fearing it will 
        interfere with the 20 percent hardship exemption.
          (10) Currently 15 States have opted to include the 
        family violence option in their welfare plans, and 13 
        other States have included some type of domestic 
        violence provisions in their plans.
  (b) Sense of Congress.--It is the sense of Congress that--
          (1) States should not be subject to any numerical 
        limits in granting domestic violence good cause waivers 
        to individuals receiving assistance for all 
        requirements where compliance with such requirements 
        would make it more difficult for individuals receiving 
        assistance to escape domestic violence; and
          (2) any individuals granted a domestic violence good 
        cause waiver by States should not be included in the 
        States' 20 percent hardship exemption.

                                
