[House Report 105-185]
[From the U.S. Government Publishing Office]



                                                 Union Calendar No. 114
105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-185
_______________________________________________________________________


 
          REPORT ON THE REVISED SUBDIVISION OF BUDGET TOTALS

                         FOR FISCAL YEAR 1998

                             together with

                            ADDITIONAL VIEWS

                 SUBMITTED BY MR. LIVINGSTON, CHAIRMAN,

                      COMMITTEE ON APPROPRIATIONS




 July 16, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                                                              SBDV 98-3


                        COMMITTEE ON APPROPRIATIONS

                   BOB LIVINGSTON, Louisiana, Chairman

JOSEPH M. McDADE, Pennsylvania       DAVID R. OBEY, Wisconsin
C. W. BILL YOUNG, Florida            SIDNEY R. YATES, Illinois
RALPH REGULA, Ohio                   LOUIS STOKES, Ohio
JERRY LEWIS, California              JOHN P. MURTHA, Pennsylvania
JOHN EDWARD PORTER, Illinois         NORMAN D. DICKS, Washington
HAROLD ROGERS, Kentucky              MARTIN OLAV SABO, Minnesota
JOE SKEEN, New Mexico                JULIAN C. DIXON, California
FRANK R. WOLF, Virginia              VIC FAZIO, California
TOM DeLAY, Texas                     W. G. (BILL) HEFNER, North Carolina
JIM KOLBE, Arizona                   STENY H. HOYER, Maryland
RON PACKARD, California              ALAN B. MOLLOHAN, West Virginia
SONNY CALLAHAN, Alabama              MARCY KAPTUR, Ohio
JAMES T. WALSH, New York             DAVID E. SKAGGS, Colorado
CHARLES H. TAYLOR, North Carolina    NANCY PELOSI, California
DAVID L. HOBSON, Ohio                PETER J. VISCLOSKY, Indiana
ERNEST J. ISTOOK, Jr., Oklahoma      THOMAS M. FOGLIETTA, Pennsylvania
HENRY BONILLA, Texas                 ESTEBAN EDWARD TORRES, California
JOE KNOLLENBERG, Michigan            NITA M. LOWEY, New York
DAN MILLER, Florida                  JOSE E. SERRANO, New York
JAY DICKEY, Arkansas                 ROSA L. DeLAURO, Connecticut
JACK KINGSTON, Georgia               JAMES P. MORAN, Virginia
MIKE PARKER, Mississippi             JOHN W. OLVER, Massachusetts
RODNEY P. FRELINGHUYSEN, New Jersey  ED PASTOR, Arizona
ROGER F. WICKER, Mississippi         CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York          DAVID E. PRICE, North Carolina
GEORGE R. NETHERCUTT, Jr.,           CHET EDWARDS, Texas 
   Washington                        
MARK W. NEUMANN, Wisconsin           
RANDY ``DUKE'' CUNNINGHAM,           
   California                        
TODD TIAHRT, Kansas                  
ZACH WAMP, Tennessee                 
TOM LATHAM, Iowa                     
ANNE M. NORTHUP, Kentucky            
ROBERT B. ADERHOLT, Alabama          

                 James W. Dyer, Clerk and Staff Director


                          LETTER OF SUBMITTAL

                              ----------                              

                          House of Representatives,
                               Committee on Appropriations,
                                     Washington, DC, July 16, 1997.
Hon. Newt Gingrich,
The Speaker, U.S. House of Representatives,
Washington, DC.

Dear Mr. Speaker: By direction of the Committee on 
Appropriations, I submit herewith the Committee's report on 
revised subdivision of budget authority and outlays for fiscal 
year 1998 pursuant to section 302(e) of the Congressional 
Budget Act of 1974, as amended, which was ordered reported by 
the Committee on July 11, 1997.
    The following subdivision is consistent in all instances 
with the Budget Resolution.
            Sincerely,
                                            Bob Livingston,
                                                          Chairman.

                                     
                                                 Union Calendar No. 114
105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-185
_______________________________________________________________________


REPORT ON THE REVISED SUBDIVISION OF BUDGET TOTALS FOR FISCAL YEAR 1998
                                _______
                                

 July 16, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Livingston, from the Committee on Appropriations, submitted the 
                               following

                              R E P O R T

report on the revised subdivision of budget totals for fiscal year 1998

    The Committee on Appropriations submits the following 
report on the subdivision of budget totals for fiscal year 1998 
pursuant to section 302(e) of the Congressional Budget Act of 
1974.




                   ADDITIONAL VIEWS OF HON. DAVE OBEY

    The adoption of 602b allocations is one of the most 
important actions taken by this committee during the course of 
the yearly budget cycle. It is the first step in converting the 
largely incomprehensible macro numbers of a budget resolution 
into the final spending decisions that affect the daily lives 
of virtually all Americans. While the 602b allocations don't 
provide a totally clear picture of how our nation's roads, 
schools, health care, environmental protection and other 
services will fare in the deliberations that are about to 
begin, they provide a framework for those decisions and they 
are the first real indicator of what will be possible under the 
numbers assigned in the budget resolution.
    Specifically, the allocations for Fiscal 1998 contained in 
this report, give us a reasonably good notion of what will or 
will not be possible in the markups that are about to take 
place. This year's allocations will not force deep draconian 
cuts below prior year levels as we have faced in a number of 
our bills in recent years. By the same token, these allocations 
will not provide sufficient funds to do what many members of 
this body and many in the general public feel is the minimum 
that should be done to improve our schools, enhance our 
transpiration systems or ensure adequate medical care to those 
who have served this nation in time of war.

                implication for future 602b allocations

    Whether or not this shortage of funding makes passage of at 
least some portion of the fiscal 1998 appropriation bills 
problematic will depend in large part how the committee 
conducts its business in the coming weeks. But these 
allocations should be very instructive to this Committee, to 
the House and the public with respect to another question: the 
future year spending plans contained in the bipartisan budget 
agreement and the budget resolution. Any careful analysis of 
the five year budget plan with respect to discretionary 
spending will reveal that extraordinary cuts will be required. 
If there are questions raised about the adequacy of this years 
funding levels and doubt as to whether some of these bills can 
be passed, it is clear that the prospects will be very dim for 
appropriation bills in future years if they are reported within 
the discretionary spending guidelines of the budget resolution. 
This fact should be confronted squarely before--rather than 
after the tax breaks which these proposed spending cuts are 
supposed to offset become law.
    The budget agreement permits aggregate tax breaks totaling 
$135 billion over the next 5 years. It simultaneously calls for 
discretionary spending to be cut $138 billion below the amount 
the Congressional Budget Office estimates will be necessary to 
sustain existing programs at existing levels.
    What is not well understood about the budget agreement is 
that while the tax cuts are at least on paper paid for by 
reductions in discretionary spending, those reductions are 
largely postponed until after the tax breaks can be safely 
signed into law. As a result, the first year of the budget 
agreement calls for relatively generous levels of discretionary 
spending with nearly all of the ``heavy lifting'' postponed 
until the second year and beyond. In fact, of the $91 billion 
in non-defense discretionary savings anticipated by the budget 
resolution over the 5 year period, only $25 billion will take 
place in the first three years and $66 billions of 72% will 
take place in the last three. For fiscal 1998, the year for 
which we are now preparing appropriation bills, the budget 
resolution provides only marginal reductions from the amount 
CBO estimates is necessary to sustain current program levels. 
It further provides that the statutory outlay caps on 
appropriation bills be raised by a total of $7 billion in order 
to facilitate higher levels of spending than would have been 
permitted under the terms of earlier budget deals. In short, 
this pill may be sugar coated but it ain't necessarily good for 
you.

                 what is planned for fiscal year 2002?

    The spending levels anticipated for the final two years of 
the 5 year agreement are truly draconian. By the fifth year, 
fiscal 2002, non-defense discretionary programs will be cut by 
a total of 12% or $30 billion below current program.
    The fine print of the 1988 Budget Resolution shows how the 
Republican Congressional leadership would distribute this 
overall 12 percent real cut in the year 2002 among the 
functional categories of the federal budget (see following 
table). All Members should take a careful look at these 
figures, to see what is supposedly in store for us in the 
coming years to pay for the tax cuts now moving through 
Congress. Here are some examples of what they are recommending:
    Administrative costs for Social Security (function 650) 
would be cut by 23 percent by fiscal year 2002, in inflation 
adjusted terms. This would mean elimination of more than 20,000 
or the 83,000 employees who are presently working to distribute 
Social Security benefits. The current 3-month backlog in 
processing new claims would undoubtedly be driven to a year or 
more.
    Veterans programs (function 700) are slated for a 19 
percent real cut in fiscal year 2002--over $4 billion below 
what CBO says would be needed to retain the current level of 
service. Are these cuts going to come in hospital and medical 
care for veterans--which accounts for 94 percent of 
discretionary spending in this category? If not, where will 
they come?
    Health programs (function 550) would cut by 16 percent 
under the Republican Budget Resolution plan. Half the spending 
in this category goes for the National Institutes of Health. 
Are we really planning to make a 16 percent real cut in NIH by 
2002? Or are we going to make even deeper cuts in the roughly 
40 percent of the category devoted to community health centers, 
maternal and child health, the Indian Health Service, substance 
abuse and mental health services, and the like?
    The community and regional development category (function 
450) is slated for a 29 percent real cut in 2002. Within this 
category, Community Development Block Grants plus FEMA and 
other disaster relief programs together account for 71 percent 
of spending.
    These are not just isolated examples. The Budget Resolution 
recommends cuts of 23 percent for agriculture, 19 percent for 
the administrative costs of Medicare, and 16 percent for 
natural resources and the environment by the fifth year of the 
budget plan.
    Cuts in defense spending are also required to offset the 
new tax breaks. For the most part these cuts remain 
unspecified. But those which have been put forward are certain 
to be highly controversial and while they are supported by the 
Secretary of Defense and the White House it is not at all clear 
that they can garner sufficient support to be enacted by 
Congress. One proposal is a 55,000 person cut in National Guard 
and Reserve strength levels. A second is a new round of U.S. 
base closures (BRAC). Rather than holding the tax package until 
there is a minimal assurance that Congress can move forward on 
any of these current proposals to reduce defense spending and 
to permit additional proposals to be considered to achieve the 
remaining savings that are necessary, the budget plan does just 
the opposite. This year, as we are considering the tax bill, we 
will go forward in the defense area with new construction, new 
procurement and no significant new downsizing to meet the five 
year spending targets in the budget agreement. Those tasks will 
be left to a future President and a future Congress--well after 
the proposed changes in tax law have been written into the U.S. 
Code.
    All of this discussion is really trying to put forward a 
single point. The American people are being told that they can 
simultaneously enjoy tax cuts and deficit reduction. They are 
being told that the reason this is possible is that there will 
be deep cuts in ``discretionary spending.'' But no one has 
explained what the term ``discretionary spending'' means or how 
its reduction affects the programs that affect peoples lives. 
That information is being left to this committee to convey. We 
are the ones whose job it will be to tell other Members of 
Congress and the American people: ``of course we had to cut 
cancer research, of course we had to cut aid to schools and 
eliminate funds for better roads, environmental protection, 
medical care for veterans and land acquisition to protect our 
national parks. That is discretionary spending. That was what 
got cut.'' Ultimately, the country, the Congress and the 
committee will face a choice of cutting services that a broad 
segment of the American people strongly support or failing to 
deliver on the deficit reduction which the budget plan requires 
to achieve balance. Whichever of those directions we choose to 
take, our jobs will be less difficult if we begin to share 
these facts now before final actions have been taken and before 
the country and the Congress has a chance to fully weigh the 
options.

                 should we begin making a downpayment?

    One question that each member of Congress should ask as the 
Committee adopts the fiscal 1998 602b is whether he or she 
would be comfortable supporting a 602b allocation that would 
force the kinds of cuts outlined above--in other words, the 
kind of allocationwe will be asking members of the committee in 
the Congress-after-next to support.
    But even if we don't want to try to take the full fifth-
year cut now, should we try instead to get on a steady glide 
path toward that cut. If we did, our allocations would look 
very much different than those just approved by the committee. 
To make steady progress toward the five-year cuts in non-
defense discretionary programs required by the budget agreement 
would require a $4.2 billion reduction in this year's 
allocation.
    Just getting onto this steady path toward the five-year 
cuts required by the budget agreement would require taking an 
additional $1.3 billion in budget authority out of the FY 1998 
602(b) allocation for the Labor-HHS-Education bill, $1.1 
billion out of the VA-HUD bill, $499 million out of the 
Commerce-Justice-State bill, $220 million out of the 
Agriculture bill, and so on (see accompanying table). If that 
were done, it would be highly questionable as to whether these 
bills could pass the House.
    Attached are three tables. The first is taken from the data 
presented with the House Budget Resolution and compares the 
discretionary spending anticipated under the resolution for 
fiscal 2002 with the CBO baseline. The second shows how far the 
total non-defense discretionary numbers in the budget 
resolution deviate from the amounts of spending that would be 
permitted under a plan requiring the cuts be made in equal 
increments. The final table illustrates what the 602b 
allocation for fiscal 1998 would look like if we began 
implementing the spending reductions this year rather than 
postponing the disproportionate share for later appropriation 
bills.

   DISCRETIONARY SPENDING UNDER BUDGET AGREEMENT--FISCAL YEAR 2002--FIFTH YEAR OF AGREEMENT--BUDGET AUTHORITY   
----------------------------------------------------------------------------------------------------------------
                                                   CBO baseline       Budget       Budget resolution compared to
                                                    (with full      resolution               baseline           
                                                    inflation       conference   -------------------------------
                                                 adjustment) \1\      report          Dollar          Percent   
----------------------------------------------------------------------------------------------------------------
    Defense                                              307.5           289.6           -17.9              -6  
        Non-Defense (total)                              298.4           261.5           -36.9             -12  
   -------------------------------------------------------------------------------------------------------------
    International Affairs                                 21.0            18.2            -2.8             -13  
    General Science, space and Tech                       19.1            15.6            -3.5             -18  
    Energy                                                 5.0             4.2            -0.7             -14  
    Natural Resources and Environment                     25.2            21.2            -4.0             -16  
    Agriculture                                            4.9             3.8            -1.1             -23  
    Commerce and Housing Credit                            3.3             2.9            -0.4             -12  
    Transportation                                        16.5            15.3            -1.2              -7  
    Community and Regional Development                    10.7             7.6            -3.1             -29  
    Education, Training and Social Services               48.4            49.2             0.8               2  
    Health                                                28.8            24.2            -4.6             -16  
    Medicare (adminis- trative costs)                      3.2             2.6            -0.6             -19  
    Income Security                                       45.4            39.6            -5.8             -13  
    Social Security (adminis- trative costs)               4.1             3.1            -1.0             -23  
    Veterans Benefits and Services                        22.0            18.0            -4.1             -19  
    Administration of Justice                             26.9            24.7            -2.3              -8  
    General Government                                    13.9            11.4            -2.6             -18  
   -------------------------------------------------------------------------------------------------------------
        Total, Discretionary                             605.9           551.1           -54.8              -9  
----------------------------------------------------------------------------------------------------------------
    \1\ Includes adjustment to reflect VA third-party user fees (per budget agreement).                         


            ADDITIONAL CUTS NEEDED IF DISCRETIONARY SPENDING REDUCTIONS ARE TAKEN EVENLY OVER 5 YEARS           
                                          [Dollar amounts in billions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal years--                              
                                               -------------------------------------------------------   5-Year 
                                                   1998       1999       2000       2001       2002      total  
----------------------------------------------------------------------------------------------------------------
                                   Non-Defense Discretionary; Budget Authority                                  
                                                                                                                
CBO baseline (full inflation adjustment)......     $259.1     $269.0     $278.9     $288.5     $298.4   $1,393.9
Budget Agreement..............................     $257.9     $261.5     $261.8     $260.2     $261.5   $1,302.8
    Dollar cuts below baseline................      -$1.2      -$7.5     -$17.0     -$28.4     -$36.9     -$91.1
    Percentage cuts below baseline............       -0.5       -2.8       -6.1       -9.8      -12.4       -6.5
Steady Glide Path \1\.........................     $253.7     $257.8     $261.2     $263.9     $266.2   $1,302.8
    Dollar cuts below baseline................      -$5.4     -$11.3     -$17.7     -$24.6     -$32.2     -$91.1
    Percentage cuts below baseline............       -2.1       -4.2       -6.3       -8.5      -10.8       -6.5
----------------------------------------------------------------------------------------------------------------
\1\ Percentage cuts below baseline grow by steady 2.1 percentage points per year.                               


  EFFECT ON FISCAL YEAR 1998 602(b) ALLOCATIONS OF PLACING APPROPRIATIONS ON A STEADY GLIDE PATH TO 5-YEAR CUTS 
                                   [Budget authority; in billions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                  Allocations                   
                                                                   Proposed        needed for                   
                                                                 allocations      steady glide      Difference  
                                                                                      path                      
----------------------------------------------------------------------------------------------------------------
      Non-Defense, total (including crime fund)..............          257,857          253,706           -4,151
                                                              --------------------------------------------------
Agriculture..................................................           13,650           13,430             -220
Commerce, Justice, State, Judiciary..........................           30,993           30,494             -499
District of Columbia.........................................              805              792              -13
Energy and Water Development.................................            8,960            8,816             -144
Foreign Operations...........................................           12,500           12,299             -201
Interior \1\.................................................           13,700           13,479             -221
Labor, HHS, Education........................................           79,587           78,306           -1,281
Legislative..................................................            2,247            2,211              -36
Military Construction........................................                0                0                0
National Security............................................               27               27                0
Transportation...............................................           12,211           12,014             -197
Treasury, Postal Service.....................................           12,498           12,297             -201
VA, HUD, Independent Agencies \2\............................           70,021           68,894           -1,127
Emergency Reserve............................................              658              647              -11
----------------------------------------------------------------------------------------------------------------
\1\ Includes special allocation for land acquisition.                                                           
\2\ Includes special allocation for section 8 contract renewals.                                                
                                                                                                                
Explanatory Note: In order to place appropriations on a steady glide path toward the $91 billion in cuts in non-
  defense discretionary budget authority required by the budget agreement over five years, cuts below the       
  baseline totaling $5.4 billion would be needed in FY 1998, instead of the $1.2 billion called for in the      
  budget resolution and reflected in the proposed 602(b) allocations.                                           
This table shows the effect of the additional $4.2 billion in cuts that would be needed, if spread              
  proportionately over all subcommittees.                                                                       

                                                         Dave Obey.

                                
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