[Senate Report 106-15]
[From the U.S. Government Publishing Office]






                                                        Calendar No. 31

-----------------------------------------------------------------------

106th Congress                                                   Report
  1st Session                    SENATE                          106-15

_______________________________________________________________________




 
                  GOVERNMENT SHUTDOWN PREVENTION ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                             together with

                             MINORITY VIEWS

                              to accompany

                                 S. 558

TO PREVENT THE SHUTDOWN OF THE GOVERNMENT AT THE BEGINNING OF A FISCAL 
                YEAR IF A NEW BUDGET IS NOT YET ENACTED




                 March 16, 1999.--Ordered to be printed

                               --------

                    U.S. GOVERNMENT PRINTING OFFICE                    
69-010                     WASHINGTON : 1999






                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire

             Hannah S. Sistare, Staff Director and Counsel
                      Dan G. Blair, Senior Counsel
      Joyce a. Rechtschaffen, Minority Staff Director and Counsel
                    Kevin J. Landy, Minority Counsel
                       Lynn L. Baker, Chief Clerk




                            C O N T E N T S

                              ----------                              
                                                                   Page
   I. Purpose.....................................................     1
  II. Summary of S. 558...........................................     1
 III. Background and Need for Legislation.........................     2
  IV. History of Legislation Designed to Prevent Government
        Shutdowns.................................................     4
   V. Legislative History of S. 558...............................     4
  VI. Section-by-Section Analysis.................................     5
 VII. Regulatory Impact Statement.................................     6
VIII. Congressional Budget Office Cost Estimate...................     7
  IX. Minority Views..............................................    10
   X. Executive Communications....................................    14
  XI. Changes to Existing Laws....................................    16



                                                        Calendar No. 31

106th Congress                                                   Report
  1st Session                    SENATE                          106-15

=======================================================================



                   GOVERNMENT SHUTDOWN PREVENTION ACT

                                _______
                                

                 March 16, 1999.--Ordered to be printed

                                _______


Mr. Thompson, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 558]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 558) to prevent the shutdown of the 
Government at the beginning of a fiscal year if a new budget is 
not yet enacted; having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                               I. Purpose

    The purpose of S. 558, the Government Shutdown Prevention 
Act, is to provide for a contingent appropriation to fund the 
operations of the federal government in the event that regular 
appropriations bills are not enacted by the beginning of the 
new fiscal year (October 1st). The bill is effective for fiscal 
year 2000 and 2001 only. By providing for such automatic 
appropriations Congress will eliminate the possibility of a 
government shutdown.

                         II. Summary of S. 558

    S. 558 provides that the operations of the federal 
government which are funded through the annual appropriations 
process would continue--uninterrupted--in the event that action 
on any particular regular appropriations bill is not completed 
by the beginning of the fiscal year (October 1st). Such 
provisions have often been referred to as an ``auto CR''. The 
purpose of an auto CR as set out in this bill is to remove the 
``threat'' of a government shutdown. This bill provides for a 
contingent appropriation for fiscal year 2000 and fiscal year 
2001--the contingency being the failure to enact any of the 
regular appropriations bill prior to the beginning of the 
fiscal year. This bill both authorizes and provides the 
continuing appropriation. If enacted, no further action would 
be required prior to the beginning of either fiscal year 2000 
or fiscal year 2001 to avoid a shutdown of any part of the 
government.

                III. Background and Need for Legislation

    Since 1981, there have been 11 funded gaps or ``government 
shutdowns''. These shutdowns occurred when final action on any 
or all of the 13 regular appropriations bills was not completed 
before October 1st and an interim funding measure (known as a 
continuing resolution of ``CR'') had not been signed by the 
President. Prior to 1981 there were a number of ``funding 
gaps'' but they did not result in the shutdown of the 
government or suspension of government operations. During this 
period the government simply continued to operate until funding 
was enacted. Often these funding gaps took place over a 
weekend, so the general public was largely unaffected This 
practice ceased however in the early 1980's upon the issuance 
of an opinion by then-Attorney General Civiletti (see 43 Op. 
Atty Gen. 293--January 16, 1981).
    The ``Civiletti opinion'' addressed the legal and 
constitutional authorities which would govern the continued 
operations of the federal government during a temporary lapse 
of appropriations. Generally, pursuant to the Antideficiency 
Act, government operations may only continue in the absence of 
an appropriation: (i) where expressly authorized by law (such 
as the payment of Social Security benefits and other 
entitlements) and (ii) in emergency situations involving the 
safety of human life or the protection of property. In 
addition, the President may, in the absence of appropriations, 
continue to engage in activities specifically delegated to him 
bythe Constitution such as the conduct of foreign relations 
Some may point to the existence of the Civiletti opinion as the reason 
for Congress' struggle with the issue of shutdowns today.
    Of these ``real'' shutdowns, the most recent occurred in 
1995 when President Clinton vetoed the second continuing 
resolution and debt extension bill. The 1995 shutdown was also 
the longest in history: lasting for 21 days, from December 16, 
1995 through January 6, 1996. An estimated 284,000 federal 
employees were furloughed by the shutdown. After January 6th, 
there were a succession of short term CRs that funded the 
government through April, when Congress enacted (and the 
President signed) an appropriation to fund those agencies 
through the end of fiscal year 1996.
    A listing of these of all the funding lapses since the full 
implementation of the Congressional Budget Act of 1974 is 
provided below:

------------------------------------------------------------------------
                                        Full day(s)
   Fiscal year     Date gap commenced     of gaps    Date gap terminated
------------------------------------------------------------------------
1977............  Thursday 09-30-76..            10  Monday 10-11-76
1978............  Friday 09-30-77....            12  Thursday 10-13-17
                  Monday 10-31-77....             8  Wednesday 11-09-77
                  Wednesday 11-30-77.             8  Friday 12-09-77
1979............  Saturday 09-30-78..            17  Wednesday 10-18-78
1980............  Sunday 09-30-79....            11  Friday 10-12-79
1982............  Friday 11-20-81....             2  Monday 11-23-81
1983............  Thursday 9-30-82...             1  Saturday 10-2-82
                  Friday 12-17-82....             3  Tuesday 12-21-82
1984............  Thursday 11-10-83..             3  Monday 11-14-83
1985............  Sunday 9-30-84.....             2  Wednesday 10-3-84
                  Wednesday 10-3-84..             1  Friday 10-5-84
1987............  Thursday 10-16-86..             1  Saturday 10-18-86
1988............  Friday 12-18-87....             1  Sunday 12-20-87
1991............  Friday 10-5-90.....             3  Tuesday 10-9-90
1996............  Tuesday 11-13-95...             6  Sunday 11-19-95
                  Saturday 12-15-95..            21  Saturday 1-6-96
------------------------------------------------------------------------
Source: For years prior to 1996, data are from Continuing Resolutions
  and Funding Gaps: Selected Data for Fiscal Years 1997-1995, by Robert
  Keith and Edward Davis, CRS Report 95-995 GOV (Washington: September
  25, 1995.)

    Except as permitted under the Civiletti opinion, when there 
is no appropriation for a particular project or activity, the 
government is forced to cease that project or activity and to 
furlough the relevant employees. In some cases, this has the 
potential for causing hardship on those who depend upon the 
services provided by the Federal government, affected Federal 
employees, and those who do business with the Federal 
government. Providing for an automatic appropriation asset out 
in this legislation is clearly preferable to interrupting 
necessary government activities.
    Shutdowns may also cause ripple effects in the economy. For 
instance, during a shutdown not only are federal employees 
furloughed, but government contractors may be forced to layoff 
their employees until funding is resumed. Clearly it is more 
desirable for the economy as a whole for the operations of 
government to continue without interruption when action on 
appropriations bills can not be completed.
    The Committee recognizes the inherent political nature of 
the appropriations process. Yet, enactment of this legislation 
is intended to insulate this process against the practice of 
using the threat of a government shutdown as political leverage 
in forcing last minute negotiations over new outlays and even 
authorizations. Ideally, the existence of an automatic CR 
removes the threat of a government shutdown as a political 
tool. Enactment of this legislation should encourage more 
bipartisan discussions on appropriations bills and discourage 
the past practices of holding appropriations bills hostage to 
last-minute negotiations.
    The adoption of an automatic CR is not intended to 
substitute for enactment of the regular appropriations bills. 
Rather, the existence of an automatic CR is intended to 
encourage the completion of the regular process. In the 
hopefully unusual event that this work is not completed on 
time, the automatic CR would serve as a ``stop-gap'' measure to 
keep the government and agencies running until the Congress and 
the Administration can reach agreement on the regular 
appropriations bills.
    The adoption of CRs has become standard operating 
procedures in Washington. During the past 24 years, Congress 
has passed 82 CRs to fund the government and avoid a lapse in 
funding authority. While the CR is in effect, Congress and the 
President continue to work on adopting any remaining regular 
appropriations bills before the expiration of the CR. Only 
twice since the 1950's has Congress passed all 13 separate 
appropriations bills by the deadline of September 30th without 
having to pass an omnibus bill or a CR. During the last two 
fiscal years, Congress has passed 6 continuing resolutions each 
year to further fund agencies whose appropriations bills had 
not been adopted.
    Relying upon CRs has become normal procedure during the 
last 50 years. Rather than relying upon the crisis-driven 
process of enacting a succession of temporary continuing 
resolutions or a huge omnibus appropriations bill, the 
Committee believes that it is preferable to provide a mechanism 
(an automatic appropriation) by which the government will 
continue to operate while the Congress and the President 
continue working on the individual regularappropriations bills. 
Providing interim funding on an ad hoc basis, as we have in the past, 
has been inefficient for both Congress and Executive branch and for the 
economy as a whole.
    The bill, as reported from the Committee, injects some 
certainty into this process: it provides that sufficient 
resources will be appropriated while the Congress and the 
President resolve their differences regarding any remaining 
appropriations bills.
    The Committee acknowledges that the provision for a 
contingent appropriation such as outlined in S. 558 is a new 
concept. Therefore, the Committee has recommended that this 
occur on a trial basis. The appropriation provided in this bill 
could only be effective for fiscal years 2000 or 2001. It is 
not permanent.

IV. History of the Legislation Designed to Prevent Government Shutdowns

    104th Congress.--Senator McCain introduced S. 2013 The 
Government Shutdown Prevention Act to provide for continuing 
appropriations in the absence of regular appropriations.
    105th Congress.--Senator McCain introduced S. 228 The 
Government Shutdown Prevention Act. In order to provide funding 
for FY 1998 Sen. McCain also introduced S. 547 which would fund 
the government at 98 percent of operations provided for in FY 
1997. While debating S. 672, FY 1997 Supplemental 
Appropriations and Rescissions Act, Senator Byrd offered an 
amendment that would strike title VII which provided continuing 
appropriations for FY 1998 at 100 percent of FY 1997 levels. At 
Senator Stevens motion, the Senate tabled the amendment by a 
55-45 vote.
    106th Congress.--Senators Grams and McCain separately 
introduced legislation intended to prevent the shutdown of the 
government. Senator Grams' bill (S. 104) would fund the 
government at 100 percent of operations provided for FY 1999 
and Senator McCain's bill (S. 99) would provide funding at 98 
percent of the previous year's level for FY 2000.

                    V. Legislative History of S. 558

    1999--S. 558 was ordered to be reported as an original bill 
from the Committee on Governmental Affairs on March 4, 1999 and 
filed with the Senate on March 8, 1999. The bill provides for 
the continued funding of government agencies and programs if 
any of the regular appropriations bills are not enacted on 
time. Funding under this bill is provided at the lower of the 
President's requested level or the previous year's appropriated 
level.

i. Hearings

    January 27, 1999--Joint Budget and Governmental Affairs 
Committee Hearing.
    Governmental Affairs Committee Chairman Thompson and Budget 
Committee Chairman Dominici chaired a joint hearing on S. 92, 
the Biennial Budgeting and Appropriations Act, and S. 93, the 
Budget Enforcement Act of 1999. Title IV of S. 93 embodied the 
text of S. 558.
    There were three panels of witnesses:
            Panel I
    The Honorable John McCain, United States Senator from 
Arizona. Senator McCain testified in favor of legislation 
implementing an automatic continuing resolution.
            Panel II
    The Honorable Benjamin L. Cardin, A Representative from 
Maryland and the Honorable Jim Nussle, a Representative from 
Iowa. Both witnesses testified in favor of legislation creating 
an automatic continuing resolution.
            Panel III
    Timothy J. Muris, Professor, George Mason University School 
of Law; Van Doorn Ooms, Senior Vice President and Director of 
Research, Committee for Economic Research; and Martha Phillips, 
Executive Director, the Concord Coalition.
    Ms. Phillips testified in favor of legislation creating an 
automatic continuing resolution.

i. Committee action

    On March 4, 1999, the Committee held a business meeting at 
which an original committee bill embodying of the title IV of 
S. 93, the Government Shutdown Prevention Act, was considered. 
Following discussion by the Committee, the Committee favorably 
ordered the committee bill to be reported to the full Senate by 
a roll call vote of 6 Yeas (Stevens, Collins, Voinovich, 
Dominici, Cochran and Thompson) and 4 Nays (Lieberman, Levin, 
Akaka, and Durbin).
    Senators Roth, Specter and Gregg indicated their position 
by proxy in favor of the legislation. Senators Torricelli, 
Cleland and Edwards indicated their position by proxy in 
opposition of the legislation.

                    VI. Section-by-Section Analysis

    The bill provides for an automatic continuing resolution 
(CR) in the event appropriations bills are not enacted by the 
October 1st deadline.
    Section 1 of the bill provides that the title of the bill 
may be cited as the ``Government Shutdown Prevention Act.''
    Section 2(a) of the bill amends title 31 of the United 
States Code to add a new section 1311:
    Paragraph (1) of section 1311(a) appropriates funds from 
the Treasury if regular appropriations bills have not been 
enacted into law by the beginning of the fiscal year.
    Paragraph (2) of section 1311(a) provides that the level of 
appropriations for projects and activities is the lower of: (1) 
the previous year's appropriated level, (2) if no amount was 
appropriated for the previous year, the amount provided in a 
continuing resolution for the previous year (3) the amount 
proposed in the President's budget request, or (4) the 
annualized level provided in a continuing resolution for the 
fiscal year.
    Paragraph (3) of section 1311(a) provides that the 
appropriations provided in this section will lapse when an 
appropriations bill or joint resolution becomes law or at the 
end of the fiscal year.
    Section 1311(b) provides that the appropriations made under 
this section are subject to the same terms and conditions as 
provided in the previous year's appropriations law or in 
current law.
    Section 1311(c) provides that the appropriations made under 
this section will cover all obligations for the relevant 
project or activity for the period of time covered by this 
section. For example, if this authority was needed to fund the 
first month of the fiscal year, this section provides that the 
appropriation under this section covers all obligations for the 
relevant projects and activities for the first month of the 
fiscal year.
    Section 1311(d) provides that expenditures made pursuant to 
this section shall be charged to the applicable appropriation, 
fund, or authorization when the regular appropriation 
legislation becomes law.
    Section 1311(e) provides that appropriations made pursuant 
to this section shall not be made for projects or activities 
that are already funded under other laws or if another law 
prohibits funding for such projects or activities.
    Section 1311(f) defines the term ``regular appropriation 
bill.''
    Section 2(b) of the bill is a technical amendment and 
amends title 31 to add section 1311 to the table of contents.
    Section 3 of the bill provides that this continuing 
appropriations authority is only available for fiscal years 
2000 and 2001.

                    VII. Regulatory Impact Statement

    Enactment of S. 558 should result in no significant 
regulatory impact. S. 558 contains no intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) and would impose no costs on state, local, or 
tribal governments.

            VIII. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 12, 1999.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 558, the Government 
Shutdown Prevention Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mary B. 
Maginniss, James R. Horney, and Priscilla M. Aycock.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 558--Government Shutdown Prevention Act

    Summary: To avoid future government shutdowns, S. 558 would 
put in place an automatic continuing resolution for fiscal 
years 2000 and 2001 that would take effect if the Congress and 
the President fail to agree on regular or temporary 
appropriation bills by October 1 of each fiscal year. The 
appropriation for each project of activity would be the lower 
of (1) the previous year's appropriated level, (2) the amount 
proposed in the President's budget, or (3) the annualized level 
provided in the most recently enacted continuing resolution for 
that year. The bill also specifies various conditions and rules 
that would apply to the continuing resolution.
    S. 558 would act as a fallback source of funding for 
activities at a restricted level, for as long as necessary, 
until regular appropriation bills or alternative continuing 
resolutions are enacted, thereby preventing a disruption in the 
routine activities of most federal agencies. By providing an 
automatic funding source for 2000 that would take effect 
without further legislative action, S. 558 would provide direct 
spending authority, and pay-as-you-go procedures would apply to 
the bill. CBO estimates that enacting S. 558 would provide 
budget authority of about $550 billion in 2000, resulting in 
outlays of $330 billion in 2000 and $560 billion over the 2000-
2004 period. By itself, the bill would not provide any new 
funding for 2001.
    S. 558 contains no intergovernment or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 558 is shown in the following table. For 
the purposes of this estimate, CBO assumes the bill will be 
enacted by the end of fiscal year 1999. The costs of this 
legislation fall within multiple budget functions.

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal years, in billions of dollars--
                                                          ------------------------------------------------------
                                                              2000       2001       2002       2003       2004
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING

Estimated Budget Authority...............................        550  .........  .........  .........  .........
Estimated Outlays \1\....................................        330        130         60         30         10
----------------------------------------------------------------------------------------------------------------
\1\ Outlays include amounts for transportation programs that are controlled by annual obligation limitations set
  in appropriate acts. Such limitations are not considered budget authority.

    Basis of estimate: S. 558 would provide funding for fiscal 
year 2000 for projects and activities funded in 1999 
appropriation acts. The appropriation provided for each project 
or activity would be the amount sufficient to continue funding 
for that project and activity at the lower of the rate of 
operations provided for in 1999 appropriations acts or the rate 
that would be provided for by the President's budget request 
for 2000. Upon enactment of an applicable regular appropriation 
bill or a continuing resolution for 2000, the appropriation for 
a project or activity provided by S. 558 would no longer be 
available.
    Because scorekeeping guidelines adopted by the Congress and 
the Administration require that estimates of a bill not take 
into account possible future legislation, and no regular 
appropriation bills or continuing resolution for 2000 have been 
enacted, CBO estimates the effect that S. 558 would have if on 
appropriation bill providing funding for 2000 are enacted. In 
addition, though S. 558 would provide funding for discretionary 
programs, budget authority provided by law other than 
appropriation acts is defined as direct spending for purposes 
of budget enforcement. (If the same provisions were enacted in 
an appropriation bill, the resulting spending would be 
considered discretionary.)
    CBO estimates that continuing projects and activities 
funded in 1999 appropriations acts would require new budget 
authority of about $550 billion in 2000. (This figure does 
notinclude almost $10 billion already enacted as advance appropriations 
for 2000). CBO estimates that the new budget authority for 2000 would 
result in outlays of $330 billion in 2000 and about $560 billion over 
the 2000-2004 period.
    S. 558 also would provide funding in 2001 to continue 
projects and activities funded in appropriation acts for 2000 
if regular appropriation acts or a continuing resolution for 
2001 are not enacted. (The bill sunsets after 2001.) Since the 
appropriations for 2001 provided by S. 558 are contingent on 
appropriation bills for 2000 that have not yet been enacted, S. 
558 by itself would not provide any new funding for 2001. Under 
the provisions of S. 558, however, enactment of appropriation 
bills for 2000 would trigger appropriations for 2001 to 
continue the projects that and activities funded for 2000 in 
the appropriation acts.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. The bill would not affect 
governmental receipts.

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal years in billions of dollars--
                                               -----------------------------------------------------------------
                                                   1999       2000       2001       2002       2003       2004
----------------------------------------------------------------------------------------------------------------
Changes in outlays............................          0        330        130         60         30         10
Changes in receipts...........................                           Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 558 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Mary B. Maginniss, James R. Horney, 
and Priscilla M. Aycock.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

    IX. MINORITY VIEWS OF SENATORS LIEBERMAN, LEVIN, AKAKA, DURBIN, 
                    TORRICELLI, CLELAND, AND EDWARDS

    We support the objectives of this bill, which are to 
prevent future government shutdowns. The partial government 
shutdowns during the 104th Congress were unnecessary and 
costly. Congress and the President should strive to ensure that 
they never happen again.
    However, this legislation would have the effect of reducing 
the leverage of those who want to change appropriation levels 
to respond to new conditions and changing needs, or to reflect 
new priorities within or outside the government. By setting the 
default position for discretionary funding at the prior year's 
level, there would be less incentive for Congress to iron out 
compromise funding levels with the Administration. In effect, 
it would give a pocket veto to those supporting the status quo.
    For example, under this bill, a congressional majority 
could decide to pass bills in which they want increases and not 
pass bill in which the Administration or a minority in Congress 
wants increases. On the other hand, programs that no longer 
require funds could go on receiving them while programs that 
have a genuine need for funding increases would continue to go 
without the needed funds.
    One apparent effect of the bill, whether intended or not, 
is that for the next two fiscal years--until the end of this 
Administration--it gives more leverage to the congressional 
majority at the expense of the minority and the White House. 
But changing the allocation of power should not be the real 
issue. We believe that Congress could do more to prevent 
government shutdowns by passing its appropriations bills on a 
timely basis, and by working responsibly with the President to 
negotiate the compromises that are required by our political 
process. It is unrealistic for either party to expect it will 
get everything it wants simply because it controls Congress or 
the White House. However, appropriations and Presidents have 
frequently held out until the end of the fiscal year for their 
preferred funding levels. Often it is only the looming deadline 
of a new fiscal year that forces the necessary negotiations and 
compromises. Although the process is often not as streamlined 
as we would like, with one exception the parties in the past 
have been able to make the necessary compromises to arrive at 
the next year's funding levels without causing much, if any, 
disruption.
    In fact, the list of funding lapses included in the 
Majority Report demonstrates that since the 1981 issuance of 
the Civiletti opinion (which limits government operations in 
the absence of an appropriation) the only government shutdowns 
that lasted more than three days occurred during the showdown 
between President Clinton and Congressional Republicans in the 
winter of 1995-1996. President Clinton's November 13, 1995 veto 
occurred because the President would not accept political 
conditions and funding levels included in the continuing 
resolution, such as a significant increase in Medicare premiums 
and potentially drastic cuts in education, environmental, and 
other spending. The change in Medicare law was wholly unrelated 
to the short-term extension of government functions, and 
drastically cutting targeted programs as a condition of 
continued funding was also a break from the continuing 
resolutions of previous years. The November veto resulted in a 
government shutdown that lasted for six days. The record 
twenty-one day government shutdown referred to in the Majority 
report began on December 15, 1995, after Congress failed to 
send a continuing resolution to the White House that covered 
more than a select few federal agencies. In all the other 
instances of funding lapses, public services and the 
functioning of the government were barely affected.
    In contrast, the negative effects caused by ``The 
Government Shutdown Prevention Act'' would be keenly felt by 
the American public. It could allocate spending in irrational 
ways that have little to do with the nation's pressing needs. 
More ominously, it could allow the party controlling Congress 
to pass only those appropriation bills where it wanted 
increases.
    By setting the default level for discretionary funding at 
the prior year's level, the congressional majority would have 
less motivation to iron out compromise funding levels. Large 
portions of the federal budget could be placed on automatic 
pilot for years. The President's only leverage to fight 
targeted budget freezes would be to hold hostage, with a veto 
threat, those appropriations bills that Congress did pass. In 
the end, political gamesmanship would likely continue despite 
the passage of this legislation, only instead of deadlines 
forcing showdowns and compromises the entire government might 
be funded indefinitely by an unresponsive automatic continuing 
resolution.
    An automatic continuing resolution would lead to absurd 
results: it would continue to set aside money for projects and 
activities where money was no longer needed, while other 
programs where needs had increased would go underfunded. For 
example, most capital accounts, such as federal facility 
construction, are earmarked in appropriation bills for 
particular projects. If the previous year's appropriation bill 
had earmarked millions of dollars towards the completion of a 
federal courthouse, an automatic continuing resolution would 
still blindly allocate the sameamount, though the building was 
fully completed, leaving unspent money that could have been allocated 
to other projects or programs. This clear misallocation of scarce 
resources would be duplicated throughout the continuing resolution.
    At the same time, pressing needs that may have increased 
because of changing economic circumstances could go 
underfunded. For example, the market price for the food 
products made available to pregnant women and mothers of 
infants and small children under the WIC program may have risen 
sharply in a given year. Appropriators would ordinarily 
consider this rise in food prices in deciding whether to 
proportionally increase WIC's appropriation for the year. 
Instead, an automatic continuing resolution would blindly set a 
rate below that year's needs.
    The appropriations process is a vital part of our 
legislative business, not to mention our constitutional duties. 
Hearings are held throughout the year to examine programs, 
establish priorities, make difficult choices regarding how best 
to spend scarce tax dollars. Are the benefits of all those 
hearings, all the careful considerations made at subcommittee 
mark-ups, to be thrown aside simply because it is too difficult 
for the President and Congress to reach a compromise?
    For example, if we had an automatic continuing resolution 
in effect for fiscal year 1999 instead of the appropriations 
acts that were enacted through the legislative process, many 
significant accomplishments would never have been realized. The 
following examples compare FY 1998 enacted funding levels (the 
levels which would have been used for FY 1999 if the automatic 
CR called for in S. 558 had been in effect) to the funding 
levels enacted for FY 1999, according to information provided 
by the office of Management and Budget.\1\
---------------------------------------------------------------------------
    \1\ These would be the effects assuming program managers continued 
to operate programs as they had in FY 1998.
---------------------------------------------------------------------------
     The Class Size Reduction initiative would not have 
been funded, taking $1.2 billion away from schools and 
eliminating the hiring of 30,000 teachers, the first 
installment for the seven year goal of 100,000 new, qualified 
teachers to help educate, in smaller and more effective 
classes, the rapidly growing numbers of elementary and 
secondary children.
     The Pell grant maximum award would have been 
frozen at $3,000, instead of rising to $4,125. 38,000 fewer low 
income college students would have been helped to pay for 
schooling through Work-Study.
     The GEAR-UP program passed by Congress in FY 1998, 
would not have been funded, preventing 177,000 low-income 
middle-school students from receiving tutoring, mentoring, and 
counseling services to help them prepare for college.
     Special Education, assistance to school districts 
educating children with disabilities, would have been cut $523 
million, or 11 percent.
     Defense Operations and maintenance funding levels 
would have been reduced by about $1 billion from the FY 99 
enacted level, further exacerbating military readiness 
shortfalls. In particular, additional funds to purchase 
critical weapon system spare parts would not have materialized, 
which would likely have led to a steeper decline in readiness 
rates for Air Force fighter and bomber aircraft.
     Defense weapons procurement funding levels would 
have been reduced by about $4 billion from the FY 99 enacted 
level. Most notably, Air Force aircraft procurement would have 
been cut by about $2 billion, which would have resulted in 
significant delays in the purchase of the F-22 fighter aircraft 
and C-17 cargo aircraft. These are the bedrock systems for Air 
Force aircraft modernization into the 21st century.
     NIH would have been cut $1.98 billion (13%) from 
the FY 1999 enacted funding level. The number of NIH-funded new 
research grants would have been cut by up to 1,900 (21%) in FY 
1999.
     Ryan White AIDS Treatment Grants would have been 
cut 23 percent from the FY 1999 funding level, cutting 
resources to provide protease inhibitors, other drugs and 
medical treatment, and support services to people suffering 
with AIDS.
     Up to 13,000 fewer children would be participating 
in Head Start.
     VA Medical Care would have been denied to 45,000 
veterans.
     No additional funding would have been available 
for anti-terrorism to protect our citizens abroad in response 
to the embassy bombings in Africa.
     The proposed increase of 167 FBI agents, who are 
being hired to investigate computer crimes and health care 
fraud, would have been blocked.
     50,000 families moving from welfare-to-work would 
not have been able to receive Section 8 housing assistance 
vouchers critical to their moving to areas close to or within 
commuting distance of jobs.
     Interior Department funding for the restoration of 
facilities at Historically Black Colleges and Universities 
would have been about 40 percent below the enacted level if 
frozen at the FY 98 level.
     The FAA would not have been able to hire the 
additional 150 maintenance technicians and approximately 50 
safety staff requested in 1999, and would have had to eliminate 
nearly 1,200 air traffic controller workyears.
     Bureau of Indian Affairs School Construction--An 
$8 million increase in FY 1999 (about 25 percent over FY 1998) 
for major repairs and improvements at some of the most 
dilapidated Bureau of Indian Affairs-funded schools would not 
have been provided.
     The INS would not be hiring 1,000 additional 
border control agents.
    It can be very difficult to pass appropriations bills, 
especially during a period of divided government. This 
legislation would encourage inertia, since it would enable 
voting blocs to hold out for the expenditure levels from the 
previous year. Without the specter of an imminent deadline 
spurring us on, we are concerned that the government will plod 
along, as if on automatic pilot. We are much better off making 
the tough choices that are required of us.

                                   Joseph Lieberman.
                                   Daniel K. Akaka.
                                   Robert Torricelli.
                                   John Edwards, Jr.
                                   Carl Levin.
                                   Dick Durbin.
                                   Max Cleland.

                      X. Executive Communications

                 Executive Office of the President,
                           Office of Management and Budget,
                                     Washington, DC, March 2, 1999.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: I understand that S. 93, the ``Budget 
Enforcement Act of 1999,'' introduced in the Senate by Senator 
Domenici on January 19, 1999, will be marked up by the 
Governmental Affairs Committee on Thursday, March 4. As 
explained below, the Administration has significant concerns 
regarding: (1) the proposal to establish an automatic 
continuing resolution; (2) the Budget Enforcement Act changes 
that would permanently weaken the pay-as-you-go rules; and (3) 
the proposals to impose new supermajority limitations on 
emergency spending.
    As you know, the President's budget for fiscal year 2000 
proposes a third consecutive surplus--the first time that will 
have happened in half a century. The budgetary rules and 
requirements of the Budget Enforcement Act (BEA) were critical 
to this achievement. They should not be changed merely because 
we have achieved balance. If we are to maintain discipline, we 
should preserve these rules, making only limited changes and 
then only after careful review.
    While we have significant concerns about these particular 
reform proposals, this Administration has been a strong 
advocate for budget process reforms that would provide more 
stability and predictability to a system that provides the 
framework for responsible fiscal behavior. For example, over 
the last six years this Administration has consistently 
expressed interest in the potential advantages of biennial 
budgeting and urged its adoption by the Congress. I look 
forward to working with the Congress to enact such reforms.
    Establishing an Automatic Continuing Resolution. Title IV 
of S. 93 would establish an automatic continuing resolution 
(CR) for fiscal years 2000 and 2001 in the event that Congress 
fails to enact appropriations legislation. We think that doing 
so would reduce the discipline of the appropriations process.
    The partial government shutdowns during the 104th Congress 
were unnecessary and very costly, and--as the President has 
said--should never happen again, but putting the Government's 
finances on automatic pilot is not the answer. Congress should 
not undermine the ability to respond to a changing world by 
substituting an automatic funding mechanism for the hard work 
and judgment that are embodied in bicameral action and 
presidential approval.
    An automatic CR is not a workable policy. It would 
effectively set the default position for discretionary spending 
at a freeze level, resulting in: (1) the underfunding of 
programs which require increases to cover growing costs and 
populations; and (2) the overfunding of projects which are 
already near or at completion.
    With an automatic CR in place, large portions of the 
Federal budget could be placed on automatic pilot for years at 
a time. This could result in underfunding vital programs such 
as research; Pell Grants; Head Start; assistance to Women, 
Infants and Children; and veterans medical care. In addition, 
the proposal would create an incentive simply to do nothing, 
for those who wish to prevent change, protect entrenched 
programs or quash new initiatives.
    Weakening the BEA Pay-As-You-Go Rules. The PAYGO rules 
require that any new tax cuts and new mandatory spending must 
be fully offset by revenue raises and/or mandatory spending 
cuts. If full offsets are not provided, this creates a negative 
PAYGO balance which can trigger a sequester (automatic 
reductions) of Medicare and other mandatory spending programs.
    The PAYGO rules have been a very effective pillar of fiscal 
discipline since their enactment in 1990 and extension in 1993 
and 1997. They are an important reason why we have reached a 
surplus, and the Administration believes that this fiscal 
discipline should continue.
    Unfortunately, Title III of S. 93 would immediately and 
permanently permit new tax cuts or mandatory spending increases 
to be enacted without offsets, up to the amount of projected 
on-budget surpluses. For example, the proposal would permit 
enactment of large tax cuts, without any offsets, so long as 
the tax cuts do not create, or increase, an on-budget deficit 
in the budget year or the ensuring four fiscal years.
    These proposals would create a built-in bias toward 
spending entire on-budget surpluses on tax cuts. Even though 
the spending caps would still be in place for discretionary 
spending, the on-budget surpluses would be freely available for 
expenditure on tax cuts. We believe that allocation of 
projected surpluses should be carefully deliberated in the 
context of a comprehensive budget framework, and oppose 
changing the pay-as-you-go rules at this time.
    The Administration has proposed a 15-year framework for 
strengthening Social Security and Medicare, reducing the debt, 
providing tax relief to working Americans through Universal 
Savings Accounts, and maintaining defense and domestic 
priorities; and the President believes that after such a 
framework is in place, the pay-as-you-go disciplines should 
continue. This was the policy in the deficit reduction 
legislation in 1993, and again in 1997; in each case, 
structural changes in the Federal budget were negotiated and 
all subsequent proposals for tax cuts and spending increases 
were made subject to continuing pay-as-you-go rules.
    The Budget Enforcement Act should not be amended in a way 
that sacrifices long-term fiscal discipline.
    Limitations on Emergency Spending. Title II of S. 93 would 
effectively require a supermajority of 60 votes in the Senate 
to enact legislation as an emergency. The bill would permit 
Senators to raise points of order striking any emergency 
provisions from legislation, subject to a 60-vote waiver. The 
points of order could also be made against provisions in 
conference reports, and non-emergency provisions in emergency 
spending bills.
    The Administration shares the objective that emergency 
spending should be limited to bona fide emergencies. We believe 
the current requirement that the President and the Congress 
must jointly agree on emergency designations is the right 
approach.
    The Administration opposes placing a supermajority 
requirement on emergency designations. While support for 
emergency spending tends to be bipartisan and collegial, the 
60-vote requirement has the potential to delay or make it more 
difficult to obtain funding for emergencies that are regional 
in nature--such as agricultural assistance, home energy 
assistance when temperatures are extreme, or for disasters that 
impact a specific location.
    I appreciate the opportunity to comment on this legislation 
and look forward to working with you.
            Sincerely,
                                            Jacob J. Lew, Director.

                      XI. Changes to Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported are shown as follows:
    Chapter 13 of title 31, United States Code, is amended by 
inserting after section 1310 the following new section:

``1311. CONTINUING APPROPRIATIONS.

    ``(a)(1) If any regular appropriation bill for a fiscal 
year does not become law prior to the beginning of such fiscal 
year or a joint resolution making continuing appropriations is 
not in effect, there is appropriated, out of any moneys in the 
Treasury not otherwise appropriated, and out of applicable 
corporate or other revenues, receipts, and funds, such sums as 
may be necessary to continue any project or activity for which 
funds were provided in the preceding fiscal year--
          ``(A) in the corresponding regular appropriation Act 
        for such preceding fiscal year; or
          ``(B) if the corresponding regular appropriation bill 
        for such preceding fiscal year did not become law, then 
        in a joint resolution making continuing appropriations 
        for such preceding fiscal year.
    ``(2) Appropriations and funds made available, and 
authority granted, for a project or activity for any fiscal 
year pursuant to this section shall be at a rate of operations 
not in excess of the lower of--
          ``(A) the rate of operations provided for in the 
        regular appropriation Act providing for such project or 
        activity for the preceding fiscal year;
          ``(B) in the absence of such an Act, the rate of 
        operations provided for such project or activity 
        pursuant to a joint resolution making continuing 
        appropriations for such preceding fiscal year;
          ``(C) the rate provided in the budget submission of 
        the President under section 1105(a) of title 31, United 
        States Code, for the fiscal year in question; or
          ``(D) the annualized rate of operations provided for 
        in the most recently enacted joint resolution making 
        continuing appropriations for part of that fiscal year 
        or any funding levels established under the provisions 
        of this Act.
    ``(3) Appropriations and funds made available, and 
authority granted, for any fiscal year pursuant to this section 
for a project or activity shall be available for the period 
beginning with the first day of a lapse in appropriations and 
ending with the earlier of--
          ``(A) the date on which the applicable regular 
        appropriation bill for such fiscal year becomes law 
        (whether or not such law provides for such project or 
        activity) or a continuing resolution making 
        appropriations becomes law, as the case may be; or
          ``(B) the last day of such fiscal year.
    ``(b) An appropriation or funds made available, or 
authority granted, for a project or activity for any fiscal 
year pursuant to this section shall be subject to the terms and 
conditions imposed with respect to the appropriation made or 
funds made available for the preceding fiscal year , or 
authority granted for such project or activity under current 
law.
    ``(c) Appropriations and funds made available, and 
authority granted, for any project or activity for any fiscal 
year pursuant to this section shall cover all obligations or 
expenditures incurred for such project or activity during the 
portion of such fiscal year for which this section applies to 
such project or activity.
    ``(d) Expenditures made for a project or activity for any 
fiscal year pursuant to this section shall be charged to the 
applicable appropriation, fund, or authorization whenever a 
regularappropriation bill or a joint resolution making 
continuing appropriations until the end of a fiscal year providing for 
such project or activity for such period becomes law.
    ``(e) This section shall not apply to a project or activity 
during a fiscal year if any other provision of law (other than 
an authorization of appropriations)--
          ``(1) makes an appropriation, makes funds available, 
        or grants authority for such project or activity to 
        continue for such period; or
          ``(2) specifically provides that no appropriation 
        shall be made, no funds shall be made available, or no 
        authority shall be granted for such project or activity 
        to continue for such period.
    ``(f) In this section, the term `regular appropriation 
bill' means any annual appropriation bill making 
appropriations, otherwise making funds available, or granting 
authority, for any of the following categories of projects and 
activities:
          ``(1) Agriculture, rural development, and related 
        agencies programs.
          ``(2) The Departments of Commerce, Justice, and 
        State, the judiciary, and related agencies.
          ``(3) The Department of Defense.
          ``(4) The government of the District of Columbia and 
        other activities chargeable in whole or in part against 
        the revenues of the District.
          ``(5) The Departments of Labor, Health and Human 
        Services, and Education, and related agencies.
          ``(6) The Department of Housing and Urban 
        Development, and sundry independent agencies, boards, 
        commissions, corporations and offices.
          ``(7) Energy and water development.
          ``(8) Foreign assistance and related programs.
          ``(9) The Department of the Interior and related 
        agencies.
          ``(10) Military construction.
          ``(11) The Department of Transportation and related 
        agencies.
          ``(12) The Treasury Department, the U.S. Postal 
        Service, the Executive Office of the President, and 
        certain independent agencies.
          ``(13) The legislative branch.''
    The analysis of chapter 13 of title 31, United States Code, 
is amended by inserting after the item relating to section 1310 
the following new item:

``1311. CONTINUING APPROPRIATIONS.''.

                                
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