Budget Issues: Budget Enforcement Compliance Report (Letter Report,
05/31/2000, GAO/AIMD-00-174).
Pursuant to a congressional request, GAO assessed compliance by the
Office of Management and Budget (OMB) and the Congressional Budget
Office (CBO) with the requirements of the Balanced Budget and Emergency
Deficit Control Act of 1985. The assessment covers OMB and CBO reports
issued for legislation enacted during the 1st session of the 106th
Congress, which ended on November 22, 1999.
GAO noted that: (1) overall, OMB and CBO substantially complied with the
act; (2) however, some of the required OMB reports were issued late; (3)
the Deficit Control Act (DCA) sets a specific timetable for issuance of
OMB reports; (4) by law, OMB must issue sequestration reports at three
specific times during the year: (a) the preview report when the
President submits his budget; (b) the update on August 20; and (c) the
final report 15 days after the end of a congressional session; (5) OMB
issued its fiscal year (FY) 2000 Sequestration Update Report on August
25, 1999--5 days late; (6) its final sequestration report for FY 2000
was issued on January 25, 2000--49 days later than the required date of
December 7, 1999; (7) the extremely late issuance of OMB's final report
resulted in the late issuance of CBO's FY 2001 Sequestration Preview
Report; (8) DCA requires that CBO issue a sequestration preview report
for the coming fiscal year 5 days before the President submits his
budget to Congress; (9) because OMB's final sequestration report for FY
2000 was issued 49 days late, CBO did not have the data needed to use as
the starting point to update its estimates for FY 2001 and issue its
report in a timely manner; (10) this in turn meant that OMB did not have
CBO's published adjustments to include in the OMB FY 2001 Preview
Report, published in the President's budget, which was issued in
February 2000; (11) as has been the case for the past 3 fiscal years,
OMB issued most of its FY 2000 scorekeeping reports late; (12) on
average, the FY 2000 discretionary spending reports were 39 working days
late and the pay-as-you-go reports were 7 working days late; (13) OMB's
timeliness on these reports has continued to be a problem; (14)
excluding final sequestration reports, 94 percent of FY 2000 reports
were late, 83 percent of FY 1999 reports were late, 50 percent of the
1998 reports were late, and about 70 percent of the 1997 reports were
late; (15) the extremely late issuance of OMB's final sequestration
report could have had an impact on the report's usefulness for its
original purposes; and (16) CBO and OMB also differed substantially in
scoring various appropriation acts.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-00-174
TITLE: Budget Issues: Budget Enforcement Compliance Report
DATE: 05/31/2000
SUBJECT: Budget scorekeeping
Noncompliance
Budget outlays
Reporting requirements
Balanced budgets
Deficit reduction
Budget deficit
IDENTIFIER: Medicare Program
Medicaid Program
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GAO/AIMD-00-174
Appendix I: Background and Scope and Methodology
8
Appendix II: Compliance Issues
15
Appendix III: Implementation Issues
19
Appendix IV: Emergency Spending
37
Appendix V: GAO Contact and Staff Acknowledgments
42
Table 1: Sequestration Reports and Due Dates 9
Table 2: Discretionary Spending Categories by Fiscal Year 10
Table 3: Timing of OMB Sequestration Reports 15
Table 4: Percentage of OMB Scoring Reports Issued Late 17
Table 5: CBO and OMB Estimates of Fiscal Year 2000
Appropriations Compared to Adjusted Caps 24
Table 6: Provisions with More than $500 Million Difference
Between OMB and CBO Estimates 26
Table 7: Comparison of OMB and CBO PAYGO Scoring for
Consolidated Appropriations Act 30
Table 8: Comparison of OMB and CBO PAYGO Scoring for Medicare, Medicaid, and
SCHIP 30
Table 9: Comparison of OMB and CBO PAYGO Scoring for Veterans Millennium
Health Care and Benefits Act 31
Table 10: Comparison of OMB and CBO PAYGO Scoring for
Ticket to Work and Work Incentives Improvement
Act of 1999 33
Table 11: Adjustments to the Discretionary Spending Caps in the Final
Sequestration Reports 35
Table 12: Emergency Budget Authority, Fiscal Years 1991-2000 37
Table 13: Emergency Spending, Fiscal Year 2000 39
BEA Budget Enforcement Act of 1990
BEA-97 Budget Enforcement Act of 1997
CBO Congressional Budget Office
DCA Deficit Control Act
EITC Earned Income Tax Credit
GRH Gramm-Rudman-Hollings
OBRA 93 Omnibus Budget Reconciliation Act of 1993
OMB Office of Management and Budget
PAYGO pay-as-you-go
SCHIP State Children's Health Insurance Program
TEA-21 Transportation Equity Act for the 21st Century
VA Department of Veterans Affairs
Accounting and Information
Management Division
B-285122
May 31, 2000
The Honorable John R. Kasich
Chairman
Committee on the Budget
House of Representatives
Dear Mr. Chairman:
This report responds to your request that we assess compliance by the Office
of Management and Budget (OMB) and the Congressional Budget Office (CBO)
with the requirements of the Balanced Budget and Emergency Deficit Control
Act of 1985, as amended (the Deficit Control Act). Our assessment covers OMB
and CBO reports issued for legislation enacted during the 1st session of the
106th Congress, which ended on November 22, 1999.
According to CBO's Final Sequestration Report issued on December 2, 1999,
discretionary outlays for all spending categories combined are estimated to
exceed the spending limits by $16.6 billion for fiscal year 2000. CBO
estimated that a 4 percent sequestration would be required for the Overall
Discretionary category. In contrast, OMB's Final Sequestration Report,
issued on January 25, 2000, estimated than no sequestration of discretionary
spending will be required for fiscal year 2000. Since by law OMB's estimates
are controlling, there will be no sequester in fiscal year 2000.
Background information on the budget enforcement process, the various
reports required by the act, and details concerning our scope and
methodology are discussed in appendix I.
Our work was conducted in Washington, D.C., from August 1999 through May
2000 in accordance with generally accepted government auditing standards. We
provided a draft of this report to OMB and CBO officials for their review
and comment. OMB and CBO officials agreed with our presentation of their
views and the facts as presented. We incorporated their comments where
appropriate.
Overall, we found that OMB and CBO substantially complied with the act.
However, some of the required OMB reports were issued late. This issue is
discussed further in appendix II. The Deficit Control Act (DCA) sets a
specific timetable for issuance of OMB reports. By law, OMB must issue
sequestration reports at three specific times during the calendar year:
(1) the preview report when the President submits his budget, (2) the update
on August 20, and (3) the final report 15 days after the end of a
congressional session.1 OMB issued its fiscal year 2000 Sequestration Update
Report on August 25, 1999--5 days late. Its final sequestration report for
fiscal year 2000 was issued on January 25, 2000--49 days later than the
required date of December 7, 1999. The extremely late issuance of OMB's
final report resulted in the late issuance of CBO's fiscal year 2001
Sequestration Preview Report. DCA requires that CBO issue a sequestration
preview report for the coming fiscal year 5 days before the President
submits his budget to the Congress. This report contains updated estimates
of discretionary spending limits based on adjustments set forth in law and
an estimate of any net increase or decrease in the deficit or surplus caused
by entitlement or revenue legislation enacted. CBO uses the discretionary
spending limits (caps) included in OMB's Final Sequestration Report as the
starting point for the adjustments that it publishes in its Preview Report.
Because OMB's final sequestration report for fiscal year 2000 was issued so
late (49 days later than required), CBO did not have the data needed to use
as the starting point to update its estimates for fiscal year 2001 and issue
its report in a timely manner. This in turn meant that OMB did not have
CBO's published adjustments to include in the OMB fiscal year 2001 Preview
Report, published in the President's budget, which was issued in February
2000.
As has been the case for the past 3 fiscal years, OMB issued most of its
fiscal year 2000 scorekeeping reports late. For fiscal year 2000, OMB issued
a total of 4 discretionary scorekeeping reports (covering 11 pieces of
enacted legislation) and 13 pay-as-you-go (PAYGO) reports.2 Of these 17
reports, all but one (a PAYGO report) were issued later than the time
specified by law. The law requires that these reports be issued 7 working
days after enactment of the relevant piece of legislation. On average, the
fiscal year 2000 discretionary spending reports were 39 working days late
and the PAYGO reports were 7 working days late. OMB's timeliness on these
reports has continued to be a problem. Excluding final sequestration
reports, 94 percent of the fiscal year 2000 reports were late; 83 percent of
the fiscal year 1999 reports were late; 50 percent of the 1998 reports3 were
late; and about 70 percent of the 1997 reports were late.4
The extremely late issuance of OMB's final sequestration report could have
had an impact on the report's usefulness for its original purposes. For
example, if a sequestration had been required for fiscal year 2000 based
upon OMB's estimates of the budgetary effects of enacted legislation, the
sequester could not have begun until near the end of January 2000--several
months into the fiscal year--which would have magnified the effect of the
sequestration for the remaining months.
As you requested, we also looked at implementation issues. We further
discuss in appendix III three areas in which CBO and OMB differ on
(1) appropriations scoring, (2) PAYGO scoring, and (3) discretionary
spending cap adjustments. In fiscal year 2000, as in fiscal year 1999, the
emergency designation was used more broadly than had been the case in
previous years. This is discussed in appendix IV.
CBO and OMB differed substantially on the scoring treatment of H.R. 3425,
the Miscellaneous Appropriations Act, 2000. The scoring differences resulted
from different applications of the directed scoring provision contained in
the act. CBO interpreted the scoring direction as requiring that all of the
act's provisions be scored as PAYGO, resulting in $7.3 billion of PAYGO
savings. OMB, in an attempt to reflect the budget agreement the
administration had negotiated with congressional leadership, scored only
some of the provisions as PAYGO and others as offsets to discretionary
spending, reducing discretionary outlays by $9.5 billion and increasing
PAYGO spending by $35 million.
CBO and OMB also differed substantially in scoring other appropriation acts.
We identified a total of 456 scoring differences between CBO and OMB in
either budget authority or outlays. However, most of these differences were
small, with nearly 75 percent less than $100 million and fewer than 7
percent greater than $500 million. Of the 31 differences greater than $500
million, 19 were due to long-standing differences in the way CBO and OMB
treat contingent emergencies.5 The remaining differences were due to
different DCA categorization, different estimates of Highway and Mass
Transit spending, different outlay rate estimates, and different estimates
of the rate of receipts.
CBO and OMB differed substantially in PAYGO scoring of three pieces of
enacted legislation. CBO and OMB differed in their estimates of the impact
of the provisions contained in the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 by about $1 billion. CBO estimated that the
provisions of the Veterans Millenium Health Care and Benefits Act would cost
about $1.2 billion over the 5-year period 2000-2004 whereas OMB estimated
that the legislation would cost $96 million over the same period. CBO
estimated the cost of the Ticket to Work and Work Incentives Improvement Act
of 1999 at $15.5 billion from 2000 through 2004, while OMB estimated the
costs at $17.9 billion over the same period.
To assess compliance with the Deficit Control Act, we reviewed OMB and CBO
reports issued under the act to determine if they complied with all of the
act's requirements. To accomplish this, we reviewed the OMB and CBO preview,
update, and final sequestration reports to determine if they reflected all
of the technical requirements specified in DCA, such as
(1) estimates of the discretionary spending limits, (2) explanations of any
adjustments to the limits, (3) estimates of the amount of net deficit
increase or decrease, and (4) the sequestration percentages necessary to
achieve the required reduction in the event of a sequester. In addition we
reviewed the scorekeeping reports issued by OMB and CBO to (1) identify
major scoring differences and (2) determine the timeliness of the reports.
We are sending copies of this report to The Honorable Jacob J. Lew,
Director, Office of Management and Budget; The Honorable Dan Crippen,
Director, Congressional Budget Office; Representative John Spratt,
Representative C.W. Bill Young, Representative David R. Obey, Senator Pete
V. Domenici, Senator Frank R. Lautenberg, Senator Ted Stevens, and Senator
Robert Byrd in their capacities as Chair or Ranking Minority Member of
Senate and House Committees. Copies will be made available to other
interested parties on request. Please contact me at (202) 512-9142 if you or
your staff have any questions. Major contributors to this report are listed
in appendix V.
Sincerely yours,
Susan J. Irving
Associate Director, Budget Issues
Background and Scope and Methodology
DCA,6 as amended, established statutory limits on federal government
spending for fiscal years 1991 through 2002 by creating
� annual adjustable dollar limits (spending caps) on discretionary spending
funded through the regular appropriations process,
� a pay-as-you-go (PAYGO)7 requirement for direct spending8 and receipts
legislation, and
� a sequestration9 procedure to be triggered if (1) aggregate discretionary
appropriations enacted for a fiscal year exceed the fiscal year's
discretionary spending caps or (2) aggregate PAYGO legislation is estimated
to increase the combined current and budget year deficits.
To track progress against the budget enforcement requirements and to
implement any needed sequestration, DCA requires CBO and OMB to score
(estimate) the budgetary effects of each appropriation action and each piece
of PAYGO legislation. As soon as practicable after the Congress completes
action on an appropriation or on PAYGO legislation, CBO is required to
report to OMB the estimated amount of new budget authority and outlays
provided by the legislation. Within 7 working days after an appropriation or
PAYGO legislation is enacted, OMB must report its estimates for these
amounts, using the same economic and technical assumptions underlying the
most recent budget submission. It must also include the CBO estimates and
explain any differences between the two sets of estimates. If there are
significant differences between the OMB and CBO estimates, OMB is required
to consult with the budget committees prior to issuing its scoring report.
DCA also requires CBO and OMB to submit a series of three sequestration
reports at specified times during each year, as shown in table 1. CBO and
OMB reports include a discretionary sequestration report that adjusts the
discretionary spending caps and a PAYGO sequestration report that displays
the net decrease or increase in the deficit or surplus for enacted PAYGO
legislation. Because OMB's reports control for purposes of sequestration,
CBO uses estimates from OMB's most recent sequestration report as the
starting point for each of its reports.
Due date
Report CBO OMB
Preview 5 days before President's
report budget submission President's budget submission
Update
report August 15 August 20
Final report 10 days after end of 15 days after end of
congressional session congressional session
Annual discretionary spending limits for budget authority and outlays are
set forth in the Deficit Control Act. The Budget Enforcement Act of 1997
amended DCA to establish three separate categories of discretionary spending
for 1998 and 1999: defense, nondefense excluding violent crime reduction
spending, and violent crime reduction spending. For fiscal year 2000,
defense and nondefense are combined, resulting in two categories--violent
crime reduction spending and all other discretionary spending.10 For 2001
and 2002 these are combined into a single category. The Transportation
Equity Act for the 21st Century (TEA-21)11 altered the spending cap
structure by establishing two new outlay caps that apply separately to
highway and mass transit programs for 1999 and continue through 2003. (See
table 2.) Since these programs had been included under the nondefense cap,
the nondefense cap for 1999 and the Overall Discretionary caps for 2000,
2001, and 2002 were reduced. Because the new caps on highway and mass
transit outlays exceed the reductions in the other caps by about $15.4
billion, the amount of total discretionary outlays permitted under all of
the caps has been increased for each year from 1999 through 2002.
1998 1999 2000 2001 2002
Violent Violent
Crime Crime Violent Crime Overall Overall
Reduction Reduction Reduction Discretionary Discretionary
Defense Defense Overall
Discretionary
Nondefense Nondefense
Highway Highway Highway Highway
Mass Mass Transit Mass Transit Mass Transit
Transit
Note: The Highway and Mass Transit categories were formerly included in the
nondefense category.
DCA provides that adjustments be made to the discretionary limits for
certain specified reasons. The limits must be adjusted for (1) changes in
concepts and definitions, (2) emergency appropriations, (3) funding for
continuing disability reviews, (4) funding for International Monetary Fund
(IMF) increases, (5) international arrearages funding, (6) the earned income
tax credit compliance initiative, and (7) a special outlay allowance to
cover technical scoring differences between OMB and CBO. In addition to
adjustments to the limits required by DCA, TEA-21 added adjustments for the
two transportation caps. It requires that OMB adjust the highway spending
caps in each year's sequestration Preview Report to reflect differences
between current and future estimates of revenues that will be credited to
the Highway Trust Fund. It also requires that both transportation caps be
adjusted each year to reflect any changes in technical estimates of the
outlays that will result from the TEA-21 funding levels.
The spending limits are to be enforced by sequestration should budget
authority or outlays exceed the statutory limits. CBO reported in its Final
Sequestration Report that total discretionary outlays for all categories
combined are estimated to exceed the adjusted caps by $16.6 billion for
fiscal year 2000. CBO estimated that this would require a sequestration of
about 4 percent of budget authority for the Overall Discretionary
category.12 In contrast, OMB's final sequestration report estimated that no
sequestration of discretionary funding would be required for fiscal year
2000. Since by law OMB's estimates control for purposes of sequestration,
there will be no sequester in fiscal year 2000.
In addition, the law specifies that for a fiscal year in progress, if an
appropriation enacted between end-of-session adjournment and July 1 of that
fiscal year causes any of the spending limits for the year in progress to be
exceeded, CBO and OMB must issue within-session sequestration reports 10 and
15 days, respectively, after enactment. On the same day as the OMB report,
the President must issue an order implementing any sequestrations set forth
in the OMB report. No within-session sequestration reports were required for
fiscal year 1999.
PAYGO enforcement covers all direct spending and receipts legislation. CBO
and OMB maintain a "scorecard" showing the cumulative deficit/surplus effect
of PAYGO legislation to track progress against the PAYGO requirements. If,
at the end of a congressional session, cumulative legislated changes enacted
in direct spending and receipts result in a net cost, a sequester of
nonexempt direct spending programs is required to offset the cost. When
determining the need for sequestration the estimates for the budget year and
those for the current year that were not included in the final sequestration
report for the current year are combined. Effective on its enactment, BEA-97
set the scorecard balance to zero for the then-current year and for each
subsequent year through fiscal year 2002. This prevented any net savings
achieved by legislation enacted prior to the enactment of BEA-97 from being
used to offset deficit-increasing legislation enacted through 2002. The
Consolidated Appropriations Act, 2000 (P.L. 106-113) required OMB to reset
the PAYGO scorecard to zero on January 3, 2000. Although the BEA expires in
2002, the sequestration procedure applies through 2006 to eliminate any
projected net costs stemming from PAYGO legislation enacted through fiscal
year 2002.
In their final sequestration reports, both OMB and CBO calculate the net
change in the deficit or surplus due to PAYGO legislation. However, the OMB
report is the sole basis for determining whether any end-of-session
sequestration is required. If OMB determines that sequestration is required,
the President must issue an order implementing it. For fiscal year 2000,
both CBO's report, issued December 2, 1999, and OMB's report, issued January
25, 2000, concluded that a PAYGO sequester was not needed.
In OMB's fiscal year 2001 Preview Report, the administration proposed
several changes to DCA.13 Although the administration has not yet proposed
legislation to make these changes, the Preview Report suggested that the
following proposals could be forthcoming.
� Revision and extension of discretionary spending caps : The administration
proposed to revise and extend the discretionary spending caps through 2010.
Beginning in fiscal year 2001, the caps would be revised to "reflect the
cost of maintaining the operation of the Federal Government at currently
enacted levels into the future." The administration's proposed changes to
the discretionary caps would increase discretionary spending at about the
same pace as inflation. The proposals would also reinstate the inflation
adjustment, included in the original BEA of 1990 in which higher than
expected inflation permitted the caps to be adjusted upward.
� New discretionary spending category : The administration would permit the
highway and mass transit spending caps to expire in fiscal year 2003, as
currently provided in law. However, in fiscal year 2001 a new discretionary
spending category and an associated cap would be established for the Lands
Legacy initiative.
� New technical spending cap adjustment : The administration proposed a new
technical cap adjustment for section 8 housing contract renewals, which it
described as consistent with the existing DCA adjustment to the
discretionary baseline.
� Extension of PAYGO rules : The administration also proposed to extend the
PAYGO enforcement system to fiscal year 2010.
� Restoration of budgetary conventions : The administration proposed a
restoration of "traditional budgetary treatment" for certain items where
"appropriations departed from budgetary conventions." The first such
proposal is to replace certain fiscal year 2001 advance appropriations with
full, up-front funding in fiscal year 2000. Second, the administration
proposes to reverse several obligation delays and timing shifts that would
otherwise delay several spending items until fiscal year 2001. Since the
administration has not formally proposed legislation to make these
adjustments, it is unclear how these adjustments would be made and what
effect they would have on the discretionary spending caps in either fiscal
year 2000 or 2001.
After consulting with the congressional budget committees and the
Congressional Budget Office, OMB agreed to make two changes to budget
scoring and to adjust the discretionary spending caps accordingly. The first
change concerns receipts from purchase power and wheeling activities
associated with the Department of Energy's power marketing administrations.
These receipts have been reclassified from mandatory to discretionary.
Because scoring these receipts as discretionary reduces net discretionary
budget authority and outlays, the spending caps will be reduced by
approximately $60 million in both fiscal years 2001 and 2002.
The second change has to do with scoring for contingent emergency
appropriations.14 When the Congress designates an appropriation as a
contingent emergency, the funds are not available for obligation until the
President designates the appropriation as an emergency as well. In the past,
OMB scored contingent emergency appropriations when the President designated
them as "emergency requirements" and then increased the discretionary
spending caps by the budget authority made available and the estimated
outlays. In its fiscal year 2001 Preview Report, OMB stated that it will
follow the CBO practice and score budget authority for these items after the
Congress has completed action on those items; it will score outlays when the
President releases the funds.
To determine whether the OMB and CBO reports complied with the requirements
of DCA as amended by BEA and other legislation, we reviewed the OMB and CBO
preview, update, and final sequestration reports to determine if they
reflected all of the technical requirements specified in DCA, such as (1)
estimates of the discretionary spending limits, (2) explanations of any
adjustments to the limits, (3) estimates of the amount of net deficit
increase or decrease, and (4) the sequestration percentages necessary to
achieve the required reduction in the event of a sequester.
We reviewed legislation dealing with budget enforcement, including DCA, as
amended, TEA-21, and the Consolidated Appropriations Act, 2000. We reviewed
appropriations acts enacted during the first session of the 106th
Congress--the two supplemental emergency appropriations for fiscal year
1999, the seven continuing appropriations measures, the eight separately
enacted regular appropriations for fiscal year 2000, and the five
appropriations bills included in the Consolidated Appropriations Act, as
well as all applicable OMB and CBO appropriations scoring reports issued as
of January 3, 2000. We also examined the OMB and CBO PAYGO scoring reports
for mandatory spending and receipts legislation. We compared each OMB and
CBO report and obtained explanations for differences of $500 million or more
in estimates for the PAYGO reports. For discretionary spending, we compared
OMB and CBO scoring reports and obtained explanations for differences of
$500 million or more in budget authority or outlay estimates. We examined
OMB and CBO adjustments to the discretionary spending limits for the
preview, update, and final sequestration reports. We also examined
appropriations scoring reports for patterns in reasons for differences
between OMB and CBO, irrespective of the dollar amounts. During the course
of our work, we also interviewed OMB and CBO officials.
Our work was performed in Washington, D.C., from August 1999 through May
2000, in accordance with generally accepted government auditing standards.
We provided a draft of this report to OMB and CBO officials for their review
and comment. OMB and CBO officials agreed with our presentation of their
views and the facts as presented. We incorporated their comments where
appropriate.
Compliance Issues
The only compliance issues we found related to the timing of required
reports: (1) OMB issued both the update and final sequestration reports
later than the law requires and (2) OMB issued most of its scorekeeping
reports late. Each of these issues is discussed in more detail below.
DCA sets a specific timetable for issuance of OMB reports, as shown in table
3.15
Report Date
Preview report With President's budget (first Monday in February)
Update report August 20
Final report 15 days after the end of the congressional session
OMB met the timing requirement only for the Preview Report. The
Sequestration Update Report was issued 5 days late on August 25, 1999. The
Final Sequestration Report was issued 49 days late on January 25, 2000 (more
than 2 months after the end of the congressional session). The extremely
late issuance of OMB's Final Report resulted in the late issuance of CBO's
fiscal year 2001 Preview Report. As a result, OMB's 2001 Preview Report did
not include CBO's published adjustments.
DCA requires that CBO issue a sequestration preview report 5 days before the
President submits his budget to the Congress. This report contains updated
estimates of discretionary spending limits based on adjustments set forth in
law and an estimate of any net increase or decrease in the deficit or
surplus caused by entitlement or revenue legislation enacted. As stated
above, on the same day the President submits his budget to the Congress, OMB
is required to issue its sequestration preview report. The OMB report
contains the same information as the CBO report along with an explanation of
any differences between its estimates and those of CBO. CBO uses the
discretionary spending limits (caps) included in OMB's final report as the
starting point for the adjustments CBO publishes in its Preview Report.
Because OMB's Final Report for fiscal year 2000 was issued 49 days later
than required, CBO did not have the data needed to use as the starting point
to update its estimates for fiscal year 2001 and so was forced to delay the
issuance of its report later than the deadline. As a consequence of this,
OMB's 2001 Preview Report, published in the President's budget, did not
include CBO's published adjustments for fiscal year 2001.16
OMB has issued late sequestration reports in past years also. In our report
covering fiscal year 1999 compliance, we reported that OMB issued its Final
Report 35 days late (50 days after the end of the congressional session).17
One of the factors that contributed to the late issuance in that case was
the conflicting requirements of DCA. If OMB had issued its report on the
required date, the report would have excluded the impact of numerous pieces
of legislation--legislation that either the President had not signed before
DCA's 15-day deadline or for which scorekeeping reports had not been
issued.18 We reported a similar situation in our report covering fiscal year
1997 compliance when OMB delayed the Final Report in order to include all
enacted legislation.19 However, OMB has not always delayed its final report
in order to include all enacted legislation. In our report covering fiscal
year 1998 compliance, we reported that because OMB issued the Final Report
several days before the statutory deadline it did not include several pieces
of enacted legislation in the Final Report .20 That year, as permitted by
DCA, the PAYGO effect of these provisions was simply carried over to the
Preview Report for the following year.
The extremely late issuance of OMB's Final Report for fiscal year 2000 could
have had an impact on the report's usefulness for its original purposes and
intent. If OMB's Final Report shows that a sequestration is required, a
presidential order must be issued the same day the OMB report is issued. DCA
envisions this to be 15 days after the end of a session of Congress--usually
relatively close to the beginning of the fiscal year. However, because OMB's
final report for fiscal year 2000 was issued in January 2000, if the
budgetary effects of enacted legislation had necessitated a sequester for
fiscal year 2000, the sequestration would have begun in late January
2000--more than one quarter into the fiscal year. This would have left only
8 months remaining in the fiscal year for agencies to implement the
sequester, thus magnifying the effect of any sequestration on agencies that
are already hard pressed to deal with static appropriation levels.
Sections 251 and 252 of DCA require OMB to issue scorekeeping reports for
all enacted appropriation and PAYGO legislation within 7 working days of
enactment. OMB issued 4 discretionary scorekeeping reports (covering 11
pieces of enacted legislation)21 and 13 PAYGO reports. Of these 17 reports,
16 were issued later than the time required by law. On average, the fiscal
year 2000 discretionary spending reports were issued 39 working days late
and the PAYGO reports were issued 7 working days late. The one report issued
on time was a PAYGO report.
Compared to previous fiscal years, a higher percentage of fiscal year 2000
reports was issued late. Table 4 shows the percentage of reports issued late
for the last 5 years. The percentage of late reports has more than doubled
since 1996 and increased by more than 10 percent from fiscal year 1999
through fiscal year 2000.
Fiscal year 1996 1997 1998 1999 2000
Percent of reports issued late 40 71.3 52.5 82.8 94
OMB, using the same reasoning it did to explain its late final sequestration
report, cited the volume of legislation enacted late in the year as causing
the scorekeeping reports to be due during "budget crunch" season. During
this time, producing the President's budget is OMB's highest priority.
Implementation Issues
In addition to the compliance issue, we found several implementation issues
on which OMB and CBO differed: (1) the scoring treatment of
H.R. 3425, the Miscellaneous Appropriations Act, 2000, (2) other
appropriations scoring, (3) PAYGO scoring, and (4) discretionary spending
cap adjustments.
The Consolidated Appropriations Act, 2000, Public Law 106-113, November 29,
1999, (H.R. 3194) incorporated by reference several unenacted bills,
including five appropriations bills for the fiscal year ending September 30,
2000. As introduced, H.R. 3194 provided fiscal year 2000 appropriations for
the District of Columbia, but it was broadened in conference to incorporate
by reference, in paragraphs 1000(a)(1)-(4), four other regular
appropriations bills: H.R. 3421, Departments of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations Act, 2000; H.R.
3422, Foreign Operations, Export Financing, and Related Programs
Appropriations Act, 2000; H.R. 3423, Department of the Interior and Related
Agencies Appropriations Act, 2000; and H.R. 3424, Departments of Labor,
Health, and Human Services, and Education, and Related Agencies
Appropriations Act, 2000.
In addition, paragraph 1000(a)(5) incorporated by reference H.R. 3425, the
Miscellaneous Appropriations Act, 2000, which dealt with miscellaneous
appropriations and included many of the offsets agreed to by the
administration and the congressional leadership in order to avoid a
sequestration, such as shifting military and some civilian pay dates from
fiscal year 2000 to fiscal year 2001, a $3.8 billion transfer from the
Federal Reserve Board to the Treasury, and a governmentwide rescission of
0.38 percent of discretionary budget authority.
Finally, paragraphs 1000(a)(6)-(9) incorporated by reference unenacted bills
dealing primarily with mandatory spending, such as amendments to Medicare,
authorizations for the State Department, the Milk Marketing Orders program,
and the Intellectual Property and Communications Omnibus Reform Act.
Applications of the Directed Scoring Provision
Subsection 1001(a) of Public Law 106-113 provided for directed scoring of
several acts. It states the following.
PAYGO Adjustments. (a) Notwithstanding Rule 3 of the Budget Scorekeeping
Guidelines
. . ., legislation enacted. . . by reference in the paragraphs after
paragraph 4 of subsection 1000(a) that would have been estimated by the
Office of Management and Budget as changing direct spending or receipts
under section 252 of the Balanced Budget and Emergency Deficit Control Act
of 1985 were it included in an Act other than an appropriations Act shall be
treated as direct spending or receipts legislation as appropriate, under
section 252 of the Balanced Budget and Emergency Deficit Control Act of
1985, but shall be subject to subsection (b).22
Rule 3 directs that "substantive changes to or restrictions on entitlement
law or other mandatory spending law in appropriations laws will be scored
against the Appropriations Committee …", i.e., as discretionary
spending. Section 1001(a) suspends Rule 3 and directs OMB to score as PAYGO
any mandatory spending or receipts provisions in the bills referred to in
paragraphs 1000(a)(5)-(9), notwithstanding their inclusion in an
appropriation act. Based on discussions with OMB and CBO staff, it appears
that the directed scoring provision was intended to avoid a sequestration by
suspending Rule 3 for the acts incorporated by paragraphs 1000(a)(6)-(9),
leaving the substantial savings generated by paragraph 1000(a)(5), totaling
$9.5 billion in outlays according to OMB, to offset fiscal year 2000
discretionary spending. Both staffs attributed the inclusion of paragraph
1000(a)(5) (i.e., H.R. 3425) under the directed scorekeeping provision to a
drafting error.23
In scoring H.R. 3425, CBO interpreted the scoring direction of section
1001(a) as requiring that all of H.R. 3425's provisions be scored as PAYGO,
resulting in $7.3 billion of PAYGO savings.24 On the other hand, OMB, in an
attempt to reflect the budget agreement that the administration had
negotiated with congressional leadership, reported that it scored any
provision reported out of an appropriation committee as discretionary and
scored other provisions as PAYGO. OMB's scoring of H.R. 3425 reduced
discretionary outlays by $9.5 billion and increased PAYGO spending by
$35 million for fiscal year 2000.
Most of the scoring difference between OMB and CBO for H.R. 3425 can be
attributed to the difference in scoring of a $3.8 billion transfer from the
Federal Reserve Board. CBO scored the Federal Reserve Board transfer as
PAYGO while OMB scored the transfer--clearly a receipts provision--as
discretionary. While this may be consistent with OMB's understanding of the
budget agreement that was negotiated, it is inconsistent with the scoring
directions in section 1001(a) to score direct spending or receipts as PAYGO
legislation.
CBO's Final Report for fiscal year 2000 stated that a 4 percent
sequestration (across-the-board reduction) in the Overall Discretionary
category would be required. CBO estimated that discretionary spending in all
categories combined would exceed the outlay caps by $16.6 billion. CBO noted
however, that these amounts did not include the funding and offsets provided
in H.R. 3425. The report says that without the directed scoring in section
1001(a), CBO would have scored some of H.R. 3425 as discretionary (or as
offsets to discretionary spending) resulting in $4 billion less in
discretionary outlays for fiscal year 2000 and that the required
sequestration would have been 3 percent. Also, a CBO official stated that
absent the directed scoring provision, CBO would have scored all of
H.R. 3425 except for the receipts provisions as discretionary spending.
However, no sequester was required because OMB scored the effects of most of
the provisions in H.R. 3425 as offsets to discretionary spending and
differed with CBO on other scoring as discussed later in this report.
Both OMB and CBO provided PAYGO estimates for provisions in Public Law
106-113 in their individual scorekeeping reports but, as directed by
subsection 1001(b) of Public Law 106-113, did not include the estimates in
their final PAYGO totals. Subsection 1001(c) directed OMB to reset the PAYGO
balances to zero on January 3, 2000, and CBO used that as its starting point
for fiscal year 2001 as well.
The different OMB and CBO treatments of the provisions in H.R. 3425
(i.e., PAYGO vs. discretionary) make it somewhat difficult to compare their
scoring estimates. For fiscal year 2000, for the provisions it scored as
discretionary, OMB estimated net savings of $6.8 billion in budget authority
and $9.5 billion in outlays. The total fiscal year 2000 cost of the
provisions OMB scored as PAYGO (international debt relief, survivor
benefits, and trade adjustment assistance) is $35 million. CBO's PAYGO
estimate of
H.R. 3425 shows net outlay savings of $7.3 billion in fiscal year 2000.
Despite the difficulty in comparing discretionary and direct spending
estimates, there are several provisions for which the differences between
the CBO and OMB fiscal year 2000 estimates are clearly significant. The
largest of those differences are described below.
Governmentwide Rescission. Section 301 of H.R. 3425 rescinded
0.38 percent of fiscal year 2000 discretionary budget authority. CBO and OMB
estimated budget authority savings similarly at $2.2 billion and
$2.4 billion respectively. However, their estimates of the effects on fiscal
year 2000 outlays differed significantly. OMB estimated discretionary outlay
savings of $1.4 billion, while CBO estimated PAYGO savings of only $814
million. Because OMB and CBO differed in their interpretation of the
directed scorekeeping (discretionary vs. PAYGO), CBO scored PAYGO savings
and OMB did not. The CBO PAYGO scoring report on H.R. 3425 showed outlay
savings of $2.2 billion accruing over 10 years. The OMB discretionary
scoring report showed effects of the rescission for fiscal year 2000 only.
National Directory of New Hires. Section 303 of H.R. 3425 gives the
Department of Education access to the Department of Health and Human
Services' database on new hires to help collect defaulted student loans. OMB
estimated much higher outlay savings resulting from this access than did
CBO. OMB estimated this provision would reduce budget authority by $880
million and outlays by $879 million in fiscal year 2000. In contrast, in its
PAYGO report, CBO assumed a much smaller impact from the legislation,
estimating savings of only $95 million in fiscal year 2000 and cumulative
savings of $200 million over 10 years. CBO estimates only a small proportion
of total defaulted loans will be affected by use of this database.
Emergency Supplemental Appropriations for Agriculture. Title I of H.R. 3425
provides contingent emergency appropriations for a variety of agricultural
programs. CBO estimated a cost of $456 million for fiscal year 2000. Since
these were contingent emergency appropriations that had not yet been
released by the President, in keeping with its then-current scoring
practice, the OMB scoring report did not show a cost estimate for Title I.
Four appropriations acts--Military Construction (Public Law 106-52),
Legislative Branch (Public Law 106-57), Treasury and General Government
(Public Law 106-58), and Energy and Water Development (Public Law
106-60)--were enacted prior to the start of fiscal year 2000. Another four
acts--Transportation and Related Agencies (Public Law 106-69), Veterans
Affairs, Housing and Urban Development, and Independent Agencies (Public Law
106-74), Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies (Public Law 106-78), and Department of Defense (Public Law
106-79)--were enacted after the start of the fiscal year. The five remaining
regular appropriations acts were combined into the Consolidated
Appropriations Act, 2000 (Public Law 106-113).25
Caps
The CBO and OMB final sequestration reports differed on the need for
sequestration in fiscal year 2000. As shown in table 5, CBO estimated that
budget authority and outlays for the Overall Discretionary category and
outlays for the Highway and Mass Transit categories exceeded the spending
caps. OMB estimated budget authority in all categories and outlays in all
categories except the Violent Crime Reduction category as below or meeting
the caps.26 Since OMB's estimates and spending caps are controlling for
purposes of sequestration, a sequester was not triggered. The difference
between the CBO and OMB estimates is accounted for by many scorekeeping
differences; the largest of these are detailed in the following discussion.
Dollars in millions
OMB CBO
Budget Outlays Budget Outlays
authority authority
Overall Discretionary
Enacted appropriations $ 562,045 $ 561,407 $ 570,440 $ 577,664
End-of-session limits 563,602 564,870 563,714 562,429
Difference -1,558 -3,463 6,726 15,235
Violent Crime Reduction
Enacted appropriations 4,500 6,344 4,500 5,548
End-of-session limits 4,500 6,344 4,500 5,554
Difference 0 0 0 -6
Highway
Enacted appropriations 24,574 25,344
End-of-session limits 24,574 24,574
Difference 0 770
Mass Transit
Enacted appropriations 4,117 4,685
End-of-session limits 4,117 4,117
Difference 0 568
Total for All Spending Categories
Total enacted
appropriations $ 566,545 $ 596,442 $ 574,940 $ 613,241
End-of-session limits 568,102 599,905 568,214 596,674
Difference -1,558 -3,463 6,726 16,567
Note: Highway and Mass Transit Categories were created by TEA-21 and include
outlay caps only.
Although there were many scorekeeping differences between OMB and CBO, most
of the differences were relatively small. We identified 456 scoring
differences between CBO and OMB in either budget authority or outlays. Of
the 456 differences, nearly 75 percent were less than $100 million, and less
than 7 percent of the differences were greater than $500 million.
Of the 31 differences greater than $500 million, 19 were due to
long-standing differences in the way OMB and CBO treat contingent
emergencies. CBO scores contingent emergency appropriations when the
Congress enacts them. OMB traditionally has waited to score contingent
emergency appropriations until the President has designated them as
emergency requirements and the funds have been released.27 Since the
scorekeeping differences due to the treatment of contingent emergencies
reflect differences in timing, we have not included them in the discussion
below. The provisions with the remaining 12 largest differences in budget
authority, outlays, or both are shown in table 6.
Dollars in millions
Difference between OMB and CBO
estimates
(OMB-CBO)
Fiscal year 1999 Fiscal year 2000
Act Account Budget Outlays Budget Outlays
authority authority
Transportation and
Related Agencies Transit Budget b $ 0
Appropriations Authority b $ -1,159
Act, 2000
Transportation and
Related Agencies Highway and -1,314
Appropriations Transit Category b b 0
Act, 2000 Outlays
State and Local
Consolidated Law Enforcement 564
Appropriations Assistance, b b 0
Act, 2000 Department of
Justice
Department of
Defense Spectrum Auction
Appropriations Receipts b b -2,600 -2,600
Act, FY2000
Department of
Defense Operations and
Appropriations Maintenance, b b 0 -1,285
Act, FY2000 Navy
Department of
Defense Operations and
Appropriations Maintenance, Air b b 0 -1,011
Act, FY2000 Force
Department of
Defense Shipbuilding and
Appropriations Conversion, Navy b b 0 -628
Act, FY2000
Department of
Defense Aircraft -517
Appropriations Procurement, Air b b 0
Act, FY2000 Force
Department of
Defense Working Capital
Appropriations Fund b b 0 -783
Act, FY2000
Emergency Overseas
Supplemental Contingency
Appropriations Operations 0 1,231 0 1,017
Act, FY1999 Transfer Fund
aDifferences due to the treatment of contingent emergencies are not
included.
bNo budgetary impact in 1999.
Notes: Negative numbers indicate provisions where CBO estimates were higher
than OMB. Positive numbers indicate provisions where CBO estimates were
lower than OMB.
Sources: OMB and CBO.
For these provisions, the differences between the OMB and CBO estimates can
be grouped into the following categories:
� DCA categorization difference: The Transportation Equity Act of the 21st
Century (TEA-21) amended the BEA to create separate outlay caps for highway
and mass transit spending. However, the Highway and Mass Transit spending
categories do not have budget authority limits. OMB and CBO used different
treatments of the budget authority in the Mass Transit category in their
final sequestration reports. CBO did not include approximately $1.2 billion
in budget authority for mass transit programs in its estimates of
discretionary budget authority contained in its report. However, CBO does
report budget authority for mass transit programs when it scores
appropriation bills in order to keep an accurate record of the amount of
budget authority provided for these programs.28 In its report, OMB
categorized the Mass Transit budget authority as mandatory spending to
ensure that its discretionary totals did not overstate budget authority.
Although OMB and CBO treated the Mass Transit budget authority differently
for their scoring reports, neither Final Report scored it against the
discretionary budget authority spending caps.
� Difference in the Overall Discretionary spending category due to
differences in estimates of Highway and Mass Transit spending: CBO estimated
that outlays in the Highway and Mass Transit categories will exceed the
spending caps by $1.3 billion. Pursuant to DCA, CBO scores outlays exceeding
the caps against the Overall Discretionary category. CBO's fiscal year 2000
Final Report shows outlays in the Highway category exceeding the cap by $770
million and outlays in the Mass Transit category exceeding the cap by $568
million. OMB estimated that Highway and Mass Transit outlays would not
exceed the caps, and thus, there is no deduction from the Overall
Discretionary category. According to an OMB official, the $770 million
difference in the Highway category is attributable to different assumptions
of the spendout rates for obligated and unobligated balances in the Federal
Aid to Highways account. The official thought that different spendout rate
assumptions in the Discretionary Grants account could also explain the $568
million difference in the Mass Transit category.
� Different outlay rate estimates: Differences in the State and Local Law
Enforcement Assistance account result from OMB assuming $564 million more in
outlays in fiscal year 2000 from previously available budget authority than
CBO assumed. Similarly, the differences in the OMB and CBO estimates for
Navy operations and maintenance, Air Force operations and maintenance, Navy
shipbuilding and conversion, Air Force aircraft procurement, and the Working
Capital Fund are due to differences in estimates of outlay rates. In these
five accounts, OMB assumes slower rates for fiscal year 2000 than does CBO.
In the case of the Overseas Contingency Operations Transfer Account, CBO
assumes a slower spendout rate than does OMB in fiscal year 1999 (43 percent
versus 74 percent) and a faster rate in fiscal year 2000 (46 percent versus
20 percent).
� Different rate of receipts estimates: For Spectrum Auction Receipts, OMB
estimates that legislation to speed the collection of spectrum auction
proceeds will net $2.6 billion in accelerated receipts, while CBO assumes
that the legislative changes will not result in increased receipts in fiscal
year 2000.
In its Final Report, CBO reported that PAYGO legislation enacted through the
end of the first session of the 106th Congress resulted in a net spending
increase in fiscal year 1999 of $58 million and produced net savings of
$3,179 million for fiscal year 2000. Based on these estimates, CBO concluded
that no sequestration of mandatory spending for fiscal year 2000 was
required. OMB, in its Final Report, estimated that the same legislation
produced a net increase of $58 million for 1999 and a net savings for 2000
of $3,072 million.29 OMB also concluded that, based on these estimates, no
PAYGO sequester was required.
As directed by section 1001(b) of the Consolidated Appropriations Act, 2000
(Public Law 106-113), the final PAYGO scorecard numbers of both CBO and OMB
did not include any estimates of changes in direct spending or receipts that
result from the enactment of that legislation. Section 1001(c) of that act
further directs OMB to remove from its scorecard any PAYGO balances on
January 3, 2000. OMB's Preview Report issued on February 7, 2000, showed
zero PAYGO balances for all years. According to CBO estimates, sections
1001(b) and (c) of Public Law 106-113 eliminated over $35 billion in costs
from the PAYGO scorecard for fiscal years 2001 through 2004, primarily due
to the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999
and the Ticket to Work and Work Incentives Improvement Act of 1999.
During the first session of the 106th Congress, only 13 pieces of PAYGO
legislation with estimated budgetary impact greater than $500,000 were
enacted.30 We analyzed those scorekeeping reports for which OMB and CBO
estimates differed by $500 million or more either in any single year or over
the 5-year period 2000 through 2004. Only three pieces of legislation met
this criterion: (1) the Consolidated Appropriations Act, 2000, Public Law
106-113, (2) the Veterans Millenium Health Care and Benefits Act, Public Law
106-117, and (3) the Ticket to Work and Work Incentives Improvement Act of
1999, Public Law 106-170. They are discussed below.
As discussed earlier, the Consolidated Appropriations Act, 2000, Public Law
106-113, incorporated five separate bills on the remaining regular
appropriations acts for fiscal year 2000 into a single measure, H.R. 3194.
In addition to the regular appropriations acts, the consolidated act
included five other separate measures including (1) miscellaneous
appropriations (H.R. 3425), (2) amendments to Medicare and related programs
(H.R. 3426), (3) authorizations for the State Department (H.R. 3427), (4)
Federal Milk Marketing Orders program, (H.R. 3428), and (5) the Intellectual
Property and Communications Omnibus Reform Act of 1999 (S. 1948). Both OMB
and CBO prepared PAYGO scorekeeping reports on this legislation, but as
directed by section 1001(b), both excluded the PAYGO amounts from the PAYGO
scorecard totals.
As shown in table 7, there were significant differences between OMB and CBO
scoring over the 5-year cost of the legislation. Although OMB and CBO
differed by only about $900 million over the 5-year estimate, the estimates
in the years 2000 and 2001 differed by $8.1 billion and $6.7 billion
respectively.
Dollars in millions
Fiscal year 2000 2001 2002 2003 2004 Total
OMB $ 1,552 $ 5,504 $ 4,581 $ 2,268 $ 1,288 $ 15,193
CBO -6,563 12,244 3,916 2,786 1,943 14,326
Difference (OMB-CBO) $ 8,115 $ -6,740 $ 665 $ -518 $ -655 $ 867
The major differences stemmed from two factors: scoring of miscellaneous
appropriations in H.R. 3425 and Medicare related changes in H.R. 3426 that
were incorporated into this legislation by reference. Most ($7.3 billion) of
the scoring difference is the result of H.R. 3425 as discussed in the
previous section.
H.R. 3426, the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999, mitigated the impact of some Medicare provisions in the Balanced
Budget Act of 1997 on health care providers and included a number of changes
to Medicaid and State Children's Health Insurance Program. Differences in
OMB and CBO scoring of this legislation total almost $1 billion over the
5-year period 2000 through 2004. As shown in table 8, the annual differences
ranged from $300 million to $700 million per year.
Dollars in millions
Fiscal year 2000 2001 2002 2003 2004 Total
OMB $ 1,500 $ 5,500 $ 4,600 $ 2,200 $ 1,300 $ 15,100
CBO 1,161 5,800 4,200 2,900 2,000 16,061
Difference (OMB-CBO) $ 339 $ -300 $ 400 $ -700 $ -700 $ -961
Most of this difference is related to a Medicare provision on implementation
of a new prospective payment system for hospital outpatient services. CBO
scored the provision while OMB believes that the language merely clarifies
congressional intent in previous law and therefore does not score any costs
for it. Had OMB scored its estimate for congressional intent, its estimate
for the cost of the legislation would have been about $4.9 billion higher
over the 5-year period. This difference is partially offset by lower CBO
costing of other health entitlement provisions resulting from the use of
different baselines and estimating models.
The Veterans Millennium Health Care and Benefits Act, Public Law 106-117,
expanded several veterans health care benefits; revised and extended
veterans programs for housing, education, and compensation benefits;
authorized new medical facility projects and leases; and provided buyout
authority for Department of Veterans Affairs (VA) employees as well as other
miscellaneous provisions.
CBO estimated that the provisions in the act would cost about $1,179 million
over the 5-year period 2000-2004, whereas OMB scored the legislation to cost
$96 million over the same period--a difference of $1,083 million. Table 9
shows the annual differences between OMB and CBO scoring for this
legislation.
Dollars in millions
Fiscal year 2000 2001 2002 2003 2004 Total
OMB $ 10 $ 12 $ 28 $ 15 $ 31 $ 96
CBO -4 289 343 414 137 1,179
Difference (OMB-CBO) $ 14 $ -277 $ -315 $ -399 $ -106 $ -1,083
The principal difference between OMB and CBO, amounting to $1,195 million
over the 5-year period, related to the scoring of the VA costs for extended
nursing home care for veterans who are 70 percent or more service-connected
disabled. Absent this provision, the scoring differences between OMB and CBO
were only $112 million over the period. The particular provision of law
requiring nursing home care was inserted at the House and Senate conference
on the bill. This new section, section 101(a) of the act, amended existing
legislation by adding a new section "Required nursing home care," which
provided that "The Secretary shall provide nursing home care which the
Secretary determines is needed (1) to any veteran in need of such care for a
service-connected disability, and (2) to any veteran who is in need of such
care and who has a service-connected disability rated at 70 percent or
more." Section 101(c) added another section, "Extended care services," which
provided that "The Secretary (subject to 1710(a)(4) of this title and
subsection (c) of this section) shall operate and maintain a program to
provide extended care services to eligible veterans in accordance with this
section." The difference between the two sections and the CBO and OMB
scoring stems from the reference to 1710(a)(4) in the extended care services
section which makes programs subject to annual appropriations. The new
section on nursing home care did not contain such a reference. OMB and CBO
interpreted this omission differently.
CBO scored the nursing home provision as direct spending authority. CBO
stated that there is some doubt as to whether the Congress intended this
since all other components of veterans medical care are subject to
appropriation. OMB did not score the nursing home provision as having
additional cost because it believed that the requirement merely directed VA
to give a higher priority for nursing home care to these veterans. According
to OMB, VA's general counsel expressed the opinion that the nursing home
care costs are to be funded from VA's medical care account which is subject
to annual appropriations.
The Ticket to Work and Work Incentives Improvement Act of 1999, Public Law
106-170, among other things altered cash and health care benefits for people
with disabilities; tightened restrictions on payment of Social Security
benefits to prisoners; gave certain clergy members another opportunity to
enroll in the Social Security system; and amended existing tax laws and
extended numerous tax provisions that have recently expired or are about to
expire.
As shown in table 10, OMB scored the 5-year cost of this act to be $17.9
billion, or $2.4 billion higher than CBO's estimate of $15.5 billion.
Dollars in millions
Fiscal year 2000 2001 2002 2003 2004 Total
OMB $ -80 $ 4,874 $ 7,550 $ 2,933 $ 2,628 $ 17,905
CBO -97 2,899 8,089 2,404 2,210 15,505
Difference (OMB-CBO) $ 17 $ 1,975 $ -539 $ 529 $ 418 $ 2,400
The most significant differences between OMB and CBO scoring of this act
related to the estimates for the tax extension provisions. OMB uses
estimates prepared by the Department of the Treasury while CBO uses
estimates prepared by the Joint Committee on Taxation. Neither OMB nor CBO
changes the numbers provided by the respective organizations. For this act,
the 5-year estimate for revenue losses used by OMB was $2.5 billion greater
than that used by CBO. The primary difference in the estimates for tax
extensions was identified as the result of different baselines and
estimation models related to the research and experimentation tax credit and
Subpart F for active financing income. Specifically, the Joint Committee on
Taxation uses a model that assumes corporations will take more time
initially to use the tax incentives. Thus, CBO's estimates would show
revenue losses lower than OMB's in the 5-year window. However, over a longer
period, such as over 10 years, the estimates would become similar.
Section 251(b) of DCA requires that the discretionary spending limits be
adjusted to account for (1) changes in concepts and definitions,
(2) emergency appropriations, (3) an allowance for the International
Monetary Fund, (4) international arrearages, (5) earned income tax credit
compliance initiative, and (6) spending for continuing disability reviews by
the Social Security Administration. While both CBO and OMB are required to
calculate how much the spending limits should be adjusted, OMB's adjustments
control for the purposes of budget enforcement, such as determining whether
enacted appropriations fall within the spending limits, whether a
sequestration is required, and, if so, how much. CBO's cap adjustment
estimates are advisory. Consequently, when CBO adjusts the discretionary
spending caps in each of its sequestration reports, it first
adopts OMB's figures from the previous sequestration report.31 CBO then
adjusts the OMB figures for its estimates for enacted legislation or other
activity since the previous sequestration report.
In its Final Report for fiscal year 2000, CBO adjusted the spending caps for
the Overall Discretionary category, but no adjustments were made for any
other spending category. OMB adjusted both the Overall Discretionary
category spending caps and the Violent Crime Reduction cap. Overall, in
their final sequestration reports, CBO's estimates of the 2000 caps are $112
million higher than OMB's for budget authority and $3,231 million lower for
outlays. Table 11 shows the spending cap adjustments made by OMB and CBO in
the final sequestration reports.
Dollars in millions
Fiscal year 2000
Budget authority Outlays
OMB CBO Difference OMB CBO Difference
Violent Crime Reduction Category
Special Outlay
Allowance 0 0 0 $ 790 0 $ 790
Overall Discretionary Spending Category
Emergency
appropriations
enacted and $ $ $ $
released since 29,772 29,881 $ -109 22,777 20,331 $ 2,446
August update
report
Continuing
disability reviews 405 405 0 373 353 20
Allowance for
international 426 428 -2 0 13 -13
arrearages
EITC compliance
initiatives 144 144 0 144 146 -2
Adoption
assistance 20 20 0 2 12 -10
Cap increasea 1,065 1,065 0 0 0 0
Adjustments for
the Overall $ $ $ $
Discretionary 31,832 31,943 $ -111 23,296 20,855 $ 2,441
Spending Category
Total Adjustments
to Discretionary $ $ $ -111 $ $ $ 3,231
Spending 31,832 31,943 24,086 20,855
aThe cap increase adjustment in the Overall Discretionary Spending category
refers to a provision in Public Law 106-113 that raised the budget authority
cap for fiscal year 2000 by 0.2 percent.
Note: Although, as shown above, the total of the differences between CBO and
OMB adjustments in the Overall Discretionary Spending category add to $111
million, OMB's final sequestration report shows the total difference to be
$112 million. This difference could be due to rounding. The OMB number has
been used elsewhere in this report.
Sources: CBO and OMB.
As the table shows, almost all of the increase in the fiscal year 2000
discretionary budget authority and outlay caps is due to adjustments for
emergency appropriations. Nearly all of the difference in the adjustments to
budget authority is due to the different treatments of H.R. 3425. OMB's
budget authority adjustment for emergency spending includes a reduction of
$101 million pursuant to the provision in H.R. 3425 which rescinds 0.38
percent of the discretionary budget authority provided for fiscal year 2000.
CBO's adjustment does not include any such reduction since it scored
H.R. 3425 as direct spending. Of the nearly $2.5 billion difference in the
adjustments for outlays from emergency spending, OMB explained that $735
million was due to OMB having higher estimates of fiscal year 2000
outlays for two items.32 OMB offered no explanation for the remaining
difference in emergency appropriations outlay estimates.
Also, there is a $790 million difference in estimates of fiscal year 2000
outlays in the Violent Crime Reduction category. OMB estimates spending in
that category to be within the budget authority limit but exceeding the
outlay limit by $790 million. OMB used the special outlay allowance provided
under section 251(b)(2) of DCA to cover the breach. This allows for an
adjustment of the outlay cap when outlays are estimated to exceed the
discretionary spending limit as long as new budget authority does not exceed
its limit within the same spending category. The adjustment may not exceed
0.5 percent of the total adjustment for discretionary spending limits for
outlays.
Emergency Spending
In accordance with the Deficit Control Act, the Congress and the President
may designate appropriations as "emergency spending" and as such, those
appropriations are in effect exempt from the discretionary spending caps. In
practice, when spending is designated as an emergency, the discretionary
caps are increased by the amount of the associated budget authority and
outlays. As was true for fiscal year 1999, the amount designated as
emergency spending for fiscal year 2000 is significantly higher than in most
past years, the proportion of emergency spending offset was much lower than
in the past, and some new programs were designated as emergencies in fiscal
years 1999 and 2000.
In the 10 years since the enactment of the Budget Enforcement Act in 1990,
fiscal year 2000's $30.8 billion emergency budget authority33 has been
surpassed only twice: fiscal year 1999's $34.4 billion and fiscal year
1991's $45.8 billion, which included funding for Operation Desert Storm.
(See table 12.) The $21.8 billion appropriated in fiscal year 2000 for
nondefense-related items is the largest amount of emergency appropriations
for nondefense purposes since BEA was enacted. Only 2 other fiscal years had
more than $10 billion in nondefense emergency budget authority--1994, which
included funding associated with the Northridge earthquake, and 1999.
Dollars in millions
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Defense $ $ 7,527 $ 642 $ 1,509$ $ 982 $ $ $ $ 9,038
44,387 2,529 2,077 2,861 16,845
Nondefense1,459 8,641 5,387 12,346 5,406 4,069 7,459 3,042 17,511 21,802
Total $ $ $ $ $ $ $ $ $ $
45,846 16,168 6,029 13,855 7,935 5,051 9,536 5,903 34,356 30,840
Note: Data for fiscal years 1991 through 1999 are current as of June 8,
1999, and data for fiscal year 2000 are current as of December 2, 1999.
Source: CBO.
Most of the nearly $31 billion in emergency budget authority enacted for
fiscal year 2000 was not offset with reductions in other discretionary
spending. While emergency spending is effectively exempt from the spending
caps, between 1994 and 1997 the Congress typically offset some of the
supplemental emergency appropriations with cuts in other programs. For
example, the 1998 Supplemental Appropriations and Rescissions Act (Public
Law 105-174) enacted on May 1, 1998, included $5.4 billion in emergency
appropriations and $2.6 billion in reductions in other programs. In
contrast, the fiscal year 1999 Emergency Supplemental Appropriations Act
(Public Law 106-31) enacted on May 21, 1999, included nearly $15 billion in
emergency supplemental appropriations for fiscal years 1999 and 2000.
However, the law included only about $2.0 billion in offsetting rescissions.
The Consolidated Appropriations Act, 2000, which provided over $10 billion
in emergency spending, included offsetting reductions in outlays and
increases in revenues totaling about $6 billion.34 It should be noted,
however, that $3.6 billion of the outlay reductions were due to shifting pay
dates for military and some civilian personnel so that $3.6 billion in
salary outlays will be charged to fiscal year 2001 instead of fiscal year
2000. Also, approximately $3.8 billion in additional revenue is due to the
transfer of that amount from the Federal Reserve Board to the Treasury
during fiscal year 2000. CBO has reported that it expects an offsetting
reduction of the same amount in the Federal Reserve Board's fiscal year 2001
payments to the Treasury as the board restores its financial balance to its
desired level.35
The Deficit Control Act sets forth no criteria to use in determining what
constitutes emergency spending. It imposes only the following definition:
"any appropriations . . ., that the President designates as emergency
requirements and that the Congress so designates in statute." Operation
Desert Storm and peacekeeping operations in Kosovo are examples of
defense-related emergency spending. Nondefense emergency spending primarily
occurs in response to natural disasters such as hurricanes and earthquakes.
However, as discussed in our compliance report for 1999,36 emergency
appropriations addressed broader purposes than in most prior years,
including for example, appropriations for operation and maintenance of
information systems and for the 2000 Census. As in fiscal year 1999, a wide
variety of programs have been designated as emergencies in fiscal year 2000.
Table 13 shows the CBO estimates for appropriations that were designated as
emergencies for fiscal year 2000.
Dollars in millions
Budget authority
Appropriations Act Program(s) for fiscal year
2000
1999 Emergency Supplemental Department of Defense:
Appropriations Act Military Personnel $ 1,838
1999 Emergency Supplemental Department of Agriculture:
Appropriations Act Commodity Credit 35
Corporation Fund
1999 Emergency Supplemental
Appropriations Act Denali Commission 8
Consolidated Appropriations
Act, 2000 Commerce: 2000 Census 4,476
Consolidated Appropriations Foreign Operations:
Act, 2000 Foreign Military Financing 1,375
Consolidated Appropriations Foreign Operations:
Act, 2000 Economic Support 450
Consolidated Appropriations Department of Health and
Act, 2000 Human Services: Refugee 427
and Entrant Assistance
Consolidated Appropriations Department of Health and
Act, 2000 Human Services: Low Income 1,400
Home Energy Assistance
Consolidated Appropriations Department of Health and
Act, 2000 Human Services: Children 1,700
and Families Services
Consolidated Appropriations Department of Health and
Act, 2000 Human Services: General 584
Departmental Management
Consolidated Appropriations Department of the
Act, 2000 Interior: Wildland Fire 90
Management
Department of the
Consolidated Appropriations Interior: United Mine
Act, 2000 Workers of America 68
Combined Benefits Fund
Consolidated Appropriations Department of Education:
Act, 2000 Student Financial 10
Assistance
Veterans Affairs, Housing and
Urban Development, and FEMA − Disaster 2,480
Independent Agencies Relief
Agriculture, Rural
Development, Food and Drug
Administration, and Related Federal Crop Insurance 250
Agencies
Agriculture, Rural
Development, Food and Drug Emergency Assistance
Administration, and Related − Department of 8,449
Agencies Agriculture
Department of Defense Operations and Maintenance 7,200
Total $ 30,840
Source: CBO.
The debate that began during the 105th Congress over what constitutes
emergency spending continued into the 106th Congress. Prior to enactment of
fiscal year 2000 regular appropriations, several proposals were introduced
to change the treatment of emergency spending.37 Those proposals ranged from
requiring committee reports to include justifications for emergency spending
provisions to including some emergency spending within the spending caps.
After enactment of the fiscal year 2000 appropriations, the Congress
continued to propose changes to the treatment of emergency spending. The
budget resolution for fiscal year 2001 (H. Con. Res. 290), passed by the
House and Senate on April 13, 2000, included language requiring committee
reports that propose emergency spending to analyze whether the proposed
expenditure or tax change meets the following criteria:
� necessary, essential, or vital (not merely useful or beneficial);
� sudden, quickly coming into being, and not building up over time;
� an urgent, pressing, and compelling need requiring immediate action;
� unforeseen, unpredictable, and unanticipated; and
� not permanent, temporary in nature.38
In addition, the resolution introduced a point of order in the Senate
against designating nondefense spending as an emergency. The point of order
may be waived only with an affirmative vote of at least 60. There was a
similar point of order in the fiscal year 2000 budget resolution, however it
was raised only once, against relief funding for Hurricane Mitch in the May
2000 supplemental appropriations bill.
Additional information on issues related to emergency spending can be found
in the CBO report Emergency Spending Under the Budget Enforcement Act,
issued in December 1998, the update to that report, issued in June 1999, the
GAO reports Budgeting for Emergencies: State Practices and Federal
Implications39 and Emergency Criteria: How Five States Budget for
Uncertainty.40
GAO Contact and Staff Acknowledgments
Christine E. Bonham, (202) 512-9576
In addition to the person named above, Trina V. Lewis, Robert M. Sexton,
Joseph G. Heisler, Melinda F. Bowman, Charles Roney, and Frank Maguire made
key contributions to this report.
(935338)
Table 1: Sequestration Reports and Due Dates 9
Table 2: Discretionary Spending Categories by Fiscal Year 10
Table 3: Timing of OMB Sequestration Reports 15
Table 4: Percentage of OMB Scoring Reports Issued Late 17
Table 5: CBO and OMB Estimates of Fiscal Year 2000
Appropriations Compared to Adjusted Caps 24
Table 6: Provisions with More than $500 Million Difference
Between OMB and CBO Estimates 26
Table 7: Comparison of OMB and CBO PAYGO Scoring for
Consolidated Appropriations Act 30
Table 8: Comparison of OMB and CBO PAYGO Scoring for Medicare, Medicaid, and
SCHIP 30
Table 9: Comparison of OMB and CBO PAYGO Scoring for Veterans Millennium
Health Care and Benefits Act 31
Table 10: Comparison of OMB and CBO PAYGO Scoring for
Ticket to Work and Work Incentives Improvement
Act of 1999 33
Table 11: Adjustments to the Discretionary Spending Caps in the Final
Sequestration Reports 35
Table 12: Emergency Budget Authority, Fiscal Years 1991-2000 37
Table 13: Emergency Spending, Fiscal Year 2000 39
1. CBO has similar reporting requirements.
2. Although CBO issued scorekeeping reports on 53 PAYGO bills enacted during
this session of Congress, OMB elected to no longer issue PAYGO scorekeeping
reports for legislation where OMB and CBO estimate zero or negligible budget
impact.
3. Reports issued in fiscal year 1998 were governed by two different
criteria. Those issued before August 5, 1997, were required to be issued
within 5 calendar days of enactment. Those issued after that date were
required to be issued within 7 working days of enactment. Nearly 78 percent
of the reports issued before the change in criteria were late compared with
48 percent issued after the change in criteria.
4. OMB attributes the increased delay to the concentration of legislation at
the end of the session. Both the lateness of appropriations action and the
size of the bills enacted late in the year means that reports come due
during the budget crunch period. This factor was cited in previous years as
well.
5. In OMB's sequestration Preview Report, issued February 7, 2000, OMB
reported that it plans to change its scoring of budget authority for
contingent emergency appropriations to be consistent with congressional
scoring practice.
6. The Balanced Budget and Emergency Deficit Control Act of 1985 as amended
by the Budget Enforcement Act of 1990 (BEA), the Omnibus Budget
Reconciliation Act of 1993 (OBRA 93), and the Budget Enforcement Act of 1997
(BEA-97). In addition to being known as the Deficit Control Act, it is
sometimes called Gramm-Rudman-Hollings or GRH. It is also referred to as BEA
since that legislation amended GRH in 1990 by adding the current
discretionary spending caps and PAYGO procedures.
7. DCA requires that the aggregate effect of new legislation that increases
direct spending or decreases receipts be deficit neutral (that is, not
increase the deficit). Such legislation is often referred to as PAYGO
legislation. OMB and CBO have interpreted the PAYGO requirement as applying
to surpluses as well; the aggregate effect of new legislation must not
decrease the surplus.
8. Direct spending (commonly referred to as mandatory spending) means
entitlement authority, the food stamp program, and any budget authority
provided by laws other than in appropriation acts.
9. Sequestration is the cancellation of budgetary resources.
10. CBO refers to the spending category that encompasses all other
discretionary spending as "Overall Discretionary" while OMB refers to it as
"Other Discretionary."
11. Title VIII of TEA-21 (P.L. 105-178, enacted June 9, 1998) amended DCA to
add these two new caps. These caps continue for 2003 even though DCA caps
only exist through 2002.
12. Had CBO scored certain provisions contained in H.R. 3425 as
discretionary offsets rather than as direct spending, the required
sequestration would have been 3 percent. See discussion in appendix III on
Scoring of H.R. 3425, the Miscellaneous Appropriations Act, 2000.
13. Budget of the United States Government, Fiscal Year 2001, Analytical
Perspectives, February 7, 2000.
14. In its fiscal year 2001 Preview Report, OMB adjusted its scoring of the
2000 appropriations acts and the resulting discretionary spending caps to
conform with this change.
15. CBO has similar reporting requirements.
16. OMB attributed the delay in issuing its Final Report for fiscal year
2000 to the lateness of legislation, leading to a situation in which many of
its scorekeeping reports were due during its busiest time of the year--when
it was preparing the President's budget. As discussed in appendix I, OMB is
supposed to issue these reports within 7 working days after an appropriation
or PAYGO legislation is enacted. Because the final sequestration report
covers all legislation enacted during a congressional session, late
scorekeeping reports can affect its timing as well. According to OMB, the
lateness of appropriation action and the magnitude of legislation enacted at
the end of the year caused it to miss its reporting deadline.
17. Budget Issues: Budget Enforcement Compliance Report (GAO/AIMD-99-100,
April 1, 1999).
18. Although the President is required to act on legislation 10 days, except
Sundays, after it is presented to him by the Congress, there can be delays
between final congressional action and when the measure is formally
presented to the President for signature.
19. Budget Issues: Budget Enforcement Compliance Report (GAO/AIMD-97-28,
January 16, 1997).
20. Budget Issues: Budget Enforcement Compliance Report (GAO/AIMD-98-57,
January 23, 1998).
21. This includes two fiscal year 1999 supplemental appropriations acts,
which contained spending for fiscal year 2000.
22. Subsection (b) directs OMB to exclude the direct spending and receipts
amounts from its PAYGO scorecard totals.
23. Although unable to provide documentation, both OMB and CBO officials and
at least one press report characterized as a drafting error the application
of the directed scoring provision of section 1001(a) to paragraph
1000(a)(5). We are not aware of any contemporaneous official documentation
of such a drafting error. However, section 5103, H.R. 3908, 106th Congress,
introduced on March 14, 2000, would amend section 1001 of Public Law 106-113
to provide that the directed scoring applies to paragraphs after paragraph 5
and to clarify that paragraph 5 was intended to be scored as discretionary
spending. The House passed this bill on March 30, 2000.
24. The Miscellaneous Appropriations Act, 2000 (paragraph 5) contained
appropriations as well as direct spending provisions. Since Rule 3 deals
solely with direct spending programs contained in appropriations acts,
disregarding it as directed by section 1001(a) could be interpreted as
having no effect on scoring the appropriations provisions in paragraph 5 as
discretionary. However, this was not CBO's interpretation.
25. As discussed earlier, the Consolidated Appropriations Act, 2000 also
incorporated by reference five other bills. Both CBO and OMB treated four of
the bills as direct spending. One bill (H.R. 3425, the Miscellaneous
Appropriations Act) was treated as direct spending by CBO, while OMB treated
part of the bill as discretionary spending and part as direct spending. (See
previous section on H.R. 3425 in this appendix for more information.)
26. Although OMB estimated outlays in the Violent Crime Reduction category
as exceeding the cap, it will make use of the special outlay allowance
provided under section 251(b)(2) to adjust the limit to cover the breach.
27. In OMB's Preview Report, issued February 7, 2000, OMB reported that it
plans to change its scoring of budget authority for contingent emergency
appropriations to be consistent with congressional scoring practice. See
discussion on Changes in OMB's Budget Scoring in appendix I.
28. CBO's scoring report for the Department of Transportation and Related
Agencies shows two budget authority totals--one including the $1.2 billion
estimate for Mass Transit and one total excluding the estimate.
29. As required by the DCA, the fiscal year 1999 total reflects only that
legislation added to the scorecard after the 1999 Final Report was issued.
Under DCA, the fiscal year 1999 and 2000 numbers were combined to determine
whether sequestration was required.
30. OMB announced in its Preview Report for fiscal year 2000 that it was no
longer issuing PAYGO reports on legislation where OMB and CBO estimate zero
or negligible budget impact, i.e., less than $500,000.
31. In its sequestration reports, CBO shows its own estimates of the
discretionary spending caps from the previous sequestration report and shows
the difference between those estimates and OMB's estimates as an adjustment.
32. The two items were Operations and Maintenance for the Department of
Defense and the Department of Health and Human Services' Head Start program.
33. The amount of emergency budget authority for fiscal year 2000 may
increase if additional emergency spending designations are made during the
year. After regular appropriations acts for a given fiscal year are enacted,
additional appropriations are commonly made in supplemental spending acts.
34. The estimates cited in this section are CBO estimates.
35. While CBO treated these provisions as mandatory (see section on H.R.
3425 in appendix III for more information) for sequestration purposes, it
reclassified many of the effects as discretionary when recalculating the
January 2000 baseline.
36. Budget Issues: Budget Enforcement Compliance Report (GAO/AIMD-99-100,
April 1, 1999); see also Budgeting for Emergencies: State Practices and
Federal Implications (GAO/AIMD-99-250, September 30, 1999).
37. See, for example, Senate Resolution 5, S. 93, H.R. 853, and House
Concurrent Resolution 290.
38. These criteria are similar to those proposed in the Budget Enforcement
Act of 1999 (S. 93) and those proposed by OMB in 1991.
39. Budgeting For Emergencies: State Practices and Federal Implications
(GAO/AIMD-99-250, September 30, 1999).
40. Emergency Criteria: How Five States Budget for Uncertainty
(GAO/AIMD-99-156R Emergency Criteria).
*** End of document. ***