Budget Issues: Budget Enforcement Compliance Report (Letter Report,
01/16/97, GAO/AIMD-97-28).
Pursuant to a congressional request, GAO reviewed the Office of
Management and Budget's (OMB) and the Congressional Budget Office's
(CBO) compliance with the requirements of the Balanced Budget and
Emergency Deficit Control Act of 1985, focusing on OMB and CBO reports
issued on legislation enacted during the second session of the 104th
Congress that ended October 4, 1996.
GAO found that: (1) overall, CBO and OMB substantially complied with the
act; (2) three compliance issues and some implementation issues
represent questionable and inconsistent scoring practices; (3) because
OMB delayed the issuance of its final sequestration report so that it
could include estimates of all legislation passed during the second
session of the 104th Congress, it did not issue the report within 15
days of the end of the congressional session as required by section
254(a); (4) although not consistent with the law, OMB's decision to
delay the report so it could be complete does not seem unreasonable to
GAO, especially since the Omnibus Consolidated Appropriations Act,
enacted during the 104th Congress, required that pay-as-you-go (PAYGO)
balances for 1997 be set at zero; (5) OMB did not issue most of its
appropriation and PAYGO scoring reports within 5 days of enactment as
required by law; (6) in scoring the Personal Responsibility and Work
Opportunity Reconciliation Act, OMB charged to the PAYGO scorecard an
amount equal to the discretionary cap adjustment provided for in the
law, as if it were direct spending, but it does not meet the definition
of direct spending; (7) under longstanding practice, both OMB and CBO
have included the most recent farm bill in their baselines; (8) rather
than scoring the Federal Agriculture Improvement and Reform Act of 1996
(FAIR) against the most recent legislation for all years, OMB scored
against the 1949 act for crop year 1996 and against the 1990 act for all
other years in its baseline; (9) although OMB cited a court case as
justification for its scoring of FAIR, GAO's view of that case is that
it does not support OMB's position; (10) in contrast to OMB, CBO, which
was also aware of the court decision, scored against the 1990 act for
all years; (11) if OMB had scored FAIR as CBO did, an offset would have
been required to avoid a PAYGO sequester; and (12) other implementation
issues related to discretionary spending include differences in OMB and
CBO treatment for adjustments to the discretionary caps and scoring
estimates for appropriations actions.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-97-28
TITLE: Budget Issues: Budget Enforcement Compliance Report
DATE: 01/16/97
SUBJECT: Budget scorekeeping
Balanced budgets
Deficit reduction
Spending legislation
Noncompliance
Budget deficit
Future budget projections
Reporting requirements
Agency reports
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to the Chairman, Committee on the Budget, House of
Representatives
January 1997
BUDGET ISSUES - BUDGET ENFORCEMENT
COMPLIANCE REPORT
GAO/AIMD-97-28
Compliance Report
(935208)
Abbreviations
=============================================================== ABBREV
BA - budget authority
BEA - Budget Enforcement Act
CBO - Congressional Budget Office
CDR - Continuing Disability Reviews
DBOF - Defense Business Operations Fund
DOD - Department of Defense
FAIR - Federal Agriculture Improvement and Reform Act of 1996
FEMA - Federal Emergency Management Agency
GNMA - Government National Mortgage Association
GRH - Balanced Budget and Emergency Deficit Control Act of 1985
(Gramm-Rudman-Hollings)
HHS - Department of Health and Human Services
OBRA - Omnibus Budget Reconciliation Act of 1990
OBRA93 - Omnibus Budget Reconciliation Act of 1993
OCRA - Omnibus Consolidated Rescissions and Appropriations Act of
1996
OCAA - Omnibus Consolidated Appropriations Act, 1997
OMB - Office of Management and Budget
PAYGO - pay-as-you-go
SSI - Supplemental Security Income
USDA - Department of Agriculture
VA/HUD - Department of Veterans Affairs/Department of Housing and
Urban Development
VCRTF - Violent Crime Reduction Trust Fund
Letter
=============================================================== LETTER
B-275751
January 16, 1997
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, more commonly known as
Gramm-Rudman-Hollings (GRH), as amended. Our assessment covers OMB
and CBO reports issued on legislation enacted during the second
session of the 104th Congress that ended October 4, 1996.
To assess compliance with GRH, we reviewed OMB and CBO reports issued
under the act to determine if they reflected all of the act's
requirements. We interviewed OMB and CBO officials to obtain
explanations for differences between reports. Background information
on the budget enforcement process and the various reports required by
the act and details concerning our objective, scope, and methodology
are discussed in appendix I.
Overall, we found that CBO and OMB substantially complied with the
act. We did find three compliance issues and some implementation
issues that represent questionable and inconsistent scoring
practices. The compliance issues are discussed briefly below and in
more detail in appendix II. The implementation issue regarding the
scoring of the Federal Agriculture Improvement and Reform Act of 1996
(FAIR) is discussed briefly below and--along with other, less
significant, scoring differences--in
appendix III.
COMPLIANCE ISSUES
------------------------------------------------------------ Letter :1
OMB ISSUED LATE REPORTS
---------------------------------------------------------- Letter :1.1
As discussed in appendix II, GRH sets a specific timetable for
issuance of CBO and OMB reports. We found two compliance issues
regarding timing.
Because OMB delayed the issuance of its final sequestration report so
that it could include estimates of all legislation passed during the
second session of the 104th Congress, it did not issue the report
within 15 days of the end of the congressional session as required by
section 254(a). Since the last pay-as-you-go (PAYGO) legislation
passed by the Congress was not sent to the President for signature
until after the 15-day deadline, OMB was faced with the choice
between a timely report that did not include all legislation and a
complete report issued late. Although not consistent with the law,
OMB's decision to delay the report so it could be complete does not
seem unreasonable to us especially since the Omnibus Consolidated
Appropriations Act (OCAA), enacted during the 104th Congress,
required that PAYGO balances for 1997 be set at zero--i.e., that no
balance be carried over to offset the costs of future legislation.\1
Given this requirement, OMB decided it was important that the final
report reflect all PAYGO legislation. Since we believe that the main
purpose of the final report should be to determine whether a
sequester is necessary based on all legislation enacted during a
session of the Congress, it would be appropriate to consider changing
the timing of the report.
Second, OMB did not issue most of its appropriation and PAYGO scoring
reports within 5 days of enactment as required by law. Our analysis
of 101 scorekeeping reports issued by OMB for legislation enacted
during the second session of the 104th Congress showed that 72 (71
percent) of them were issued more than 5 days after enactment.
Although issuance ranged from 2 to 34 days after enactment, the time
averaged 7.5 days and 88 percent were issued within 10 days. This
differs from the most recent years in which most of OMB's scoring
reports were issued within 5 days. While CBO does not have a
specified number of days as its requirement for report issuance, it
has averaged about the same number of days as OMB in reporting on
enacted legislation.
--------------------
\1 GRH as amended by the Budget Enforcement Act (BEA) provides that
if in the aggregate PAYGO legislation increases the deficit in the
current or budget year, there is a sequester. Section 4001 of the
Omnibus Consolidated Appropriations Act (P.L. 104-208) requires that
if the balance for fiscal year 1997 is not an increase in the deficit
(i.e., if no sequester is required) then the day following the
issuance of OMB's final sequestration report, the scorecard balance
for fiscal year 1997 be set at zero. OMB reported that, on the day
after submission of its final sequestration report, $6.3 billion in
savings would be removed from the PAYGO scorecard for fiscal year
1997 and will not be available to offset future legislation.
MATTER FOR CONGRESSIONAL
CONSIDERATION
---------------------------------------------------------- Letter :1.2
The Congress may wish to consider changing the required timing of
OMB's final sequestration report to link its issuance to the
completion of Presidential action on all legislation passed during a
session of the Congress.
PAYGO SCORECARD CHARGED FOR
DISCRETIONARY CAP ADJUSTMENT
---------------------------------------------------------- Letter :1.3
In two separate acts (the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 and the Contract With America
Advancement Act), the Congress authorized the appropriation of
additional administrative funds for continuing disability reviews
(which are scored against the discretionary caps) with the intention
of reducing overall PAYGO outlays. The acts also provided that the
discretionary caps be increased by the amount appropriated.
In scoring the Personal Responsibility and Work Opportunity
Reconciliation Act, OMB charged to the PAYGO scorecard an amount
equal to the discretionary cap adjustment provided for in the law, as
if it were direct spending.\2 However, it does not meet the
definition of direct spending. There is no provision in either GRH
or in the scorekeeping guidelines\3 allowing an increase in the
discretionary caps to be offset by recording it as a PAYGO cost. And
long-standing practice has been not to do so. OMB correctly scored
similar provisions in the Contract With America Advancement Act. By
scoring the Personal Responsibility and Work Opportunity
Reconciliation Act as it did, OMB ensured that the potential increase
in discretionary spending was offset by recording it as a PAYGO cost.
We have previously commented\4 on the need to consider when and under
what circumstances such breaches of the wall between discretionary
and PAYGO categories make sense. Both of these issues are discussed
more fully in appendix II.
--------------------
\2 The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 increased the previously-authorized discretionary cap
adjustment for Social Security Administration continuing disability
reviews. OMB showed this increase as an increase in PAYGO outlays,
thus in effect "charging PAYGO" for a change in an appropriation
ceiling.
\3 The Statement of Managers contains certain scorekeeping guidelines
agreed to by the budget committees, CBO, and OMB. Although section
251(d) of GRH anticipates development of scorekeeping guidelines,
these guidelines may not always be consistent with a strict
interpretation of the law.
\4 Letter to Chairmen and Ranking Members of House Committees on
Government Operations and on the Budget and of Senate Committees on
Governmental Affairs and on the Budget on possible changes to BEA
(B-247667, May 19, 1993). Also, Budget Process: Evolution and
Challenges (GAO/T-AIMD-96-129, July 11, 1996).
MATTER FOR CONGRESSIONAL
CONSIDERATION
---------------------------------------------------------- Letter :1.4
To enhance its ability to accommodate shifts in spending priorities,
the Congress may wish to consider specifying the circumstances and
conditions under which tradeoffs between mandatory and discretionary
spending are permitted.
IMPLEMENTATION ISSUES
------------------------------------------------------------ Letter :2
We also found an implementation issue relating to PAYGO estimates for
the Federal Agriculture Improvement and Reform Act of 1996 (FAIR)
which, while not an issue of compliance with the act, represents
questionable and inconsistent scoring practices. Details of this
issue, discussed below, and other, less significant, scoring
differences for the Small Business Job Protection Act of 1996 and the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 are provided in appendix III.
The Congress typically has passed 5-year farm bills providing lower
crop support levels than would be paid under 1949 permanent
agriculture law. The 1990 farm act expired on December 31, 1995, but
FAIR was not signed into law until April 4, 1996.
Under longstanding practice, both OMB and CBO have included the most
recent act in their baselines.\5 However, rather than scoring FAIR
against the most recent legislation for all years, OMB scored against
the 1949 act for crop year 1996 and against the 1990 act for all
other years in its baseline. Although OMB cited a court case as
justification for its scoring of FAIR, our view of that case is that
it does not support OMB's position. In contrast to OMB, CBO, which
was also aware of the court decision, scored against the 1990 act for
all years. If OMB had scored FAIR as CBO did, an offset would have
been required to avoid a PAYGO sequester. In its Final Sequestration
Report, CBO noted that if it used the starting balances in OMB's
preview report and its own estimates of the effects of legislation
enacted since then, a sequestration would be required in 1997.
According to CBO, this different outcome from OMB's final report is
because OMB and CBO differed in their estimates of the PAYGO effects
of FAIR.
Other implementation issues related to discretionary spending include
differences in OMB and CBO treatment for adjustments to the
discretionary caps and scoring estimates for appropriations actions.
These are discussed fully in appendix IV.
--------------------
\5 Section 257(b)(2) requires that, in constructing the baseline, no
program with estimated current-year outlays greater than $50 million
shall be assumed to expire in the budget year or outyears.
MATTER FOR CONGRESSIONAL
CONSIDERATION
---------------------------------------------------------- Letter :2.1
The Congress may wish to consider clarifying section 257(b) to
explicitly require the most recently expiring provisions of law for
programs with current year outlays greater than $50 million be used
to construct the baseline.
We provided a draft of this report to OMB and CBO officials for their
review. OMB officials declined to provide comments. CBO officials
agreed with our presentation of their views and the facts as
presented. We incorporated their comments where appropriate.
Copies of this report are being provided to the Director of the
Office of Management and Budget, the Director of the Congressional
Budget Office, the Ranking Minority Member of your Committee, and the
Chairmen and Ranking Minority Members of the Senate Budget Committee
and the House and Senate Appropriations 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 OBJECTIVE, SCOPE,
AND METHODOLOGY
=========================================================== Appendix I
BACKGROUND
--------------------------------------------------------- Appendix I:1
The Balanced Budget and Emergency Deficit Control Act of 1985 (GRH),
as amended by the Budget Enforcement Act of 1990 (BEA) and the
Omnibus Budget Reconciliation Act of 1993 (OBRA 93), established
statutory limits on federal government spending for fiscal years 1991
through 1998 by creating:
(1) annual adjustable dollar limits (spending caps) on discretionary
spending, \1
(2) a pay-as-you-go (PAYGO)\2 requirement for direct spending\3 and
receipts legislation, and
(3) a sequestration\4
procedure to be triggered if (a) aggregate discretionary
appropriations enacted for a fiscal year exceeds the fiscal year's
discretionary spending caps or (b) aggregate PAYGO legislation is
estimated to increase the deficit over the current and budget year.
To track progress against the above requirements and to implement any
needed sequestration, GRH 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 any appropriation involving discretionary
spending, CBO is required to report to OMB the estimated amount of
new budget authority and outlays provided by the legislation. Within
5 calendar days after an appropriation 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. OMB and CBO have similar PAYGO
scoring requirements for reporting their estimates for any direct
spending or receipts legislation.
GRH also requires CBO and OMB to submit a series of three
sequestration reports at specified times during each year as shown in
table I.1. Each CBO and OMB report must include a discretionary
sequestration report which tracks progress against the discretionary
spending caps and a PAYGO sequestration report that displays the net
deficit decrease or increase for enacted PAYGO legislation. Because
OMB's reports are controlling for purposes of sequestration, CBO
adjusts its reports to the most recent OMB estimates as a starting
point for each of its reports.
Table I.1
Sequestration Reports and Due Dates
Due date
----------------------------------------------
Report CBO OMB
---------------------- ---------------------- ----------------------
Preview report 5 days before With President's
President's budget budget submission
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 GRH. It requires that these limits be adjusted for
emergency appropriations, funding for continuing disability
reviews,\5 and changes in inflation estimates and concepts and
definitions. The spending limits are enforced by sequestration
should appropriations exceed the limits.
A separate spending limit for budget authority and outlays was
established for the Violent Crime Reduction Trust Fund (VCRTF) by the
Violent Crime Control and Law Enforcement Act of 1994 (P.L.
103-322). The VCRTF, which was excluded from the general purpose
spending caps, is subject to sequestration if estimated outlays from
the fund exceed annual spending limits specified in the Violent Crime
Control and Law Enforcement Act.
In addition, if an appropriation for a fiscal year in progress that
is 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. This
year no Within-Session Sequestration Reports were required.
PAYGO enforcement covers all direct spending and receipts
legislation. CBO and OMB maintain a "scorecard" showing the
cumulative deficit effect of PAYGO legislation to track progress
against the PAYGO requirements. If at the end of a congressional
session, cumulative legislated changes in direct spending and
receipts enacted since BEA was enacted in 1990 increase the deficit
during the period covered by the current and budget year, a sequester
of non-exempt direct spending programs is required to offset the
increase. Net savings in either the current or budget year can be
used to offset increases in the next year during the period. The
Omnibus Consolidated Appropriations Act, 1997 (P.L. 104-208)
requires that on the day following OMB's final sequestration report
for fiscal year 1997, the scorecard balance for fiscal year 1997 be
changed to zero if such balance for the fiscal year is not an
increase in the deficit.
In their final sequestration reports, both OMB and CBO calculate
whether a sequester is necessary. 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 1997,
neither CBO's report, issued October 11, 1996, nor OMB's report,
issued November 15, 1996, called for a sequester.\6
--------------------
\1 Programs or activities funded through the regular appropriations
process.
\2 BEA requires that any 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.
\3 Direct spending (commonly referred to as mandatory spending) means
entitlement authority, the food stamp program, and any budget
authority provided by law other than in appropriation acts.
\4 Sequestration is the revocation or cancellation of budgetary
resources.
\5 The Contract With America Advancement Act of 1996 (P.L. 104-121)
and the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (P.L. 104-193) amended GRH to provide for adjusting the
discretionary spending limits for appropriations for conducting
continuing disability reviews by the Social Security Administration
when appropriations exceed certain levels set forth in the
legislation.
\6 CBO's final sequestration report stated that if it had used the
balances in OMB's March preview report and its own estimates of the
effects of legislation enacted since then, it would conclude that the
combined 1996 and 1997 deficits had increased by about $2.9 billion
and that a sequester would be required in 1997. See PAYGO discussion
in appendix II for more detail.
OBJECTIVE, SCOPE, AND
METHODOLOGY
--------------------------------------------------------- Appendix I:2
The objective of our review was to determine whether the OMB and CBO
reports complied with the requirements of GRH as amended by BEA and
other legislation. 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 GRH, 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) in the event of a sequester,
the sequestration percentages necessary to achieve the required
reduction.
We reviewed legislation dealing with budget enforcement including GRH
as amended by BEA, OBRA 93, the Violent Crime Control and Law
Enforcement Act of 1994, the Contract With America Advancement Act of
1996, the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996, and the Omnibus Consolidated Appropriations Act, 1997
(OCAA). We reviewed the pertinent appropriations acts enacted during
the second session of the 104th Congress--the 9 continuing
appropriations measures and the 6 regular appropriations enacted for
fiscal year 1996\7 and the 13 appropriations enacted for fiscal year
1997.\8 We also examined the OMB and CBO scoring reports for all
PAYGO reports on 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 and analyzed all
OMB and CBO scoring reports and obtained explanations for differences
of $100 million or more in budget authority estimates and $400
million or more in outlay estimates for all general purpose items.
We also examined and analyzed all OMB and CBO adjustments to the
discretionary spending limits for the preview, update, and final
sequestration reports. We also examined appropriation scoring
reports for patterns in reasons for differences between OMB and CBO,
irrespective of the dollar amounts.
During the course of our work, we interviewed OMB and CBO officials.
Our work was conducted in Washington, D.C., from July through
December 1996.
--------------------
\7 Five of the regular appropriations for 1996 were combined and
enacted as the Omnibus Consolidated Rescissions and Appropriations
Act of 1996.
\8 Six of the regular appropriations for 1997 were combined and
enacted as the Omnibus Consolidated Appropriations Act, 1997.
COMPLIANCE ISSUES
========================================================== Appendix II
We found three compliance issues during our review. Two of the
issues relate to the late issuance of OMB reports--the final
sequestration report and 5-day scoring reports. The third issue
relates to charging appropriations actions for continuing disability
reviews to the PAYGO scorecard. These issues are discussed below.
OMB ISSUED LATE REPORTS
-------------------------------------------------------- Appendix II:1
GRH sets a specific timetable for issuance of CBO and OMB reports.
CBO and OMB sequestration reports are required by law to be issued
three times during the calendar year as dictated by a specific event
or a specific date--the President's budget submission, specific dates
in August, and the end of a congressional session. The law also
requires that CBO and OMB issue scoring reports on appropriation and
PAYGO legislation at specified times after completion of
congressional action and enactment. For 1997, OMB, for reasons
explained below, did not issue its final sequestration report within
the time established in law. OMB also issued most of its scoring
reports on individual pieces of legislation after the time specified
in law.
Section 254(g) requires that OMB issue a final sequestration report
15 days after the end of a congressional session (as set forth in
section 254(a)) updated to reflect laws enacted through that date.
The 104th Congress adjourned sine die on October 4, 1996. OMB's
final sequester report was required to be issued on October 19, 1996,
based on the congressional adjournment date.
OMB, however, did not issue its report until November 15, 27 days
later than required by law. OMB decided not to issue a report until
all legislation enacted during the 104th Congress had been sent to
and signed by the President. The last piece of legislation sent to
the President was the Omnibus Parks and Public Lands Management Act
of 1996 (HR 4236). Although the Congress completed action on this
bill on October 3, 1996, it was not sent to the President for
signature until November 5, 1996. The President signed the bill into
law on November 12, 1996.
According to OMB, the final report was delayed to include all
legislation. The Omnibus Consolidated Appropriations Act enacted
during the 104th Congress required that PAYGO balances for 1997 in
next year's preview report be set at zero--i.e., that no balance be
carried over to offset the costs of future legislation. Thus, OMB
decided it was important that the final report reflect all PAYGO
legislation.\1
The law clearly requires OMB to issue its report after the end of the
session. However, because delays in the final processing of
legislation could occur again, the Congress should decide whether OMB
should issue an incomplete report by the 15th day or issue the report
after all legislation passed by that session of the Congress has been
acted upon. We believe that the purpose of the final report should
be to determine whether a sequester is necessary based on all
legislation enacted during a session of the Congress. Therefore, as
noted in the letter, we suggest that the Congress consider amending
GRH to direct OMB to issue its final report during a given period
after Presidential action has been taken on all legislation passed
during a session.
With regard to the scoring reports required to be issued by OMB,
section 252(d) requires that "Within 5 calendar days after the
enactment of any direct spending or receipts legislation enacted
after the enactment of this section, OMB shall transmit a report to
the House of Representatives and to the Senate containing such CBO
estimate of that legislation, an OMB estimate of the amount of change
in outlays or receipts, as the case may be, in each fiscal year
through 1998 resulting from that legislation, and an explanation of
any difference between the two estimates." Section 251(a)(7) contains
a requirement for reporting estimates of budget authority and current
year and budget year outlays within 5 days after the enactment of any
discretionary appropriation.
Our analysis of 101 scorekeeping reports for both PAYGO and
appropriations actions issued by OMB for legislation enacted during
the second session of the 104th Congress showed that 72 (71 percent)
of the scoring reports were issued more than 5 days after enactment.
Report issuance ranged from 2 days to 34 days after enactment and
averaged 7.5 days per report. Most reports (88 percent) were issued
within 10 days after enactment.
Timing for CBO reports on bills with completed congressional action
was similar to that of OMB. Although CBO had a slightly lower
average days per report (7.3), only 54 percent of its reports were
issued more than 5 days after the Congress completed action on the
legislation. However, unlike OMB, CBO does not have a specified
number of days as its requirement for report issuance. CBO is
required only to issue its reports "as soon as practicable after
Congress completes action."
--------------------
\1 GRH as amended by BEA provides that if in the aggregate all PAYGO
legislation increases the deficit in the current or budget year,
there is a sequester. Section 4001 of the Omnibus Consolidated
Appropriations Act (P.L. 104-208) requires that if the balance for
fiscal year 1997 is not an increase in the deficit (i.e., if no
sequester is required) then the day following the issuance of OMB's
final sequestration report, the scorecard balance for fiscal year
1997 be set at zero. OMB reported that, on the day after submission
of its final sequestration report, $6.3 billion in savings would be
removed from the PAYGO scorecard for fiscal year 1997 and will not be
available to offset future legislation.
MATTER FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------ Appendix II:1.1
The Congress may wish to consider changing the required timing of
OMB's final sequestration report to link its issuance to the
completion of Presidential action on all legislation passed during a
session of the Congress.
OMB CHARGED DISCRETIONARY CAP
ADJUSTMENT TO PAYGO SCORECARD
-------------------------------------------------------- Appendix II:2
In its scoring for the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, OMB in effect "charged PAYGO" for the
increase in the discretionary cap adjustment provided for in the act.
To understand this action, it is necessary to look at both this act
and the earlier Contract with America Advancement Act of 1996 (P.L.
104-121).
Section 103(b) of the Contract with America Advancement Act of 1996
amended section 251(b)(2) of GRH to adjust the discretionary caps
upward by specified amounts for appropriations enacted for continuing
disability reviews under the heading "Limitation on Administrative
Expenses" for the Social Security Administration.\2 In scoring this
act, both OMB and CBO increased the discretionary caps and took no
action on the PAYGO scorecard. The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996, passed later in the session,
amended the previously passed act to increase by $150 million in 1997
and $100 million in 1998 the allowable amounts of the cap adjustment.
This increase in dollar amounts for continuing disability reviews was
the sole change to this section of the law.
In its PAYGO scoring report on the Personal Responsibility and Work
Opportunity Act of 1996, OMB increased PAYGO outlays by the $250
million newly authorized to be appropriated. Thus, OMB made a PAYGO
adjustment based on authorized future appropriations action. This
contrasted with its earlier scoring of the Contract with America
Advancement Act for which it made no adjustment for PAYGO outlays.
OMB said that under the Contract with America Advancement Act, the
intention was to fund administrative expenses to achieve a certain
level of mandatory savings. OMB further said that since the
additional discretionary resources provided in the Personal
Responsibility and Work Opportunity Reconciliation Act cap
adjustment--unlike those provided in the earlier Contract with
America Advancement Act--were not necessary to achieve the mandatory
savings, it scored the second cap adjustment as a PAYGO cost.
In its final sequester report of October 11, CBO took exception with
OMB's adjustment of PAYGO outlays. It pointed out that a cap
adjustment does not involve direct spending and should not be
included on the PAYGO scorecard. Section 250(c)(8) defines direct
spending as budget authority provided by law other than appropriation
acts, entitlement authority, and the food stamp program.
OMB's PAYGO scoring of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 cap adjustments for continuing
disability reviews is not consistent with the definition of "direct
spending" in GRH nor with the long-standing practices followed by OMB
and CBO. OMB's scoring of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 in effect constrains mandatory
spending to pay for an increase in the discretionary caps by holding
the PAYGO part of the budget responsible for the discretionary
spending increase permitted by the upward cap adjustment. The
scoring attempts to ensure that the potential increase in
discretionary spending is offset by recording it as a PAYGO cost. We
have previously commented\3
on the need to consider when and under what circumstances breaching
the wall between discretionary and mandatory categories makes sense.
OMB's scoring of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 raises the issue again, and we suggest
that the Congress look at this issue.
--------------------
\2 Administrative expenses are shown on the discretionary scorecard
but benefit payments are part of the PAYGO scorecard. Therefore,
although continuing disability reviews reduce Supplemental Security
Income (SSI) costs, these savings in SSI payments cannot be used to
offset the costs of increased continuing disability reviews. We have
previously commented on the problem this presents. [See
correspondence to Chairmen and Ranking Members of Government
Operations and Budget and Governmental Affairs Committees, B-247667,
May 19, 1993]. The increase in the caps provided in these 1996 laws
was likely intended to deal with this problem and may have been
patterned after the cap adjustment for IRS compliance.
\3 Letter to Chairmen and Ranking Members of House Committees on
Government Operations and on Budget and of Senate Committees on
Governmental Affairs and Budget on possible changes to BEA (B-247667,
May 19, 1993). Also Budget Process: Evolution and Challenges
(GAO/T-AIMD-96-129, July 11, 1996).
MATTERS FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------ Appendix II:2.1
To increase its ability to shift spending priorities, the Congress
may wish to consider specifying the circumstances and conditions
under which tradeoffs between mandatory and discretionary spending
are permitted.
IMPLEMENTATION ISSUES RELATING TO
ESTIMATES FOR PAYGO LEGISLATION
========================================================= Appendix III
Ninety-seven pieces of direct spending and receipts legislation were
enacted during the second session of the 104th Congress. In its
final sequestration report, OMB estimated that PAYGO legislation
decreased the fiscal year 1996 deficit by $1.2 billion and the 1997
deficit by $6.3 billion for a combined total of $7.5 billion for the
2 years.
GRH requires that, in total, direct spending and receipts legislation
not increase the deficit in any year through 1998. Net savings
enacted for 1 fiscal year may be used to offset net increases in the
next year. The PAYGO process requires that OMB maintain a
"scorecard" that shows the cumulative deficit impact of such
legislation, beginning with the 102nd Congress.\1
CBO's final sequestration report estimated that PAYGO legislation
reduced the deficit for fiscal year 1996 by $1.1 billion and $6.3
billion for fiscal year 1997. Thus, CBO concluded that no PAYGO
sequestration would be necessary. However, this conclusion was only
made because CBO adopted OMB's PAYGO balances from OMB's August
update report as the basis for calculating the current balances. CBO
reported that if it had used the balances in OMB's March preview
report and its own estimates of the effects of PAYGO legislation
enacted since then, it would conclude that the combined 1996 and 1997
deficits had increased by about $2.9 billion and that a sequestration
would be required in 1997. CBO attributed these different outcomes
to different estimates of the effects of the Federal Agriculture
Improvement and Reform Act of 1996 (FAIR). This issue is discussed
in detail in the next section of this report.
Table III.1 shows the five laws for which OMB and CBO PAYGO estimates
differed by over $100 million. These differences accounted for most
of the total estimating differences. Table III.2 contains a list of
PAYGO legislation having a deficit impact in either fiscal year 1996
or 1997 that was enacted during the second session of the 104th
Congress.
Table III.1
Comparison of OMB and CBO Scoring of
PAYGO Legislation With a Difference
Greater than $100 Million in Fiscal
Years 1996 or 1997
(Dollars in millions)
Change in
fiscal year
baseline
deficit
--------------
Act 1996 1997
------------------------------------------------------ ------ ------
Contract with America Advancement Act
OMB estimate $ -26 $ -
212
CBO estimate -6 -341
Difference -20 129
Federal Agriculture Improvement and Reform Act of 1996
OMB estimate - -
1,941 3,746
CBO estimate 3,175 1,476
Difference - -
5,116 5,222
Small Business Job Protection Act of 1996
OMB estimate -255 126
CBO estimate -92 -579
Difference -163 705
Health Insurance Portability and Accountability Act of
1996
OMB estimate -10 191
CBO estimate 52 -275
Difference 42 466
Personal Responsibility and Work Opportunity
Reconciliation Act of 1996
OMB estimate -18 -
3,932
CBO estimate \a -
2,994
Difference - 18 -938
----------------------------------------------------------------------
\a Less than $500,000.
We examined the reasons for the differences between CBO and OMB for
the three pieces of PAYGO legislation where the scoring difference
exceeded $500 million. A discussion of those analyses follows.
--------------------
\1 Section 4001 of the Omnibus Consolidated Appropriations Act, 1997
(P.L. 104-208) requires that on the day following the issuance of
OMB's final sequestration report, the scorecard balance for fiscal
year 1997 be set at zero if the balance for fiscal year 1997 is not
an increase in the deficit. OMB reported that, on the day after
submission of its final sequestration report, $6.3 billion in savings
would be removed from the PAYGO scorecard for fiscal year 1997 and
will not be available to offset future legislation.
FEDERAL AGRICULTURE IMPROVEMENT
AND REFORM ACT OF 1996
------------------------------------------------------- Appendix III:1
OMB and CBO differed by $5.1 billion for 1996 and $5.2 billion for
1997 in their estimates of the deficit impact of the Federal
Agriculture Improvement and Reform Act of 1996 (FAIR) (P.L.
104-127).\2 FAIR is a comprehensive law authorizing agriculture
programs for fiscal years 1996 through 2002 and includes commodities,
credit, conservation, rural development, trade, nutrition, research,
and market promotion programs. As shown in table III.1, OMB
estimated that FAIR would reduce the deficit by $1.9 billion in 1996
and $3.7 billion in 1997. CBO estimated that the act would increase
the deficit by $3.2 billion in 1996 and $1.5 billion in 1997. Had
OMB scored FAIR as CBO did, an offset would have been required to
avoid a PAYGO sequester.
The primary reason for this difference, according to both OMB and
CBO, is the use of different baseline assumptions against which to
compare FAIR for the 1996 crop year.\3
Based on longstanding practice, both CBO and OMB would have been
expected to calculate the impact of FAIR against a baseline that
assumed the provisions of the 1990 farm act\4 were in effect--and CBO
did so. OMB, however, assumed the provisions of the 1938 and 1949
agriculture acts were in effect for crop year 1996 (affecting fiscal
years 1996 and 1997) but that the 1990 act was in effect for crop
years 1997 and beyond. OMB's use of two different sets of
legislative assumptions in its baseline calculations is
unprecedented.
Baseline assumptions are derived from section 257(b)(2) of GRH which
requires that, in constructing the baseline, "No program with
estimated current-year outlays greater than $50 million shall be
assumed to expire in the budget year or outyears." The conference
report on OBRA 93 addressed the issue of baseline construction
specifically by stating that, "In case of CCC, which reverts to
older, very general authority, existing practice is to assume that
authority would be used in the same manner as the just expired law."
The Congress has typically passed 5-year farm bills providing lower
crop support levels than would be paid under the 1949 permanent
agriculture law. The 1990 farm act expired in December 1995, but
FAIR was not signed into law until April 4, 1996.
Although section 257(b)(2) conceivably could be interpreted as
assuming a reversion, for baseline purposes, to laws which had been
superseded by the expired law, a more reasonable interpretation--and
one which consistently has been used by both OMB and CBO in all past
instances--is to construct the baseline based on the law that is set
to expire (or that was most recently in effect if it has already
expired). This usual interpretation ensures that scoring of new
legislation is compared with what actually exists or was most
recently in effect. Thus, for purposes of constructing the baseline,
had OMB used standard scoring conventions, it would have scored FAIR
against the 1990 legislation.
Notwithstanding this longstanding practice, OMB seems to have been of
two minds on this issue. In the President's 1997 budget issued March
19, 1996, the current services estimates for 1995-2002 used the 1990
farm act as the basis for estimates of mandatory programs for
farmers. However, a footnote to the current services budget noted
that at the time the budget was prepared new authority for farm
programs--which had expired in December 1995--had not yet been
enacted. This footnote stated further that legislation enacted after
the release of the 1997 budget would be scored against the permanent
law baseline (1938 and 1949 farm bills). When OMB issued its 5-day
scoring estimates after the passage of FAIR,\5 it said it scored the
commodity provisions against the extension of the 1990 act for all
crop years except 1996. According to OMB, because a recent federal
court decision prior to the enactment of FAIR affirmed implementation
of "permanent law" for commodity programs for the 1996 crop year, the
OMB baseline for 1996 was prepared assuming this permanent law.
Despite the footnote in the 1997 budget, an OMB official told us that
absent this court case OMB would have used the 1990 farm bill as the
baseline for all years.
Our review of the court order in that case,\6 along with a transcript
of the hearing, does not support OMB's characterization of the Morris
v. Glickman decision as having "affirmed USDA implementation of
'permanent law' for its commodity programs with the 1996 crop year."
In the Morris v. Glickman case, plaintiff farmers sued to compel the
Secretary of Agriculture to establish commodity price support levels
under the 1949 act for the 1996 crop year. At the hearing, the court
determined that the Secretary was not legally compelled to establish
support levels "in advance of the planting season," but rather to
establish such levels "as soon as practicable." Although the court
stated that the 1949 act was in effect until a new act was signed,
the court stated that it was unlikely that the farmers would receive
payments under the 1949 act. Accordingly, the court dismissed the
case with prejudice.
It appears that, except for the claimed effect of the Morris v.
Glickman decision, both OMB and CBO agree on the baseline assumptions
for farm commodity programs--i.e., that commodity credit programs
should be scored against the expiring act.
Even if OMB had used the 1990 act as its baseline for fiscal years
1996 and 1997, there would have been sizable scoring differences with
CBO due to long-acknowledged differences in technical program
assumptions. According to OMB, these assumptions include the number
of program participants, amount of cropland in production, and
differences in commodity prices. CBO has also reported in the past
that OMB's baseline was consistently higher than its projected
outlays with the biggest differences in 1992 and 1993 when CBO's
projections were $1.9 billion and $1.6 billion lower, respectively,
than the administration's.\7
--------------------
\2 This represents the largest difference in scoring between CBO and
OMB since the establishment of PAYGO procedures in BEA.
\3 A crop year is the 12-month period beginning at the time of
harvest and is identified by the year in which it begins.
\4 Food, Agriculture, Conservation, and Trade Act of 1990 (P.L.
101-624).
\5 The President signed FAIR on April 4, 1996, and OMB issued its
5-day scoring estimates on April 9.
\6 Morris v. Glickman (DCDC Civ. No. 96-0373, March 21, 1996).
\7 The Outlook for Farm Commodity Program Spending, Fiscal Years
1992-1997 Congressional Budget Office, June 1992.
MATTER FOR CONGRESSIONAL
CONSIDERATION
----------------------------------------------------- Appendix III:1.1
The Congress may wish to consider clarifying section 257(b) to
explicitly require the most recently expiring provisions of law for
programs with current year outlays greater than $50 million to be
used to construct the baseline.
SMALL BUSINESS JOB PROTECTION
ACT OF 1996
------------------------------------------------------- Appendix III:2
OMB and CBO differed by $163 million for 1996 and $705 million for
1997 in their estimates of the PAYGO impact of the Small Business Job
Protection Act of 1996 (P.L. 104-188). The act makes numerous
changes in the tax code that reduce revenues while providing relief
to small businesses, simplifying pension plans, and extending certain
expiring provisions.
CBO estimated that, due to increased revenues, the deficit would
decrease by $92 million in 1996 and $579 million in 1997 for a total
deficit reduction totaling $671 for the 2 years. OMB estimated that
the 1996 deficit would decrease by $255 million due to increased
revenues. However, it estimated that decreased revenues would cause
the 1997 deficit to increase by $126 million, for a 2-year deficit
reduction of $129 million.
The largest revenue increases result from the repeal of the
possessions tax credit given to domestic corporations with operations
in Puerto Rico and other U.S. possessions (Section 936) and the
extension of expired Airport and Airway Trust Fund excise taxes
through the end of 1996. CBO, which receives its estimates of
changes in tax laws from the Joint Committee on Taxation, estimated
that these two provisions would result in higher revenue gains than
OMB, which receives its estimates of tax law changes from the
Treasury Department. These increases were either partially offset or
more than offset by extending tax credits such as that for
employer-provided educational assistance.
PERSONAL RESPONSIBILITY AND
WORK OPPORTUNITY RECONCILIATION
ACT OF 1996
------------------------------------------------------- Appendix III:3
OMB and CBO estimates for 1997 differed by $938 million for the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 (P.L. 104-193). This legislation repealed certain welfare
entitlements and replaced them with a block grant to states. It also
requires welfare recipients to work and places time limits on the
receipt of welfare benefits as well as amending a variety of other
federal programs.
OMB estimated that this legislation would reduce the deficit by $3.9
billion for fiscal year 1997 while CBO estimated that it would reduce
the deficit by $3.0 billion. Despite this large difference for 1997,
the total difference for the 7-year period 1996-2002 amounts to only
$154 million.
While there were relatively small overall differences between OMB and
CBO estimates, larger differences at the program level result from
different technical assumptions and different program baselines. OMB
and CBO analysts told us that the program level differences were
attributable primarily to assumptions about implementation of
immigrant provisions of the law. OMB assumed that provisions denying
immigrant benefits could be implemented sooner than CBO assumed. In
addition, OMB and CBO estimates for receipts relating to the Earned
Income Tax Credit differ because OMB uses Treasury estimates and CBO
uses Joint Committee on Taxation estimates for receipts.
Of more analytic significance was OMB's adjustment of PAYGO outlay
estimates in response to an authorization for appropriations for
continuing disability reviews. OMB increased PAYGO outlay estimates
by $150 million for 1997 and $100 million in 1998 for amounts
authorized as a discretionary cap adjustment for Social Security
Administration continuing disability reviews. CBO did not include
any PAYGO effects for this item. This is discussed in detail under
compliance issues in appendix II.
TOTAL PAYGO LEGISLATION
------------------------------------------------------- Appendix III:4
Table III.2 lists all PAYGO legislation enacted during the second
session of the 104th Congress having an impact of more than $500,000
on the deficit in fiscal years 1996 or 1997. Both OMB and CBO
estimates are included, along with the difference between the two.
Complete lists of PAYGO legislation with deficit impact and without
deficit impact are included in OMB's final sequestration report dated
November 15, 1996.
Table III.2
PAYGO Legislation Enacted During the
Second Session of the 104th Congress
That Has a Deficit Impact Greater Than
$500,000 in Fiscal Years 1996 or 1997
(Dollars in millions)
1996 1997
-------------------------- --------------------------
P.L. No. Title OMB CBO Difference OMB CBO Difference
---------- ------------ ------ ------ ---------- ------ ------ ----------
104-96 Smithsonian $ 0 $ -3 $ 3 $ 0 $ -3 $ 3
Institution
Sesquicente
nnial
Commemorati
ve Coin Act
of 1995
104-104 Telecommunic 0 0 0 4 1 3
ations Act
of 1996
104-105 Farm Credit -1 -1 0 -1 -1 0
System
Reform Act
of 1996
104-106 Defense 315 395 -80 609 672 -63
Authorizati
on Act of
1996
104-110 Extension of -3 -5 2 -1 -1 0
VA Medical
and Housing
Programs
104-117 Tax Relief 38 38 0 45 45 0
for Troops
in
"Operation
Joint
Endeavor"
104-121 Contract -26 -6 -20 -212 -341 129
With
America
Advancement
Act
104-123 Greens Creek \a 0 \a -1 0 -1
Land
Exchange
104-127 Federal - 3,175 -5,116 - 1,476 -5,222
Agriculture 1,941 3,746
Improvement
and Reform
Act of 1996
104-132 Antiterroris -2 -2 0 -2 -3 1
m and
Effective
Death
Penalty Act
104-134 Omnibus \b 0 0 \b -4 4
Consolidated
Rescissions
and
Appropriati
ons Act
104-164 Defense and -72 0 -72 0 0 0
Security
Assistance
Improvement
s
Pvt Law Private 1 1 0 0 0 0
104-1 Relief for
Benchmark
Rail Group
104-168 Taxpayer 26 30 -4 16 15 1
Bill of
Rights 2
104-185 Federal Oil 0 0 0 -1 -1 0
and Gas
Royalty
Simplificat
ion and
Fairness
Act of 1996
104-188 Small -255 -92 -163 126 -579 705
Business
Job
Protection
Act of 1996
104-190 AID Buyout \b 0 0 \b -1 1
Authority
104-191 Health -10 -52 42 191 -275 466
Insurance
Portability
and
Accountabil
ity Act of
1996
104-193 Personal -18 \a --18 - - -938
Responsibil 3,932 2,994
ity and
Work
Opportunity
Reconciliat
ion Act of
1996
104-201 National 0 0 0 -22 -22 0
Defense
Authorizati
on Act for
Fiscal Year
1997
104-208 Omnibus \b 0 0 \b 1 -1
Consolidated
Appropriati
on Act
104-251 Railroad 0 0 0 12 12 0
Unemployment
Insurance
Amendments
Act of 1996
104-264 Federal 0 0 0 0 50 -50
Aviation
Authorizati
on Act of
1996
104-275 Veterans 0 0 0 -34 0 -34
Benefits
Improvement
s Act of
1996
104-286 Central Utah 0 0 0 -75 -72 -3
Project
Completion
Act
Amendments
104-294 Economic 0 0 0 -5 -5 0
Espionage
Act of 1996
104-295 Miscellaneou 0 0 0 15 9 6
s Trade and
Technical
Corrections
Act of 1996
104-297 Sustainable 0 0 0 0 -2 2
Fisheries
Act
104-301 The Navajo- 0 0 0 0 48 -48
Hopi Land
Dispute
Settlement
Act of 1996
104-304 Accountable 0 0 0 3 3 0
Pipeline
and
Partnership
Act of 1996
104-308 Compensation 0 0 0 4 3 1
for Patent
Owners in
Certain
Suits
Against the
United
States
104-315 Change in 0 0 0 -10 -8 -2
Medicaid
Nursing
Facility
Resident
Review
Requirement
s
104-318 Emergency 0 0 0 7 7 0
Drought
Relief Act
104-324 Coast Guard 0 0 0 3 3 0
Authorizati
on Act of
1996
104-329 United 0 0 0 -6 -6 0
States
Commemorati
ve Coin Act
of 1996
================================================================================
Total - 3,484 -5,432 - - -5,040
Enacted 1,948 7,013 1,973
This
Session
--------------------------------------------------------------------------------
Note: A negative number in the OMB or CBO column represents a
reduction in the deficit, whereas a positive number represents an
increase in the deficit.
\a Less than $500,000.
\b OMB did not score this legislation as PAYGO.
IMPLEMENTATION ISSUES FOR
DISCRETIONARY SPENDING
========================================================== Appendix IV
In our review of compliance with discretionary spending controls
during the second session of the 104th Congress, we identified
several instances in which OMB and CBO differed in (a) making
adjustments to discretionary spending limits, or caps, and (b)
scoring appropriations, that is, estimating the amounts of
discretionary new budget authority and outlays for enacted
appropriations bills. These two areas are discussed in separate
sections below, after a brief introductory section describing (1) the
unusual circumstances for appropriations during the year and (2) the
overall level of fiscal year 1996 and 1997 discretionary spending in
relation to the discretionary spending limits.
1996 WAS AN UNUSUAL BUDGET YEAR
-------------------------------------------------------- Appendix IV:1
The second session of the 104th Congress was an unusual year for
appropriations because the Congress and the President had not reached
agreement on 6 of 13 fiscal year 1996 appropriations when the session
began in January 1996, 3 months after the start of fiscal year 1996.
From January through April 1996, nine different continuing
appropriations measures for fiscal year 1996 were enacted to keep
nearly one-third of the government operating until final agreement
was reached between the Congress and the President on the six
remaining fiscal year 1996 appropriations.\1 The fiscal year 1996
appropriation for Foreign Operations was enacted on February 12,
1996, while the remaining five regular appropriations for fiscal year
1996--for Commerce, the District of Columbia, Interior,
Labor/HHS/Education, and VA/HUD--were combined into the Omnibus
Consolidated Rescissions and Appropriations Act of 1996 (OCRA),
enacted on April 26, 1996, almost 7 months after the start of the
fiscal year.
In contrast with the fiscal year 1996 appropriations, all fiscal year
1997 appropriations were enacted into law before the start of fiscal
year 1997 on October 1, 1996. Seven of the 13 regular appropriations
bills--for Agriculture, District of Columbia, Military Construction,
Legislative Branch, VA/HUD, Transportation, and Energy/Water--were
enacted during August and September. The remaining six bills were
combined into the Omnibus Consolidated Appropriations Act, 1997
(OCAA), enacted on September 30.
--------------------
\1 Prior to the second session, four continuing resolutions for
fiscal year 1996 were enacted.
DISCRETIONARY SPENDING
DURING THE YEAR WAS WELL
BELOW BEA SPENDING CAPS
------------------------------------------------------ Appendix IV:1.1
Appropriations enacted during the second session were well below the
1996 and 1997 discretionary spending limits--by about $29-$34 billion
in budget authority and $12-$14 billion in outlays (see table IV.1).
As a result, OMB and CBO differences over discretionary cap
adjustments and scoring of appropriations were not of the same
consequence as the PAYGO scoring differences discussed in appendix
III, since such differences posed no sequester threat for
discretionary spending as they did for the PAYGO spending.
Table IV.1
Enacted Appropriations As of November
15, 1996, Under Discretionary Caps\a
(Dollars in millions)
Fiscal Year Fiscal Year
1996 1997
-------------- --------------
Outlay Outlay
BA\b s\b BA\b s\b
-------------------------------------- ------ ------ ------ ------
Discretionary spending limits\c $526,6 $552,7 $532,0 $550,9
63 34 31 91
Total appropriations enacted 492,48 538,20 502,38 538,70
4 9 8 2
Amount under spending limits 34,179 14,525 29,643 12,289
----------------------------------------------------------------------
\a In addition to the statutory spending limits discussed above, the
Congress also sets separate discretionary spending caps in its budget
resolutions. These budget resolution caps were lower than the
statutory caps for fiscal year 1997. The budget resolution caps were
$497.4 billion in budget authority ($35 billion less than the
statutory cap for budget authority (BA)) and $538.6 billion in
outlays ($12 billion lower than the statutory cap for outlays).
Fiscal year 1997 appropriations enacted during the session exceeded
the budget resolution discretionary budget authority caps by about $3
billion according to CBO, the scorekeeper for congressional budgeting
purposes. Total estimated fiscal year 1997 outlays were below the
budget resolution caps by $141 million in the Senate and by $3
billion in the House, the main difference being that the House
counted as an offset to fiscal year 1997 outlays $3.1 billion from
the Banking and Savings Association Insurance Funds as provided for
in OCAA.
\b OMB estimates.
\c Includes both General Purpose and Violent Crime Reduction Trust
Fund Limits.
OMB AND CBO DIFFERED ON
ADJUSTMENTS TO DISCRETIONARY
SPENDING LIMITS
-------------------------------------------------------- Appendix IV:2
Section 251(b) of GRH requires that discretionary spending limits be
adjusted to account for (a) changes in concepts and definitions, (b)
changes in inflation, (c) emergency appropriations, and (d) spending
for continuing disability reviews by the Social Security
Administration in excess of certain amounts. 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 or whether a sequestration is required to
avoid a breach of them. CBO's cap adjustment estimates are advisory.
During the year, OMB and CBO made cap adjustments for changes in
concepts and definitions, changes in inflation, emergency
appropriations, and continuing disability reviews. Overall, based on
our calculations, CBO and OMB increased the 1996 spending caps by
over $1 billion for these adjustments, while CBO and OMB decreased
the 1997 and 1998 caps in making these adjustments by over
$2 billion for 1997 and $7 billion for 1998.\2 OMB's cap adjustments
were lower than CBO's for 1996 by less than $100 million for both
budget authority and outlays, and OMB's were lower for 1997 by about
$200 million in budget authority and $600 million in outlays. On the
other hand, OMB's cap adjustments were higher than CBO's for 1998 by
about $550 million for both budget authority and outlays. Our
analysis of these differences follows.
--------------------
\2 The CBO numbers are based on our estimates of what the spending
limits would have been had CBO's cap adjustments not been conformed
to OMB's adjustments during the year.
OMB AND CBO DIFFERED ON
ADJUSTMENTS FOR CHANGES IN
CONCEPTS AND DEFINITIONS
------------------------------------------------------ Appendix IV:2.1
Discretionary spending limits are adjusted for changes in accounting
and scorekeeping conventions, and budget concepts definitions,
including reclassification of spending and programs between the
direct and discretionary spending categories. In their March 1996
preview sequestration reports, both OMB and CBO adjusted the 1997 and
1998 spending caps for changes in concepts and definitions. OMB
increased the budget authority spending caps for such changes by $117
million and $86 million for 1997 and 1998, respectively, while OMB
decreased the outlay spending caps by $1.9 billion and $1.8 billion
for 1997 and 1998, respectively. Compared to OMB, CBO's proposed cap
adjustments for changes in concepts and definitions would have
resulted in lower spending caps: for budget authority by $161
million in 1997 and $33 million in 1998, and for outlays by $437
million in 1997 and $130 million in 1998. These differences were the
result of three factors.
First, OMB increased the caps more because it estimated greater
savings than CBO from legislative changes made to direct spending
programs in appropriations acts (which are "reclassified" and scored
as discretionary changes with corresponding changes to the
discretionary spending limits), primarily the savings from acreage
limitations placed on the wetlands and conservation reserve programs
by provisions in the 1996 Agriculture Appropriations Act (P.L.
104-37). For this reason, OMB estimated $73 million and $139 million
more budget authority savings than CBO in fiscal years 1997 and 1998,
respectively. OMB's related outlay savings were $47 million and $30
million more than CBO's for fiscal year 1997 and 1998, respectively.
Second, the spending limits were reduced to reflect a
reclassification of the portion of the Department of Transportation's
federal aid to highways account that is not subject to appropriations
committee control through obligation limitations. This highway
spending was reclassified from discretionary to mandatory spending
beginning in 1997 and the caps were reduced to reflect the
discretionary outlays that would have been included in the
discretionary spending baseline if the category change had not
occurred. OMB reduced the outlay caps by $2.12 billion and $1.86
billion for 1997 and 1998, respectively, to reflect the
reclassification of the highway spending. Since CBO projected lower
highway outlays, it would have reduced the outlay caps by $2.18
billion and $1.99 billion for 1997 and 1998, or $62 million in 1997
and $126 million in 1998 more than OMB actually reduced the outlay
caps for the reclassified highway spending.
Third, apparent cap adjustment differences between OMB and CBO in
budget authority of $88 million in 1997 and $-106 million in 1998 and
in outlays of $328 million in 1997 and $-26 million in 1998 were due
to a sign error (transposition of (+/-) signs to a set of budget
figures in a list of reclassified programs) by CBO that was corrected
in its August 1996 update report.
CBO AND OMB DIFFERED IN
ADJUSTING 1998 DISCRETIONARY
SPENDING LIMITS FOR CHANGES
IN INFLATION
------------------------------------------------------ Appendix IV:2.2
Discretionary spending limits are adjusted to reflect changes in
prior inflation estimates. This year both CBO and OMB revised
downward prior inflation estimates for 1997 and 1998 reflected in the
President's 1996 Budget. Thus both CBO and OMB called for reducing
the discretionary spending caps--by the same amount for 1997 and by
different amounts for 1998--to reflect the lower inflation
forecasts.\3 Since CBO projected a 0.1 percent lower rate of
inflation for 1998 than OMB, CBO would have reduced the 1998 caps by
$520 million more in budget authority and by $312 million more in
outlays than OMB actually did.
CBO's and OMB's updated inflation estimates were reflected in their
March 1996 preview reports. For 1997, since CBO and OMB each
projected the same 1997 inflation rate of 2.7 percent, down about 0.5
percent from the prior inflation estimate for 1997 of 3.2 percent,
both agencies called for reducing the 1997 caps by the same amount:
$4.7 billion in budget authority and $2.8 billion in outlays.
For 1998 inflation, CBO projected a rate of 2.6 percent, while OMB
projected 2.7 percent, different rates, but both down from the prior
estimate of about 3.2 percent. Due to this difference over the
projected 1998 inflation rate, the CBO and OMB preview reports had
differing estimates of how much the 1998 caps needed to be adjusted.
OMB reduced the 1998 caps by $7.3 billion in budget authority and
$5.6 billion in outlays to reflect its updated, lower 1998 inflation
estimate. CBO would have reduced the 1998 discretionary spending
caps by $7.8 billion in budget authority and $5.9 billion in outlays
to reflect its revised inflation estimate. The 0.1 percent inflation
estimate difference resulted in a cap adjustment difference of $520
million in budget authority and $312 million in outlays.
--------------------
\3 This year CBO and OMB each began using a new chain-weighted
methodology for computing their respective inflation estimates.
Because of this shift in method, the prior inflation forecast
contained in the economic assumptions for the President's 1996 Budget
had to be restated on a chain-weighted basis. Then, the difference
between the restated 1996 budget inflation estimates and each
agency's comparable 1997 inflation estimates were compared to produce
CBO's proposed inflation adjustment and OMB's actual inflation
adjustment to the discretionary caps.
CBO AND OMB DIFFERED IN
SCORING AND ADJUSTING
DISCRETIONARY SPENDING
LIMITS FOR EMERGENCY
SPENDING AND RESCISSIONS
------------------------------------------------------ Appendix IV:2.3
Discretionary spending caps are adjusted to reflect emergency
appropriations. There are two types of emergency appropriations:
(1) emergency appropriations so designated in statute and (2)
contingent emergency appropriations designated in statute as
emergencies contingent upon later action by the President officially
designating them as emergency requirements.
The amount of emergency cap adjustments by CBO and OMB differ for two
reasons. First, CBO and OMB can and always do differ in when they
score the contingent emergency appropriations for purposes of cap
adjustments. Second, CBO and OMB can differ in how they score the
budget authority and outlays for an emergency appropriation. For
example, the two agencies can have different estimates of the rate at
which the emergency funds appropriated will be obligated and then
outlayed.
The first reason cap adjustments for emergencies differ is that OMB
and CBO can and always do differ in when they score contingent
emergency appropriations. CBO scores and adjusts the spending caps
for contingent emergencies when they are enacted into law because the
Congress does not need to take any further action to make them
available. OMB, however, does not adjust the caps for contingent
emergencies until the President designates (releases) them as
emergency requirements. This means that between enactment and
Presidential release of funds, there is usually a difference in cap
adjustment for contingent emergencies between CBO and OMB. For
example, CBO's update sequestration report issued in August 1996
included a budget authority cap adjustment of $87 million for 1996
for the amounts of unreleased contingent emergencies included in
OCRA. OMB did not make this adjustment. CBO in its final
sequestration report then made an adjustment to its estimates of the
caps for 1996 to reconcile the $87 million budget authority
difference with OMB's update report.
The different rules used by CBO and OMB for scoring contingent
emergency appropriations led to OMB's 1997 budget authority cap
adjustment being $364 million lower than CBO's in its final
sequestration report. In its October 11, 1996, Final Report, CBO
estimated that $1.9 billion in 1997 budget authority for emergencies
had been enacted since OMB's August Update Report, which included
$1.3 billion in regular emergency appropriations and $566 million for
contingent emergencies. It adjusted the cap upward by the total
amount. OMB, in its final report, adjusted the cap upward for the
$1.3 billion for regular emergencies and $202 million of the $566
million of contingent emergency appropriations that were released by
the President on November 12, 1996. OMB did not adjust the cap for
the remaining $364 million of 1997 unreleased contingent emergency
funds, leading to the $364 million 1997 budget authority cap
adjustment difference with CBO.
The second reason cap adjustments for emergencies differ is that OMB
and CBO can differ in how they score budget authority or outlays from
an emergency appropriation. The August 1996 OMB and CBO update
reports reflected such a difference in the scoring of outlays. Due
to different outlay timing estimates, OMB called for smaller
emergency cap adjustments than CBO for 1996 and 1997 outlays, by $84
million and $746 million respectively, but OMB called for a $147
million higher cap than CBO for 1998 outlays. These emergency outlay
differences between OMB and CBO were due primarily to the scoring of
outlays from two emergency items included in OCRA enacted on April
26, 1996: (1) an $820 million Defense emergency supplemental
appropriation and (2) a $1.0 billion rescission from the unobligated
balance in the Federal Emergency Management Agency (FEMA) disaster
relief fund.
OMB estimated that the $820 million supplemental for Department of
Defense (DOD) military personnel and operations and maintenance
activities would result in outlays of $335 million more than CBO for
1996 and over $245 million less for 1997. CBO estimated that about
$336 million (41 percent) of the DOD emergency supplemental would be
outlayed in the remaining 5-plus months of fiscal year 1996, and
another $394 million (48 percent) in 1997. In contrast, OMB
projected that DOD would spend about $670 million (82 percent) of the
supplemental funds during the remainder of fiscal year 1996. It
based its faster outlay spendout estimate on knowledge that DOD
anticipated the increased funding and was ready to spend it.
The other major scoring difference in OCRA involved how fast savings
would be produced as a result of the $1 billion rescission from the
unobligated balance in FEMA's disaster relief fund. CBO estimated
that outlay savings from the rescission would not begin until 1998
based on a "first-in first-out" method of calculating outlay savings.
The "first-in first-out" method assumes that outlays are made from
the oldest budget authority first, and that savings would occur
later. Using this method, CBO projected that outlay savings from the
rescission would not begin until 1998, when savings of 30 percent
($300 million) of the $1 billion rescission would occur. In
contrast, OMB estimated savings to begin in 1996, when 40 percent
($400 million) of the savings from the rescission would occur,
followed by another 40 percent ($400 million) in 1997, and the
remaining 20 percent ($200 million) in 1998. Unlike CBO, OMB used a
simple 3-year 40:40:20 percent method of projecting future outlay
savings from the rescission, with all outlay savings to occur over 3
years (1996-1998), that is, 40 percent in year 1 (the current fiscal
year of 1996), 40 percent in year 2 (1997), and 20 percent in year 3
(1998).
Primarily as a result of the scoring of these two emergency items,
OMB, in its update sequestration report, adjusted the 1996 outlay cap
downward by $84 million more than CBO. OMB's faster outlay savings
estimate for the FEMA rescission was offset by its faster spendout
(outlay or spending rate) estimate for the DOD emergency supplemental
(that is, $400-$335=$65 of the $84 million difference in 1996
outlays). For the 1997 cap adjustment, the scoring differences on
the DOD and FEMA items accounted for over $645 million of the $746
million lower OMB 1997 outlay cap. In contrast with 1996 and 1997,
for 1998 CBO projected a lower cap than OMB, as CBO estimated an
initial $300 million in savings from the FEMA rescission to begin,
while OMB estimated the final $200 million in FEMA savings to end,
accounting for $100 million of the $147 million lower CBO 1998 outlay
cap.
COMMON REASONS FOR DIFFERENT
APPROPRIATION SCORING
-------------------------------------------------------- Appendix IV:3
Section 251(a)(7) of GRH requires CBO and OMB to score the budget
authority and outlays of each discretionary appropriation bill
enacted. Within 5 days of enactment of an appropriation bill, OMB is
required to transmit its and CBO's scoring estimates to the House and
the Senate, with an explanation of any differences between the OMB
and CBO estimates. We examined all the CBO and OMB scoring reports
for appropriations enacted during the second session of the 104th
Congress which included fiscal year 1996 appropriations for nearly
one-third of the government as well as all fiscal year 1997
appropriations. We focused primarily on items with the largest
scoring differences and discussed reasons for scoring differences
with OMB and CBO analysts.
We identified seven reasons for differences between OMB and CBO in
the scoring of discretionary budget authority:
1. different assumptions,
2. different cost estimates,
3. baseline differences,
4. timing differences,
5. errors,
6. different scoring of contingent emergency, and
7. different classifications of spending between discretionary and
direct spending categories.
We also identified three reasons for differences in the scoring of
outlays:
1. different spendout rates of new budget authority;
2. different spendout rates of prior year authority, including
spendout of account balances from prior year budget authority as well
as prior authority to spend receipts from offsetting collections; and
3. different new/current year budget authority estimates.
While there were many discretionary scoring differences between OMB
and CBO, none involved substantive compliance issues. Also, the
scoring differences were not consequential because estimated
discretionary spending was well below the spending caps, thus posing
no sequester threat for discretionary spending like they did for the
PAYGO spending.
OVERALL BUDGET AUTHORITY
DIFFERENCES WERE QUITE SMALL
------------------------------------------------------ Appendix IV:3.1
Overall, during the session, CBO and OMB discretionary budget
authority scoring differences were relatively small, amounting to
less than 1 percent of total budget authority. OMB and CBO differed
in their estimates of budget authority on 30 spending items (budget
accounts or groups of related accounts) for 1996 and 33 spending
items for 1997 according to our review of OMB's 5-day reports. There
were 8 items in 1996 and 5 items in 1997 that had differences of $100
million or more. The total budget authority (BA) scoring difference
for these 13 items totaled about $3 billion in absolute value,
accounting for nearly 75 percent of the about $4 billion absolute BA
scoring difference between CBO and OMB.
Absolute scoring differences represent the sum of the absolute value
of scoring differences for spending items, in contrast with net
scoring differences that represent the sum of positive and minus
number differences which tend to offset or cancel each other out. A
net scoring difference is never larger and is usually much smaller
than the absolute difference. Absolute scoring differences are a
better indicator than net scoring differences of the magnitude or
extent of scoring differences between OMB and CBO, since the positive
and minus number differences comprising a net scoring difference
within a bill and between bills offset each other.
Tables IV.2 and IV.3 show items exceeding $100 million in BA scoring
differences for fiscal years 1996 and 1997, respectively, along with
the stated reasons for the differences. The eight items for 1996 in
Table IV.2 accounted for about 80 percent ($1.9 billion of $2.4
billion) of the absolute BA scoring difference between OMB and CBO in
1996 appropriations enacted during the 2nd session of the 104th
Congress.
Table IV.2
BA Scoring Differences: Fiscal Year 1996
Items Exceeding $100 Million\a
(Dollars in millions)
Item: Budget
Appropriatio program authority
n or account difference Stated reason(s) for difference
------------ ------------ ------------ --------------------------------------
VA/HUD in Government $499 Different assumptions: CBO estimated
OCRA National that GNMA would make a profit for the
Mortgage government in FY 96, scoring a $499
Association million profit or negative subsidy.
(GNMA): OMB assumes that GNMA is designed to
Guarantees break even, and therefore it has no
of Mortgage- subsidy by definition. However, OMB
Backed did estimate that GNMA fee collections
Securities and other income would exceed expenses
by $477 million in FY 96, but noted
that this amount would be retained by
GNMA in order to cover future year
expenses and serve as a reserve
against losses that may be incurred on
GNMA guarantees in the future.
VA/HUD in FHA General -337 Different cost estimates: OMB had a
OCRA and Special $170 million lower net present value
Risk Program estimate of the subsidy than CBO based
Account on different volume and subsidy
assumptions, including a negative
subsidy for the Nursing Home loan
program that OMB included but CBO did
not. Also, OMB scored $167 million in
projected proceeds for a loan asset
sale which CBO did not. CBO did not
think the sale proceeds belong in the
program account, since the sale was
allowed under current law and involved
pre-1992 loans. Also, CBO questioned
whether the sale would make any money.
Labor/HHS in Grants to 258 Baseline differences: Difference
OCRA States for resulted from a difference in OMB and
Medicaid: CBO baseline estimates for this
Sec. 519 program. OMB's Medicaid baseline
(Optional included the latest state estimate of
Alternative federal spending for Louisiana: $2.4
Medicaid billion in FY 96. The appropriation
Payment act capped the federal share of
Method) payments to Louisiana at $2.6 billion;
therefore, OMB scored the provision
with a cost of $258 million. OCRA
defined the periods covered in state
fiscal years, and the $258 million
reflects the cost in FY 96. CBO's
baseline included $2.6 billion as the
federal share of costs, not the
earlier state estimate of $2.4
billion, and therefore CBO scored no
costs in FY 96.
Energy in U.S. 239 Timing differences: OMB continued its
OCRA Enrichment assumption made in the President's FY
Corporation 97 budget that the sale of USEC to the
(USEC) Fund private sector would take place at the
start of the 4th quarter of FY 96, and
scored lost USEC 4th quarter income of
$39 million and $200 million in
working capital to be provided from
the sale proceeds. CBO did not project
the sale to take place in FY 96 and
scored no BA for FY 96, but did
project $90 million additional outlays
to prepare for the sale. Neither CBO
nor OMB scored the $1.6 billion in
expected proceeds from the sale
itself, since OCRA did not contain a
waiver of BEA's asset sale scoring
rule.
Interior in Strategic 227 Errors: CBO, under congressional
OCRA Petroleum budget resolution rules, scored
Reserve proceeds of $227 million from the sale
of Weeks Island oil, but mistakenly
forgot to change its scoring to zero
as required under BEA before sending
its scoring data to OMB. OMB did not
score the sale since BEA does not
allow scoring of non-routine asset
sales.
VA/HUD in FHA Mutual -184 Different cost estimates: OMB and CBO
OCRA Mortgage had the same estimates for the
Insurance negative subsidy. OMB scored proceeds
of $184 million for a loan asset sale,
but CBO did not think the sale would
make any money.
Labor/HHS in Family 102 Baseline differences: OMB did not
OCRA Education score any BA savings associated with
Loan Account the reduction in authority from $550
and Federal million to $436 million to obligate
Direct the FY 96 permanent appropriations for
Student Loan loan administration. CBO scored BA
Program savings of $114 million. OMB scored
Account $12 million in BA savings associated
with the elimination of the $10 loan
origination payment to schools. CBO
scored no savings, assuming savings
would be completely offset by
increased payments to alternative
originators.
Interior in Strategic 100 Errors: CBO, under congressional
OCRA Petroleum budget resolution rules, scored
Reserve proceeds of $100 million from the sale
of Weeks Island oil, but mistakenly
forgot to change its scoring to zero
as required under BEA before sending
its scoring data to OMB. OMB did not
score the sale since BEA does not
allow scoring of non-routine asset
sales.
--------------------------------------------------------------------------------
\a A positive BA difference means OMB scored higher BA; a negative BA
difference means CBO scored higher BA.
The 5 items for 1997 in table IV.3 accounted for about 64 percent ($1
billion of $1.6 billion) of the absolute BA scoring difference
between OMB and CBO in fiscal year 1997 appropriations bills enacted
during the second session of the 104th Congress.
Table IV.3
BA Scoring Differences: Fiscal Year 1997
Items Exceeding $100 Million\a
(Dollars in millions)
Item: Budget
Appropriatio program or authority
n account difference Stated reason(s) for difference
------------ ------------ ------------ --------------------------------------
Labor/HHS in Low Income $-300 Different scoring of contingent
OCAA Home Energy emergency: CBO scored this $300
Assistance million contingent emergency for FY
Program 97, included in OCRA, to OCAA. OMB
will score this contingency if and
when it is released by the President.
Labor/HHS in Federal 218 Baseline differences: CBO scored $218
OCAA Direct million in BA savings as a result of
Student Loan limitations on spending for student
Program, loan administration, while OMB did
Financing not, consistent with each agency's
Account baseline for the program.
VA/HUD GNMA: 209 Different assumptions: CBO estimated
Guarantees that GNMA would make a profit for the
of Mortgage- government in FY 97, thus scoring a
Backed $209 million profit or negative
Securities subsidy. OMB assumes that GNMA is
designed to break even, and therefore
it has no subsidy by definition. OMB
estimated that GNMA fees and income
would exceed expenses by $532 million
in FY 97 but that these amounts would
be retained to cover future costs.
VA/HUD FHA General -160 Different cost estimates: OMB and CBO
and Special have different estimates of the
Risk Program negative subsidy for this credit
Account program due to different volume and
subsidy assumptions. OMB scored $25
million in BA, while CBO scored $185
million in BA.
VA/HUD FHA -132 Different cost estimates: CBO has a
Assignment lower estimate of the net present
Reform value of savings associated with this
reform than does OMB. CBO calculates a
$128 million savings, OMB $260
million.
--------------------------------------------------------------------------------
\a A positive BA difference means OMB scored higher BA; a negative BA
difference means CBO scored higher BA.
OUTLAY SCORING DIFFERENCES
WERE LARGER THAN BUDGET
AUTHORITY SCORING
DIFFERENCES
------------------------------------------------------ Appendix IV:3.2
Overall, during the session, the absolute value of CBO and OMB
discretionary outlay scoring differences amounted to about 3 percent
of total outlays, that is, $23 billion out of the estimated $731
billion in total budget year outlays from all fiscal year 1996 and
1997 discretionary appropriations enacted during the second session.
Not unexpectedly, absolute discretionary outlay scoring differences
were much larger (nearly 6 times larger) than the $4 billion or 0.6
percent absolute budget authority scoring differences between CBO and
OMB. Since appropriation acts specify the exact dollar amount of
budget authority for most discretionary programs, scoring budget
authority is relatively simple. In contrast, outlays for a
particular fiscal year depend on the pace at which budget authority
is used and so can be more difficult to score with precision.
Outlays during a fiscal year may be for obligations incurred in prior
years as well as in the current fiscal year, and current year
obligations and outlays may be from permanent (no-year) and prior
year authority as well as new (current fiscal year) budget
authority.\4
Net outlay scoring differences amounted to only $109 million, about
0.01 percent of the $731 billion in total estimated budget year
outlays for all fiscal year 1996 and 1997 appropriations passed in
the second session, versus the $23 billion or 3 percent absolute
outlay scoring difference. Both the net and absolute outlay scoring
differences were smaller for 1997 appropriations than for the 1996
appropriations.
Table IV.4
Outlay Estimates for Appropriations
Enacted in Second Session
(Dollars in millions)
Percent
Difference difference
-------------- --------------
Absolu Absolu
Fiscal year appropriations OMB CBO Net te Net te
-------------------------------- ------ ------ ------ ------ ------ ------
All 1996 Bills $197,1 $194,6 $2,534 $10,18 1.29 5.17
75 41 7
All 1997 Bills 533,49 535,92 - 12,709 0.45 2.38
9 4 2,425
================================================================================
Total $730,6 $730,5 $109 $22,89 0.01 3.13
74 65 6
--------------------------------------------------------------------------------
OMB and CBO differed in their estimates of outlays on 87 spending
items in 1996 appropriations bills and 106 separate spending items
for 1997 bills according to our review of OMB's 5-day reports. There
were 10 items (5 items in 1996 and 5 items in 1997) that had outlay
differences of $400 million or more.\5 The absolute value of the
outlay scoring difference for these 10 items totaled almost $7
billion, accounting for about 30 percent of the $23 billion absolute
outlay scoring difference between CBO and OMB.
Tables IV.5 and IV.6 show items exceeding $400 million in outlay
differences for fiscal years 1996 and 1997, respectively, along with
the stated reasons for the scoring differences. The 5 items in table
IV.5 accounted for nearly 28 percent ($2.8 billion of $10.2 billion)
of the absolute outlay scoring difference between OMB and CBO for
fiscal year 1996 appropriations enacted during the second session of
the 104th Congress.
Table IV.5
Outlay Scoring Differences: Fiscal Year
1996 Items Exceeding $400 Million\a
(Dollars in millions)
Item:
Appropriatio program Outlay
n or account difference Stated reason(s) for difference
------------ ------------ ------------ --------------------------------------
Labor/HHS in Student $713 Spendout of prior year authority: OMB
OCRA Financial estimated a 10.5 percent higher
Assistance spendout from prior year budget
authority balances than CBO in this
$7.5 billion per year account that
funds Pell Grants and other campus-
based aid for college students.
VA/HUD in Community 632 Spendout of prior year authority: OMB
OCRA Development estimated a 13 percent higher spendout
Block Grants from prior year budget authority
balances, due in large part to OMB's
use of more recent technical
assumptions for outlays in this $5
billion per year account.
VA/HUD in GNMA: 499 Different current year BA estimate:
OCRA Guarantees The outlay difference is due to the
of Mortgage- different BA estimates for FY 96,
Backed which are based on different views OMB
Securities and CBO have of the program and
whether or not it makes a profit and
the associated $499 million difference
in budget authority scoring.
P.L. 104-91 National -490 Spendout of prior year authority: CBO
Institutes estimated an aggregate 8 percent
of Health higher spendout from prior year budget
authority balances than OMB for the
$12 billion per year programs and
activities comprising NIH.
VA/HUD in FEMA 475 Spendout of new budget authority and
OCRA Disaster prior year authority: CBO calculates
Relief outlays based on historical averages
for FEMA spending, while OMB uses a
simple 40:40:20 percentage spendout of
new BA over 3 years.
--------------------------------------------------------------------------------
\a A positive outlay difference means OMB scored higher outlays; a
negative outlay difference means CBO scored higher outlays.
The 5 items in table IV.6 accounted for nearly 33 percent ($4.1
billion of $12.7 billion) of the absolute outlay scoring difference
between OMB and CBO in fiscal year 1997 appropriations bills enacted
during the second session.
Table IV.6
Outlay Scoring Differences: Fiscal Year
1997 Items Exceeding $400 Million\a
(Dollars in millions)
Item:
Appropriatio program Outlay
n or account difference Stated reason(s) for difference
------------ ------------ ------------ --------------------------------------
Defense in Defense $-1,208 Spendout of prior year authority: CBO
OCAA Business and OMB projected the same 86.3
Operations percent year 1 spendout rate of $948
Fund (DBOF) million in new BA for the DBOF. DBOF
also has balances from prior year
budget authority and permanent
authority to spend offsetting
collections. OMB projects FY 97 DBOF
collections (of $68.2 billion) will
exceed projected outlays from such
authority by $588 million, while CBO
estimates such outlays will exceed
collections by $620 million. The $1.2
billion difference represents less
than 2 percent of the total estimated
DBOF collections/outlays for FY 97.
VA/HUD Annual -1,093 Spendout of prior year authority:
Contribution About $700 million of the difference
s for is due to CBO's estimate of faster
Assisted spendout of balances. Some of the
Housing difference is the result of different
estimates of outlays resulting from
the transfer of balances. (OMB later
adjusted spendout assumptions in its
mid-session review significantly
reducing the difference with CBO).
VA/HUD Public 757 Spendout of prior year authority: OMB
Housing estimated 18 percent higher spendout
Capital Fund ($4.3 billion to CBO's $3.5 billion)
from prior year balances transferred
from the Annual Contributions Account.
VA/HUD FEMA 617 Spendout of new and prior year
Disaster authority: OMB used a faster spendout
Relief rate for $1.3 billion in new budget
authority that accounted for $464
million of the difference, and a $153
million higher spendout of balance
from prior year authority.
Defense in Defense -482 Spendout of new and prior year
OCAA Shipbuilding authority: CBO had a 6.5 percent or
and $465 million higher spendout of prior
Conversion, year balances than OMB ($6.6 billion
Navy to CBO's $7.1 billion), and a 0.3
percent or $17 million higher spendout
(5.2 percent for CBO versus 4.9
percent for OMB) of the $5.6 billion
in new BA.
--------------------------------------------------------------------------------
\a A positive outlay difference means OMB scored higher outlays; a
negative outlay difference means CBO scored higher outlays.
--------------------
\4 According to CBO estimates, about 75 percent of the total amount
of budget authority appropriated for fiscal year 1997 will be
outlayed during 1997, while almost 30 percent of outlays in 1997 will
be from prior year or permanent budget authority.
\5 We used a larger threshold ($400 million) for outlays than for
budget authority ($100 million) since outlay estimating differences
between CBO and OMB tend to offset over the time that finite amounts
of budget authority "spend out." The rates at which budget authority
is spent (outlayed) is called the spendout rate. Spendout rates vary
across the budget due to the differing nature of government programs,
projects, and activities comprising the budget. Budget authority for
salaries and expenses, for example, spends out much faster than
budget authority for large construction projects such as shipbuilding
or the procurement of aircraft. For large budget accounts, even
small spendout rate differences between OMB and CBO can lead to large
differences in outlay estimates for a given fiscal year.
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION
--------------------------------------------------------- Appendix V:1
Christine E. Bonham, Assistant Director
Robert M. Sexton, Evaluator-in-Charge
Robert G. Kershaw, Senior Evaluator
Joseph G. Heisler, Evaluator
OFFICE OF THE GENERAL COUNSEL
--------------------------------------------------------- Appendix V:2
Charles Roney, Assistant General Counsel
Edda Emmanuelli-Perez, Attorney-Advisor
*** End of document. ***