Budget Issues: Budget Enforcement Compliance Report (Letter Report,
01/23/98, GAO/AIMD-98-57).
Pursuant to a congressional request, GAO assessed compliance by the
Office of Management and Budget (OMB) and the Congressional Budget
office (CBO) with the requirements of the Balanced Budget and Emergency
Deficit Control Act of 1985, commonly known as Gramm-Rudman-Hollings,
focusing on: (1) estimates of the discretionary spending limits; (2)
explanations of any adjustments to the limits; (3) estimates of the
amount of net deficit increase or decrease; and (4) the sequestration
percentages necessary to achieve the required reduction in the event of
a sequester.
GAO noted that: (1) overall, CBO and OMB substantially complied with the
act; (2) although CBO met its deadlines, OMB issued both sequestration
update report and a number of its required scorekeeping reports later
than the law requires; (3) Gramm-Rudman-Hollings sets a specific
timetable for issuance of OMB reports; (4) by law, OMB must issue
sequestration reports at three specific times of the calendar year: (a)
when the President submits his budget; (b) on August 20; and (c) 15 days
after the congressional session; (5) instead of issuing its fiscal year
1998 sequestration update report on August 20 as required by law, OMB
issued it on September 5, 1997, as part of the mid-session review on the
fiscal year 1998 budget; (6) this was 16 days later than the law
requires; (7) also, as was the case for fiscal year 1997 compliance, OMB
issued many of its scorekeeping reports late; (8) all of its
scorekeeping reports on individual appropriation acts and many of its
pay-as-you-go (PAYG0) scorekeeping reports were issued later than the
time specified in law; (9) of the 34 scorekeeping reports OMB issued by
the time it issued its final sequestration report on November 24, about
40 percent of the reports were late; (10) this year, under the 7-day
criterion, the 27 most recent scorekeeping reports issued after OMB
issued its final sequestration report have averaged 12.6 work days
between enactment and report issuance, making the reports, on average,
5.6 work days late; and (11) GAO also found some implementation issues
related to OMB and CBO differences in: (a) scorekeeping for the open
season for switching to the Federal Employees' Retirement System; (b)
cap adjustments; (c) appropriations scoring; and (d) PAYGO estimates for
the airport and airway tax reinstatement.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-98-57
TITLE: Budget Issues: Budget Enforcement Compliance Report
DATE: 01/23/98
SUBJECT: Balanced budgets
Budget deficit
Agency reports
Budget administration
Budget scorekeeping
Reporting requirements
Appropriations
IDENTIFIER: Federal Employees' Retirement System
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Cover
================================================================ COVER
Report to the Chairman, Committee on the Budget, House of
Representatives
January 1998
BUDGET ISSUES - BUDGET ENFORCEMENT
COMPLIANCE REPORT
GAO/AIMD-98-57
Budget Enforcement Compliance Report
(935247)
Abbreviations
=============================================================== ABBREV
BEA - Budget Enforcement Act of 1990
BEA-97 - Budget Enforcement Act of 1997
CBO - Congressional Budget Office
CSRS - Civil Service Retirement System
DOD - Department of Defense
FEMA - Federal Emergency Management Agency
FERS - Federal Employees' Retirement System
GRH - Gramm-Rudman-Hollings
HUD - Department of Housing and Urban Development
IMF - International Monetary Fund
NTEU - National Treasury Employees Union
OBRA93 - Omnibus Budget Reconciliation Act of 1993
OMB - Office of Management and Budget
PAYGO - pay-as-you-go
Letter
=============================================================== LETTER
B-278615
January 23, 1998
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. The Budget Enforcement Act
of 1997 (BEA-97)\1 extended GRH budget enforcement provisions through
fiscal year 2002 and made other technical changes. Our assessment
covers OMB and CBO reports issued on legislation enacted during the
1st session of the 105th Congress, which ended on November 13, 1997.
To assess compliance with GRH, we reviewed OMB and CBO reports issued
under the act to determine if they complied with all of the act's
requirements. To accomplish this, we reviewed the OMB and CBO
preview, update, and final sequestration reports to determine if they
reflected all of the technical requirements specified in 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) the sequestration percentages
necessary to achieve the required reduction in the event of a
sequester. We interviewed OMB and CBO officials to obtain
explanations for differences between reports. We also reviewed OMB
and CBO estimates for the 78 provisions in appropriations laws that
the President had canceled using his line item veto authority before
OMB issued its final sequestration report.
Our work was conducted in Washington, D.C., from July 1997 through
December 1997 in accordance with generally accepted government
auditing standards. Background information on the budget enforcement
process, including the scorekeeping process when the line item veto
act is used and the various reports required by the act, and details
concerning our scope and methodology are discussed in appendix I.
Overall, we found that CBO and OMB substantially complied with the
act. We did find one compliance issue--discussed in detail in
appendix II--related to the late issuance of some of the required OMB
reports. Although CBO met its deadlines, OMB issued both its
sequestration update report and a number of its required scorekeeping
reports later than the law requires. GRH sets a specific timetable
for issuance of OMB reports.\2 By law, OMB must issue sequestration
reports at three specific times during the calendar year: (1) when
the President submits his budget, (2) on August 20, and (3) 15 days
after the end of a congressional session. Instead of issuing its
fiscal year 1998 sequestration update report on August 20 as required
by law, OMB issued it on September 5, 1997, as part of the
mid-session review on the fiscal year 1998 budget. This was 16 days
later than the law requires.
Also, as was the case for fiscal year 1997 compliance, OMB issued
many of its scorekeeping reports late. All of its scorekeeping
reports on individual appropriation acts and many of its
pay-as-you-go (PAYGO) scorekeeping reports were issued later than the
time specified in law. The law requires that OMB issue scorekeeping
reports on appropriation and PAYGO legislation at specified times
after enactment. During the period under review, BEA-97 lengthened
the time frame for issuing reports, effective August 5, 1997, from 5
calendar days to 7 working days.
Of the 34 scorekeeping reports OMB issued by the time it issued its
final sequestration report on November 24, about 40 percent of the
reports (14) were late. The late reports included all 9
appropriation reports and 5 of the 25 PAYGO reports. Twenty-one
PAYGO and 6 appropriations scorekeeping reports were issued after
OMB's final sequestration report. Eighteen (67 percent) of them
(including all 6 appropriations reports) were issued late.
In our report on fiscal year 1997 BEA compliance,\3 we raised the
issue of late scorekeeping reports. In that review, we looked at 101
scorekeeping reports that had been issued under the 5-day criterion.
The average length of time between enactment and scorekeeping report
issuance was 7.5 calendar days, making the reports, on average, 2.5
days late. This year, under the 7-day criterion, the 27 most recent
scorekeeping reports issued after OMB issued its final sequestration
report have averaged 12.6 work days between enactment and report
issuance, making the reports, on average, 5.6 work days late.
Although OMB has been given additional time to prepare scorekeeping
reports, the reports have been later than before the law was changed.
In addition to this compliance issue, we also found some
implementation issues related to OMB and CBO differences in (1)
scorekeeping for the open season for switching to the Federal
Employees' Retirement System, (2) cap adjustments, (3) appropriations
scoring, and (4) PAYGO estimates for the airport and airway tax
reinstatement. These issues are discussed in appendix III.
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 have 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 Committee on the
Budget and the Senate and House Committees on Appropriations. 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
IV.
Sincerely yours,
Susan J. Irving
Associate Director, Budget Issues
--------------------
\1 Title X of the Balanced Budget Act of 1997, Public Law 105-33.
\2 CBO has similar reporting requirements.
\3 Budget Issues: Budget Enforcement Compliance Report
(GAO/AIMD-97-28, January 16, 1997).
BACKGROUND AND SCOPE AND
METHODOLOGY
=========================================================== Appendix I
BACKGROUND
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
-- annual adjustable dollar limits (spending caps) on discretionary
spending funded through the regular appropriations process,
-- a pay-as-you-go (PAYGO)\1 requirement for direct spending\2 and
receipts legislation, and
-- a sequestration\3 procedure to be triggered if (1) aggregate
discretionary appropriations enacted for a fiscal year exceed
the fiscal year's discretionary spending caps or (2) aggregate
PAYGO legislation is estimated to increase the combined current
and budget year deficits.
The Budget Enforcement Act of 1997 (BEA-97)\4 extended these budget
enforcement provisions through fiscal year 2002 and made several
other technical and conforming changes to GRH. Changes relevant to
this compliance report are reflected in this appendix.
To track progress against the budget enforcement 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 7 working days after an appropriation is
enacted,\5 OMB must report its estimates for these amounts, using the
same economic and technical assumptions underlying the most recent
budget submission. It must also include the CBO estimates and
explain any differences between the two sets of estimates. If there
are significant differences between the OMB and CBO estimates, OMB is
required to consult with the budget committees prior to issuing its
scoring report.\6 OMB and CBO have similar 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 that 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 OMB estimates in its most recent
sequestration report 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 President's budget
President's 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
----------------------------------------------------------------------
--------------------
\1 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.
\2 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.
\3 Sequestration is the cancellation of budgetary resources.
\4 BEA-97 is title X of the Balanced Budget Act of 1997 (Public Law
105-33), signed into law on August 5, 1997.
\5 Prior to the enactment of BEA-97 in August 1997, OMB was required
to issue a scorekeeping report within 5 calendar days of enactment of
an appropriation.
\6 This requirement was added by BEA-97.
DISCRETIONARY SPENDING
LIMITS
------------------------------------------------------- Appendix I:0.1
Annual discretionary spending limits for budget authority and outlays
are set forth in GRH. BEA-97 established three separate categories
of discretionary spending for 1998 and 1999: defense, nondefense
excluding violent crime reduction spending, and violent crime
reduction spending. For the year 2000, the law sets two
categories--violent crime reduction spending and all other
discretionary spending--and for 2001 and 2002, a single category.
The law provides that certain adjustments be made to the
discretionary limits when appropriate. The limits may be adjusted
for changes in concepts and definitions, emergency appropriations,
funding for continuing disability reviews, allowances for
International Monetary Fund (IMF) increases, allowances for
international arrearages funding, the earned income tax credit
compliance initiative, and a special outlay allowance to cover
technical scoring differences between OMB and CBO.\7
In addition to adjustments to the limits set forth in BEA-97, the
Line Item Veto Act of 1996, as discussed later in this appendix,
requires adjustments to the discretionary limits for budget authority
canceled by the President that is not enacted into law as a
disapproval bill.\8 The spending limits are enforced by sequestration
should appropriations exceed the limits. According to both CBO and
OMB, no sequestration of discretionary funding was required for
fiscal year 1998.
In addition, for a fiscal year in progress, if an appropriation 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.
--------------------
\7 Prior to BEA-97, an adjustment for changes in inflation was
permitted. Both OMB and CBO preview reports issued prior to the
enactment of BEA-97 contained adjustments for inflation. Also,
BEA-97 added the adjustments for IMF increases, international
arrearages, and earned income tax credit compliance.
\8 A disapproval bill is a bill or joint resolution that only
disapproves one or more cancellations of dollar amounts of
discretionary budget authority, items of new direct spending, or
limited tax benefits in a special message transmitted by the
President.
PAY-AS-YOU-GO ENFORCEMENT
------------------------------------------------------- Appendix I:0.2
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 enacted in direct spending and
receipts increase the deficit for the budget year, a sequester of
nonexempt direct spending programs is required to offset the
increase. Prior to enactment of BEA-97, net savings in either the
current or budget year could be used to offset increases in the next
year. The Omnibus Consolidated Appropriations Act, 1997 (Public Law
104-208) required that the PAYGO scorecard balance for fiscal year
1997 be changed to zero on the day following OMB's final
sequestration report for fiscal year 1997. This had the effect of
requiring any increases in the deficit that result from legislation
enacted in the 1st session of the 105th Congress to be offset within
that session by either legislation reducing the deficit or
sequestration. BEA-97 sets the current year scorecard balance to
zero at the end of each session of the Congress each year through
fiscal year 2002, which prevents any net savings achieved by
legislation enacted during one session from being used to offset
deficit-increasing legislation enacted in the future.
BEA-97 extended PAYGO discipline to legislation enacted through
fiscal year 2002. The PAYGO scorecard must take into account the
effects in the current year, budget year, and the following 4 years.
Therefore, the effects of PAYGO legislation enacted through fiscal
year 2002 could result in the cancellation of budgetary resources
through fiscal year 2006.
In their final sequestration reports, both OMB and CBO calculate the
net change in the deficit due to PAYGO legislation. However, the OMB
report is the sole basis for determining whether any end-of-session
sequestration is required. If OMB determines that sequestration is
required, the President must issue an order implementing it. For
fiscal year 1998, neither CBO's report, issued November 21, 1997, nor
OMB's report, issued November 24, 1997, called for a sequester.
LINE ITEM VETO ACT AND BEA
------------------------------------------------------- Appendix I:0.3
The Line Item Veto Act of 1996 (Public Law 104-130) directly affects
the discretionary spending caps and scorekeeping reports issued by
OMB. The act authorizes the President to cancel discretionary budget
authority, new items of direct spending, and limited tax benefits
with specified characteristics that are in a bill signed into law.
The President must notify the Congress of any such cancellations
within 5 calendar days (excluding Sundays) after enactment of a law
to which the cancellation applies. Items vetoed in a law must be
transmitted to the Congress in a special message setting forth
specified information, which includes, among other things, budgetary
effects and adjustments to the discretionary spending limits. The
cancellations are effective on the date the special message is
received in the House and Senate.
Under the expedited disapproval procedures provided in the Line Item
Veto Act, the Congress has 30 calendar days of session in which to
pass a disapproval bill. If a disapproval bill overturning the
President's cancellations is passed in both houses, it is sent to the
President for his signature. The President may veto the disapproval
bill under his constitutional authority to veto laws; a two-thirds
vote in both the House and the Senate would be required to override
the veto. Under the Line Item Veto Act procedures, if the
disapproval bill is enacted into law, it voids the cancellations
disapproved and the original provisions of law are effective as of
the original date provided in the law to which the cancellation
applied. If the Congress adjourns at the end of a Congress prior to
the expiration of the 30-day period of consideration and a
disapproval bill is then pending, a disapproval bill for the same
special message may be introduced within the first 5 calendar days of
session of the next Congress.
For discretionary budget authority and each item of new direct
spending canceled from an appropriation law, the law requires that
the reduction in budget authority and outlays be reflected in the
estimates in OMB's scorekeeping reports and that the discretionary
spending limits for budget authority and outlays be reduced by
amounts reported in the scorekeeping reports. "As soon as
practicable" after the President makes a cancellation, CBO is
required to provide the budget committees of the House and Senate
with an estimate of the reduction in budget authority and outlays.
Ten calendar days (excluding Sundays) after the expiration of the
30-day period set for consideration of a disapproval bill, the
spending limits are adjusted; these adjusted limits are included in
the next sequestration report.
For new direct spending or limited tax benefit cancellations, the law
directs OMB to include an estimate of the deficit decrease as a
separate entry in its PAYGO scorekeeping reports. However, the law
specifies that OMB shall not include any change in the deficit
resulting from a cancellation in its sequestration reports.
At the time that OMB issued its final sequestration report, the
President had sent 78 special messages canceling budget authority
provided in 8 of the 11 appropriations acts he had signed.\9 The
Congress had passed one disapproval bill (H.R. 2631) to overturn
cancellations related to the Military Construction Appropriation Act;
the President vetoed that disapproval bill on November 13, 1997, the
same day that the Congress adjourned. There was no attempt to
override the President's veto.
--------------------
\9 On December 2, 1997, the President issued an additional special
message canceling budget authority in the Departments of Commerce,
Justice, and State, and Related Agencies Appropriations Act, 1998,
one of the two appropriations acts not signed at the time OMB issued
its final sequestration report on November 24.
BEA-97 INCORPORATED GAO
RECOMMENDATIONS AND ISSUES
------------------------------------------------------- Appendix I:0.4
BEA-97 made many technical and conforming changes, corrected certain
drafting errors in BEA, and brought the law up to date for various
changes enacted since 1990. Included in the changes are some that
address issues raised by GAO in previous BEA compliance reports. In
several reports on OMB and CBO compliance with BEA,\10 we reported on
incomplete inflation adjustments to the discretionary caps and the
use of different bases for computing inflation. BEA-97 resolved
these problems by eliminating inflation as an adjustment to the
discretionary caps. In several other reports,\11 we pointed out
large differences in OMB and CBO estimates for discretionary and
PAYGO legislation. BEA-97 added a provision that now requires OMB to
consult with the budget committees when there are significant
differences between CBO and OMB estimates on legislation.
In our report on BEA compliance for fiscal year 1997,\12 we reported
on OMB delays in issuing reports and its erroneous interpretation of
baseline construction in its scoring of the 1996 farm legislation.
CBO also had raised the baseline issue in its August 1996
sequestration update report on OMB's departure from long-standing
scoring practices when it scored the farm bill. In response to these
problems, BEA-97 extended the time allotted to OMB for issuance of
scoring reports from 5 calendar days to 7 working days. It also
clarified baseline construction for expiring or recently expired
programs by requiring the use of the law most recently in effect in
determining the baseline.
SCOPE AND METHODOLOGY
To determine whether the OMB and CBO reports complied with the
requirements of GRH as amended by BEA and other legislation, we
reviewed the OMB and CBO preview, update, and final sequestration
reports to determine if they reflected all of the technical
requirements specified in 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) the sequestration percentages necessary to achieve
the required reduction in the event of a sequester.
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, the Omnibus Consolidated Appropriations Act, 1997, and
the Budget Enforcement Act of 1997. We reviewed appropriations acts
enacted during the 1st session of the 105th Congress--1 for
supplemental emergency appropriations for fiscal year 1997, the 6
continuing appropriations measures, and the 13 regular appropriations
enacted for fiscal year 1998\13 and any applicable OMB and CBO
scoring reports issued by December 31, 1997. We also examined the
OMB and CBO PAYGO scoring reports for mandatory spending and receipts
legislation. We compared each OMB and CBO report and obtained
explanations for differences of $100 million or more in estimates for
the PAYGO reports. For discretionary spending, we compared OMB and
CBO scoring reports and obtained explanations for differences of $500
million or more in budget authority or outlay estimates. We also
examined 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.
Finally, we reviewed OMB and CBO estimates of items canceled by the
President under authority in the Line Item Veto Act of 1996. During
the course of our work, we also interviewed OMB and CBO officials.
--------------------
\10 Budget Issues: Compliance With the Budget Enforcement Act of
1990 (GAO/AFMD-93-38,
November 23, 1992), Budget Issues: Compliance Report Required by the
Budget Enforcement Act of 1990 (GAO/AIMD-94-66, January 10, 1994),
Budget Issues: Compliance Report Required by the Budget Enforcement
Act of 1990 (GAO/AIMD-96-41, February 16, 1996).
\11 Budget Issues: Compliance Report Required by the Budget
Enforcement Act of 1990 (GAO/AFMD-92-43, February 14, 1992), Budget
Issues: Compliance With the Budget Enforcement Act of 1990
(GAO/AFMD-93-38, November 23, 1992), Budget Issues: Compliance
Report Required by the Budget Enforcement Act of 1990
(GAO/AIMD-94-66, January 10, 1994), Budget Issues: Compliance Report
Required by the Budget Enforcement Act of 1990 (GAO/AIMD-95-66,
January 13, 1995), Budget Issues: Compliance Report Required by the
Budget Enforcement Act of 1990 (GAO/AIMD-96-41, February 16, 1996),
Budget Issues: Budget Enforcement Compliance Report (GAO/AIMD-97-28,
January 16, 1997).
\12 Budget Issues: Budget Enforcement Compliance Report
(GAO/AIMD-97-28, January 16, 1997).
\13 At the time OMB issued its final sequestration report for fiscal
year 1998 on November 24, 1997, covering legislation enacted through
November 21, two appropriations acts were not yet signed by the
President. He signed both bills (Commerce and Foreign Operations) on
November 26, 1997, 2 days after OMB issued its final sequestration
report.
COMPLIANCE ISSUE
========================================================== Appendix II
SOME OMB REPORTS ISSUED LATE
Although CBO met its deadlines, OMB issued its sequestration update
report and a number of its required scorekeeping reports later than
the law requires. Because BEA-97 changed the timing requirements for
scorekeeping reports, two different timing requirements were
effective for fiscal year 1998 legislation. Prior to August 5, 1997
(the effective date of BEA-97), scorekeeping reports were due within
5 calendar days of enactment of appropriations and PAYGO legislation.
Last year, we reported that OMB issued 72 scorekeeping reports
late.\1 Since August 5, 1997, the scorekeeping reports have been due
within 7 working days of enactment.
--------------------
\1 Budget Issues: Budget Enforcement Compliance Report
(GAO/AIMD-97-28, January 16, 1997).
OMB ISSUED LATE
SEQUESTRATION UPDATE REPORT
------------------------------------------------------ Appendix II:0.1
GRH sets a specific timetable for issuance of OMB reports.\2 By law,
OMB must issue sequestration reports at three specific times during
the calendar year: when the President submits his budget, on August
20, and 15 days after the end of a congressional session. OMB did
not issue its fiscal year 1998 sequestration update report on August
20 as required by law. Instead, OMB issued its report on September
5, 1997, as part of the mid-session review on the fiscal year 1998
budget.\3 This was 16 days later than required by law.
In its letter transmitting the mid-session report, OMB said it
delayed the sequestration update report so that it might incorporate
policy changes called for by the Balanced Budget Act and the Taxpayer
Relief Act, both of which were signed into law by the President on
August 5, 1997.
--------------------
\2 CBO has similar reporting requirements.
\3 Section 1106(a) of Title 31, United States Code, requires the
President to issue before July 16 of each year a supplemental summary
of the budget (commonly known as the Mid-Session Review).
OMB ISSUED LATE SCOREKEEPING
REPORTS
------------------------------------------------------ Appendix II:0.2
As was the case for fiscal year 1997 compliance, OMB issued many of
its reports for fiscal year 1998 later than the time specified in
law. All of its scorekeeping reports on individual appropriation
acts and many of its PAYGO scorekeeping reports were issued late.
The law requires that OMB issue scorekeeping reports on appropriation
and PAYGO legislation at specified times after enactment.\4 As noted
above, during the period under review, the time frame for issuing
reports was lengthened by BEA-97. For scorekeeping reports required
to be issued by OMB prior to August 5, 1997, section 251(a)(7)
required the following:
"Within 5 calendar days after the enactment of any discretionary
appropriation, OMB shall transmit a report to the House of
Representatives and to the Senate containing the CBO estimate of
that legislation, an OMB estimate of the amount of discretionary
new budget authority and outlays for the current year (if any)
and the budget year provided by that legislation, and an
explanation of any difference between the two estimates."
For direct spending or receipts legislation, section 252(d) contained
a requirement for reporting estimates of changes in outlays or
receipts resulting from that legislation within 5 days after the
enactment of that legislation.
Nine scorekeeping reports for both appropriations and PAYGO actions
were issued when the time frame was 5 days. Report issuance ranged
from 5 to 11 days after enactment, with an average of 7.7 days.
Seven of these 9 reports (78 percent) of the scoring reports were
issued more than 5 days after enactment. Both appropriations reports
were issued 11 days after enactment--i.e., 6 days late. The 5 PAYGO
reports were an average of 2.4 days late.
BEA-97 changed the time allowed for OMB's submission of scorekeeping
reports for appropriations and PAYGO legislation from 5 calendar days
to 7 work days (calendar days excluding Saturdays, Sundays, and legal
holidays). Since enactment of the longer time frame to issue
reports, the results have been mixed. Our analysis of the 25
scorekeeping reports issued under the new time frame criteria at the
time OMB issued its final sequestration report showed that all 7
reports on appropriations were from 1 to 8 work days late and
averaged 11 work days from enactment. In contrast, all 18 PAYGO
reports were issued on time and averaged 6.1 work days from
enactment.
At the time OMB issued its final sequestration report on November 24
(which covered legislation enacted through November 21), the
President had not yet signed two appropriations bills. In addition
to those two appropriations, OMB had not yet issued appropriation
scorekeeping reports for 4 other appropriations that had been
enacted. OMB did, however, include estimates for all appropriations
actions for fiscal year 1998 in its final sequestration report.
Twenty-one PAYGO scorekeeping reports were issued after OMB's final
sequestration report. In contrast to those issued between August 5
and November 21 (the cut-off date for OMB's final sequestration
report), 12 PAYGO scorekeeping reports (57 percent) issued after
OMB's final sequestration report were late. The late reports were
from 1 to 3 work days late and averaged 9.1 work days from enactment
to issuance of the scorekeeping report. In its final sequestration
report, OMB did include preliminary estimates for bills enacted or
pending presidential signature for which OMB had not yet issued a
PAYGO report, but the estimates were not included in deficit
calculations. Those cost estimates will be included in deficit
calculations reported in OMB's preview sequestration report issued in
the President's fiscal year 1999 budget submission.
Six appropriations scorekeeping reports were not issued until January
5, 1998. These reports were late an average of 21.8 work days.
Issuance ranged from 17 to 27 work days late.
In our report on fiscal year 1997 BEA compliance, we raised the issue
of late scorekeeping reports. In that review, we looked at 101
scorekeeping reports that had been issued under the 5-day criterion.
The average length of time between enactment and scorekeeping report
issuance was 7.5 calendar days, or 2.5 days late. This year, the 27
most recent scorekeeping reports issued after OMB's final
sequestration report have averaged 12.6 work days between enactment
and report issuance, making them an average of 5.6 work days late.
Although OMB has been given additional time to prepare scorekeeping
reports, the reports have been later than before the law was changed.
--------------------
\4 CBO is required to issue scorekeeping reports "as soon as
practicable" after the Congress completes action on any discretionary
appropriation and any direct spending or receipts legislation.
IMPLEMENTATION ISSUES
========================================================= Appendix III
We identified several implementation issues in which OMB and CBO
differed in making (1) estimates of the open season for federal
employees' retirement, (2) adjustments to the discretionary spending
limits, (3) estimates of discretionary appropriations, and (4) an
estimate of PAYGO legislation.
OPEN SEASON FOR FEDERAL EMPLOYEES'
RETIREMENT SYSTEM
The Treasury and General Government Appropriations Act for fiscal
year 1998 (Public Law 105-61) included a provision to provide an open
season for federal employees covered by the Civil Service Retirement
System (CSRS) to switch to the Federal Employees' Retirement System
(FERS). Differences between OMB and CBO in estimating the impact of
this provision affect both discretionary and PAYGO estimates. The
primary difference in discretionary estimates stems from very
different OMB and CBO assumptions on the number of employees who
would switch from CSRS to FERS. The difference in PAYGO is
attributable to whether revenue provisions in appropriations acts
must be scored against the PAYGO scorecard.
The Federal Employees' Retirement System Open Enrollment Act of 1997
(section 642 of the Treasury and General Government Appropriations
Act, 1998) provided that employees currently enrolled in CSRS could
elect to transfer from CSRS to FERS between July 1, 1998, and
December 31, 1998. The President signed the appropriation act on
October 10, 1997, but on October 16 elected to use his power under
the Line Item Veto Act to cancel the provision authorizing the
transfer program.\1
The President's cancellation notice and accompanying press release
contained an estimate that a new open season would reduce revenues
for the CSRS trust fund by $8 million in fiscal year 1998 and $854
million over the 1998-2002 period and result in additional costs to
agencies of
$1.3 billion in discretionary resources in future years to pay higher
retirement benefits.\2 The cancellation notice identified these
estimated costs as savings resulting from the line item veto. CBO
estimated that a new open season would reduce CSRS revenues by $4
million in fiscal year 1998 and $139 million from 1998 through 2002.
CBO estimated the increase in agency costs (excluding the Postal
Service) to be $262 million. The President's recent decision to
withdraw the cancellation means that the OMB estimates represent
estimated costs, not savings.
These different estimates result primarily from different assumptions
about how many workers would take advantage of the opportunity to
switch retirement plans. OMB made an assumption that the federal
workers who would switch would have at least 37 years of federal
service--about 60,000 people or 5 percent of the eligible workforce.
CBO, on the other hand, estimated that about 11,500, or only 1
percent of eligible employees, would switch to FERS if given the
opportunity. CBO based its estimates on the rates at which employees
switched from CSRS to FERS in 1987 and its assumption that today's
CSRS employees would switch at a lower rate than in 1987. CBO
officials testified that if CBO had used OMB's assumption that 60,000
workers would switch plans, its estimate would have been similar to
OMB's.
In addition to the differences noted above, CBO reported PAYGO costs
due to loss of on-budget revenues of $4 million in 1998, $151 million
for the period 1998-2002, and $312 million over the 1998-2007 period.
OMB did not consider the Treasury and General Government
Appropriations Act to be subject to PAYGO so it did not score any
PAYGO costs. These revenue losses scored by CBO represent the loss
of income tax revenue resulting from an estimated increase in
employees' contributions to the Thrift Savings Plan and the loss of
on-budget revenue resulting from the switch of 6.2 percentage points
of employees' contributions from the Civil Service trust fund to the
off-budget social security trust fund.
Under GRH, both CBO and OMB count changes in direct spending caused
by provisions in appropriation acts as increases or decreases in
discretionary spending for purposes of determining compliance with
the discretionary caps. According to CBO, changes in revenues in
appropriation acts are not counted in determining compliance with
discretionary caps and, therefore, should be recorded on the PAYGO
scorecard. OMB did not consider the bill to be subject to PAYGO and
thus did not score any PAYGO costs. OMB did not provide any further
explanation for its scoring.
OMB AND CBO DIFFERED ON
ADJUSTMENTS TO DISCRETIONARY
SPENDING LIMITS
Adjustments to the spending limits for fiscal year 1998 are covered
by two sets of criteria: those in effect prior to enactment of
BEA-97 and those set forth in BEA-97. OMB and CBO preview
sequestration reports were issued under the pre-BEA-97 criteria and
the update and final sequestration reports were issued under BEA-97
criteria.
Section 251(b) of GRH, which is applicable to the preview
sequestration reports, required that spending limits be adjusted to
account for (1) changes in concepts and definitions, (2) changes in
inflation, (3) emergency appropriations, and (4) 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.
In the preview reports, both OMB and CBO made fiscal year 1998 cap
adjustments for changes in inflation and concepts and definitions.
OMB and CBO adjustments to the preview report caps differed by $6.4
billion in budget authority and $1.5 billion in outlays. OMB lowered
the general purpose caps for 1998 by $577 million in budget
authority, while CBO lowered them by $7 billion. For outlays, OMB
lowered the caps by $2.6 billion and CBO by $4.1 billion.
--------------------
\1 The National Treasury Employees Union (NTEU) filed a lawsuit
challenging the President's authority to veto this provision. NTEU
argued that employee contributions to the CSRS fund are not "dollar
amounts of discretionary budget authority" subject to cancellation
under the Line Item Veto Act. Pursuant to an agreement reached
between NTEU and the Department of Justice, the court issued an order
which invalidated the veto and reinstated the provision for an open
season to switch to FERS.
\2 These increased agency costs estimated by OMB and CBO are subject
to future appropriations, which are not scored until actually
appropriated.
CBO AND OMB DIFFERED IN
ADJUSTING 1998 DISCRETIONARY
SPENDING LIMITS FOR CHANGES
IN INFLATION
----------------------------------------------------- Appendix III:0.1
Prior to enactment of BEA-97, discretionary spending limits were
adjusted to reflect changes in earlier inflation estimates. After
enactment of BEA-97, inflation is no longer an adjustment item. Both
CBO and OMB preview sequestration reports for fiscal year 1998 issued
prior to the enactment of BEA-97 contained downward inflation
estimates for 1998. Thus both CBO and OMB called for reducing the
discretionary spending caps to reflect the lower inflation forecasts.
CBO estimated the 1998 inflation rate at 2.4 percent\3
while OMB estimated it at 2.6 percent.
Inflation adjustments were calculated using the cumulative inflation
factor of the current year divided by the cumulative inflation factor
estimates from OMB's preview report for the prior year. Since CBO
and OMB had different estimates of inflation, the CBO and OMB preview
reports had different estimates of how much the 1998 caps needed to
be adjusted. OMB reduced the 1998 caps by $4.2 billion in budget
authority and $2.5 billion in outlays to reflect its updated, lower
1998 inflation estimate. Using OMB's methodology but CBO's inflation
estimate, CBO reduced the caps by $6.7 billion in budget authority
and $4.0 billion in outlays.
--------------------
\3 CBO's preview report cited 2.6 percent inflation for 1998 but CBO
officials advised us that this was a typographical error. CBO's
calculations in its preview report correctly were based on the 2.4
percent estimate, which was the amount published in its January 1997
publication, The Economic and Budget Outlook: Fiscal Years
1998-2007.
OMB AND CBO MADE DIFFERENT
ADJUSTMENTS FOR CHANGES IN
CONCEPTS AND DEFINITIONS
----------------------------------------------------- Appendix III:0.2
Discretionary spending limits are adjusted for changes in
scorekeeping conventions and budget concepts and definitions,
including reclassification of spending and programs between the
direct and discretionary spending categories. In their preview
sequestration reports for fiscal year 1998, both OMB and CBO adjusted
the 1998 spending caps for changes in concepts and definitions. OMB
increased the budget authority spending caps for such changes by $3.6
billion for 1998, while CBO decreased the budget authority spending
caps by $220 million. This difference was due primarily to a single
adjustment.
OMB included an upward cap adjustment of $3.7 billion in budget
authority for the redefinition of certain obligation limitations as
discretionary budget authority. The funding for administrative
expenses for some trust fund accounts had been counted as a
discretionary obligation limitation rather than discretionary budget
authority and was not covered under the discretionary budget
authority spending caps although its outlays were covered. Beginning
with the 1998 budget, obligation limitations enacted in
appropriations acts were defined as discretionary budget authority to
treat administrative expenses for all trust funds consistently.
Although CBO officials did not include an adjustment for this item
because the change occurred in the 1998 budget, which was submitted
after CBO's report had been issued, they told us that they did not
disagree with the adjustment that OMB made.
OMB AND CBO MADE DIFFERENT
ADJUSTMENTS FOR EMERGENCY
SPENDING
----------------------------------------------------- Appendix III:0.3
OMB and CBO update sequestration reports differed in their fiscal
year 1998 cap adjustments for emergency spending due to different
estimates of budget authority and outlays for emergency funding
enacted since issuance of the preview reports. A difference of $16
million in 1998 budget authority reflects CBO scoring of a
reappropriation of funds for the U.S. Customs Service. Those funds
were originally appropriated as emergency spending in fiscal year
1997 in the 1997 Emergency Supplemental Appropriations Act for
Recovery From Natural Disasters, and for Overseas Peacekeeping
Efforts, Including Those in Bosnia (Public Law 105-18). In our
opinion, OMB correctly scored the reappropriation as a regular
appropriation and did not adjust the caps, whereas CBO treated it as
emergency spending and adjusted the caps upward. Although the
original appropriation had used an emergency designation, the
reappropriation language did not.
The largest difference in cap adjustment outlays is due to different
assumptions about the spendout rates for outlays associated with
additional resources provided in Public Law 105-18 for the Federal
Emergency Management Agency's (FEMA) Disaster Relief Fund. CBO did
not score any outlays in 1998, while OMB scored $1.3 billion.
Another large difference is due to different assumptions about the
spendout rate of Department of Defense (DOD) resources in Public Law
105-18. CBO scored $419 million and $1.1 billion for 1997 and 1998,
respectively, while OMB scored $1.5 billion and $301 million for 1997
and 1998, respectively. OMB's faster spendout rate for FEMA and DOD
was also discussed in last year's compliance report.\4
OMB and CBO also had different estimates of fiscal year 1998 cap
adjustments in their final sequestration reports for budget authority
and outlays. The $307 million difference in budget authority was
attributable primarily to a $300 million contingent emergency
appropriation for the Low-Income Home Energy Assistance Program in
the Labor, Health and Human Services, Education and Related Agencies
Appropriation Act. CBO scores contingent emergency appropriations at
the time the appropriation is made because congressional action is
completed. In contrast, OMB scores budget authority only when the
President officially releases those contingent appropriations.
OMB and CBO also differed in outlay adjustments to the caps for
violent crime reduction spending. OMB adjusted the caps upward by
$1.2 billion using the special outlay allowance permitted under
law,\5 while CBO made no adjustment. The difference was due to OMB's
estimate of a faster spendout rate for violent crime reduction
spending than CBO.
OMB AND CBO SCORED APPROPRIATIONS
DIFFERENTLY
Appropriations enacted during the 1st session of the 105th Congress
did not exceed the 1997 or 1998 discretionary spending caps.
However, as shown in table III.1, OMB's estimates of both budget
authority and outlays from appropriations for violent crime reduction
spending were at the spending cap level. CBO's estimates of 1998
discretionary spending were all less than the discretionary caps
except for violent crime reduction spending, which equaled the budget
authority cap. OMB estimated a higher spendout of violent crime
reduction funding than did CBO and used the special outlay allowance
to adjust the cap upward by $1.2 billion to cover the estimated
spending.
Table III.1
OMB Estimates of Fiscal Year 1998
Appropriations Compared to Discretionary
Caps
((Dollars in millions))
Violent crime
Defense Non-Defense reduction
------------------ ----------------- -----------------
Budget Budget Budget
authorit Outlays\ authorit Outlays authorit Outlays
y\a a y\a \a y\a \a
---------------------- -------- -------- -------- ------- -------- -------
Discretionary spending $269,000 $267,124 $253,500 $285,68 $5,500 $4,833\
limits 0 b
Total appropriations 268,491 262,391 252,123 284,797 5,500 4,833
enacted
================================================================================
Amount under spending $-509 $-4,733 $-1,377 $-883 $0 $0
limits
--------------------------------------------------------------------------------
\a OMB estimates contained in final sequestration report. Estimates
of appropriations include cancellations transmitted by the President
as of November 21, 1997. Not all scorekeeping reports had been
issued when OMB issued its final sequestration report on November 24,
1997.
\b Contains special outlay allowance adjustment of $1,241 million to
avoid a sequester.
--------------------
\4 Budget Issues: Budget Enforcement Compliance Report
(GAO/AIMD-97-28, January 16, 1997).
\5 The special outlay allowance is included in the BEA to cover
technical scoring differences that result when OMB scoring exceeds
CBO scoring. If, in any fiscal year, outlays for a discretionary
spending category exceed its spending limit but new budget authority
does not, the special outlay allowance may be used.
DIFFERENCES IN SCORING
APPROPRIATIONS
----------------------------------------------------- Appendix III:0.4
Section 251(a)(7) of GRH requires CBO and OMB to score the budget
authority and outlays of each discretionary appropriation bill
enacted. Not later than 7 work days after the date 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 two estimates. We examined all CBO and
OMB scoring reports for appropriations enacted during the 1st session
of the 105th Congress for which scoring reports were released by
November 24, 1997, the date of OMB's final sequestration report. As
of December 31, 1997, OMB had not released scoring reports for the
last 6 appropriations\6 enacted even though it had included estimates
for all appropriations in its final sequestration report. Therefore,
our analysis of differences in OMB and CBO scoring of appropriations
legislation was limited to those for which OMB had issued a
scorekeeping report.
OMB and CBO differed less on budget authority than on outlays.
Differences in budget authority generally result from different
program assumptions where specific program levels are not specified.
Appropriation acts specify the exact dollar amount of budget
authority for most discretionary programs and scoring budget
authority is relatively simple and straightforward. In contrast,
outlays for a particular fiscal year depend on the pace at which
budget authority is obligated and payments are made, and can be more
difficult to score with precision. Outlays during a fiscal year
consist of payments for obligations incurred in prior years as well
as in the current year.
Small differences in total scoring of an appropriation may be
comprised of several offsetting components. For example, a
difference of $316 million in scoring 1998 emergency spending outlays
in the 1997 Emergency Supplemental Appropriations and Rescissions Act
resulted from six instances in which CBO's estimates exceeded OMB's
by a total of $996 million and one instance in which OMB's estimate
exceeded CBO's by $1.3 billion.
Sizable differences between OMB and CBO scoring\7 occurred for four
appropriations acts--the emergency supplemental appropriations act
and regular appropriations acts for Energy and Water Development,
Defense, and Veterans Affairs and Housing and Urban Development
(HUD).\8
--------------------
\6 Scorekeeping reports for appropriations for Agriculture, Commerce,
District of Columbia, Foreign Operations, Interior, and Labor were
not issued at the time OMB issued its final sequestration report.
\7 We adjusted OMB estimates where applicable to eliminate any
differences due to any amounts subject to a line item veto.
\8 Scorekeeping reports for only 7 of the 13 regular appropriations
acts had been issued as of December 31, 1997.
EMERGENCY APPROPRIATIONS
--------------------------------------------------- Appendix III:0.4.1
OMB and CBO differed in their scoring of the 1997 Emergency
Supplemental Appropriations and Rescissions Act (Public Law 105-18)
for outlays for 1997 and for both budget authority and outlays for
1998. OMB estimated that emergency spending outlays in this act
would be $1.7 billion higher in 1997 and $316 million higher in 1998
than did CBO. These differences were due to different OMB and CBO
assumptions as to the spendout rate for emergency funding. OMB
assumes a faster spendout rate than does CBO.
For nonemergency spending in Public Law 105-18, the differences were
$471 million and $91 million in budget authority for 1997 and 1998,
respectively, and $864 million and $272 million in outlays for 1997
and 1998, respectively. The largest item affecting 1997 budget
authority was a $700 million difference in the estimate for Payments
to States for job opportunities and basic skills training program in
the Department of Health and Human Services. OMB and CBO had
different assumptions about the effect of the language in the bill.
CBO assumed that the language would result in a rescission of $700
million in budget authority for fiscal year 1997 and scored a
savings. OMB does not score a rescission to an appropriated
entitlement that does not change the authorization for the
entitlement. Therefore, OMB did not score any savings from this
provision.
With regard to OMB and CBO differences in scoring outlays, several
Department of Defense accounts represented $635 million of the $864
million difference in 1997. This was attributed to different
assumptions about the spendout rates for Defense accounts in the act.
For 1998, these same Defense accounts represented $197 million of the
$272 million difference in outlays. Another difference between OMB
and CBO budget authority and outlay scoring was in the Commodity
Credit Corporation export loans program account. CBO assumed a lower
demand for guarantees than was assumed in the 1998 budget and
estimated no savings. The budget assumed $5.5 billion in guarantee
commitments. According to OMB, the bill decreased the loan level to
$3.5 billion, resulting in savings of $160 million in subsidy budget
authority and outlays.
ENERGY AND WATER
DEVELOPMENT APPROPRIATION
--------------------------------------------------- Appendix III:0.4.2
OMB's outlay estimates for the Energy and Water Development
Appropriation accounts in the nondefense category were $601 million
higher than CBO's. The largest item making up that difference was
related to Department of Energy General Science and Research
Activities where OMB estimated $382 million more in outlays than CBO.
Although CBO assumed $205 million more in outlays from prior balances
than OMB did, CBO's first-year spendout rate for new appropriations
was 49 percent, compared to OMB's 76 percent. For the defense
discretionary category, CBO estimated $758 million more in outlays
than OMB did. This was due primarily to different spendout rates and
estimates of outlays from prior budget authority for the Weapons
Activities and the Defense Environmental Restoration and Waste
Management accounts in the Department of Energy, which differed by
$159 million and $587 million, respectively.
DEFENSE APPROPRIATION
--------------------------------------------------- Appendix III:0.4.3
OMB and CBO differed by about $2.6 billion in their outlay estimates
of the Defense Appropriations Bill in the defense discretionary
category. OMB estimated that Defense Working Capital Funds would
generate $798 million in revenues in excess of expenditures, while
CBO estimated this amount to be only $250 million. For several other
Defense accounts, OMB and CBO differed on spendout rates and
estimates of outlays from prior year balances, resulting in a total
outlay difference of about $2.8 billion. In almost all of these
instances CBO estimated higher spendout rates than OMB did.
VETERANS AFFAIRS AND HUD
APPROPRIATION
--------------------------------------------------- Appendix III:0.4.4
OMB and CBO differed in scoring of the Veterans Affairs and HUD
Appropriation for the nondefense discretionary category by about
$1.1 billion. OMB estimated that outlays from the Department of
Veterans Affairs account for construction of major projects would be
$164 million less than CBO estimated. The differences were due to
different estimates of initial spendout rates for new appropriations
and for outlays from prior balances. OMB also estimated that Federal
Emergency Management Agency disaster relief outlays would be $191
million lower than CBO estimated. OMB had estimated that $128
million of new budget authority would be outlayed, while CBO
estimated that none would be outlayed. However, this difference was
more than offset by a difference of $319 million in outlays from
prior year balances. OMB also made an adjustment of $1.4 billion to
score outlays for previously enacted emergency spending to this act.
OMB stated that the adjustment was made so that final OMB scoring
would be comparable to the discretionary caps that were included in
its sequestration update report, which included adjustments for
emergency spending.
OMB AND CBO DIFFERED ON PAYGO
ESTIMATE
In its final sequestration report, OMB included the deficit effect of
PAYGO legislation enacted (as of November 21, 1997) during the 1st
session of the 105th Congress. According to OMB, this legislation
reduced the deficit for 1998 by $11 million, so no PAYGO sequester
was required. The $11 million savings for 1998 will be removed from
the PAYGO scorecard as required by BEA-97. CBO's final sequestration
report reported that the same PAYGO legislation decreased the deficit
by $7 million for 1998. CBO also concluded that no sequester for
1998 would be required.
OMB's final report also included preliminary estimates for 22
additional pieces of PAYGO legislation pending OMB PAYGO reports or
enactment. OMB estimated that these items would decrease the 1998
deficit by $155 million. These estimates are not included in the
final totals for 1998 and will be included in OMB's preview report
issued with the fiscal year 1999 budget.
None of the PAYGO estimates for fiscal year 1998 met our criteria for
further analysis, that is, no OMB and CBO PAYGO estimates for 1998
differed by more than $100 million. We did, however, do additional
analysis on the fiscal year 1997 PAYGO calculations for the Airport
and Airway Trust Fund Tax Reinstatement Act of 1997 (Public Law
105-2), where there was a $324 million difference in the estimates.
The Airport and Airway Trust Fund Tax Reinstatement Act reinstated
aviation excise taxes that expired on December 31, 1996. The
reinstated taxes were a 10 percent excise tax on domestic passenger
tickets, a $6 per person international departure tax, and various
taxes on freight and aviation fuel. CBO's estimate, which was
provided by the Joint Committee on Taxation, anticipated increased
receipts of $2,730 million. OMB's lower estimate, which was provided
by the Department of the Treasury, was $2,406 million. OMB and CBO
analysts told us that the difference between the estimates was mainly
a result of different estimates of the number of people expected to
be taking international flights and of the pricing and volume of
domestic flights. The other causes for the difference in the
estimates were different assumptions about the amount of freight to
be shipped and the number of gallons of aviation fuel to be used.
CBO prepared a PAYGO estimate for the Treasury and General Government
Appropriations Act, 1998 (Public Law 105-61), for a provision that
permitted federal employees to transfer from CSRS to FERS. OMB did
not consider this a PAYGO matter. Although the difference for 1998
is only $4 million, the 5-year cost is $151 million, according to
CBO. This case was discussed earlier in this appendix.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION
Christine E. Bonham, Assistant Director
Robert M. Sexton, Evaluator-in-Charge
Joseph G. Heisler, Evaluator
OFFICE OF THE GENERAL COUNSEL
Charles Roney, Assistant General Counsel
Carlos Diz, Attorney-Advisor
Edda Emmanuelli-Perez, Attorney-Advisor
*** End of document. ***