Impoundment Control Act: Use and Impact of Rescission Procedures
(Testimony, 07/30/1999, GAO/T-OGC-99-56).

Since the Impoundment Control Act was enacted 25 years ago, Presidents
have used the rescission process to advance their own priorities for
spending cuts. But, Congress has increasingly used rescissions to
express its own view of changing priorities, especially in an era of
tight discretionary spending caps. As Congress has come to enact larger
budget cuts than those proposed by presidents, the debate has shifted
from whether to cut to where to cut. This testimony discusses GAO's role
in the congressional rescission process and provides some perspective on
the use and impact of rescissions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-OGC-99-56
     TITLE:  Impoundment Control Act: Use and Impact of Rescission
	     Procedures
      DATE:  07/30/1999
   SUBJECT:  Budget authority rescission
	     Impoundment
	     Reporting requirements
	     Congressional oversight
	     Budget outlays
	     Deferral of budget authority
	     Presidential messages
	     Budget administration

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Cover
================================================================ COVER

Before the Subcommittee on Legislative and Budget Process, Committee
on Rules, House of Representatives

For Release on Delivery
Expected at
9:30 a.m.  EST
Friday
July 30, 1999

IMPOUNDMENT CONTROL ACT - USE AND
IMPACT OF RESCISSION PROCEDURES

Statement of Gary L.  Kepplinger
Associate General Counsel
Office of General Counsel/Accounting and Information
Management Division

GAO/T-OGC-99-56

GAO/OGC-99-56T

(990900)

Abbreviations
=============================================================== ABBREV

  ICA - Impoundment Control Act
  OBM - Office of Management and Budget

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

I am pleased to be here today to discuss the General Accounting
Office's role in the congressional rescission process and to provide
some perspective on the use and impact of rescissions. 

The Impoundment Control Act of 1974 (ICA) was enacted to tighten
congressional control over Presidential impoundments and establish a
procedure under which Congress could consider the merits of
impoundments proposed by the President.  Under the ICA the President
may propose a rescission when he wishes to withhold funds from
obligation permanently or submit a deferral when the withholding of
funds is temporary.  Funds proposed for rescission may be withheld
from obligation for 45 days of continuous congressional session.  If
Congress does not approve the rescission during this period, the
President must release the funds on the 46\th day.  The ICA also
provides a special discharge procedure permitting 20 percent of the
members of either house to force a floor vote on any presidential
rescission proposal. 

Rescissions under the ICA have not historically served as a
significant spending reduction tool.  Since enactment of the ICA in
1974, Presidents have proposed 1,172 rescissions totaling $75.8
billion dollars.  The Congress has accepted 459 of those proposals
(39%), totaling $24.9 billion (33%).  During this period, Congress
has initiated $104.8 billion in rescissions to revise spending
decisions. 

   THE COMPTROLLER GENERAL'S ROLE
---------------------------------------------------------- Chapter 0:1

As you know, the President is required to send a copy of the special
message proposing rescissions or deferrals to the Comptroller General
on the same day it is sent to the Congress.  Under the ICA, the
Comptroller General is required to review each special message and
report his findings to the Congress as soon as practicable.  We
review each message to verify the facts surrounding, as well as the
justification for, and the estimated program effect of, the proposed
impoundment.  We do this by talking with program officials, reviewing
the latest agency budget documents and discussing the proposed
rescission with Office of Management and Budget (OMB) officials.  We
also review each message to ensure that it is not misclassified, such
as a rescission proposal reported as a deferral.  We report our
findings on each special message to the Congress, typically within 25
working days after receipt of the President's message. 

The ICA also requires the Comptroller General to report to the
Congress any impoundment which the President has failed to report. 
Obviously, it would be impractical to attempt to continuously review
every account of the government, but we have found that this is
unnecessary.  When an unreported withholding takes place, concerned
Members or Committees of the Congress, intended recipients, or our
auditors typically bring it to our attention. 

After the President submits an impoundment message to the Congress,
we are responsible for monitoring the status of affected funds.  For
example, we monitor deferred budget authority to ensure that the
funds are released in time to allow for prudent obligation.  Well
before the expiration of deferred appropriations, we initiate
inquiries at OMB to verify that the funds will not be permitted to
lapse.  If it appears that a lapse may occur, we report the deferral
to the Congress as a de facto rescission.  We also monitor the 45-day
statutory time limit associated with proposed rescissions to ensure
that funds are released promptly following congressional disapproval
or the expiration of the 45-day time limit. 

If the funds are not promptly released after the expiration of the
45-day period, the Comptroller General is empowered to bring a civil
action in the United States District Court for the District of
Columbia to require release of the budget authority.  Prior to
bringing suit, the Comptroller General must report to the Speaker of
the House of Representatives and the President of the Senate the
circumstances giving rise to the need to bring suit.  We may not
initiate a suit until the passage of 25 days of continuous session of
Congress. 

During the initial years of the ICA, we filed suit on one occasion
and filed 25-day reports on several other occasions.  In each case,
the funds were released.  In recent years, it has not been necessary
to resort to these procedures. 

Finally, we provide statistical summaries and analyses on the
impoundment process, as an adjunct to the above roles.  In the past,
we informally provided a variety of data to the Congress.  As the
level of interest in this area has increased, we have prepared and
periodically submitted to the Congress formal summaries of the number
and dollar amounts of the President's proposed and enacted
rescissions, and of congressionally initiated rescissions. 
Attachment I summarizes all proposed and enacted rescissions since
1974. 

Mr.  Chairman, I would now like to turn to our rescission data to
provide some perspective on the use of rescissions by both the
President and the Congress since the ICA was enacted. 

   USE OF THE RESCISSION PROCESS
---------------------------------------------------------- Chapter 0:2

Both Republican and Democratic presidents have submitted substantial
rescission proposals in each year, save one, since 1974.  However,
the number and dollar values proposed have varied widely with each
administration.  See attachment II.  For example, the Reagan
administration proposed the highest number (245 in 1985) and highest
dollar value ($15.4 billion in 1981) as well as the lowest (zero in
1988). 

Since 1974, the Congress has approved about 39 percent of
Presidential rescission proposals, totaling about 33 percent of the
budget authority proposed for rescission.  The approval rate varies
by administration.  In the Clinton administration, Congress has
approved about 68 percent of the proposals, covering 55 percent of
the budget authority proposed for rescission.  In the Bush
administration, Congress approved about 20 percent of the proposals,
covering 18 percent of the budget authority proposed for rescission. 
The comparable numbers for the Reagan administration were about 36
percent of both the rescissions proposed and the associated budget
authority.  In the Carter administration, the comparable numbers were
56 percent of the rescissions proposed and 46 percent of the budget
authority. 

The Congress, on its own initiative, has made increasing use of
rescissions as a tool to revise enacted budget authority\1 .  As
shown in attachment I, the Congress has not merely reacted to
presidential proposals, but has also initiated its own rescissions. 
Overall, since 1974, congressionally initiated rescissions total
nearly $105 billion.  When this is added to the presidential
proposals accepted by the Congress, the total of nearly $130 billion
of enacted rescissions exceeds the nearly $76 billion proposed by all
presidents since 1974.\2

This data suggest an evolution in the use of rescissions as a
budgetary tool.  In 1974, at the time of enactment of the Impoundment
Control Act, the rescission procedure was envisioned as a mechanism
to accommodate a President's desire to impound funds by providing for
congressional review and approval of presidential rescission
proposals.  Congress, of course, can always rescind enacted budget
authority on its own initiative, either to reduce spending or to
adjust spending priorities.  Over time, the share of total
rescissions enacted each year which were originally proposed by the
president has fallen and the share originating in the Congress has
increased. 

Prior to the enactment of the Balanced Budget and Emergency Deficit
Control Act of 1985, Congress enacted approximately $18.6 billion (or
about $1.7 billion/year) of the $38 billion proposed for rescission
by the president, while enacting approximately $11.2 billion (or $1
billion/year) in congressionally initiated rescissions.  From 1985
through 1990, the years under the Balanced Budget Act, Congress
enacted approximately $355 million (or $59 million/year) of the $18.5
billion proposed for rescission by the president, while enacting
approximately $29.7 billion (or about $5 billion/year) in
congressionally initiated rescissions.  From 1991 through 1998 under
the Budget Enforcement Act of 1990, Congress enacted approximately
$5.9 billion (or about $737 million/year) of the $19.3 billion
proposed for rescission by the president, while enacting
approximately $63.9 billion (or about $8 billion/year) in
congressionally initiated rescissions. 

--------------------
\1 These congressionally initiated "rescissions" are independent of
the Impoundment Control Act of 1974. 

\2 These estimates do not include rescissions of an indefinite amount
of budget authority; that is, rescissions that do not cancel a
specific dollar value at the time of enactment. 

   THE FISCAL AND PROGRAMMATIC
   EFFECTS OF RESCISSIONS
---------------------------------------------------------- Chapter 0:3

While these statistics highlight Congress' increasing use of
rescissions, the relatively small amounts rescinded make clear that
rescissions have not been a major tool to reduce spending.  Under the
ICA, the President can propose rescissions only for funding provided
by annual appropriations or supplementals - referred to as
discretionary spending.  Today this spending represents only about
one-third of the budget and is constrained by statutory caps. 
However, it is the remaining two thirds of the budget, which is spent
on such programs as Social Security and Medicare, and interest on
federal debt, which has driven the deficits.  Under the ICA, the
President cannot propose rescissions in mandatory spending. 

Also, enacted rescissions do not reduce total spending if the
rescinded amount is used to offset spending of an equivalent amount
of budget authority in another account.  In such cases, the
rescission in effect transfers funds from one program to another,
thereby shifting budget priorities rather than reducing spending.  It
is our sense that rescissions are often used to offset new
appropriations under the discretionary spending caps.  Although not
required, Congress has recently offset some or all of emergency
appropriations with reductions in other discretionary spending. 

   EXPEDITED RESCISSION PROPOSALS
---------------------------------------------------------- Chapter 0:4

This is not to say that rescissions are unimportant.  Certainly, the
President's rescission proposals can foster debate between the
President and the Congress over funding priorities and cuts in
specific programs.  To enhance accountability and further public
debate over spending priorities, there have been a number of
proposals presented in Congress over the years for an expedited
rescission process.  Although the details of the proposals vary,
expedited rescission proposals are designed to ensure rapid and
formal congressional consideration of rescissions proposed by the
President.  An essential element of an expedited rescission procedure
is a prompt up-or-down vote in the Congress on the President's
proposals to reduce enacted spending authority.  Since budget
authority is not canceled unless a law rescinding existing budget
authority is enacted in accordance with Article I, Section 7 of the
Constitution, an expedited rescission process does not present the
constitutional issues that led the Supreme Court to strike down the
Line Item Veto Act.  (Clinton v.  City of New York, 118 S.Ct.2091
(1998).)

The necessity for, and the form of, an expedited rescission process
are, of course, a matter for Congress to decide.  We have one
logistical concern.  As noted earlier, an expedited rescission
process requires a prompt vote, for example, within 10 days of
receipt of the President's proposal.  Such a timeframe will limit our
ability to support congressional review of the President's proposed
rescissions. 

   CONCLUSION
---------------------------------------------------------- Chapter 0:5

In summary, Mr.  Chairman, we believe that 25 years of experience
show that the rescission process has been used, as designed, by
presidents to advance their own priorities for spending cuts.  But
rescissions have also been increasingly used by the Congress as a
vehicle to express its own view of changing priorities, especially in
an era of tight discretionary spending caps.  As the Congress has
come to enact greater reductions in budget authority than proposed by
presidents, the debate has shifted from deciding whether to cut to
deciding where to cut. 

Thank you, Mr.  Chairman.  This concludes my prepared remarks.  I
would be happy to answer any questions you may have. 

SUMMARY OF PROPOSED AND ENACTED
RESCISSIONS, FISCAL YEARS
1974-1998 (ALL LEGISLATIVE ACTION
THROUGH OCTOBER 1, 1998)
=========================================================== Appendix I

    Rescissi        Dollar
Fi       ons        amount  Proposal        Dollar  Rescissi        Dollar            Total dollar
sc  proposed   proposed by         s     amount of       ons     amount of     Total     amount of
al        by     president  accepted     proposals  initiate   rescissions  rescissi        budget
ye  presiden           for        by    enacted by      d by  initiated by       ons     authority
ar         t    rescission  Congress      Congress  Congress      Congress   enacted     rescinded
--  --------  ------------  --------  ------------  --------  ------------  --------  ------------
19        25   $25,260,000        21   $17,276,000        43  $4,180,814,2        64  $4,198,090,2
 98                                                                     34                      34
19        10   407,111,000         6   285,111,000        96  7,381,253,00       102  7,666,364,00
 97                                                                      0                       0
19        24  1,425,900,00         8   963,400,000       104  4,974,852,13       112  5,938,252,13
 96                      0                                               1                       1
19        29  1,199,824,00        25   845,388,805       248  18,868,380,1       273  19,713,768,9
 95                      0                                              21                      26
19        65  3,172,180,00        45  1,293,478,54        81  2,374,416,28       126  3,667,894,83
 94                      0                       6                       4                       0
19         7   356,000,000         4   206,250,000        74  2,205,336,64        78  2,411,586,64
 93                                                                      3                       3
19       128  7,879,473,69        26  2,067,546,00       131  22,526,953,0       157  24,594,499,0
 92                      0                       0                      54                      54
19        30  4,859,251,00         8   286,419,000        26  1,420,467,00      34\1  1,706,886,00
 91                      0                                               0                       0
19        11   554,258,000         0             0        71  2,304,986,00        71  2,304,986,00
 90                                                                      0                       0
19         6   143,100,000         1     2,053,000        11   325,913,000        12   327,966,000
 89
19         0             0         0             0        61  3,888,663,00        61  3,888,663,00
 88                                                                      0                       0
19        73  5,835,800,00         2    36,000,000        52  12,359,390,6        54  12,395,390,6
 87                      0                                              75                      75
19        83  10,126,900,0         4   143,210,000         7  5,409,410,00        11  5,552,620,00
 86                     00                                               0                       0
19       245  1,856,087,00        98   173,699,000        12  5,458,621,00       110  5,632,320,00
 85                      0                                               0                       0
==================================================================================================
Su       736  $37,841,144,       248  $6,319,831,3     1,017  $93,679,456,     1,265  $99,999,287,
 b                     690                      51                     142                     493
 t
 o
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 a
 l
 :
 1
 9
 8
 5
 -
 1
 9
 9
 8
==================================================================================================
Su       436  $38,018,165,       211  $18,670,073,       111  $11,215,221,       322  $29,885,294,
 b                     000                     366                     347                     713
 t
 o
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 a
 l
 :
 1
 9
 7
 4
 -
 1
 9
 8
 4
==================================================================================================
Gr     1,172  $75,859,309,       459  $24,989,904,     1,128  $104,894,677     1,587  $129,884,582
 a                     690                     717                    ,489                  ,206\2
 n
 d
 T
 o
 t
 a
 l
 :
 1
 9
 7
 4
 -
 1
 9
 9
 8
--------------------------------------------------------------------------------------------------
\1 The Military Construction Appropriations Act of l991 approved
certain rescissions approved by the President in 1990 41 days after
the funds were released for obligation under the Impoundment Control
Act.  Presidential rescission proposals R90-4, R90-5, and R90-10
totalling about $41 million were not approved. 

\2 The total estimate of budget authority rescinded is understated. 
This table does not include rescissions which eliminate an indefinite
amount of budget authority. 

    Rescissi        Dollar
Fi       ons        amount  Proposal        Dollar  Rescissi        Dollar            Total dollar
sc  proposed   proposed by         s     amount of       ons     amount of     Total     amount of
al        by     president  accepted     proposals  initiate   rescissions  rescissi        budget
ye  presiden           for        by    enacted by      d by  initiated by       ons     authority
ar         t    rescission  Congress      Congress  Congress      Congress   enacted     rescinded
--  --------  ------------  --------  ------------  --------  ------------  --------  ------------
19         9  $636,400,000         3   $55,375,000         7  $2,188,689,0        10  $2,244,064,0
 84                                                                     00                      00
19        21  1,569,000,00         0             0        11   310,605,000        11   310,605,000
 83                      0
19        32  7,907,400,00         5  4,365,486,00         5    48,432,000        10  4,413,918,00
 82                      0                       0                                               0
19       133  15,361,900,0     101\3  10,880,935,5        43  3,736,490,60       144  14,617,426,1
 81                     00                      50                       0                      50
19        59  1,618,100,00        34   777,696,446        33  3,238,206,10        67  4,015,902,54
 80                      0                                               0                       6
19        11   908,700,000         9   723,609,000         1    47,500,000        10   771,109,000
 79
19        12  1,290,100,00         5   518,655,000         4    67,164,000         9   585,819,000
 78                      0
19        20  1,926,930,00         9   813,690,000         3   172,722,943        12   986,412,943
 77                      0
19        50  3,582,000,00         7   148,331,000         0             0         7   148,331,000
 76                      0
19        87  2,722,000,00        38   386,295,370         1     4,999,704        39   391,295,074
 75                      0
19         2   495,635,000         0             0         3  1,400,412,00         3  1,400,412,00
 74                                                                      0                       0
==================================================================================================
Su       436  $38,018,165,        11  $18,670,073,       111  $11,215,221,       322  $29,885,294,
 b                   000 2                     366                     347                   713\4
 t
 o
 t
 a
 l
 :
 1
 9
 7
 4
 -
 1
 9
 8
 4
--------------------------------------------------------------------------------------------------
\3 Thirty-three rescissions proposed by President Carter and
totalling over $1.1 billion are not included in this table.  These
rescission proposals were converted to deferrals by President Reagan
in his Fifth Special Message for Fiscal Year 1981 dated February 13,
1981. 

\4 The total estimate of budget authority is understated.  This table
does not include rescissions which eliminate an indefinite amount of
budget authority. 

RESCISSIONS BY PRESIDENTIAL
ADMINISTRATION UNDER THE
IMPOUNDMENT CONTROL ACT
========================================================== Appendix II

                                                                    Rescissions initiated
          Rescissions proposed   Presidential proposals accepted      by Congress during
          by President Clinton             by Congress              Clinton administration
          --------------------  ----------------------------------  ----------------------
Fiscal    Numb                    Number                   Percent
year        er   Dollar amount  accepted   Dollar amount  accepted  Number   Dollar amount
--------  ----  --------------  --------  --------------  --------  ------  --------------
1998        25     $25,260,000        21     $17,276,000        84      43  $4,180,814,234
1997        10     407,111,000         6     285,111,000        60      96   7,381,253,000
1996        24   1,425,900,000         8     963,400,000        33     104   4,974,852,131
1995        29   1,199,824,000        25     845,388,805        86     248  18,868,380,121
1994        65   3,172,180,000        45   1,293,478,546        69      81   2,374,416,284
1993         7     356,000,000         4     206,250,000        57      66   1,962,511,000
==========================================================================================
Total      160  $6,586,275,000       109  $3,610,904,351        68     638  $39,742,226,77
                                                                                         0
------------------------------------------------------------------------------------------
                                                                    Rescissions initiated
          Rescissions proposed   Presidential proposals accepted      by Congress during
           by President Bush               by Congress               Bush administration
          --------------------  ----------------------------------  ----------------------
Fiscal    Numb                    Number                   Percent
year        er   Dollar amount  accepted   Dollar amount  accepted  Number   Dollar amount
--------  ----  --------------  --------  --------------  --------  ------  --------------
1993         0              $0         0              $0         0       8    $242,825,643
1992       128   7,879,473,690        26   2,067,546,000        20     131  22,526,953,054
1991        30   4,859,251,000         8     286,419,000        27      26   1,420,467,000
1990        11     554,258,000         0               0         0      71   2,304,986,000
1989         0               0         0               0         0      11     325,913,000
==========================================================================================
Total      169  $13,292,982,69        34  $2,353,965,000        20     247               $
                             0                                              26,821,144,697
------------------------------------------------------------------------------------------
                                                                    Rescissions initiated
          Rescissions proposed   Presidential proposals accepted      by Congress during
          by President Carter              by Congress              Carter administration
          --------------------  ----------------------------------  ----------------------
Fiscal    Numb                    Number                   Percent
year        er   Dollar amount  accepted   Dollar amount  accepted  Number   Dollar amount
--------  ----  --------------  --------  --------------  --------  ------  --------------
1981        33  $1,142,364,000         0              $0         0       0              $0
1980        59   1,618,100,000        34     777,696,446        58      33   3,238,206,100
1979        11     908,700,000         9     723,609,000        82       1      47,500,000
1978        12   1,290,100,000         5     518,655,000        42       4      67,164,000
1977         7     791,552,000         2      96,090,000        29       3     172,722,943
==========================================================================================
Total       89  $4,608,452,000        50  $2,116,050,446        56      41  $3,525,593,043
------------------------------------------------------------------------------------------
Note:  The 33 rescissions proposed by President Carter were converted
to deferrals by President Reagan in his Fifth Special Message of
Fiscal Year 1981, dated February 13, 1981. 

                                                                    Rescissions initiated
          Rescissions proposed   Presidential proposals accepted      by Congress during
           by President Ford               by Congress               Ford administration
          --------------------  ----------------------------------  ----------------------
Fiscal    Numb                    Number                   Percent
year        er   Dollar amount  accepted   Dollar amount  accepted  Number   Dollar amount
--------  ----  --------------  --------  --------------  --------  ------  --------------
1977        13  $1,135,378,000         7    $717,600,000        54       0              $0
1976        50   3,582,000,000         7     148,331,000        14       0               0
1975        87   2,722,000,000        38     386,295,370        44       1       4,999,704
1974         2     495,635,000         0               0         0       3   1,400,412,000
==========================================================================================
Total      152  $7,935,013,000        52  $1,252,226,370        34       4  $1,405,411,704
------------------------------------------------------------------------------------------
                                                                    Rescissions initiated
          Rescissions proposed   Presidential proposals accepted      by Congress during
          by President Reagan              by Congress              Reagan administration
          --------------------  ----------------------------------  ----------------------
Fiscal    Numb                    Number                   Percent
year        er   Dollar amount  accepted   Dollar amount  accepted  Number   Dollar amount
--------  ----  --------------  --------  --------------  --------  ------  --------------
1989         6    $143,100,000         1      $2,053,000        17       0              $0
1988         0               0         0               0         0      61   3,888,663,000
1987        73   5,835,800,000         2      36,000,000         3      52  12,359,390,675
1986        83  10,126,900,000         4     143,210,000         5       7   5,409,410,000
1985       245   1,856,087,000        98     173,699,000        40      12   5,458,621,000
1984         9     636,400,000         3      55,375,000        33       7   2,188,689,000
1983        21   1,569,000,000         0               0         0      11     310,605,000
1982        32   7,907,400,000         5   4,365,486,000        16       5      48,432,000
1981       133  15,361,900,000       101  10,880,935,550        76      43   3,736,490,600
==========================================================================================
Total      602  $43,436,587,00       214  $15,656,758,55        36     198  $33,400,301,27
                             0                         0                                 5
------------------------------------------------------------------------------------------

*** End of document. ***