[Concurrent Resolution on the Budget FY 1998]
[From the U.S. Government Printing Office, www.gpo.gov]


105th Congress                                                  S. Prt.
                            COMMITTEE PRINT

 1st Session                                                     105-27
_______________________________________________________________________


 
               Concurrent Resolution on the Budget FY 1998

                               __________

                      COMMITTEE PRINT TO ACCOMPANY

                            S. CON. RES. 27

                        COMMITTEE ON THE BUDGET

                          UNITED STATES SENATE

                       Pete V. Domenici, Chairman




                                MAY 1997

           Printed for the use of the Committee on the Budget

            For sale by the U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



                        COMMITTEE ON THE BUDGET

                 PETE V. DOMENICI, New Mexico, Chairman
CHARLES E. GRASSLEY, Iowa            FRANK R. LAUTENBERG, New Jersey
DON NICKLES, Oklahoma                ERNEST F. HOLLINGS, South Carolina
PHIL GRAMM, Texas                    KENT CONRAD, North Dakota
CHRISTOPHER S. BOND, Missouri        PAUL S. SARBANES, Maryland
SLADE GORTON, Washington             BARBARA BOXER, California
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
OLYMPIA J. SNOWE, Maine              RON WYDEN, Oregon
SPENCER ABRAHAM, Michigan            RUSSELL D. FEINGOLD, Wisconsin
BILL FRIST, Tennessee                TIM JOHNSON, South Dakota
ROD GRAMS, Minnesota                 RICHARD J. DURBIN, Illinois
GORDON SMITH, Oregon

                  G. William Hoagland, Staff Director
              Bruce King, Staff Director for the Minority



                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Introduction and Overview........................................1
 II. Economics........................................................2
III. Spending and Revenues...........................................16
        Baseline.................................................    16
            A.  Spending by Function.............................    17
            B.  Revenues.........................................    41
 IV. Summary Tables..................................................42
  V. Budget Resolutions: Enforcement, Reconciliation and Other Issues69
        Enforcement..............................................    69
        Reconciliation...........................................    70
        Other Issues.............................................    74
 VI. Text of Bipartisan Budget Agreement.............................75
VII. Committee Views and Estimates...................................92
VIII.Committee Votes................................................191

 IX. Additional Minority and Supplemental Views.....................195
                      I. Introduction and Overview

    The FY 1998 Concurrent Budget Resolution is the first 
Congressional step in implementing the Bipartisan Budget 
Agreement announced by President Clinton and the Bipartisan 
Congressional Leadership on May 2, 1997. The Agreement 
represents commitments to good faith efforts including this 
first step of adopting a 1998 Budget Resolution with 
reconciliation instructions fully reflecting the Agreement.
    This budget resolution--built on the parameters of the 
Agreement and the economic projections of the Congressional 
Budget Office--when implemented through statutory legislation 
will balance the Unified Federal Budget, reduce spending, 
reduce the scope of spending, and reduce federal taxes while it 
protects priority spending programs.
    The FY 1998 Budget Resolution will result in a balanced 
unified federal budget in FY 2002--the first balanced unified 
federal budget since 1969. The unified federal deficit, 
expected to reach nearly $150 billion in FY 2002 if left on 
automatic pilot, would be reduced each year beginning in 1998. 
Total trust fund surpluses, primarily in the social security 
trust fund, are projected to stand at about $96 billion in 
2002. The federal funds deficit, therefore, will total $96 
billion in 2002 down from $240 billion in 1996.
    The FY 1998 Budget Resolution will result in federal 
government spending reductions over the next five years and 
beyond. Total federal spending will slow from a currently 
projected 4.4 percent to 3.1 percent annual rate of increase 
over the next five years. Compared to current projections 
federal spending will be reduced by $290 billion over the next 
five years, and if reformed policies continue beyond 2002, 
total federal spending will be reduced nearly $1.1 trillion 
over the next ten years not counting debt service savings.
    The FY 1998 Budget Resolution will reduce the scope of 
spending. Measured by the size of a growing economy resulting 
from a balanced federal budget, federal spending will decline 
from 20.8 percent in 1996 to 18.9 percent in 2002, the lowest 
level since 1974. The Agreement's reduction in federal spending 
generally reflects the makeup of current federal spending: (1) 
27 percent of the five year spending savings is from 
discretionary defense spending, defense spending would decline 
from 3.6 percent of GDP in 1996 to an estimated 2.7 percent in 
2002; (2) 21 percent of the five year savings is from 
discretionary nondefense spending, nondefense discretionary 
spending would decline from 3.6 percent of GDP to day to an 
estimated 2.9 percent in 2002; and (3) 52 percent of the five 
year savings is from reduced entitlement growth--entitlement 
spending (including debt service) would decline slightly from 
today's 13.7 percent of GDP to 13.3 percent in 2002. Over 40 
percent of the entitlement savings are achieved through 
reforming the Medicare program in order to avert imminent 
bankruptcy in that program and to extend the solvency of the 
Part A Trust Fund at least for 10 years.
    The Agreement achieves a balanced federal budget while also 
reducing taxes on American families and businesses. The growth 
of federal taxes will decline from 4.2 percent to 4.0 percent 
annually over the next five years. By 2002, federal tax 
receipts will balance spending at 18.9 percent of GDP, down 
from 19.4 percent in 1996.
    In aggregate, implementing legislation from the resolution 
would provide for $135 billion in tax reductions over the next 
five years primarily focused on child tax credits, broad-based 
capital gains tax reductions, tax relief for post-secondary 
education, and other provisions. Offsetting the tax reductions 
and resulting in a net tax cut of $85 billion over the next 
five years, $250 billion over the next ten, the tax writing 
committees will identify various expiring tax raising 
provisions and other tax reform items.
    While achieving balance in 2002, the Agreement does assume 
an allocation of limited federal resources to some priority 
spending programs in education, environment, transportation, 
crime fighting, and international affairs. Spending for these 
functions of the federal budget would grow from $144.2 billion 
in 1998 to $152 billion in 2002, but all other nondefense 
discretionary spending would be reduced from $142.3 billion in 
1998 to $135 billion in 2002. In total, nondefense 
discretionary spending--controlled by discretionary spending 
caps--will grow by slightly less than 0.5 percent over the next 
five years. The Agreement also provides for a children's health 
insurance initiative, modifications last year's welfare reform 
law and other initiatives that could total $33.6 billion.
    The Agreement is enforced through the existing budget 
process rules--two reconciliation bills, Committee allocations, 
and existing pay-go procedures. The FY 1998 Budget Resolution 
also includes provisions to enforce by rule, firewalls between 
defense and nondefense discretionary spending for two years and 
make it out of order to consider future budget resolutions that 
exceed the discretionary spending allocations included in the 
Agreement. Since the statutory enforcement provisions expire at 
the end of FY 1998, the Agreement commits to the enactment of 
new budget enforcement legislation to extend discretionary caps 
in law, establish PAYGO procedures to 2002, and other 
enforcement provisions.

                             II. Economics

    The Committee's baseline is built upon multi-year economic 
assumptions, which reflect the expected benefit from balancing 
the budget by 2002. The economic projections were developed by 
the Congressional Budget Office (CBO), as published in their 
January 1997 report. Slight adjustments were made, however, to 
CBO's price measures, in response to recently announced 
technical CPI changes by the BLS. The baseline also includes 
CBO's technical revenue re-estimate which reflects the higher 
than expected revenue inflow in FY1997 and its implications for 
the revenue baseline.
    The forecasts for 1997 and 1998 are short-term forecasts 
which consider the current state of the economy and relative 
position in the business cycle. The out year forecasts are 
based upon long-term trends in the economy.

                           economic overview

    Economic growth continued apace in 1996, despite the fact 
that the expansion has now entered its sixth year. Real GDP 
grew 3.1 percent last year on a fourth quarter over fourth 
quarter basis, above its commonly assumed potential growth 
rate. Growth was concentrated in the latter half of 1996, and 
carried over to the first quarter of 1997, which posted an 
impressive annualized growth rate of 5.6 percent. The first 
quarter surge was accompanied by a drop in the unemployment 
rate to 4.9 percent.
    While some slowdown seems likely going forward, the Federal 
Reserve remains apprehensive that inflationary pressures may 
build in the latter part of 1997. The primary concern is the 
tightness of the labor market. Historically, recent levels of 
unemployment have been consistent with rising price pressures. 
It is an open question, however, as to whether labor market 
developments (ie declining unionization, increased foreign 
competition and greater outsourcing over the last several 
years) now permit a lower non-inflationary, unemployment rate. 
Inflation has been more subdued in the last two years than one 
would have expected given the low unemployment rates, although 
technical CPI changes by the BLS have also played a role here.
    While the Federal Reserve has tried to allow for the fact 
that the economy's potential growth rate may have risen 
slightly of late, they nonetheless thought it prudent to raise 
interest rates by 25 basis points in March, as an insurance 
policy. It remains to be seen whether the Federal Reserve's 
action will have a negative, short-term impact on the economy 
going forward. However, the Fed's recent track record bodes 
well--its 1994-1995 tightening laid the groundwork for today's 
continued economic expansion.
    Optimism is also fueled by the fact that there are 
surprisingly few signs of economic imbalance at present, 
despite the fact that the current expansion is already the 
third longest on record--inventories are lean, the banking 
sector is healthy, and the rise in consumer net wealth tempers 
concerns over growing consumer debt. For this reason, neither 
CBO nor OMB forecasts a recession during the next two years. 
Evidence of recent broad-based economic strength is seen in 
Table 1.

                                TABLE 1.--YEARLY GROWTH IN GDP SECTORS (PERCENT)                                
----------------------------------------------------------------------------------------------------------------
                                                                     Non-                                       
                                          Overall     Personal   residential  Residential                Total  
                                            GDP     consumption     fixed        fixed      Exports   government
                                           growth                 investment   investment                       
----------------------------------------------------------------------------------------------------------------
1992...................................        2.7         2.8          1.8         17.1         6.5         0.5
1993...................................        2.3         2.8          6.5          7.5         3.0        -0.2
1994...................................        3.5         3.1          9.8         10.7         8.2        -0.1
1995...................................        2.0         2.3          9.5         -2.2         8.8         0.0
1996...................................        2.4         2.5          7.4          5.3         6.6         0.9
----------------------------------------------------------------------------------------------------------------

                 comparison of cbo versus omb economics

    CBO's and OMB's underlying economic projections are very 
similar and indeed are within the margin of error for both 
forecasts. Despite this closeness, they still produce a $68 
billion difference in deficit projections in 2002 alone, 
according to CBO's ``An Analysis of the President's Budgetary 
Proposals for FY1998''. (Note, this was calculated before the 
recent CBO revenue re-estimate). Both sets of economic 
assumptions are predicated on the assumption of a balanced 
budget in 2002 and are thus termed ``post-policy'' forecasts.

Growth and unemployment

    CBO is slightly less optimistic than OMB regarding the 
long-run potential growth rate of the economy--CBO believes 
potential GDP growth from 1996-2002 will be 2.2 percent, versus 
OMB's 2.3 percent assumption over the same period. Furthermore, 
CBO also believes the risk of a negative economic shock during 
the budget window are slightly greater than the risks of a 
positive shock. For this reason, they assume that GDP remains 
0.3 percent below its potential level in 2002, while 
unemployment remains slightly above its NAIRU (non-accelerating 
inflation rate of unemployment). For its part, OMB believes 
that the risks of recession or boom are equally balanced and 
hence makes no explicit adjustment for the prospect of 
recession.
    For all intents and purposes, however, the gap between 
CBO's and OMB's real GDP growth forecasts is very small. CBO 
projects average annualized real GDP growth of 2.18 percent 
over the budget window, while OMB forecasts 2.23 percent 
growth.

Income shares

    Income shares are a less publicized part of economic 
forecasts, however, they have great deficit impact. These 
shares depict the breakdown of national income between wages & 
salaries, benefits, corporate profits, proprietors' income, 
rental income and net interest. They are expressed as a share 
of GDP.
    If all of the above areas were taxed the same, the division 
between income categories would make little budget difference. 
However, this is not the case. Wages and salaries and corporate 
profits are taxed at a higher effective rate than the others. 
Thus, the higher the projected wage & salary and corporate 
profit share, the higher the projected revenue stream.
    CBO has slightly more pessimistic wage & salary and 
corporate profit shares than does OMB. In the case of wages & 
salaries, CBO believes that this share will fall somewhat over 
the budget window as benefit costs begin to grow faster than 
wages. In contrast, OMB expects the wage & salary share to 
remain relatively stable over the budget window.
    CBO also expects a steeper drop-off in the corporate profit 
share than does OMB. One main reason is that CBO expects 
companies'' net interest costs as a share of GDP to begin 
rising again, in a reversion to historical trend. OMB is less 
concerned about this prospect, since they believe the drop in 
interest rates from a balanced budget agreement will temper net 
interest costs.

                          economic projections

    While both CBO and OMB offer reasonable forecasts for the 
main economic variables, the Committee has chosen to use CBO's 
slightly more conservative projections, which are believed to 
accurately reflect the risks to the economy going forward.
    It is important to note that the FY 1998 Budget Resolution 
uses CBO's winter projections, which do not reflect the surge 
in first quarter 1997 GDP growth nor the Federal Reserve's 
recent interest rate tightening. Complete reflection of these 
developments would need to be examined in the context of a 
formal re-opening of CBO's economic forecasts. Since this will 
not occur until this summer at the earliest, the baseline 
assumes CBO's winter economic forecasts. However, it should be 
noted that CBO's recent revenue re-estimate does reflect recent 
economic developments, and so does provide some partial 
consideration of the current status of the economy.
    The baseline economics have been adjusted, however, to 
reflect new information about BLS' technical CPI changes. In a 
May 1, 1997 letter, CBO Director O'Neill provided the Senate 
Budget Committee Chairman with her estimates of these changes' 
likely CPI impact. As such, the FY 1998 Budget Resolution 
updates CBO's CPI forecasts to reflect two technical CPI 
changes which the BLS will make in early 1999. The Committee 
has reflected these two changes in CPI alone and has not made 
any alteration to CBO's GDP deflator nor real GDP growth 
forecasts, since nominal GDP will remain unchanged.
    A small adjustment was also made to CBO's forecasts for 
taxable incomes, since CBO's initial treatment of the 1996 BLS 
correction in CPI formula bias may not have been fully 
reflected in CBO's taxable income forecasts. These adjustments 
will be discussed in greater detail in Section VII.

                    TABLE 3.--COMMITTEE'S ECONOMIC PROJECTIONS (POST POLICY; CALENDAR YEARS)                    
----------------------------------------------------------------------------------------------------------------
                                                                   1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
Percent change (year to year):                                                                                  
    Real GDP growth.............................................     2.3     2.1     2.2     2.2     2.2     2.1
    Consumer price index........................................     2.9     2.9     2.7     2.7     2.7     2.7
    GDP price deflator..........................................     2.3     2.5     2.6     2.6     2.6     2.6
Annual rate:                                                                                                    
    Unemployment................................................     5.3     5.6     5.8     5.9     6.0     6.0
    Three-month T-bill..........................................     5.0     5.0     4.6     4.2     3.9     3.9
    Ten-year T-note.............................................     6.2     6.1     5.8     5.5     5.5     5.5
Share of GDP:                                                                                                   
    Wages and salaries..........................................    48.0    47.7    47.6    47.4    47.3    47.3
    Corporate profits (book profits)............................     8.2     8.1     7.9     7.8     7.9     7.8
----------------------------------------------------------------------------------------------------------------

                pre-policy versus post-policy economics

    As mentioned in the previous section, both CBO and OMB use 
post-policy economic forecasts, which reflect the benefits of 
balancing the budget by 2002. Economists agree that balancing 
the budget would lower long-term interest rates, which would in 
turn boost investment and GDP growth. Such an improvement in 
economic fundamentals would itself contribute to lower deficits 
via increased tax revenues and smaller debt service. In 1995, 
CBO acknowledged that such a favorable feedback would reduce 
the amount of budget trimming that Congress would need to do, 
in essence, agreeing to dynamically score their deficit 
reduction plan.
    CBO assumes that balancing the budget by 2002 will prompt a 
70 basis point drop in both short and long term interest rates. 
This in turn will prompt GDP to be 0.2 percent higher by 2002 
than it would otherwise be and boosts the corporate profits 
share of GDP by 0.6 percentage points in 2002.
    It is not possible to view OMB's assumed impact of a 
balanced budget, since they only produce post-policy economic 
forecasts. However, it appears that they expect an even 
stronger economic impact from balancing the budget than does 
CBO.

                            fiscal dividend

    The size of the fiscal dividend has varied greatly since 
its inception in early 1995. It expanded notably in December 
1995, as CBO included an expected boost in corporate income tax 
receipts from the balanced budget drop in interest rates. 
(Lower interest rates reduce businesses' borrowing costs, 
raising profits and hence taxes paid.)
    However, the size of the fiscal dividend is considerably 
lower in the FY98 assumptions--at just $77 billion, it is 
roughly two thirds lower than May 1996's $254 billion dividend. 
There are several factors at play. First, baseline deficits are 
significantly lower given the drop in FY 1996's deficit. Over 
the 1997-2002 period, there was a $454 billion cumulative drop 
in deficit projections between May 1996 and January 1997, which 
would have reduced May 1996's fiscal dividend by one third.
    Second, CBO expects that it will take longer for a balanced 
budget plan to be implemented. In May 1996, CBO assumed such a 
plan would come into effect at the end of 1996. In its most 
recent update, CBO now believes that early FY1998 would be the 
first possible date for enactment of all components of a 
balanced budget plan.
    Lastly, CBO has delayed the response of long-term interest 
rates to deficit reduction. This delay has also reduced the 
fiscal dividend's size.

                                   TABLE 4.--EVOLUTION OF THE FISCAL DIVIDEND                                   
----------------------------------------------------------------------------------------------------------------
                                 1996      1997      1998      1999       2000      2001      2002    Cumulative
----------------------------------------------------------------------------------------------------------------
January 1997:                                                                                                   
    Interest.................  ........       0.0  ........      -2.0       -8.0     -15.0     -20.0      -45.0 
    Debt service.............  ........  ........  ........  ........       -1.0      -2.0      -3.0       -5.0 
    Revenues.................  ........  ........      -1.0      -3.0       -5.0      -8.0     -11.0      -28.0 
    Student loans............  ........  ........  ........  ........  .........  ........  ........  ..........
                              ----------------------------------------------------------------------------------
      Total..................  ........  ........      -1.0      -4.0      -13.0     -25.0     -34.0      -77.0 
May 1996:                                                                                                       
    Interest.................      -0.2      -3.2     -10.8     -21.9      -32.0     -38.3     -43.2     -149.6 
    Debt service.............      -0.0      -0.2      -0.9      -2.2       -4.2      -6.9     -10.1      -24.4 
    Revenues.................      -0.0      -2.1      -7.3     -12.7      -16.3     -18.6     -21.1      -78.1 
    Student loans............       0.4      -0.0      -0.3      -0.5       -0.5      -0.6      -0.6       -1.0 
                              ----------------------------------------------------------------------------------
      Total..................       0.2      -5.5     -19.3     -37.3      -53.0     -64.4     -75.0     -254.1 
----------------------------------------------------------------------------------------------------------------

                   ADJUSTMENT TO THE REVENUE BASELINE

    In light of the strong economic growth that we've seen over 
the past year, tax receipts are surging in mid-FY1997. Indeed, 
CBO reported to the Budget Committees on May 2, 1997 that they 
believe FY1997 revenues will be $45 billion higher than they 
had anticipated in their winter baseline forecasts. Given CBO's 
belief that the bulk of the higher than expected revenue is 
likely to be persistent, CBO economists believe that most of 
the FY1997 revenue increase should be carried through the 
baseline forecast. As such, CBO wrote to the Budget Committees 
that they should decrease their deficit projections by a figure 
similar to $45 billion for each year of the budget window. This 
annual reduction would include both the revenue extrapolation 
and its accompanying debt service. Over the budget window, the 
revenue extrapolation shrinks gradually, while debt service 
savings increases.

  TABLE 5.--POSSIBLE CHANGE IN DEFICIT INDICATED BY HIGHER REVENUES IN 1997 THAN WAS ANTICIPATED IN CBO'S MARCH 
                                            1997 BASELINE PROJECTIONS                                           
----------------------------------------------------------------------------------------------------------------
                                                        1997    1998    1999    2000    2001    2002   1998-2002
----------------------------------------------------------------------------------------------------------------
Increase in revenues.................................      45      41      39      37      35      33        185
Debt service.........................................       0      -4      -6      -8     -10     -12        -40
                                                      ----------------------------------------------------------
Change in deficit....................................     -45     -45     -45     -45     -45     -45       -225
----------------------------------------------------------------------------------------------------------------
Source: CBO, May 2, 1997.                                                                                       

    Revenues have been strong throughout FY1997 to date. For 
the first 6 months of the fiscal year, personal withholding tax 
payments came in $10 billion higher than CBO's baseline 
assumptions. This was followed by a further $25 billion 
windfall in the month of April alone, as final 1996 tax 
payments were made. In the remaining 5 months of the fiscal 
year, CBO believes that an additional $10 billion in higher 
personal withholding payments will be received relative to 
their baseline assumptions, in light of the robust economy. 
Thus, in total, revenues are expected to be $45 billion higher 
in FY1997 than CBO had assumed. This suggests that the FY 1997 
deficit will come in at $67 billion.
    Faced with the strong rise in FY1997 tax receipts, CBO had 
to decide whether this was a one-off occurrence or whether it 
was due to more lasting factors. After reviewing the issue, CBO 
decided that the bulk of the revenue surprise will likely be 
persistent--almost half the revenue surge comes from higher 
personal withholding, which reflects the strong growth in wages 
and salaries seen in this economic expansion. Furthermore, CBO 
believes that one-off, capital gains realizations are unlikely 
to account for the bulk of the April windfall. Lastly, a large 
upward revenue surprise was seen in FY 1996 as well, which 
supports the view that these high tax inflows are likely to be 
persistent.
    CBO believes that there are several likely reasons why 
revenues have come in so much higher than their baseline 
estimates. (1) Real potential GDP may be higher than that 
assumed in CBO's economic forecasts. This implies higher 
taxable incomes. (2) Government statistics may be consistently 
missing some of the incomes generated altogether, which means 
there will be a gap between actual receipts received and 
incomes as measured by the Commerce Department. Since CBO bases 
its forecasts on Commerce Department data, this could lead to a 
persistently lower, CBO forecast stream for incomes. (3) 
Furthermore, there may be a tendency for the gap between 
measured GDP and gross domestic income to widen--this gap is 
called the NIPA statistical discrepancy. In theory, the 
statistical discrepancy should be random and should not trend. 
However, it has trended notably since 1994, suggesting that 
there may be a systematic measurement problem within the NIPA 
accounts. If the statistical discrepancy continues to trend 
higher, there will be consistently higher incomes relative to 
GDP. At present, CBO assumes that the discrepancy will shrink 
over the budget window, which tempers CBO's income projections. 
(4) Effective tax rates may be slightly higher than what CBO 
assumes. This could be the case if the current economic 
expansion has led to larger tax payments by wealthier 
individuals.
    CBO believes that the FY1997 revenue increase resulted from 
a combination of the above factors. If the above changes were 
thought to be persistent, CBO could have projected the revenue 
adjustment to grow over the budget window. Indeed, CBO does 
believe that most of the FY1997 revenue increase will be 
persistent. However, it is also possible that the positive 
revenue impact of these structural developments could be offset 
if the economy were to go into a recession within the budget 
window--this would be consistent with the view that the economy 
is in a short-lived boom right now, which will soon be followed 
by a bust. In light of this risk, CBO chose a more cautious 
path which attempts to balance the likelihood that the FY1997 
revenue increase will grow or fall off--CBO suggested a broadly 
constant deficit adjustment over the budget window, in which 
the revenue component tapers off gradually over the budget 
window.

                   ADJUSTMENT TO CBO's PRICE MEASURES

    The Committee's baseline reflects technical CPI changes 
that the BLS has either made recently or has announced that it 
will make. Several of these changes are reflected in the 
current CBO baseline. In addition, the Committee will reflect 
two technical CPI changes which were announced after CBO's 
winter baseline had been completed. All of the above changes 
are technical in nature and will have been made by BLS staff. 
The FY1998 Budget Resolution does not assume any legislated CPI 
adjustment.
    The Committee has also made a slight adjustment to CBO's 
taxable income stream. This was done after CBO stated that 
their winter taxable incomes estimates may have been 
understated by 0.04 percent each year in the budget window, 
during their adjustment for the 1996 reduction in CPI formula 
bias.

Changes already reflected in baseline

    There are three technical changes which are currently 
reflected in both CBO's and OMB's winter CPI forecast streams: 
the 1998 basket-weighting, the January 1997 hospital pricing 
change and the July 1996 correction of formula bias.
    First, both OMB and CBO make adjustment for the likely 
effect of the reweighting of the CPI basket in 1998. BLS makes 
this adjustment roughly every 10 years to ensure its 
expenditure weights remain current. OMB assumes this action 
will shave 0.1 percent from CPI over the budget window. CBO's 
baseline assumes this change will shave just under 0.2 percent 
from CPI in 1998. Yet, CBO also assumes that the basket becomes 
steadily more out-of-date as it ages, thus eroding some of the 
initial bias reduction in later years. Thus, during the entire 
budget window, OMB and CBO make similar baseline adjustments 
for the 1998 basket reweighting.
    Secondly, both OMB and CBO make small adjustments for an 
expected reduction in CPI stemming from the January 1997 change 
in hospital pricing. However, OMB assumed that these changes 
would shave 0.1 percentage point from CPI, while CBO assumed a 
0.01 percentage point reduction in its winter forecast.
    Lastly, both OMB and CBO make the same adjustments to their 
CPI forecasts for BLS' 0.1 percent reduction in formula bias 
which occurred in July 1996.

Changes not reflected in the baseline

    The BLS has recently made two announcements regarding 
upcoming CPI technical revisions, both of which will come into 
effect in early 1999.
    The BLS is currently reviewing whether geometric mean 
calculations should be employed at the lowest level of CPI 
aggregation. It will announce its findings in 1998 and will 
reflect them in CPI-U in January 1999. Unlike the current CPI 
structure, geometric means would allow for the fact that 
consumers change their purchasing patterns of closely related 
goods as relative prices change. (For example, switching from 
Red Delicious to Granny Smith apples as the former's price 
rises.) Allowing for such switching would reduce lower level 
substitution bias. (This differs from upper level substitution 
bias which results as consumers switch between disparate items 
like chicken and beef.) BLS has stated that a switch to 
geometric means could shave annual CPI growth by 0.00-0.25 
percent. In her May 1 letter, CBO Director O'Neill concurred 
with this range and stated that 0.15 percent is a likely point 
estimate. Since this estimate was made after the formulation of 
the CBO winter baseline, we have adjusted CBO's CPI stream to 
reflect this new information.
    In early 1999, BLS will also change the way that it 
incorporates new items into the CPI. It will begin to shift 
from area sample rotation to item category rotation. This 
should speed up the introduction of new goods into the CPI 
survey, particularly those with rapidly changing technologies. 
This should help to reduce the new product bias. In her May 
letter, CBO Director O'Neill said that this change could shave 
CPI by 0.0-0.2 percent from 1999 onwards. She believes 0.1 
percent is a likely point estimate. Since this estimate was 
done after the formulation of the CBO baseline, the Budget 
Resolution's baseline adjusts CBO's CPI stream to reflect this 
new information as well.
    It is important to note that BLS will make these two CPI 
changes irrespective of anything that happens in Congress. 
Since these will have direct impact on CPI growth, they are 
reflected in the resolution's CPI assumptions, in order to have 
the most accurate CPI forecast stream possible. CBO has often 
reflected upcoming technical CPI changes in their baseline 
(before their actual implementation by BLS), so the committee's 
action is consistent with past CBO precedent.
    In addition to the two CPI adjustments noted above, a minor 
adjustment to CBO's taxable income stream has also been made. 
In her May letter, CBO Director O'Neill stated that CBO's 
taxable income forecasts may not have fully factored in the 
July 1996 change in CPI formula bias and that these forecasts 
may be 0.04 percent too low each year. As such, the resolution 
baseline contains an increase to CBO's taxable income stream of 
0.04 percent each year. This adjustment stems from CBO's 
treatment of BLS' 1996 technical CPI change and does not relate 
to CBO's $45 billion revenue extrapolation.
    In the same May letter, CBO Director O'Neill also stated 
that CBO had slightly altered its views on the impact of the 
1998 CPI basket re-weighting and the 1997 change in CPI's 
hospital pricing. However, since the impact of these two small 
revisions largely cancel, no adjustment was made for them in 
the FY1998 Budget Resolution's assumptions.

                        LONG-TERM FISCAL OUTLOOK

    Since most of the current focus is on 2002, many may 
believe the country's fiscal problems will be solved if we 
balance the budget that year. This is not the case. Without 
substantive policy action, our deficits and debt/GNP levels 
will soon spiral out of control.
    As in most developed countries, the US will face severe 
fiscal strains as the baby boomers retire, leaving only a small 
working age population. This trend is demonstrated in a time 
series of the US' elderly dependency ratios (the percentage of 
people over the age of 65 in relation to those aged 20-64). 
This ratio will climb from 1990's 21 percent to 36 percent in 
2030 and 37 percent in 2050.
    CBO examined such demographic pressures in its recent 
``Long-Term Budgetary Pressures and Policy Options'' update. 
Without policy changes, they concluded that the deficit will 
grow to 5 percent by 2015, ballooning to 28 percent by 2035. 
Concomitant with this rise in deficits, the US debt to GNP 
ratio will also soar, topping 100 percent by 2025 and shooting 
off to infinity after 2035.
    The situation quickly becomes unsustainable, as the dynamic 
effects of higher interest rates choke off economic growth. 
This can be seen by the fact that by 2030, per capita incomes 
will actually begin to fall.
    CBO depicts the size of the long-term fiscal imbalance by 
showing the amount by which taxes would have to be increased 
permanently in order to keep the debt/GNP ratio constant at its 
current level. With no policy change, this would require a tax 
hike today equal to 4.1 percent of GDP or a 20 percent increase 
in total revenues. Even if the budget were to be balanced from 
2002-2007 by cuts in program levels only, a long-term fiscal 
imbalance would still remain--a permanent tax hike of 2.3 
percent of GDP or a 12 percent rise in current revenues would 
still be needed to rectify the long-term situation.
    Given this bleak backdrop, the need for meaningful 
entitlement reform is imperative. It is only in this way that 
we can ensure steadily rising per capita incomes for our 
children.
                                ------                                

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 2, 1997.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Based on the daily Treasury statements 
for April and the monthly Treasury statement for March, it is 
clear that budget receipts this year will be significantly 
higher than CBO estimated in early March. At this point, we 
judge that the 1997 fiscal year deficit will be about $45 
billion lower than we expected. Our previous estimate was that 
the 1997 deficit would be $112 billion, including the 
reinstatement of the Airport and Airway Trust Fund excise taxes 
through September 30, 1997.
    Withheld income and payroll taxes through March were $10 
billion higher than CBO expected, and nonwithheld income tax 
receipts in April were $25 billion higher than anticipated. The 
higher-than-expected withheld tax collections are consistent 
with the strong economic growth reported this week by the 
Department of Commerce and other economic indicators. We now 
expect that tax receipts will be another $10 billion higher 
than previously estimated for the remaining months of the 
fiscal year.
    The higher level of receipts in 1997 will affect revenue 
levels next year and beyond. Although CBO has not prepared a 
new economic forecast and new baseline budget projections, we 
believe that a downward adjustment in the deficit of $45 
billion in 1997 and similar amounts for 1998 though 2002 would 
be reasonable for planning the budget resolution. These amounts 
would include reduced debt service costs that would result from 
lower deficits.
            Sincerely,
                                                 James Blum
                                               For June E. O'Neill.
    Identical letter sent to Chairman John R. Kasich, with a 
copy to Ranking Minority Member John M. Spratt, Jr., House 
Committee on the Budget.
                                ------                                

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 9, 1997.
Hon. J. Robert Kerrey,
U.S. Senate,
Washington, DC.
    Dear Senator: Thank you for your letter of May 6, which was 
cosigned by Senator Conrad, regarding our recent estimate of 
the budget deficit for the current fiscal year and the 
implications of that estimate for 1998 and the years beyond.
    We regularly monitor the monthly Treasury statements of 
receipts and outlays to determine the accuracy of our budget 
estimates for the current fiscal year. We also monitor the 
daily Treasury statements, particularly those for April which 
is a crucial revenue month. The information that we glean from 
those statements is reported to the budget committees and other 
interested Congressional staff in a series of monthly internal 
memoranda and is incorporated in our periodic published 
economic and budget update reports.
    It was clear from the Treasury data through March that 
withheld income and payroll tax collections were running about 
$10 billion higher than we estimated in our budget projections. 
We held off drawing any conclusions from that higher stream of 
receipts until we could see what the April tax collections 
actually brought in. April is the biggest receipt month for the 
year, as final payments on the previous calendar year's income 
tax liabilities are made. It was possible that nonwithheld 
income and employment tax receipts in April would be lower than 
we had assumed, thereby offsetting the higher receipts through 
March. However, April's nonwithheld payments were $25 billion 
higher than expected, which meant that revenues for the fiscal 
year would be much higher than we had estimated.
    On April 28, the Treasury Department announced its 
borrowing estimates for the April-June and July-September 
quarters. Based on Treasury estimates of cash flows during 
those two quarters, the department announced its plan to pay 
down outstanding federal debt by $65 billion in the April-June 
quarter, in sharp contrast to its earlier plan announced on 
February 3 to pay down debt in the range of $10 billion to $15 
billion in the quarter. In reporting the Treasury's new 
borrowing plan, the Wall Street Journal the next day indicated 
that the federal budget deficit for the fiscal year ending 
September 30 would be as low as $70 billion. Earlier press 
reports had also noted that this year's deficit would be much 
lower than expected.
    CBO was asked by budget committee staff last week what we 
thought our monthly evaluation of the 1997 deficit would show 
and what the implications of a lower-than-expected deficit for 
this year would be for 1998 and beyond. Our intention had been 
to send the budget committees a letter this week to provide 
that information, once we were confident of the April receipts, 
but we were urged to provide an answer as soon as possible and 
to give specific estimates.
    The higher-than-expected withheld tax collections are 
consistent with the strong economic growth reported for the 
past six months and other economic indicators. It is reasonable 
to expect that higher income levels will persist during the 
remainder of the fiscal year and that tax receipts will exceed 
our previous estimate by $10 billion, pushing receipts for 1997 
about $45 billion above our last estimate. Outlays to date have 
been consistent with our budget estimates, so the higher 
receipts point to a deficit that is lower by the same amount.
    We believe that the higher income and revenue levels for 
1996 and 1997 will affect the budget outlook for 1998 and 
beyond. We will not have complete information on 1996 and 1997 
tax collections for several years, but taxable income is 
clearly higher than we or the Administration had previously 
discerned.
    The current high levels of income and revenue make it 
likely that future deficits will be lower than CBO projected. 
Several factors could contribute to such an outcome: revenues 
may continue to be high relative to income reported in the 
national income and product accounts, the noninflationary 
potential level of the economy may be somewhat higher, and the 
composition of income may generate more revenues. It is also 
possible that revenues have been temporarily boosted by a 
short-lived economic boom or by special factors such as higher 
capital gains realizations. In any event, debt service in the 
future will be reduced even if the higher income and revenues 
prove to be partly temporary.
    Without making a new economic forecast and a new set of 
baseline budget projections, it is not possible to provide 
precise estimates of the expected change in the deficit. For 
the purpose of planning the budget resolution, however, amounts 
similar to the $45 billion adjustment to the 1997 deficit could 
reasonably be applied to the deficits currently projected for 
both the 1998-2002 period and the five subsequent years. These 
amounts reflect possible changes in the deficit (including 
reduced debt service) that CBO believes is likely, rather than 
any specific revisions to our economic and budget projections.
    Following our customary practice, we plan to prepare a new 
economic forecast and update our budget projections this 
summer. That process will take into account any new data that 
become available over the next few months.
    The question we were asked last week was logical and 
appropriate, given the press accounts about reduced Treasury 
borrowing needs and the lower deficit for 1997. While the 
revenue picture for fiscal year 1997 is reasonably clear, the 
potential changes for 1998 and beyond are quite uncertain. We 
provided an answer that we think is reasonable given the time 
and information that was available.
    You also asked whether the effects of the 1993 deficit 
reduction package could be responsible for the unexpected 
growth in revenues this year. It is difficult to sort out the 
effects of particular pieces of past legislation on current 
revenues given the many other factors that come into play. Our 
assumptions about the economy and our budget baselines 
regularly incorporate everything we know about the effect of 
past fiscal policy changes. Thus, further consideration of the 
1993 agreement would probably not help us explain the rise of 
revenues above our baseline this year.
    I hope that this description of our recent deficit estimate 
for 1997 and the implications for subsequent years is helpful. 
I would be happy to answer any additional questions you may 
have. I am sending an identical letter to Senator Conrad.
            Sincerely,
                                         June E. O'Neill, Director.
                                ------                                

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 1, 1997.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter on April 29 
inquiring about the effect of changes to the Consumer Price 
Index (CPI) that may affect budget projections. As you note, 
the Bureau of Labor Statistics (BLS) announced a number of 
proposed changes to the CPI after CBO completed its baseline 
economic forecast, and those effects were not incorporated in 
that forecast. In addition, because the BLS has made new 
estimates of the effects of changes that CBO did include in the 
forecast, the estimates CBO used should also be reexamined. The 
five areas you mentioned in your letter are discussed below.
    1. Use of Geometric Weighting for Lower Level 
Aggregation.--BLS announced that it plans to use geometric 
weighting starting in 1999 for some categories, and they noted 
that this would slow the growth of the CPI by 0 to 0.25 
percentage points per year. Analysts generally assume that this 
type of weighting is likely to be used for somewhat more than 
half of the categories. Therefore, a reasonable point estimate 
of the effect is 0.15 percentage points.
    2. Pricing of Hospital Services.--In January 1997, BLS 
changed its method of pricing hospital services in order to 
better capture actual transaction prices and to better reflect 
changes in the provision of hospital care, such as the shift 
from inpatient to outpatient care. BLS has not estimated how 
this would affect the growth of the overall CPI, so CBO used 
its own estimate. In our winter economic forecast, we assumed 
that the effect would be very small, perhaps 0.01 percentage 
point. Subsequent conversations with BLS suggest that the 
effect is a little larger, though still small, reducing overall 
CPI growth by between 0.02 and 0.04 percentage points. A 
reasonable point estimate of the effect is the midpoint of this 
range, i.e., 0.03 percent, or three ten-thousandths per year.
    3. Changes in the Selection of Outlet Samples.--In January 
1999, BLS plans to change the way in which they choose outlets 
for refreshing the sample of items used in the CPI. BLS says 
that the new sample design permits more frequent rotation (that 
is, refreshment of the sample) for categories in which products 
are introduced into the market more frequently. If they do more 
frequent rotation of those categories, CPI growth may be slower 
because new products could be included in a more timely way. 
Since the prices of new products often decline in the years 
after their introduction, including them in the CPI earlier in 
their life cycle would tend to depress the growth of the CPI.
    The magnitude of the effect depends upon how often the BLS 
refreshes the sample for categories in which new products are 
introduced, as well as how rapidly new products are introduced 
in the future. Although there are indications that BLS will 
refresh the relevant categories more often, they have not 
announced when they will do it (that is, whether they will 
start more frequent rotation when they first use the new outlet 
sampling methods in 1999 or whether the rotation rate will 
increase later), nor have they said how much more timely the 
sampling will be.
    If rotation is done more frequently, and if the rate of 
introduction of new products and the evolution of their prices 
in the future are similar to that of the past 15 years, the new 
methods could reduce CPI growth by up to 0.2 percentage points. 
However, from what BLS has announced so far, effects could also 
be insignificant. A prudent point estimate would be 0.1 
percentage point, the midpoint of the range.
    4. Formula Bias.--The correction for formula bias that the 
BLS made in July 1996 is reflected in CBO's forecast of the 
CPI, because it affected the monthly CPI growth rates that CBO 
used for its assessment of the rate of inflation just prior to 
doing the forecast. In its analysis of the President's budget, 
CBO pointed out that one small difference between the CBO and 
Administration economic assumptions was that CBO did not 
calculate the impact of this formula bias correction on the 
relationship between the CPI growth rate and the growth of the 
GDP price index. Had that calculation been made, and not offset 
by any other assumption, it might have marginally increased the 
projected growth of the GDP price index (by about 0.04 
percentage points) and consequently marginally increased CBO's 
projection of taxable income by about four ten-thousandths per 
year.
    5. Upper Level Substitution Bias and the 1998 Basket 
Reweighting.--BLS has announced that the 1998 rebenchmarking is 
likely to reduce the rate of growth of the CPI by 0.15 
percentage points, whereas CBO assumed in its winter forecast 
that the change would be 0.2 percentage points. CBO has no 
reason to question BLS's estimate. The reduction in growth 
comes from the reduction in substitution bias, which occurs 
because over time people have the ability to reduce purchases 
of products whose prices are rising particularly rapidly. When 
consumption weights are held constant, that substitution is 
missed and the growth of prices is overstated.
    CBO's forecast also incorporated the conventional 
assumption that substitution bias would increase the further 
one moves from the base period. BLS has released a study that 
questions that assumption, finding no evidence of a systematic 
relation betweensubstitution bias and the age of the market 
basket. (A study conducted at the Federal Reserve Board came to a 
similar conclusion.) However, as the BLS study noted, this empirical 
conclusion is theoretically hard to justify. Other evidence, from the 
National Income and Product Accounts, suggests that the age of the 
consumption basket should be of considerable importance to the 
substitution bias, raising the possibility that the BLS and Federal 
Reserve results come from some unusual characteristic of the data 
period examined. We do not regard the empirical issue as resolved, and 
therefore stick to the theoretically understandable assumption 
incorporated in the forecast. In the absence of better information, we 
assume that the drift in the substitution bias is related to the 
estimated effect of rebenchmarking. Thus a change in the estimated 
effect of rebenchmarking implies a small change (that grows from year 
to year) in the estimated bias. In 2002, for example, that small change 
amounts to 0.02 percentage points.
    The 1998 re-benchmarking is unlikely to remove all 
substitution bias even in that year: the weights will still be 
five years old, and even very current weights would not 
completely avoid substitution bias. (The only way to do that is 
to change the index construction to a so-called ``superlative'' 
index, which cannot be done on a timely basis). We do not have 
a firm estimate of the bias that will remain after 1998, but 
will continue to research the topic.
    The effects of the changes described above can be added 
together to derive a net effect on the CPI. The table below 
shows how they would affect the CPI indexes used for 
calculating Social Security COLAs and for adjusting income tax 
brackets. These effects differ slightly because they are 
calculated at different times in the year. The table assumes 
that BLS will increase the rate of sample rotation for rapidly 
evolving products in January 1999. Because both the tax code 
and Social Security rules have complex rounding rules, the 
actual changes in COLAs would differ from these calculations. 
The changes described in the table would determine the COLA or 
tax bracket adjustment for the subsequent year.

                                                  [In percent]                                                  
----------------------------------------------------------------------------------------------------------------
                                                                   1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
Effect on growth of CPI used for tax brackets...................    -.01    -.02    -.06    -.22    -.23    -.24
Effect on growth of CPI used for Social Security COLA...........    -.01    -.01    -.13    -.23    -.23    -.24
----------------------------------------------------------------------------------------------------------------

    We are unable to update the table attached to your letter. 
That table was sent unofficially at the request of a member of 
your staff in order to show how the various projected changes 
in the CPI could be reasonably reconciled with CBO's CPI 
projections. It does not reflect calculations that my staff 
used to produce its forecast of the CPI; indeed, we do not 
claim to forecast the CPI with the precision of hundredths of a 
percentage point as the table suggests. The CPI is not measured 
with sufficient precision to allow presentation with such 
accuracy even of historical data, and projections necessarily 
have less precision than historical data can achieve.
    I hope this information is helpful to you. If you have any 
additional questions, please call me, or have your staff 
contact John Peterson.
                                         June E. O'Neill, Director.

                       III. Spending and Revenues

                                baseline

    This section of the committee print provides a discussion 
of the baseline underlying the Budget Resolution, which has 
been prepared by the Congressional Budget Office (CBO) in 
consultation with committee staff. The Budget Resolution 
baseline will be the basis for scoring congressional action in 
fiscal year 1998.

Baseline assumptions

    The baseline has been calculated using CBO economic 
assumptions that incorporate the economic benefits of reaching 
a balanced budget by 2002. This is referred to as a post-policy 
baseline and includes the budgetary impact of higher GDP growth 
and lower interest rates in areas such as student loans, net 
interest, and revenues. The baseline also includes the fiscal 
impact, on revenues and net interest, of the revisions to the 
economic assumptions discussed in the Economics section of the 
committee print.
    CBO calculates the baseline in the general manner 
prescribed by the BEA. For most discretionary appropriated 
accounts, personnel resources are adjusted by the Employment 
Cost Index (ECI) and program resources are adjusted by the 
chain-weight GDP deflator. Budget authority for multiyear 
subsidized housing contracts (Section 8 housing) is adjusted to 
reflect the renewal of all contracts expiring during the 
baseline period. Administrative expenses for the Medicare and 
unemployment trust funds and the railroad retirement program 
are adjusted by the projected change in the beneficiary 
population.
    Estimates for direct spending, which is all spending 
authority provided by law other than appropriations acts, 
assume full funding of current law, including cost-of-living 
adjustments. Direct spending includes entitlements and other 
mandatory programs such as Social Security, Medicare, and 
Federal retirement, where spending levels are controlled by 
eligibility rules, benefit calculations, participation levels, 
and other non-discretionary cost factors. The baseline assumes 
that all programs in excess of $50 million a year will 
continue, even if their authorization expires. Net interest 
spending, which is another subset of direct spending, is driven 
by the size of the annual and cumulative cash deficits and 
interest rates and is rarely affected directly by Congressional 
action.
    Likewise, revenue baseline estimates assume no change in 
current tax law. Excise taxes dedicated to a trust fund are 
assumed to continue if their expiration occurs during the 
baseline period. However, other expiring provisions of tax law, 
whether increasing or decreasing revenues, are not extended in 
the baseline.
    The Budget Resolution baseline incorporates several 
technical changes, including a redesignation of VA medical care 
cost recovery receipts from mandatory to discretionary to 
facilitate the Administration's proposal to make the receipts 
available as additional resources to the agency. The effects of 
enacted legislation, specifically the airline ticket tax 
extension, have also been included. No assumptions have been 
made regarding the pending 1997 supplemental appropriations 
bill.
    The following table shows the Budget Resolution baseline by 
major budget category.

                        A. Spending by Function

                     Function 050: NATIONAL DEFENSE

                       MAJOR PROGRAMS IN FUNCTION

    The National Defense function includes the Department of 
Defense (DOD) in subfunction 051, Atomic Energy Defense 
Activities (AEDA) in the Department of Energy (DOE) in 
subfunction 053, and other defense related activities in the 
Federal Emergency Management Agency, the Select Service, and 
other federal agencies in subfunction 054. More than 94.6 
percent of the 1998 budget authority in the President's Budget 
are for the Department of Defense (051); 5.1 percent of the 
funds are for subfunction 053, and the remaining 0.3 percent is 
for subfunction 054.

                         DISCRETIONARY SPENDING

    Discretionary spending in this function is a priority in 
the Bipartisan Budget Agreement.
    The table below presents the discretionary spending figures 
for the reported resolution.

----------------------------------------------------------------------------------------------------------------
                                                                                                        Total 98-
                                              1997      1998      1999      2000      2001      2002       02   
----------------------------------------------------------------------------------------------------------------
Reported budget................  BA.......     265.8     269.0     271.5     275.4     281.8     289.6    1387.3
Resolution.....................  OT.......     267.5     266.8     266.5     269.0     270.7     273.1    1346.1
----------------------------------------------------------------------------------------------------------------

    The reported resolution is a middle ground between the 
Budget Resolution Baseline and a five year freeze at the final 
1997 appropriated levels. It is an increase over the FY 1997 
Congressional Budget Resolution projections for 1998 to 2002, 
and for the same years it exceeds the President's Budget in 
budget authority and is virtually the same in outlays.
    The 1998-2002 totals of the Reported resolution are: (1) 
$63.0 billion in budget authority and $76.8 billion in outlays 
below the Budget Resolution Baseline; (2) $58.1 billion in 
budget authority and $24.1 billion in outlays above the Freeze 
Baseline; (3) $16.7 billion in budget authority and $5.2 
billion in outlays above the FY 1997 Congressional Budget 
Resolution, and (4) $4.4 billion in budget authority above the 
President's Budget; in outlays it is $200 million lower.
    The reported resolution assumes non-statutory ``firewalls'' 
for two years, 1998 and 1999. The Balanced Budget Agreement 
includes statutory firewalls to be enacted later.
    When comparing the reported resolution to the President's 
Budget, one will notice the following differences. For 1998, 
the reported resolution is $2.6 billion higher in budget 
authority and $1.0 billion higher in outlays. Over the years 
1998-2002, in budget authority, the reported resolution is 
higher or equal to the President's Budget for all years; 
overall it is an increase of $4.4 billion. Over the years 1998-
2002, in outlays, the reported resolution's defense outlays 
exceed or are equal to the President's Budget in the years 1998 
through 2001; in 2002, the President's Budget is higher. 
Overall, in outlays the reported resolution and the President's 
Budget are virtually the same; the reported resolution is $200 
million lower, a difference of one hundredth of one percent.

                           MANDATORY SPENDING

    For mandatory spending in the 050 function, $200 million in 
additional stockpile sales were requested by the President in 
2002, but they were not scored by CBO because no implementing 
legislation had been requested.

                  Function 150: INTERNATIONAL AFFAIRS

                       major programs in function

    Function 150 includes the operation of foreign affairs 
establishments including embassies and other diplomatic 
missions abroad; foreign aid loan and technical assistance 
activities in less developed countries; security assistance to 
foreign governments; foreign military sales made through the 
Foreign Military Sales Trust Fund; U.S. contributions to 
international financial institutions; U.S. contributions to 
international organizations; trade promotion activities; and 
refugee assistance.

                         discretionary spending

    Discretionary spending in this function is a priority in 
the Bipartisan Budget Agreement. International Affairs 
discretionary spending in 1998 for this function would rise to 
$19.0 billion in BA and $19.2 billion in outlays, an increase 
of $0.4 billion in BA and $0.04 billion in outlays above the 
Budget Resolution Baseline for FY 1998. Over the five year 
period, spending would drop to a level of $18.2 billion in BA 
and $18.4 billion in outlays by 2002.
    In the 1998 budget request, the President proposed funding 
$3.521 billion for the New Arrangements to Borrow (NAB), the 
emergency reserves of the IMF. Funding for the NAB is 
accommodated at the requested level by a provision in the 
Budget Process and Enforcement category providing an allowance 
for an upward adjustment to the budget authority discretionary 
spending limits should Congress act to support the proposal. A 
similar adjustment was provided for the IMF in the 1990 Budget 
Enforcement Act.
    In the 1998 budget request, the President proposed funding 
to pay off the US arrears to the United Nations and other 
international organizations and the multilateral development 
banks over three years. Funding for the arrearages is 
accommodated at the requested level by a provision in the 
Budget Process and Enforcement category providing an allowance 
for an upward adjustment to the discretionary spending limits 
should Congress act to appropriate these funds. The Committee 
intends for this adjustment to provide the committees of 
jurisdiction the necessary flexibility to reach a bipartisan 
agreement on benchmarks for reform and on the total amount of 
U.S. arrears owed to the U.N. The chairmen and ranking members 
of the committees of jurisdiction, the leadership and the 
administration are currently engaged in efforts to meet the 
Administration's goal of payment of U.S. arrears, linked to the 
achievement of mutually agreed reforms at the U.N. that are 
significant and demonstrable.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriations Committees. Examples of possible reductions 
include the following:
    The reported resolution assumes the Administration's 
proposal to cut the 1998 level of funding for the Export Import 
Bank of the United States to a level of $630 million in BA in 
1998, an $85 million decrease from 1997.
    The reported resolution assumes the Administration request 
of $492 million in BA for the Assistance for Eastern Europe and 
the Baltic States. By 2002 the request falls to $50 million in 
BA, $425 million below the 1997 level.

                           mandatory spending

    Mandatory programs, in 1997, totaled $-2.8 billion in BA 
and $-4.6 billion in outlays. In 1998, mandatory accounts total 
$-3.1 billion in BA and $-4.6 billion in outlays and by 2002 
total $-1.9 billion in BA and $-3.6 billion in outlays.

         Function 250: GENERAL SCIENCE, SPACE & TRANSPORTATION

                       major programs in function

    Function 250 includes the National Aeronautics and Space 
Administration (NASA) civilian space program, the National 
Science Foundation (NSF), and basic research programs of the 
Department of Energy (DOE).
    Seventy-five percent of the function is comprised of 
spending for NASA. Nearly 100 percent of the function is 
discretionary, under the jurisdiction of the Appropriations 
subcommittees on VA, HUD and Independent Agencies and Energy 
and Water.

                         discretionary spending

    Discretionary spending in 1998 for Function 250 would 
decrease by $0.9 billion in BA and $0.5 billion in outlays from 
the Budget Resolution baseline, resulting in total 1998 funding 
of $16.2 billion in BA and $16.8 billion in outlays. Over the 
five year period, budget authority would be decreased by $10.6 
billion in BA and $9.0 billion in outlays by 2002 from the 
Budget Resolution baseline.
    The reported resolution assumes continued support for basic 
research between 1998 and 2002. National Science Foundation 
(NSF) spending on research and related activities would grow 
from their current level of $2.4 billion to $2.5 billion in 
2002.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriations Committee.
    Examples of possible reductions include the following: (1) 
The reported resolution assumes the President's budget proposal 
to reduce DOE General Science programs from their 1997 level of 
$1.0 billion to $0.9 billion in 1998 through 2002. (2) The 
reported resolution assumes the President's reductions in these 
programs. Savings are achieved from the Budget Resolution 
baseline by allowing these programs to increase by an average 
of only two percent each year, from their current level of $4.8 
billion to $5.2 billion in 2002. Proposal would result in 
savings of $0.8 billion over the five-year period. (3) The 
reported resolution assumes the President's budget reductions 
to NASA Human Space Flight accounts. These activities would be 
reduced from their current level of $5.5 billion to $4.7 
billion, with much of this reduction coming from planned 
reductions to the Space Station, which is scheduled to be 
funded at $2.1 billion in 1998 and fall to $1.5 billion in 
2002. Proposal would result in savings of $4.2 billion over the 
five-year period. (4) The reported resolution assumes the 
President's budget reductions to NASA Mission Support 
activities, which would be frozen at $2.5 billion per year, 
saving $1.7 billion over the five-year period. (5) The reported 
resolution assumes the President's budget reductions to NSF 
spending on education and human resources, which would be 
frozen at their current level of $0.6 billion. (6) The 
President has proposed to reduce these NSF activities by $0.1 
billion between 1998 and 2002 from the Budget Resolution 
baseline.

                           mandatory spending

    There are no mandatory assumptions in Function 250.

                          Function 270: ENERGY

                       major programs in function

    Function 270 funds the civilian activities of the 
Department of Energy (DOE), the Rural Electrification 
Administration (REA), the Nuclear Regulatory Commission (NRC), 
and the net spending of the Tennessee Valley Authority (TVA) 
power program.

                         discretionary spending

    The reported resolution assumes spending of $22.9 billion 
in budget authority and $24.0 billion in outlays for the 
function over the next five years. By 2002 spending would 
decrease by $0.5 billion in BA and $0.6 billion in outlays as 
compared to Budget Resolution baseline levels.
    The aggregate numbers in this function will support the 
overall level of spending assumed in the Bipartisan Budget 
Agreement. In order to meet these levels, specific program 
reductions and freezes would be required beyond the President's 
request.
    The reported resolution places a priority on the Department 
of Energy programs that support science and basic research, 
such as DOE's efforts to map the human genome and the 
activities at the Department of Energy National Laboratories.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions include the following: (1) 
Naval Petroleum Reserves reductions. The President's Budget 
request proposes to reduce the Naval Petroleum Reserves 
program. The outyear discretionary savings result from the sale 
of Elk Hills Naval Petroleum Reserve scheduled for February 
1998 and the subsequent reduced appropriation requirement. (2) 
Fossil Energy R&D reductions. The President's request would 
reduce fossil (coal, natural gas, and petroleum) technology 
development programs. (3) Other. The President's Budget request 
proposes reductions in the Uranium Enrichment decontamination 
and decommissioning fund and the Power Marketing 
Administrations. The President's request reduces the Rural 
Electrification Administration (REA) and the Energy Information 
Administration (EIA).

                           mandatory spending

    The reported resolution adopts a proposal from the 1997 
Budget Resolution and the President's budget request that 
authorizes DOE to lease excess SPRO storage capacity.

            Function 300: ENVIRONMENT AND NATURAL RESOURCES

                       major programs in function

    This function includes funding for water resources, 
conservation and land management, recreation resources, and 
pollution control and abatement. Agencies with major program in 
this function include: the Army Corp of Engineers (CORP), 
Bureau of Reclamation (BOR), Forest Service (USFS), Bureau of 
Land Management (BLM), Fish and Wildlife Service (USFWS), the 
National Park Service (NPS), Environmental Protection Agency 
(EPA), National Oceanic and Atmospheric Administration (NOAA), 
and the U.S. Geological Survey (USGS).

                         discretionary spending

    Discretionary spending in this function is a priority in 
the Bipartisan Budget Agreement. Discretionary spending in 1998 
for this function increases by $0.6 billion in BA and increases 
by 0.3 billion in outlays above the Budget Resolution Baseline, 
to $22.8 billion in BA and $22.4 billion in outlays. Over the 
five year period, discretionary spending decreases to $21.2 
billion in BA and $21.5 billion in outlays in 2002. The 
reported resolution assumes total discretionary spending of 
$109.0 billion in BA and $108.3 billion in outlays over the 
five year period.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's request of $1.2 billion in both BA and 
outlays for National Park Service operations, an increase of 
$66 million in BA and $57 million in outlays above 1997. This 
is an increase of $25 million in BA and $19 million in outlays 
above the 1998 Budget Resolution Baseline.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's funding request within the National Park 
Service and the Corps of Engineers for the restoration of the 
Florida Everglades.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's request of $3.5 billion in BA and $3.3 
billion in outlays for EPA's operating programs, an increase of 
$0.3 billion in both BA and outlays above 1997.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's request of $41 million in 1998 for 
National Park Service land acquisition, an increase of $17 
million above 1997. The Bipartisan Budget Agreement assumes 
$162 million over the five year period.
    The Bipartisan Budget Agreement assumes an additional $700 
million in BA and outlays is available in 1998 through 2001 
from the LWCF for high priority Federal land acquisitions and 
exchanges. The funding will be allocated as an allowance 
exclusively for this purpose.
    In 1997, $1.3 billion was provided for the hazardous waste 
superfund operated through the Environmental Protection Agency. 
The Superfund authorization and the taxes to finance the 
superfund trust fund expired in 1994 and 1995, respectively. 
Increased funding can be accommodated at the President's 
request of $2.1 billion in 1998 and $8.4 billion over five 
years if policies can be worked out.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions are: (1) Forest Service 
(FS) and Bureau of Land Management (BLM) Wildfire Management: 
In 1997, approximately $0.6 billion was spent on emergency 
firefighting for both the FS and BLM. The President's budget 
does not include the emergency funding but it does provide $0.8 
billion in both BA and outlays in base funding. (2) FS 
construction and reconstruction: The President's budget 
proposes $0.1 billion in BA and $0.2 billion in outlays, a 
decrease of $34 million in BA and $24 million in outlays below 
the 1997 level. (3) Corps of Engineers: The President's budget 
proposes $3.5 billion for the major programs of the CORPs, an 
increase of $0.2 billion in BA above 1997 and a decrease of 
$0.1 billion in outlays below 1997. The reported resolution 
does not assume the President's proposal for Capital Asset 
Acquisitions.

                           mandatory spending

    The reported resolution assumes $1.0 billion over the five 
year period and $2.0 billion over ten years for new mandatory 
spending for orphan shares at Superfund hazardous waste cleanup 
sites. Orphan shares are portions of financial liability at 
Superfund sites allocated to non-Federal parties with limited 
or no ability to pay. The funds will be reserved for this 
purpose based on the assumption of a policy agreement on orphan 
share spending.

                       Function 350: AGRICULTURE

                       major programs in function

    This function includes programs that intend to promote 
economic stability in the agriculture sector. Programs in this 
function include direct assistance and loans to food and fiber 
producers, and market-information and agriculture research. 
Producers are assisted with production flexibility contract 
payment, crop insurance, non-recourse crop loans, operating 
loans and export promotion.

                         discretionary spending

    Discretionary spending in 1998 for this function would 
decrease by $0.2 billion in BA and $0.1 billion in outlays 
below the Budget Resolution Baseline, to $4.1 billion in both 
BA and outlays. Over the five year period, discretionary 
spending would decrease to $3.8 billion in both BA and outlays 
in 2002. The Resolution assumes total discretionary spending of 
$19.6 billion in BA and $19.8 billion in outlays over the five 
year period. The aggregate numbers in this function will 
support the overall level of spending assumed in the Bipartisan 
Budget Agreement. In order to meet those levels, specific 
program reductions and freezes may be required beyond the 
President's request.
    The reported resolution assumes the President's proposal of 
$0.2 billion in discretionary funds to reimburse agent's sales 
commissions and company administrative expenses for private 
delivery. Private sales agents and insurance companies 
administer federal crop insurance on the federal government's 
behalf. In exchange for private delivery, the Department of 
Agriculture reimburses the private companies. Under current 
law, reimbursements are paid from the mandatory Federal Crop 
Insurance Fund and in 1998 and, thereafter, sales commissions 
are discretionary.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions include the following: (1) 
Farm Service Agency (FSA) salaries and expenses: The 
President's budget proposes $0.7 billion in both BA and outlays 
in 1998 for salaries and expenses, a decrease of $32 million in 
BA and $30 million in outlays below the Budget Resolution 
Baseline. Over the five year period the President proposes to 
reduce FSA salaries and expenses by 1.1 billion in both BA and 
outlays. (2) Agriculture Credit Insurance Fund (ACIF): The 
President's budget proposes $0.3 billion in both BA and outlays 
for the ACIF in 1998, a decease of $46 million in BA and $40 
million in outlays below the Budget Resolution Baseline. (3) 
Agriculture Research Service (ARS) Buildings and Facilities and 
Cooperative State Research, Education, and Extension Service 
Buildings and Facilities (CSREES): The President's budget 
proposes to terminate CSREES building and facilities and reduce 
ARS buildings and facilities. The proposal saves $76 million in 
BA and $4 million in outlays in 1998 below the Budget 
Resolution Baseline. Over five years, this proposal saves $0.5 
million in BA and $0.3 million in outlays. (4) Agriculture 
Research: The President's budget proposes $1.6 billion in both 
BA and outlays for agriculture research and extension, a 
reduction of $44 million in BA and $27 million in outlays below 
the Budget Resolution Baseline.

                           mandatory spending

    Over the five year period mandatory spending decreases from 
$7.7 billion in 1998 to $5.2 billion in 2002, a decrease of 
$2.5 billion. The majority of the decrease is associated with a 
reduction in flexibility contract payments and other policy 
changes enacted in the 1996 Farm Bill. The reported resolution 
assumes total mandatory spending of $32.6 billion over the five 
year period. It does not assume policy changes for mandatory 
programs in this function.

               Function 370: COMMERCE AND HOUSING CREDIT

                       major programs in function

    Function 370 includes certain discretionary housing 
programs, such as subsidies for single and multifamily housing 
in rural areas and mortgage insurance provided by the Federal 
Housing Administration; net spending by the Postal Service; 
discretionary funding for commerce programs, such as 
international trade and exports, science and technology, the 
periodic census, and small business; and mandatory spending for 
deposit insurance activities related to banks, thrifts, and 
credit unions.

                         discretionary spending

    Discretionary spending in 1998 for this function would 
increase by $0.3 billion in BA and outlays over the 1997 level, 
to $3.1 billion in BA and outlays. By 2002, spending would 
return approximately to 1997 levels of $2.9 billion in BA and 
$2.7 billion in outlays, after having peaked at $5 billion in 
BA and $4.6 billion in outlays in 2000 to cover the costs of 
conducting the decennial census.
    The decennial census requires a level of resources that is 
an order of magnitude larger than the baseline amounts that are 
based on the 1997 appropriation of $0.2 million for the 
periodic census account. The reported resolution includes 
sufficient funding over the next five years to conduct the 
census, and reflects savings from implementing improvements in 
conducting the census.
    The Bipartisan Budget Agreement provides, as a priority 
item, the President's request for the National Institute of 
Standards and Technology (NIST), which is an increase of $0.7 
billion in budget authority and $0.3 billion in outlays over 
the Budget Resolution Baseline over the next five years.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriations Committees.
    The following are examples of possible reductions. The 
President's Budget proposes to operate a group of programs over 
the next five years at a level of resources generally frozen at 
the 1997 level, including direct rural multifamily housing 
loans and associated administrative expenses (actually a 4.5 
percent reduction in 1998 compared to 1997), SBA business loans 
andsalaries and expenses, payment for postal subsidies, FHA 
multifamily housing loan insurance, and salaries and expenses for the 
International Trade Administration (ITA), salaries and expenses at 
NIST, the Census Bureau, and the Federal Communications Commission.

                           MANDATORY SPENDING

    The apparent increase in BA and outlays from 1997 to 2002 
in the reported resolution (an $11 billion BA change and a 
$22.4 billion outlay change) stems not from new policies but 
from baseline increases in the mandatory programs in this 
function. The primary component of the baseline increase is the 
Universal Service Fund, into which telecommunications carriers 
are required to pay amounts to cover the cost of guaranteeing 
certain levels of service in rural and high cost areas. These 
amounts appear as federal revenues on the tax side of the 
budget, with corresponding spending appearing in this budget 
function. While the fund has no net impact on the budget, the 
BA and outlays for the fund grow from $1 billion in 1997 to 
$12.2 billion in 2002, swamping any changes in other mandatory 
activities in this function.
    The Treasury pays the Postal Service about $30 million 
annually for obligations incurred by the federal government 
before the Postal Service was reorganized and placed off-budget 
in 1971. The Bipartisan Budget Agreement provides for an end to 
these payments, with the costs shifting to postal rate payers, 
saving the Treasury $0.1 billion over the next five years.

                      Function 400: TRANSPORTATION

                       MAJOR PROGRAMS IN FUNCTION

    Function 400 includes ground transportation programs, such 
as the federal-aid highway program, mass transit operating and 
capital assistance, rail transportation through AMTRAK and 
other rail programs; air transportation through the Federal 
Aviation Administration (FAA) Airport Improvement Program 
(AIP), aviation facilities and equipment programs, and 
operation of the air traffic control system; water 
transportation through the Coast Guard and the Maritime 
Administration; and related transportation support activities.

                         DISCRETIONARY SPENDING

    Discretionary spending in this function is a priority in 
the Bipartisan Budget Agreement. Discretionary spending in 1998 
for Function 400 would decrease by $1.1 billion in BA, while 
outlays would increase by $0.6 billion from the Budget 
Resolution baseline, resulting in total 1998 spending of $13.6 
billion in BA and $38.3 billion in outlays. Over the five year 
period, total discretionary spending would decrease by $4.1 
billion in BA and $2.3 billion in outlays by 2002 below the 
Budget Resolution baseline.
    The Resolution Mark assumes spending of all estimated 
Highway Trust Fund tax receipts between 1998 and 2002. Yearly 
allocations of Highway Trust Fund spending would be equal to 
the current estimates of tax receipts to the Highway Trust 
Fund, with a one-year delay. Proposal would increase total 
highway spending from its current level of $20.8 billion to 
$23.1 billion in 2002.
    The Resolution Mark assumes the Budget Resolution baseline 
for FAA Operations, Facilities and Equipment, and Research, 
Engineering, and Development programs. The Resolution Mark 
would provide for these programs to grow from their 1997 level 
of $7.1 billion to $8.3 billion in 2002. The Resolution Mark 
also assumes a freeze in the Airport Improvement Program (AIP), 
through 2002, at its current level of $1.46 billion. The 
President's budget had provided for AIP to be reduced to $1.0 
billion in 1998 and frozen at this figure through 2002.
    The Resolution Mark assumes the Budget Resolution baseline 
for the Federal Transit Administration (FTA). This assumption 
would allow for total mass transit outlays to rise from their 
current level of $4.3 billion to $4.5 billion in 2002.
    The Resolution Mark assumes the Budget Resolution baseline 
for Amtrak. This proposal would allow Amtrak spending to rise 
from its current level of $0.8 billion to $0.9 billion in 2002.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriations Committee.
    Examples of possible reductions include: (1) The Department 
of Transportation Office of the Secretary accounts. (2) 
Maritime. (3) NASA Function 400 aeronautical facilities. In 
addition, Coast Guard prop period spending could be reduced by 
$0.8 billion over the five year period below the Budget 
Resolution baseline. Most of this reduction is from the 
President's proposal to freeze Coast Guard operations at $2.4 
billion from 1998 through 2002.

                           MANDATORY SPENDING

    The Resolution Mark provides for an increase in contract 
authority for highways, highway safety, and mass transit above 
the levels provided in 1997. Total highway and highway safety 
contract authority would rise from its current level of $22.6 
billion to $25.1 billion in 2002. For mass transit, the 
Resolution Mark would increase contract authority from its 
current level of $4.8 billion to $5.5 billion in 2002.
    The Bipartisan Budget Agreement assumes an extension of 
vessel tonnage fees, set to expire September 30, 1998, raising 
$0.2 billion over 1999--2002.

            Function 450: COMMUNITY AND REGIONAL DEVELOPMENT

                       MAJOR PROGRAMS IN FUNCTION

    This function includes funding for community and regional 
development and disaster relief. The major programs are 
administered through a variety of agencies including 
theDepartment of Housing and Urban Development (HUD), Appalachian 
Regional Commission (ARC), Tennessee Valley Authority (TVA), Economic 
Development Administration (EDA), Bureau of Indian Affairs (BIA), 
Federal Emergency Management Agency (FEMA), and the Department of 
Agriculture (USDA).

                         DISCRETIONARY SPENDING

    Discretionary spending in 1998 for this function would 
decrease by $1.3 billion in BA and $1.0 billion in outlays 
below the Budget Resolution Baseline, to $8.3 billion in BA and 
$10.0 billion in outlays. Over the five year period, 
discretionary spending would decrease to $7.6 billion in BA and 
$8.4 billion in outlays in 2002. The reported resolution 
assumes total discretionary spending of $39.1 billion in BA and 
$51.6 billion in outlays over the five year period. The 
aggregate numbers in this function will support the overall 
level of spending assumed in the Budget Agreement. In order to 
meet those levels, specific program reductions and freezes may 
be required beyond the President's request.
    The reported resolution is $8.4 billion in BA and $1.0 
billion in outlays below the President's 1998 request. The 
majority of the difference is due to the President's request of 
$5.8 billion for the emergency contingency fund and the 
President's $2.4 billion request for FEMA disaster relief. The 
reported resolution does not assume the emergency contingency 
fund. The 1997 emergency supplemental in the Senate-passed bill 
and the House-reported bill includes the President's request of 
$2.4 billion for FEMA disaster relief, thus the reported 
resolution does not assume the President's FEMA disaster relief 
request of $2.4 billion in 1998. The reported resolution does 
assume base non-emergency funding for FEMA disaster relief as 
requested by the President.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's request of $125 million in BA and $63 
million in outlays for the community development financial 
institution fund.
    The Bipartisan Budget Agreement assumes, as a priority 
item, the President's request of $0.8 billion for Tribal 
Priority Allocations, an increase of $0.1 billion over 1997. 
This program provides funds directly to tribes for tribal 
government operations and basic services such as law 
enforcement, child protection, education and road maintenance. 
Funding is also included in functions 300 and 500.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions include the following: (1) 
Community Development Block Grants (CDBG): The President's 
budget proposes $4.6 billion in BA and $4.7 billion in outlays, 
a decrease of $115 million in BA below the Budget Resolution 
Baseline and is essentially at a freeze in outlays. (2) 
Appalachian Regional Commission: The President's budget 
proposes $165 million in BA and $185 million in outlays, an 
increase of $5 million above 1997 in BA and a decrease of $9 
million in outlays below 1997. In 1999 through 2002, the 
President's budget proposes $70 million per year.

                           MANDATORY SPENDING

    The Resolution assumes no changes in mandatory programs in 
this function.

    Function 500: EDUCATION, TRAINING, EMPLOYMENT & SOCIAL SERVICES

                       MAJOR PROGRAMS IN FUNCTION

    This function includes those activities designed to promote 
the acquiring of knowledge and skills, to provide social 
services for needy individuals, and for research directly 
related to these program areas. In general, the activities 
funded by this function are administered through the 
Departments of Labor, Health and Human Services, and Education.

                         DISCRETIONARY SPENDING

    Discretionary spending in this function is a priority in 
the Bipartisan Budget Agreement. Discretionary spending in 1998 
for this function would increase by $4.3 billion in BA and $2.8 
billion in outlays over the 1997 level, to $46.7 billion in BA 
and $43.2 billion in outlays in 1998. By 2002, discretionary 
spending would grow by $6.8 billion in BA and $8.2 billion in 
outlays over the 1997 level, for a total of $49.2 billion in BA 
and $48.6 billion in outlays in 2002. Compared to the Budget 
Resolution Baseline, spending in this function would increase 
by $9.7 billion in BA and $5.8 billion in outlays over the next 
five years.
    In order to work toward the statutory federal goal of 
providing 40 percent of the national average per pupil 
expenditure per disabled child, the reported resolution assumes 
a $5 billion increase over the next five years for Special 
Education.
    Pell Grants are a critical form of student financial 
assistance in that they target students from low income 
families. The Bipartisan Budget Agreement supports, as a 
priority item, the President's request for an additional $8.6 
billion for this program over the next five years, including 
bringing the maximum grant from $2,700 to $3,000.
    For Head Start, a program which provides pre-school 
programming for disadvantaged children, the Bipartisan Budget 
Agreement provides, as a priority item, the President's 
request, which calls for an additional $2.7 billion over the 
next five years.
    The Bipartisan Budget Agreement provides, as a priority 
item, funding for literacy programs consistent with the goals 
and concepts of the President's America Reads program.
    The Bipartisan Budget Agreement provides, as a priority 
item, the President's request for the Technology Literary 
Challenge Fund, which will provide $946 million over the next 
four years for teacher training; updated computer equipment in 
classrooms; Internet connections; and other online learning 
resources. The program is scheduled to sunset in 2001.
    The Bipartisan Budget Agreement provides, as a priority 
item, a $446 million increase over the next five years for 
Bilingual and Immigrant Education programs to help limited 
English-proficient students and local education agencies with 
large numbers of immigrant students.
    The Bipartisan Budget Agreement, according to the 
President's Budget, provides, as a priority item, for growth at 
the rate of inflation for Job Corps, which provides basic 
education, training, work experience, and other support through 
primarily residential settings.
    In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions include the following: (1) 
Terminate Public Broadcasting Facilities. Funding for this 
program, which provides grants to noncommercial entities for 
the planning and construction of broadcasting facilities 
throughout the United States, would be terminated in the 
President's Budget. (2) School Improvement Programs. The 
President's Budget proposes to terminate the Innovative Program 
Strategies Grant Program. (3) Children and Families Services 
Programs. The President's Budget assumes reductions totaling 
nearly $1.4 billion over the next five years in the following 
programs: Community Services Block Grant, Social Services 
Research and Demonstration, termination of Community Services 
Discretionary Activities, termination of National Youth Sports, 
and termination of the Community Food and Nutrition program. 
(4) Unemployment Trust Fund and Service Operations. 
Appropriations for this account could be reduced by replacing 
federal funds through the enactment of a new alien labor 
certification fee that was proposed in the President's Budget.

                           mandatory spending

    A significant source of mandatory funding within Function 
500 includes the student loan programs. The subsidy for student 
loans is expected to grow from $3.9 billion in 1998 to $4.1 
billion in 2002. This federal subsidy will support $28.8 
billion in student loan volume in 1998, growing to $35.8 
billion in 2002.
    Proposed savings in student loan programs provided in the 
Bipartisan Budget Agreement would not increase costs, reduce 
benefits, or limit access to loans for students and their 
families. The specific policies assumed in the Bipartisan 
Budget Agreement are intended to achieve an equitable balance 
in savings between the direct student loan program and the 
guaranteed student loan program.
    The Bipartisan Budget Agreement provides for total savings 
in student loan programs of $1.8 billion over five years. 
Annual budget authority levels for the Section 458 of the 
Federal Direct Student Loan Program, Funds for Administrative 
Expenses account, would be reduced for a five year savings of 
$603 million. It would eliminate the $10 per loan federal 
payment to schools and alternate originators who make direct 
loans for a savings of $160 million over five years. The return 
to the federal government of $1 billion in excess guarantee 
agency reserves which are not necessary for guarantee agencies 
to carry out their essential functions would save $1 billion 
over five years. The Bipartisan Budget Agreement would 
eliminate the mandatory vocational education appropriation 
under the Smith-Hughes Act of 1918, as is proposed in the 
President's Budget, for a savings of $29 million over five 
years.

                          Function 550: HEALTH

                       major programs in function

    This function covers all health spending except that for 
Medicare, military health, and veterans' health. The major 
programs include Medicaid, health benefits for federal 
retirees, the National Institutes of Health, the Food and Drug 
Administration, the Health Resources and Services 
Administration, the Indian Health Service, the Centers for 
Disease Control, and the Substance Abuse and Mental Health 
Services Administration.

                         discretionary spending

    The reported resolution provides discretionary spending for 
this function in 1998 of $24.9 billion in BA and $24.6 billion 
in outlays. Compared to 1997, BA is $0.1 billion lower, and 
outlays are $0.8 billion higher. Over five years, discretionary 
spending in this function is $13.2 billion in BA and $10.0 
billion in outlays below the Budget Resolution Baseline. 
Discretionary spending is $2.2 billion in BA and $1.4 billion 
in outlays below a five year freeze baseline. The reported 
resolution assumes the National Institutes of Health will be 
given priority in terms of funding levels throughout the five 
year period. In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required in 
programs in this function. These savings will be determined by 
the Appropriations Committees. Following are examples of 
possible reductions. The President's proposals to reduce 
funding for Health Professions and General Departmental 
Management; and reductions in funding for the Agency for Health 
Care Policy and Research.

                           mandatory spending

    The reported resolution includes net Medicaid savings of 
$13.6 billion over five years. Net Medicaid savings in the 
reported resolution include a higher match for D.C., an 
inflation adjustment for programs in Puerto Rico and other 
territories, Part B premium interactions, and $1.5 billion to 
ease the impact of increasing Medicare premiums on low-income 
beneficiaries. The $13.6 billion in Medicaid savings do not 
reflect the health care investments for children's coverage, 
protections for legal immigrants under welfare reform, or the 
extension of veterans' Medicaid income protections. The 
reported resolution includes savings derived from reduced 
disproportionate share payments and flexibility provisions. The 
reported resolution includes provisions to allow States more 
flexibility in managing the Medicaid program, including repeal 
of the Boren amendment, converting current managed care and 
home/community-based care waivers to State Plan Amendment, and 
elimination of unnecessary administrative requirements.
    The reported resolution spends $16 billion over five years 
(to provide up to 5 million additional children with health 
insurance coverage by 2002). This is a priority item in the 
Bipartisan Budget Agreement. The funding could be used for one 
or both of the following, and for other possibilities if 
mutually agreeable: (1) Medicaid, including outreach activities 
to identify and enroll eligible children and providing 12-month 
continuous eligibility; and also to restore Medicaid for 
current disabled children losing SSI because of the new, more 
strict definition of childhood eligibility; and (2) A program 
of capped mandatory grants to States to finance health 
insurance coverage for uninsured children. The resources will 
be used in the most cost-effective manner possible to expand 
coverage and services for low-income and uninsured children 
with a goal of up to 5 million currently uninsured children 
being served.

                         Function 570: MEDICARE

                       major programs in function

    This function includes only the Medicare program. Medicare 
pays for medical services for 38.1 million senior citizens, 
disabled workers, and persons with end-stage renal disease. 
Medicare is administered by the Health Care Financing 
Administration, part of the Department of Health and Human 
Services.

                         discretionary spending

    The reported resolution assumes $2.7 billion in BA and 
outlays for discretionary spending in this function in 1998, 
which is $0.1 billion higher in BA compared to 1997 and 
essentially a freeze in outlays. Over five years, discretionary 
spending in this function is $1.5 billion in BA, $1.4 billion 
in outlays below the Budget Resolution Baseline and $0.4 
billion in BA and outlays above a five year discretionary 
freeze.

                           mandatory spending

    Under current law, net Medicare mandatory spending is 
estimated to grow from $188.6 billion in 1997 to $288.1 billion 
in 2002, for an average annual growth rate of 8.8 percent. On a 
per capita basis, spending is expected to increase from $4,949 
in 1997 to $7,114 in 2002, for a 7.5 percent average annual 
growth rate.
    The Bipartisan Budget Agreement includes a reduction of 
projected Medicare spending by $115 billion over five years, 
and by an estimated $434 billion over ten years. The Part A 
Trust Fund will remain solvent for at least 10 years through a 
combination of savings and structural reforms (including the 
home health reallocation). Under the agreement, net Medicare 
spending will reach $248.1 billion in 2002, for an average 
annual growth rate of 5.6 percent. On a per capita basis, 
spending will reach $6,127 in 2002, for an average annual 
growth rate of 4.4 percent.
    Structural reforms, in the Bipartisan Budget Agreement will 
include provisions to give beneficiaries more choices among 
competing private insurance options, such as provider sponsored 
organizations and preferred provider organizations. The 
Medicare program reforms will provide beneficiaries with 
comparative information about their options, such as now 
provided Federal employees and annuitants in the FEHB program. 
These proposals are similar to reforms sponsored by Senator 
Gregg, Senator Wyden, and others.
    The Bipartisan Budget Agreement maintains the Part B 
premium permanently at 25 percent of program costs and phase in 
over seven years the inclusion in the calculation of the Part B 
premium the portion of home health expenditures reallocated to 
Part B. It reforms managed care payment methodology to address 
geographic disparities. It also reforms payment methodology by 
establishing prospective payment systems for areas such as home 
health providers, skilled nursing facilities, and outpatient 
departments.
    Funding for new health benefits, in the Bipartisan Budget 
Agreement includes: (1) expanded mammography coverage; (2) 
coverage for colorectal screenings; (3) coverage for diabetes 
self-management; and (4) higher payments to providers for 
preventive vaccinations to the extent it will lead to greater 
use by beneficiaries. Invest $4 billion over five years (and 
$20 billion over ten years) to limit beneficiary copayments for 
outpatient services, unless there is a more cost-effective way 
to provide such services to beneficiaries as mutually agreed.

                     Function 600: INCOME SECURITY

                       major programs in function

    Function 600, Income Security, funds a broad range of 
programs including federal retirement programs, the major cash 
and in-kind welfare programs, housing programs and nutrition 
programs. These programs are administered by several agencies 
and departments including the Department of Health and Human 
Services, the Office of Personnel Management, the Social 
Security Administration, the Department of Housing and Urban 
Development and the Department of Agriculture.

                         discretionary spending

    Discretionary spending in 1998 for this function would 
increase by $6.3 billion in BA and $0.4 billion in outlays over 
the 1997 level, to $32.9 billion in BA and $41.3 billion in 
outlays. Comparing 1997 levels to those in 2002 under the 
reported resolution, spending would increase by $13.0 billion 
in BA (because of the requirements of additional BA to renew 
expiring section 8 housing contracts in place under current 
law), but would decrease by $0.1 billion in outlays by 2002 
(baseline outlays increase by $5.2 billion from 1997 to 2002, 
but the reported resolution would save $5.3 billion in 2002).
    The reported resolution includes sufficient funding to 
renew all section 8 contracts that expire over the next five 
years, while reflecting savings from policies proposed in the 
President's budget, which will guarantee that all those 
currently receiving assistance (or waiting for an existing unit 
to become available) will continue to receive such assistance.
    The reported resolution assumes that basic administrative 
funds for unemployment insurance programs are frozen, but that 
additional funds will be available for payment integrity and 
anti-fraud actions. The additional payment integrity activities 
would generate $763 million in entitlement unemployment 
insurance savings. This policy is part of the President's 1998 
Budget and saves an additional $1.6 billion in discretionary 
costs.
    The aggregate numbers in this function will support the 
overall level of spending assumed in the Bipartisan Budget 
Agreement. In order to meet the Bipartisan Budget Agreement's 
discretionary spending limits, savings will be required from 
programs in this function. These savings will be determined by 
the Appropriation Committees.
    Examples of possible reductions include the following: (1) 
Public housing funds and other housing programs. The 
President's Budget would freeze at the 1997 appropriation level 
the funding for public housing. The public housing 
reauthorization changes expected to be passed by the Congress 
would facilitate the operation of public housing programs in a 
freeze environment. (2) Housing preservation. The President's 
Budget would end funding for housing preservation. (3) Other 
housing programs. The President's Budget would reduce funding 
below baseline levels for the HOME program, housing for special 
populations, revitalization of distressed public housing, HUD 
salaries and expenses, homeless assistance grants, drug 
elimination grants, very low income repair grants, mutual self-
help grants, and rural housing preservation grants. (4) Food 
Program Administration. The costs of federal administration of 
food programs--food stamps, child nutrition--would be frozen at 
the 1997 level. These costs can be frozen since most food 
assistance program caseloads have declined over the past three 
years, and actual spending on entitlement nutrition program in 
1997 will be lower than 1996 spending. This proposal is part of 
the President's Budget and would save $62 million over five 
years. (5) Railroad Retirement. The President's proposals for 
Railroad Retirement Board administrative expenses and for 
windfall benefit funding would yield savings relative to the 
Budget Resolution Baseline of $0.4 billion in BA and outlays 
over the next five years. The windfall benefit funding in the 
President's budget is not a cut in benefits but an adjustment 
to the baseline reflecting the natural decline in the number of 
eligible beneficiaries for this closed-group benefit.

                           mandatory spending

    Of total spending in this function for 1997, $197.0 billion 
(or 83 percent) is spent on mandatory programs. Six programs 
account for $165.9 billion in outlays in this function--$90.9 
billion funds the major cash and in-kind means tested programs 
of Food Stamps, Supplemental Security Income (SSI), Temporary 
Assistance for Needy Families (TANF) and outlays for the Earned 
Income Tax Credit (EITC). The balance of mandatory outlays, 
$75.0 billion is spent on federal retirement programs and $24.5 
billion is spent on unemployment insurance.
    The Bipartisan Budget Agreement restores SSI and Medicaid 
eligibility for all disabled legal immigrants who are or become 
disabled and who entered the U.S. prior to August 23, 1996. 
Those disabled legal immigrants who entered after August 22, 
1996, and are on the SSI rolls before June 1, 1997 shall not be 
removed. This policy is a priority item and will cost $9.4 
billion which includes $1.6 billion in Medicaid costs found in 
function 550.
    The welfare reform bill exempted refugees and asylees from 
the ban on government assistance for five years. The agreement 
extends the refugee and asylee exemption from five years to 
seven years. This policy is a priority item and costs $200 
million over five years.
    The Bipartisan Budget Agreement $750 million in new capped 
mandatory funding to create additional work slots for 
individuals subject to the time limits. In addition, existing 
food stamps employment and training funds will be redirected to 
fund work slots. The agreement also allows states to exempt up 
to 15 percent of the individuals who would lose benefits 
because of the time limits (beyond current waiver policy) at a 
cost of $500 million over five years. These policies are 
priority items in the Bipartisan Budget Agreement.
    The Bipartisan Budget Agreement adds $3 billion over the 
next four years to the Temporary Assistance for Needy Families 
(TANF) block grant. These additional funds will be distributed 
through a formula and targeted to areas with poverty and 
unemployment at least 20 percent higher than the state average. 
A share of the funds would go to cities/counties with large 
poverty populations commensurate with the share of long-term 
welfare recipients in those jurisdictions. This policy is a 
priority item in the Bipartisan Budget Agreement.
    The Bipartisan Budget Agreement increases the ceilings of 
the Federal FUTA-funded accounts in the Unemployment Trust Fund 
to increase solvency. This policy saves $624 million over five 
years.
    The Bipartisan Budget Agreement includes savings from 
several EITC compliance initiatives concurrent with an IRS 
study finding a 23 percent error rate. Other mutually 
acceptable EITC reforms targeted to reducing noncompliance and 
fraud may also be considered. The savings from the President's 
initiatives are approximately $124 million over five years.
    The reported resolution assumes continuation of proposals 
in the President's Budget to limit certain automatic increases 
in payments made to Section 8 landlords from 1999-2002.
    The Bipartisan Budget Agreement assumes the President's 
proposal of a 1.51 percent increase in federal agency 
contributions for all employees in the Civil Service Retirement 
System (CSRS), excluding the Postal Service, for a savings of 
$2.9 billion (shown in Function 950, Undistributed Offsetting 
Receipts).
    The Bipartisan Budget Agreement assumes the President's 
proposal for a 0.5 percentage point increase in the federal 
employee's current retirement contribution rate. Rates for 
employees in the Civil Service Retirement System (CSRS) will 
increase from 7 percent to 7.5 percent, and rates for employees 
in the Federal Employees Retirement System (FERS) will increase 
from 0.8 percent to 1.3 percent, both on a phased-in basis 
beginning in 1999, according to the following schedule: 0.25 
percent in 1999, 0.15 percent in 2000, and 0.10 percent in 
2001. Total savings would amount to $1.8 billion (shown in 
Revenues).

                     Function 650: SOCIAL SECURITY

                       major programs in function

    This function includes only Social Security old age, 
survivors, and disability insurance (OASDI). Benefits are paid 
from the Social Security trust funds and financed primarily 
with payroll taxes. For purposes of the Budget Enforcement Act, 
the Social Security trust funds are off-budget. However, the 
administrative expenses of the Social Security Administration 
(SSA) are on-budget and remain within the caps on discretionary 
spending.

                         discretionary spending

    The reported resolution provides discretionary spending in 
1998 for this function at $3.3 billion in BA and $3.4 billion 
in outlays, which is $0.2 billion below the 1997 level for BA 
and $0.1 billion lower for outlays. Over the five year period, 
discretionary spending is $3.2 billion in BA and $2.8 billion 
in outlays below the Budget Resolution Baseline and $1.4 
billion in BA and $1.0 billion in outlays below a freeze 
baseline.

                           mandatory spending

    The reported resolution assumes no changes from current law 
for mandatory spending in this function.

                     Function 700: VETERAN AFFAIRS

                       major programs in function

    Function 700 funds the Department of Veterans Affairs which 
oversees programs for veterans of the armed forces. 
Compensation, pension and life insurance programs address the 
income security needs of disabled and indigent veterans as well 
as their survivors. Major education, training and 
rehabilitation and readjustment programs include the Montgomery 
GI bill, Veterans Educational Assistance program and the 
Vocational Rehabilitation and Counseling program. Veterans are 
also eligible for guaranteed home and farm loans. Roughly half 
of all spending on veterans goes to the Veterans Health 
Administration which comprises over 700 hospitals, nursing 
homes, domiciliaries and outpatient clinics.

                         discretionary spending

    In 1998, discretionary spending is assumed to decrease by 
$0.4 billion in BA but increase by $0.1 billion in outlays over 
the 1997 level to $18.5 billion in BA and $19.3 billion in 
outlays. Over the next five years, spending is assumed to 
decrease modestly to $18.0 billion in BA and outlays. The 
discretionary funding level will be augmented by converting the 
receipts of the Medical Care Cost Recovery fund into additional 
spending for the Veteran Hospital system. The shift of 
offsetting receipts from mandatory spending to discretionary 
spending has been incorporated into the Budget Committee's 
adjusted baseline. Over the next five years the number of 
veterans will continue to decline and after 1999, the over-65 
veteran population will decrease.
    The aggregate numbers in this function will support the 
overall level of spending assumed in the Budget Agreement. In 
order to meet the Bipartisan Budget Agreement's discretionary 
spending limits, savings will be required from programs in this 
function. These savings will be determined by the Appropriation 
Committees.
    Examples of possible reductions include the following: (1) 
Medical Administration and Miscellaneous Expenditures. The 
President's Budget proposes $40 million in savings from 
freezing the Medical Administration account from the Budget 
Resolution Baseline. (2) Construction of Medical Facilities. 
Adopting the President's proposal of funding no new major 
construction but providing for renovations and repair of 
existing facilities would save about $800 million over five 
years compared to the baseline. (3) General Operating Expenses. 
Freeze General Operating Expenses (GOE) at the 1997 level. This 
proposal was part of the President's Budget and saves $395 
million over five years from the Budget Resolution Baseline.

                           mandatory spending

    Spending on mandatory veterans programs will rise by 23 
percent over the next five years because of: cost-of-living 
increases, regulatory expansion of eligible populations, and a 
growing veteran population over the short term. Mandatory 
compensation benefits will peak in 2005 and gradually decline. 
Compensation and pension benefits will rise with inflation, but 
the overall veteran population will begin declining shortly 
after 2000. Starting in 1999 the over-65 veteran population 
will begin to decline. Finally, there have been recent 
administrative actions that have expanded eligibility for 
compensation, especially the Vietnam-era population.
    A provision in both the reported resolution and the 
Bipartisan Budget Agreement extends expiring provisions of OBRA 
1993: Medical Care. 1) recovery of third party insurance costs, 
a $2 co-pay for prescription drugs and a per diem for hospital 
care, and 2) verification of income for medical care 
determination. The extensions of current law were part of the 
President's Budget and the 1997 budget resolution. Cumulatively 
the extensions add $1 billion to the Medical Care Cost Recovery 
fund which is transferred to discretionary spending. In 
addition the reported resolution assumes savings from the 
mandatory administrative costs of collecting the co-pays and 
per diems, saving $641 million over five years.
    The reported resolution and the Bipartisan Budget Agreement 
extend expiring provisions of OBRA 1993: Housing Fees. 
Permanently extends 1) .75% home loan fee, 2) 3% fee on 
multiple use and 3) resale loss formula. In addition the 
Bipartisan Budget Agreement includes the President's proposal 
to charge non-veterans a fee when buying VA held properties to 
cover the costs of the program. In all the extended fees and 
new fees save $909 million over five years.
    Both the reported resolution and the Bipartisan Budget 
Agreement extend expiring provisions of OBRA 1993: Pension 
Limitation for Veterans in Medicaid Nursing Homes. Extends an 
expiring provision of law that limits pension benefits to $90 
per month for veterans residing in Medicaid paid nursing homes. 
Saves $677 million over five years net of increased Medicaid 
costs.
    The Secretary of the Veterans' Administration lacks 
authority to withhold compensation payments for veterans' 
delinquent on housing loans. This proposal allows the Secretary 
to withhold a portion of VA payments for veterans delinquent on 
loan payments. This proposal is part of the President's Budget 
and the 1997 budget resolution and saves $90 million in 1998.
    The Secretary has authority to bundle VA-backed mortgages 
into Real Estate Management Investment Contracts (REMICs). 
REMICs are securities sold to investors which carry the full 
faith and credit of the United States and command lower 
interest rates. This proposal extends current law indefinitely, 
and is part of the President's Budget and the 1997 Budget 
Resolution. This proposal saves $5 million per year and $25 
million over five years.
    Compensation and Pension beneficiaries receive annual Cost 
of Living Allowances which are tied to the Consumer Price Index 
(CPI). This proposal extends current law and rounds down the 
COLA increase per beneficiary to the nearest whole dollar. This 
proposal is part of the President's Budget and the 1997 Budget 
Resolution. Rounding down COLA's saves $391 million over five 
years.

                Function 750: ADMINISTRATION OF JUSTICE

                       major programs in function

    Function 750 includes funding for federal law enforcement 
activities, including criminal investigations by the Federal 
Bureau of Investigation (FBI) and the Drug Enforcement 
Administration (DEA), border enforcement and the control of 
illegal immigration by the Customs Service and Immigration and 
Naturalization Service (INS), as well as funding for prison 
construction, drug treatment, crime prevention programs and the 
federal Judiciary.

                         discretionary spending

    Discretionary spending in Function 750 Administration of 
Justice is a priority function in the Bipartisan Budget 
Agreement.
    Discretionary spending in 1998 for this function would 
increase by $1.5 billion in BA and $1.8 in outlays over the 
1997 level, to $24.4 billion in BA and $22.2 billion in 
outlays. Over the five year period, spending would increase to 
$24.7 billion in BA and $25.7 billion in outlays by 2002. The 
Administration of Justice function contains the Violent Crime 
Reduction Trust Fund programs which will expire after 2000 
under current law. The reported resolution retains current law 
on separate violent crime reduction trust fund caps as assumed 
in the agreement.
    In general the Bipartisan Budget Agreement assumes 
continued investments in federal and state law enforcement. 
Ongoing programs, including general fund programs, are 
generally assumed to increase with inflation. Several programs 
including the INS, FBI, DEA and Bureau of Justice Assistance 
will receive funds over baseline. The Bipartisan Budget 
Agreement assumes major investments in additional personnel to 
fight illegal immigration especially along the Southwest 
border, increased resources to prevent, combat, and adjudicate 
drug trafficking and violent crime, additional funding to 
modernize and maintain law enforcement equipment and 
facilities, additional resources to fight juvenile crime, and 
extra funding to combat acts of international and domestic 
terror.
    The reported resolution assumes adequate funding for 
federal law enforcement agencies responsible for the control of 
illegal immigration and drugs, especially the Customs Service, 
the Immigration and Naturalization Service and the Drug 
Enforcement Administration. There is a particular emphasis for 
fully funding the Southwest border initiatives, proper staffing 
levels including support staff, and assuring access to the 
latest and best technologies for fighting drugs.
    This program was created by the Violent Crime Reduction Act 
to automate paper-bound state legal systems. The reported 
resolution assumes the program is terminated once the 
automation goals are complete. This proposal saves roughly $100 
million after from 2000 to 2002.
    The state prison construction program was created with the 
Violent Crime Trust Fund. States currently receive $750 million 
per year. The reported resolution assumes sufficient spending 
to achieve the prison construction program goals. This proposal 
saves roughly $2.3 billion from 2000 to 2002 compared to the 
baseline.
    The COPS program provides states with seed money to hire 
beat policemen. The goal of the program is to pay for an 
additional 100,000 cops on the beat over five years. The 
Bipartisan Budget Agreement provides sufficient funding to meet 
the goal of current law. The BBA also assumes that states will 
continue receiving assistance from the State and Local Law 
Enforcement Block Grant which focuses resources on areas of 
high crime.

                    Function 800: GENERAL GOVERNMENT

                       major programs in function

    Function 800 consists of the activities of the Legislative 
Branch, the Executive Office of the President, U.S. Treasury 
fiscal operations (including the Internal Revenue Service), 
personnel and property management, and general purpose fiscal 
assistance to states, localities, and U.S. territories. For 
1997 discretionary spending for Function 800 will be 
approximately 84 percent of total spending for the function. 
About 60 percent of the discretionary spending is for the 
Internal Revenue Service. Slightly more than half of the 
mandatory spending is attributed to the Treasury claims fund. 
The remainder is primarily payments to states, localities, and 
Puerto Rico.

                         discretionary spending

    Discretionary spending for this function will total $59.6 
billion in budget authority and $59.8 billion in outlays from 
1998-2002. For 1998, spending will increase by $0.8 billion in 
budget authority from the 1997 level to $12.6 billion; 1998 
outlays will remain constant at $11.9 billion. Compared to the 
Budget Resolution Baseline, the Resolution Reported will save 
$5.7 billion in budget authority and $5.1 billion in outlays 
over five years. In order to meet the Bipartisan Budget 
Agreement's discretionary spending limits, savings will be 
required from programs in this function. These savings will be 
determined by the Appropriation Committees. Following are 
examples of possible reductions.
    The President has proposed aiding the District of Columbia 
through a plan which combines new mandatory spending, new tax 
breaks, and decreased discretionary spending. Mandatory 
spending for increased Medicaid benefits (see Function 550) 
would total $900 million over five years. Targeted tax breaks 
for the District would cost $260 million over five years (see 
Revenues). Finally, discretionary spending for a federal 
takeover of a portion of the District's justice, tax 
collection, and transportation responsibilities would total 
$2.8 billion over five years. In turn, annual payments to the 
District would be terminated, saving $3.9 billion over five 
years. Under this plan, Function 800 discretionary spending 
would decrease by $1.1 billion over five years compared to the 
Budget Resolution Baseline.
    The Federal Buildings Fund is a quasi-revolving fund which 
charges agencies for rent and then uses the proceeds for rent, 
building operations, repairs, and new construction. In 
addition, a relatively small amount is appropriated each year 
to bolster this fund. The President has proposed eliminating 
the annual appropriation by 1999, which would save $2.0 billion 
over five years compared to the baseline.
    The President has proposed holding the GSA, the National 
Archives and Records Administration, and central personnel 
management slightly below or at the 1997 level, which would 
save $362 million over five years compared to the baseline.
    The President has proposed holding the Treasury's building 
repair and restoration appropriation, the Bureau of Public 
Debt, and the salaries and expenses of the Departmental Offices 
(which provide basic support to the Secretary of the Treasury) 
slightly below or at the 1997 level. This would save $269 
million over five years compared to the baseline.
    The majority of the remaining spending reductions in this 
function could come from the IRS, which will account for 60 
percent of Function 800 discretionary spending in 1997. The IRS 
budget rose 32 percent in real terms from 1985 to 1997, and GAO 
has identified areas where efficiencies can be made.

                           mandatory spending

    Mandatory spending for this function will total $10.5 
billion from 1998-2002, $0.5 billion below the baseline. Of 
this total, $7.5 billion is for legal payments to harmed 
savings and loans institutions. Last year, the Supreme Court 
ruled that a 1989 federal law broke an agreement between the 
federal government and a savings and loan institution. 
Mandatory spending in this function could be offset by $0.5 
billion by selling unspecified government assets.

            Function 950: UNDISTRIBUTED OFFSETTING RECEIPTS

                       major programs in function

    Function 950 records offsetting receipts (receipts, not 
federal revenues or taxes, that the budget shows as offsets to 
spending programs) that are too large to record in other budget 
functions because they would skew the totals. Such receipts are 
either intrabudgetary (a payment from one federal agency to 
another, such as agency payments to the retirement trust funds) 
or proprietary (a payment from the public for some type of 
business transaction with the government). The main types of 
receipts recorded as ``undistributed'' in this function are--
the payments federal agencies make to the retirement trust 
funds for their employees, payments made by companies for the 
right to explore and produce oil and gas on the Outer 
Continental Shelf, and payments by those who bid for the right 
to buy or use the public property or resources, such as the 
electromagnetic spectrum.

                           mandatory spending

    The authority (provided for the first time by OBRA 93) of 
the Federal Communications Commission (FCC) to auction spectrum 
in certain instances (mutually-exclusive, subscription-based 
services) is about to expire (in 1998). Thus far, FCC auctions 
have yielded more than $20 billion in winning bids that would 
not have occurred using the previous methods of assigning 
licenses (lottery or comparative hearing). The Bipartisan 
Budget Agreement would extend the FCC auction authority and 
broaden it to include any license sought by a private business.
    As assumed in the President's Budget and the 1996 and 1997 
budget resolutions, the Bipartisan Budget Agreement would 
direct the FCC to reallocate 100 megahertz of spectrum reserved 
for private applications as well as 20 megahertz now used by 
the government to new applications and auction it.
    The Bipartisan Budget Agreement proposes to auction a 
portion of channels 60-69. Because these channels will not be 
necessary under the current FCC plan for the transition from 
analog to digital television, the President's Budget proposes 
to auction a portion of the spectrum covered by these channels 
(with the balance allocated to public safety applications) for 
new commercial applications.
    The President proposes to codify current FCC plans to 
reclaim surplus analog broadcast spectrum after broadcasters 
have migrated to new digital channels that the FCC has given 
broadcasters at no charge.
    The President proposes to require the FCC to award certain 
toll-free vanity telephone numbers by auction.
    As authorized by current law, a specific charge would be 
imposed on entities who receive free spectrum for the 
development of digital television but use it for certain other 
purposes.
    The President's Budget proposes to increase the 
contribution of federal agencies to the Civil Service 
Retirement Trust Fund by 1.51 percentage points.

                                REVENUES

    Federal revenues are taxes and other collections from the 
public that result from the government's sovereign or 
governmental powers. Federal revenues include individual income 
taxes, corporate income taxes, social insurance taxes, excise 
taxes, estate and gift taxes, customs duties and miscellaneous 
receipts (which include deposits of earnings by the Federal 
Reserve System, fines, penalties, fees for regulatory services, 
and others).

1998 Budget Resolution Revenues

                  1998-2002 (5-year total, $ billions)

Budget Resolution Baseline....................................  $8,772.8
-Net Tax Cut..................................................     -85.0
+Other Provisions Affecting Revenues..........................      +1.9
                    --------------------------------------------------------------
                    ____________________________________________________

=Net Revenue Change from Baseline.............................     -83.1
1998 Budget Resolution Revenues...............................  $8,689.6

    The Bipartisan Budget Agreement assumes the net tax cut 
shall be $85 billion over the next five years and not more than 
$250 billion over the next ten years, to provide tax relief to 
American families. Under the Agreement, revenues would continue 
to grow, from $1554.9 billion in 1997 to $1890.4 billion in 
2002, an increase of $335.5 billion over the five year period.
    As always, the Ways and Means Committee in the House and 
the Finance Committee in the Senate will determine the specific 
amounts and structure of the tax relief package. The tax-
writing committees will be required to balance the interests 
and desires of many parties (while protecting the interests of 
taxpayers generally) in crafting the tax cut within the context 
of the goals adopted by the Bipartisan Budget Agreement. The 
Agreement establishes the following guidelines for the tax 
package:
        --The level of tax cuts provide enough room for broad-
        based capital gains tax reductions, significant estate 
        tax reform, a $500 per child tax credit, and expansion 
        of IRAs;
        --The committees of jurisdiction shall include tax 
        relief of roughly $35 billion over five years for post-
        secondary education, including a deduction and a tax 
        credit. The tax package should be consistent with the 
        objectives put forward in the President's HOPE 
        scholarship and tuition tax deduction proposals to 
        assist middle-class parents;
        --The House and Senate Leadership will seek to include 
        other proposals from the President's 1998 budget (e.g., 
        the welfare-to-work-tax credit, capital gains tax 
        relief for home sales, enterprise zone and enterprise 
        community proposals, brownfields legislation, foreign 
        sales corporation (FSC) treatment of software, and tax 
        incentives designed to spur economic growth in the 
        District of Columbia), as well as various pending 
        congressional tax proposals;
        --The tax cuts shall not cause costs to explode in the 
        outyears;
        --Reforms to the Earned Income Tax Credit (EITC) or 
        other programs designed to benefit primarily lower-
        income individuals, as well as revenues from extension 
        of the Superfund tax shall not be used to offset the 
        costs of the tax cuts; and,
        --The tax estimating staffs at Treasury and the Joint 
        Committee on Taxation shall continue to consult and 
        share information necessary to understand fully the 
        basis of their revenue estimates and to minimize 
        revenue estimating differences.

      other provisions affecting revenues in the budget resolution

    Revenue effects of the following two assumptions are not 
included in the $85 billion net tax cut number.
    The Agreement assumes the President's April 1997 proposed 
reforms to the EITC to combat fraud and noncompliance, and the 
President's 1998 budget proposal to increase employee 
contributions to CSRS and FERS by 0.5 percent of base pay in 
three steps. Contributions would increase by 0.25 percent of 
base pay on January 1, 1999, another 0.15 percent on January 1, 
2000 and a final 0.10 percent on January 1, 2001. These higher 
contribution rates would be effective through 2002; on January 
1, 2003, contribution rates would return to current law levels.

                                     1998 BUDGET RESOLUTION--FUNCTION TOTALS                                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     264.9     268.2     270.8     274.8     281.3     289.1
    OT..............................................     266.6     266.0     265.8     268.4     270.1     272.6
150: International Affairs:                                                                                     
    BA..............................................      15.3      15.9      14.9      15.8      16.1      16.4
    OT..............................................      14.5      14.6      14.6      15.0      14.8      14.8
250: Science, Space and Technology:                                                                             
    BA..............................................      16.7      16.2      16.2      15.9      15.8      15.6
    OT..............................................      17.0      16.9      16.5      16.0      15.9      15.7
270: Energy:                                                                                                    
    BA..............................................       2.6       3.1       3.5       3.2       2.9       2.8
    OT..............................................       1.9       2.2       2.4       2.3       2.0       1.9
300: Natural Resources and Environment:                                                                         
    BA..............................................      22.2      23.9      23.2      22.6      22.2      22.1
    OT..............................................      22.4      22.4      22.7      23.0      22.7      22.3
350: Agriculture:                                                                                               
    BA..............................................      11.8      13.1      12.8      12.2      11.0      10.7
    OT..............................................       9.9      11.9      11.3      10.7       9.5       9.1
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       4.6       6.6      11.1      15.2      16.1      16.7
        OT..........................................     -11.0      -0.9       4.3       9.8      12.1      12.5
    Off-budget:                                                                                                 
        BA..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
        OT..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
    Total:                                                                                                      
        BA..........................................       6.0       9.3      10.1      13.9      15.6      16.9
        OT..........................................      -9.6       1.8       3.3       8.5      11.6      12.7
400: Transportation:                                                                                            
    BA..............................................      43.9      44.6      46.6      47.1      48.1      49.2
    OT..............................................      39.5      40.9      41.3      41.4      41.3      41.2
450: Community and Regional Development:                                                                        
    BA..............................................      10.2       8.8       8.5       7.8       7.8       7.8
    OT..............................................      12.1      10.4      10.9      11.0      11.4       8.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      54.2      60.0      60.5      61.7      63.0      63.3
    OT..............................................      50.5      56.1      59.3      60.7      61.9      62.3
550: Health:                                                                                                    
    BA..............................................     125.3     137.8     144.9     154.0     163.4     172.1
    OT..............................................     127.4     137.8     144.9     153.9     163.1     171.7
570: Medicare:                                                                                                  
    BA..............................................     190.8     201.6     212.1     225.5     239.6     251.5
    OT..............................................     191.3     201.8     211.5     225.5     238.8     250.8
600: Income Security:                                                                                           
    BA..............................................     228.8     239.0     254.1     269.6     275.1     286.9
    OT..............................................     237.8     247.8     258.1     268.2     277.3     285.2
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      11.0      11.4      12.1      12.8      13.0      14.4
        OT..........................................      11.0      11.5      12.2      12.9      13.0      14.4
    Off-budget:                                                                                                 
        BA..........................................     352.1     369.4     387.3     406.6     427.1     449.1
        OT..........................................     355.4     372.6     390.6     409.9     430.9     452.4
    Total:                                                                                                      
        BA..........................................     363.1     380.8     399.4     419.4     440.1     463.5
        OT..........................................     366.4     384.1     402.8     422.8     443.9     466.8
700: Veterans Benefits:                                                                                         
    BA..............................................      39.1      40.5      41.7      42.0      42.4      42.6
    OT..............................................      39.4      41.3      41.9      42.2      42.5      42.7
750: Administration of Justice:                                                                                 
    BA..............................................      23.5      24.8      25.1      24.2      24.4      24.9
    OT..............................................      20.7      22.6      24.5      25.2      25.9      24.9
800: General Government:                                                                                        
    BA..............................................      14.0      14.7      14.4      14.0      13.7      13.1
    OT..............................................      13.9      14.0      14.4      14.7      14.1      13.1
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................     291.1     296.5     304.6     304.9     303.7     303.8
        OT..........................................     291.1     296.5     304.6     304.9     303.7     303.8
    Off-budget:                                                                                                 
        BA..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
        OT..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
    Total:                                                                                                      
        BA..........................................     247.6     248.5     252.1     247.7     241.8     236.9
        OT..........................................     247.6     248.5     252.1     247.7     241.8     236.9
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................     -41.0     -41.8     -36.9     -36.9     -39.2     -51.1
        OT..........................................     -41.0     -41.8     -36.9     -36.9     -39.2     -51.1
    Off-budget:                                                                                                 
        BA..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
        OT..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
    Total:                                                                                                      
        BA..........................................     -47.5     -48.8     -44.4     -46.0     -50.1     -64.1
        OT..........................................     -47.5     -48.8     -44.4     -46.0     -50.1     -64.1
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................   1,329.0   1,384.9   1,440.2   1,486.4   1,520.4   1,551.9
        OT..........................................   1,315.0   1,372.0   1,424.3   1,468.9   1,500.9   1,516.3
    Off-budget:                                                                                                 
        BA..........................................     303.5     317.1     326.3     339.0     353.8     369.4
        OT..........................................     306.8     320.3     329.6     342.3     357.6     372.7
    Total:                                                                                                      
        BA..........................................   1,632.5   1,702.0   1,766.5   1,825.4   1,874.2   1,921.3
        OT..........................................   1,621.8   1,692.3   1,753.9   1,811.2   1,858.5   1,889.0
Revenues:                                                                                                       
    On-budget.......................................   1,166.9   1,199.0   1,241.9   1,285.6   1,343.6   1,407.6
    Off-budget......................................     388.0     402.8     422.3     442.6     461.6     482.8
    Total...........................................   1,554.9   1,601.8   1,664.2   1,728.3   1,805.2   1,890.4
Deficit:                                                                                                        
    On-budget.......................................    -148.1    -173.0    -182.4    -183.3    -157.3    -108.7
    Off-budget......................................      81.2      82.5      92.7     100.3     104.0     110.1
    Total...........................................     -66.9     -90.5     -89.7     -83.0     -53.3       1.4
----------------------------------------------------------------------------------------------------------------


                                   BUDGET RESOLUTION BASELINE--FUNCTION TOTALS                                  
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     264.9     272.4     280.7     289.2     297.9     306.9
    OT..............................................     266.6     269.0     275.7     286.3     288.4     300.3
150: International Affairs:                                                                                     
    BA..............................................      15.3      15.5      15.6      17.1      18.2      19.1
    OT..............................................      14.5      14.5      15.1      15.9      16.1      16.7
250: Science, Space and Technology:                                                                             
    BA..............................................      16.7      17.1      17.6      18.1      18.6      19.1
    OT..............................................      17.0      17.4      17.6      17.8      18.3      18.8
270: Energy:                                                                                                    
    BA..............................................       2.6       2.8       3.1       3.3       3.4       3.6
    OT..............................................       1.9       1.9       2.1       2.2       2.3       2.4
300: Natural Resources and Environment:                                                                         
    BA..............................................      22.2      23.1      23.7      24.4      25.2      25.9
    OT..............................................      22.4      22.0      22.7      23.5      24.4      25.1
350: Agriculture:                                                                                               
    BA..............................................      11.8      13.4      13.3      12.9      11.9      11.8
    OT..............................................       9.9      12.0      11.6      11.3      10.3      10.2
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       4.6       6.5      10.7      13.5      16.5      17.2
        OT..........................................     -11.0      -0.9       4.1       8.5      12.2      13.3
    Off-budget:                                                                                                 
        BA..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
        OT..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
    Total:                                                                                                      
        BA..........................................       6.0       9.2       9.8      12.3      16.0      17.4
        OT..........................................      -9.6       1.7       3.1       7.2      11.7      13.5
400: Transportation:                                                                                            
    BA..............................................      43.9      45.6      46.7      47.9      49.1      50.4
    OT..............................................      39.5      40.4      40.8      41.4      42.4      43.6
450: Community and Regional Development:                                                                        
    BA..............................................      10.2      10.1      10.1      10.4      10.6      10.9
    OT..............................................      12.1      11.4      10.7      10.5      10.3      10.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      54.2      57.0      58.3      59.9      61.7      63.6
    OT..............................................      50.5      55.9      57.6      59.3      60.9      62.7
550: Health:                                                                                                    
    BA..............................................     125.3     135.7     145.0     155.5     166.6     178.8
    OT..............................................     127.4     135.3     144.4     154.6     165.6     177.6
570: Medicare:                                                                                                  
    BA..............................................     190.8     208.1     229.0     248.5     269.1     292.2
    OT..............................................     191.3     208.2     228.5     252.5     264.2     291.4
600: Income Security:                                                                                           
    BA..............................................     228.8     238.3     253.4     269.8     277.6     291.5
    OT..............................................     237.8     245.7     257.0     271.1     276.9     289.6
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      11.0      11.7      12.5      13.4      13.8      15.3
        OT..........................................      11.0      11.7      12.5      13.4      13.8      15.3
    Off-budget:                                                                                                 
        BA..........................................     352.1     369.4     387.3     406.6     427.1     449.1
        OT..........................................     355.4     372.6     390.6     409.9     430.9     452.4
    Total:                                                                                                      
        BA..........................................     363.2     381.1     399.9     420.0     440.9     464.5
        OT..........................................     366.4     384.3     403.1     423.3     444.6     467.7
700: Veterans Benefits:                                                                                         
    BA..............................................      39.1      41.3      43.5      44.6      45.8      47.0
    OT..............................................      39.4      41.8      43.4      46.3      43.9      47.0
750: Administration of Justice:                                                                                 
    BA..............................................      23.5      24.1      24.8      25.6      26.4      27.2
    OT..............................................      20.7      22.0      24.1      25.2      25.9      26.7
800: General Government:                                                                                        
    BA..............................................      14.0      14.3      14.7      15.2      15.7      16.2
    OT..............................................      13.9      14.3      14.7      15.3      15.6      15.9
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................     291.1     296.5     305.0     306.8     307.5     311.2
        OT..........................................     291.1     296.5     305.0     306.8     307.5     311.2
    Off-budget:                                                                                                 
        BA..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
        OT..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
    Total:                                                                                                      
        BA..........................................     247.6     248.5     252.5     249.6     245.5     244.3
        OT..........................................     247.6     248.5     252.5     249.6     245.5     244.3
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................     -41.0     -41.2     -32.9     -32.9     -34.1     -35.7
        OT..........................................     -41.0     -41.2     -32.9     -32.9     -34.1     -35.7
    Off-budget:                                                                                                 
        BA..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
        OT..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
    Total:                                                                                                      
        BA..........................................     -47.4     -48.2     -40.3     -41.9     -44.9     -48.7
        OT..........................................     -47.4     -48.2     -40.3     -41.9     -44.9     -48.7
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................   1,329.0   1,392.5   1,475.2   1,543.3   1,601.3   1,672.2
        OT..........................................   1,315.3   1,377.8   1,454.8   1,529.0   1,565.0   1,642.4
    Off-budget:                                                                                                 
        BA..........................................     303.5     317.1     326.3     339.1     353.8     369.5
        OT..........................................     306.8     320.3     329.6     342.4     357.5     372.8
    Total:                                                                                                      
        BA..........................................   1,632.5   1,709.6   1,801.5   1,882.4   1,955.1   2,041.7
        OT..........................................   1,622.1   1,698.1   1,784.4   1,871.4   1,922.5   2,015.2
Revenues:                                                                                                       
    On-budget.......................................   1,166.9   1,206.4   1,252.9   1,307.5   1,366.4   1,427.4
    Off-budget......................................     388.0     402.8     422.3     442.6     461.6     482.8
    Total...........................................   1,554.9   1,609.2   1,675.3   1,750.1   1,828.0   1,910.3
Deficit:                                                                                                        
    On-budget.......................................    -148.4    -171.5    -201.8    -221.5    -198.6    -215.0
    Off-budget......................................      81.2      82.5      92.7     100.2     104.0     110.0
    Total...........................................     -67.2     -89.0    -109.1    -121.3     -94.5    -104.9
----------------------------------------------------------------------------------------------------------------


                                        FREEZE BASELINE--FUNCTION TOTALS                                        
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA........................................................     265.0     265.1     265.3     265.3     265.3
    OT........................................................     264.1     263.9     266.5     260.7     263.6
150: International Affairs:                                                                                     
    BA........................................................      15.0      14.5      15.5      16.0      16.4
    OT........................................................      14.2      14.4      14.7      14.4      14.5
250: Science, Space and Technology:                                                                             
    BA........................................................      16.7      16.7      16.7      16.7      16.7
    OT........................................................      17.1      16.9      16.7      16.7      16.7
270: Energy:                                                                                                    
    BA........................................................       2.7       2.9       2.9       2.9       2.9
    OT........................................................       1.8       2.0       2.0       1.9       1.9
300: Natural Resources and Environment:                                                                         
    BA........................................................      22.4      22.4      22.4      22.3      22.3
    OT........................................................      21.6      21.7      21.9      22.0      22.0
350: Agriculture:                                                                                               
    BA........................................................      13.2      13.0      12.5      11.3      11.1
    OT........................................................      11.9      11.4      10.9       9.8       9.5
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA....................................................       6.5      10.5      13.2      16.1      16.7
        OT....................................................      -1.0       3.9       8.2      11.9      12.8
    Off-budget:                                                                                                 
        BA....................................................       2.7      -1.0      -1.3      -0.5       0.2
        OT....................................................       2.7      -1.0      -1.3      -0.5       0.2
    Total:                                                                                                      
        BA....................................................       9.1       9.6      11.9      15.5      16.9
        OT....................................................       1.7       3.0       7.0      11.3      13.0
400: Transportation:                                                                                            
    BA........................................................      45.2      45.8      46.6      47.3      48.1
    OT........................................................      40.0      39.6      39.3      39.3      39.3
450: Community and Regional Development:                                                                        
    BA........................................................       9.8       9.6       9.6       9.6       9.6
    OT........................................................      11.4      10.5      10.1       9.6       9.5
500: Education, Training, Employment and Social Services:                                                       
    BA........................................................      56.7      56.1      56.4      57.0      57.6
    OT........................................................      56.1      56.3      56.8      57.2      57.7
550: Health:                                                                                                    
    BA........................................................     135.1     143.6     153.3     163.6     175.0
    OT........................................................     134.9     143.4     152.9     163.1     174.4
570: Medicare:                                                                                                  
    BA........................................................     208.0     228.8     248.2     268.6     291.5
    OT........................................................     208.1     228.3     252.1     263.7     290.7
600: Income Security:                                                                                           
    BA........................................................     237.7     252.0     267.6     274.6     287.8
    OT........................................................     245.3     256.1     269.5     274.8     286.8
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA....................................................      11.6      12.3      13.1      13.3      14.7
        OT....................................................      11.6      12.3      13.1      13.3      14.7
    Off-budget:                                                                                                 
        BA....................................................     369.4     387.3     406.6     427.1     449.1
        OT....................................................     372.6     390.6     409.9     430.9     452.4
    Total:                                                                                                      
        BA....................................................     381.0     399.6     419.7     440.4     463.8
        OT....................................................     384.2     402.9     423.0     444.2     467.1
700: Veterans Benefits:                                                                                         
    BA........................................................      40.7      42.1      42.6      43.1      43.5
    OT........................................................      41.2      42.1      44.4      41.3      43.6
750: Administration of Justice:                                                                                 
    BA........................................................      23.3      23.3      23.3      23.2      23.2
    OT........................................................      21.5      22.9      23.2      23.2      23.1
800: General Government:                                                                                        
    BA........................................................      13.9      13.9      14.0      14.0      14.1
    OT........................................................      14.0      14.0      14.2      14.1      13.9
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA....................................................     296.2     303.8     304.0     302.2     302.6
        OT....................................................     296.2     303.8     304.0     302.2     302.6
    Off-budget:                                                                                                 
        BA....................................................     -48.0     -52.5     -57.2     -61.9     -66.9
        OT....................................................     -48.0     -52.5     -57.2     -61.9     -66.9
    Total:                                                                                                      
        BA....................................................     248.3     251.3     246.8     240.3     235.7
        OT....................................................     248.3     251.3     246.8     240.3     235.7
920: Allowances:                                                                                                
    BA........................................................  ........  ........  ........  ........  ........
    OT........................................................  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA....................................................     -41.2     -32.9     -32.9     -34.1     -35.7
        OT....................................................     -41.2     -32.9     -32.9     -34.1     -35.7
    Off-budget:                                                                                                 
        BA....................................................      -7.0      -7.5      -9.1     -10.9     -13.0
        OT....................................................      -7.0      -7.5      -9.1     -10.9     -13.0
    Total:                                                                                                      
        BA....................................................     -48.2     -40.3     -41.9     -44.9     -48.7
        OT....................................................     -48.2     -40.3     -41.9     -44.9     -48.7
                                                               -------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA....................................................   1,378.5   1,443.6   1,494.1   1,533.0   1,583.2
        OT....................................................   1,368.9   1,430.6   1,487.7   1,505.1   1,561.6
    Off-budget:                                                                                                 
        BA....................................................     317.1     326.3     339.1     353.8     369.5
        OT....................................................     320.3     329.6     342.4     357.5     372.8
    Total:                                                                                                      
        BA....................................................   1,695.6   1,770.0   1,833.2   1,886.8   1,952.7
        OT....................................................   1,689.2   1,760.3   1,830.1   1,862.6   1,934.4
Revenues:                                                                                                       
    On-budget.................................................   1,206.4   1,252.9   1,307.5   1,366.4   1,427.4
    Off-budget................................................     402.8     422.3     442.6     461.6     482.8
    Total.....................................................   1,609.2   1,675.3   1,750.1   1,828.0   1,910.3
Deficit:                                                                                                        
    On-budget.................................................    -162.5    -177.7    -180.1    -138.7    -134.2
    Off-budget................................................      82.5      92.7     100.2     104.0     110.0
    Total.....................................................     -80.0     -85.0     -80.0     -34.7     -24.1
----------------------------------------------------------------------------------------------------------------


                                       PRESIDENT'S BUDGET--FUNCTION TOTALS                                      
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     262.1     265.6     269.0     274.8     281.3     289.1
    OT..............................................     266.7     265.0     263.0     268.4     269.3     277.4
150: International Affairs:                                                                                     
    BA..............................................      15.3      19.9      16.4      16.4      16.6      16.9
    OT..............................................      14.5      14.7      15.7      15.3      15.1      15.3
250: Science, Space and Technology:                                                                             
    BA..............................................      16.7      16.5      16.5      16.3      16.3      16.3
    OT..............................................      17.0      17.0      16.7      16.3      16.2      16.2
270: Energy:                                                                                                    
    BA..............................................       2.6       3.1       3.5       3.3       3.1       2.3
    OT..............................................       1.9       2.3       2.5       2.4       2.1       1.3
300: Natural Resources and Environment:                                                                         
    BA..............................................      22.1      23.5      23.4      22.9      22.7      22.8
    OT..............................................      22.3      22.0      22.7      23.1      23.1      22.9
350: Agriculture:                                                                                               
    BA..............................................      11.8      13.2      12.8      12.2      11.1      10.8
    OT..............................................       9.9      11.9      11.3      10.7       9.6       9.2
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       4.6       6.7      11.1      15.2      16.1      16.7
        OT..........................................     -10.9      -1.2       3.9       9.5      11.8      12.2
    Off-budget:                                                                                                 
        BA..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
        OT..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
    Total:                                                                                                      
        BA..........................................       6.0       9.4      10.1      14.0      15.6      16.9
        OT..........................................      -9.6       1.5       3.0       8.2      11.3      12.4
400: Transportation:                                                                                            
    BA..............................................      43.9      44.2      42.7      43.0      43.3      43.5
    OT..............................................      39.6      40.2      39.0      39.3      39.4      39.5
450: Community and Regional Development:                                                                        
    BA..............................................      10.4      17.2       8.6       7.9       8.0       8.1
    OT..............................................      12.3      11.4      12.0      11.7      11.6       8.7
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      54.0      64.8      62.3      64.0      64.4      65.0
    OT..............................................      50.2      57.2      62.0      63.7      64.6      63.7
550: Health:                                                                                                    
    BA..............................................     125.4     139.8     148.6     155.4     163.9     170.1
    OT..............................................     127.6     139.5     148.4     155.2     163.5     169.6
570: Medicare:                                                                                                  
    BA..............................................     190.8     205.4     219.0     230.6     246.4     262.8
    OT..............................................     191.3     205.5     218.4     234.6     241.6     262.0
600: Income Security:                                                                                           
    BA..............................................     229.2     238.8     254.4     270.7     277.0     290.6
    OT..............................................     238.4     248.2     258.9     272.0     276.6     289.1
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      11.0      11.5      12.1      12.9      13.1      14.5
        OT..........................................      11.0      11.5      12.2      12.9      13.1      14.5
    Off-budget:                                                                                                 
        BA..........................................     352.1     369.4     387.3     406.6     427.1     449.1
        OT..........................................     355.4     372.6     390.6     409.9     430.9     452.4
    Total:                                                                                                      
        BA..........................................     363.2     380.7     399.4     419.5     440.2     463.6
        OT..........................................     366.4     384.1     402.8     422.8     444.0     466.9
700: Veterans Benefits:                                                                                         
    BA..............................................      39.1      40.9      41.4      41.9      42.3      42.7
    OT..............................................      39.4      41.5      41.6      43.7      40.6      42.8
750: Administration of Justice:                                                                                 
    BA..............................................      23.5      24.8      25.5      24.7      25.1      25.7
    OT..............................................      20.7      22.6      24.7      25.6      26.5      25.6
800: General Government:                                                                                        
    BA..............................................      14.0      14.9      14.7      14.4      14.3      14.5
    OT..............................................      13.9      14.0      14.5      15.1      14.7      14.5
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................     291.0     297.2     306.1     307.1     305.9     306.4
        OT..........................................     291.0     297.2     306.1     307.1     305.9     306.4
    Off-budget:                                                                                                 
        BA..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
        OT..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
    Total:                                                                                                      
        BA..........................................     247.5     249.2     253.6     249.9     244.0     239.6
        OT..........................................     247.5     249.2     253.6     249.9     244.0     239.6
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
        BA..........................................     -41.0     -41.8     -36.7     -38.0     -41.2     -49.1
        OT..........................................     -41.0     -41.8     -36.7     -38.0     -41.2     -49.1
    Off-budget:                                                                                                 
        BA..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
        OT..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
    Total:                                                                                                      
        BA..........................................     -47.4     -48.8     -44.2     -47.1     -52.1     -62.1
        OT..........................................     -47.4     -48.8     -44.2     -47.1     -52.1     -62.1
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................   1,326.5   1,406.2   1,451.4   1,495.4   1,529.6   1,570.0
        OT..........................................   1,316.0   1,378.7   1,437.0   1,488.3   1,504.0   1,541.8
    Off-budget:                                                                                                 
        BA..........................................     303.5     317.1     326.3     339.1     353.8     369.5
        OT..........................................     306.8     320.3     329.6     342.4     357.5     372.8
    Total:                                                                                                      
        BA..........................................   1,630.0   1,723.2   1,777.7   1,834.5   1,883.4   1,939.5
        OT..........................................   1,622.8   1,699.0   1,766.7   1,830.7   1,861.5   1,914.6
Revenues:                                                                                                       
    On-budget.......................................   1,167.0   1,196.3   1,247.9   1,302.5   1,356.8   1,418.0
    Off-budget......................................     388.0     402.8     422.3     442.6     461.6     482.8
    Total...........................................   1,555.1   1,599.1   1,670.3   1,745.1   1,818.4   1,900.8
Deficit:                                                                                                        
    On-budget.......................................    -149.0    -182.4    -189.1    -185.8    -147.2    -123.8
    Off-budget......................................      81.2      82.5      92.7     100.2     104.0     110.0
    Total...........................................     -67.8     -99.4     -96.4     -85.6     -43.1     -13.8
----------------------------------------------------------------------------------------------------------------


                           PRESIDENT'S ALTERNATIVE BUDGETARY POLICIES--FUNCTION TOTALS                          
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     262.1     265.6     269.0     274.8     269.9     277.4
    OT..............................................     266.7     265.0     263.0     268.4     261.9     267.6
150: International Affairs:                                                                                     
    BA..............................................      15.3      19.9      16.4      16.4      15.8      16.2
    OT..............................................      14.5      14.7      15.7      15.3      14.7      14.7
250: Science, Space and Technology:                                                                             
    BA..............................................      16.7      16.5      16.5      16.3      15.6      15.6
    OT..............................................      17.0      17.0      16.7      16.3      15.8      15.7
270: Energy:                                                                                                    
    BA..............................................       2.6       3.1       3.5       3.3       2.9       2.1
    OT..............................................       1.9       2.3       2.5       2.4       2.0       1.1
300: Natural Resources and Environment:                                                                         
    BA..............................................      22.1      23.5      23.4      22.9      21.9      21.9
    OT..............................................      22.3      22.0      22.7      23.1      22.6      22.2
350: Agriculture:                                                                                               
    BA..............................................      11.8      13.2      12.8      12.2      10.9      10.6
    OT..............................................       9.9      11.9      11.3      10.7       9.4       9.1
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       4.6       6.7      11.1      15.2      16.0      16.6
        OT..........................................     -10.9      -1.2       3.9       9.5      11.7      12.1
    Off-budget:                                                                                                 
        BA..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
        OT..........................................       1.4       2.7      -1.0      -1.3      -0.5       0.2
    Total:                                                                                                      
        BA..........................................       6.0       9.4      10.1      14.0      15.4      16.8
        OT..........................................      -9.6       1.5       3.0       8.2      11.2      12.3
400: Transportation:                                                                                            
    BA..............................................      43.9      44.2      42.7      43.0      42.7      42.9
    OT..............................................      39.6      40.2      39.0      39.3      38.7      38.4
450: Community and Regional Development:                                                                        
    BA..............................................      10.4      17.2       8.6       7.9       7.7       7.8
    OT..............................................      12.3      11.4      12.0      11.7      11.5       8.6
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      54.0      64.8      62.3      64.0      62.4      63.0
    OT..............................................      50.2      57.2      62.0      63.7      64.0      61.9
550: Health:                                                                                                    
    BA..............................................     125.4     139.8     148.6     155.4     162.9     166.0
    OT..............................................     127.6     139.5     148.4     155.2     163.0     165.6
570: Medicare:                                                                                                  
    BA..............................................     190.8     205.4     219.0     230.6     246.3     256.2
    OT..............................................     191.3     205.5     218.4     234.6     241.5     255.4
600: Income Security:                                                                                           
    BA..............................................     229.2     238.8     254.4     270.7     275.4     284.5
    OT..............................................     238.4     248.2     258.9     272.0     275.8     283.4
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      11.0      11.5      12.1      12.9      13.0      14.4
        OT..........................................      11.0      11.6      12.2      12.9      13.0      14.4
    Off-budget:                                                                                                 
        BA..........................................     352.1     369.3     387.3     406.6     427.1     449.1
        OT..........................................     355.4     372.6     390.6     409.9     430.8     452.4
    Total:                                                                                                      
        BA..........................................     363.2     380.8     399.4     419.5     440.1     463.5
        OT..........................................     366.4     384.1     402.8     422.8     443.9     466.8
700: Veterans Benefits:                                                                                         
    BA..............................................      39.1      40.9      41.4      41.9      41.5      41.9
    OT..............................................      39.4      41.5      41.6      43.7      39.9      42.0
750: Administration of Justice:                                                                                 
    BA..............................................      23.5      24.8      25.5      24.7      24.1      24.7
    OT..............................................      20.7      22.6      24.7      25.6      25.8      24.7
800: General Government:                                                                                        
    BA..............................................      14.0      14.9      14.7      14.4      13.8      14.1
    OT..............................................      13.9      14.0      14.5      15.1      14.3      14.0
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................     291.0     297.2     306.1     307.1     303.4     303.6
        OT..........................................     291.0     297.2     306.1     307.1     303.4     303.6
    Off-budget:                                                                                                 
        BA..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
        OT..........................................     -43.5     -48.0     -52.5     -57.2     -61.9     -66.9
    Total:                                                                                                      
        BA..........................................     247.5     249.2     253.6     249.9     241.5     236.8
        OT..........................................     247.5     249.2     253.6     249.9     241.5     236.8
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................     -41.0     -41.8     -36.7     -38.0     -41.2     -58.5
        OT..........................................     -41.0     -41.8     -36.7     -38.0     -41.2     -58.5
    Off-budget:                                                                                                 
        BA..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
        OT..........................................      -6.5      -7.0      -7.5      -9.1     -10.9     -13.0
    Total:                                                                                                      
        BA..........................................     -47.4     -48.8     -44.2     -47.1     -52.1     -71.5
        OT..........................................     -47.4     -48.8     -44.2     -47.1     -52.1     -71.5
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................   1,326.5   1,406.2   1,451.4   1,495.5   1,504.9   1,521.0
        OT..........................................   1,316.0   1,378.7   1,437.1   1,488.4   1,487.9   1,496.0
    Off-budget:                                                                                                 
        BA..........................................     303.5     317.1     326.3     339.1     353.8     369.5
        OT..........................................     306.8     320.3     329.6     342.4     357.5     372.8
    Total:                                                                                                      
        BA..........................................   1,630.0   1,723.2   1,777.7   1,834.6   1,858.6   1,890.5
        OT..........................................   1,622.8   1,699.0   1,766.7   1,830.7   1,845.4   1,868.7
Revenues:                                                                                                       
    On-budget.......................................   1,167.0   1,196.3   1,248.0   1,300.8   1,359.9   1,441.8
    Off-budget......................................     388.0     402.8     422.3     442.6     461.6     482.8
    Total...........................................   1,555.1   1,599.1   1,670.3   1,743.4   1,821.5   1,924.6
Deficit:                                                                                                        
    On-budget.......................................    -149.0    -182.4    -189.1    -187.5    -127.9     -54.2
    Off-budget......................................      81.3      82.5      92.7     100.2     104.0     110.0
    Total...........................................     -67.8     -99.9     -96.4     -87.3     -23.9      55.8
----------------------------------------------------------------------------------------------------------------


                          1998 BUDGET RESOLUTION COMPARED TO BASELINE--FUNCTION TOTALS                          
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................      -4.3      -9.9     -14.4     -16.6     -17.9     -63.0
    OT..............................................      -3.0      -9.9     -17.9     -18.3     -27.7     -76.8
150: International Affairs:                                                                                     
    BA..............................................       0.4      -0.7      -1.3      -2.0      -2.8      -6.4
    OT..............................................       (*)      -0.5      -0.9      -1.4      -1.9      -4.6
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.9      -1.4      -2.1      -2.8      -3.5     -10.6
    OT..............................................      -0.5      -1.1      -1.8      -2.5      -3.2      -9.0
270: Energy:                                                                                                    
    BA..............................................       0.3       0.3      -0.1      -0.4      -0.7      -0.6
    OT..............................................       0.4       0.4       0.1      -0.2      -0.5       0.1
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.8      -0.5      -1.9      -3.0      -3.8      -8.4
    OT..............................................       0.5       0.1      -0.6      -1.6      -2.8      -4.5
350: Agriculture:                                                                                               
    BA..............................................      -0.2      -0.5      -0.7      -0.9      -1.1      -3.5
    OT..............................................      -0.1      -0.3      -0.6      -0.8      -1.1      -3.0
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       0.1       0.3       1.7      -0.4      -0.5       1.1
        OT..........................................      -(*)       0.2       1.3      -0.1      -0.7       0.7
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................       0.1       0.4       1.7      -0.4      -0.5       1.1
        OT..........................................       (*)       0.2       1.3      -0.1      -0.7       0.7
400: Transportation:                                                                                            
    BA..............................................      -1.1      -0.1      -0.8      -1.0      -1.2      -4.3
    OT..............................................       0.6       0.5      -0.1      -1.1      -2.4      -2.5
450: Community and Regional Development:                                                                        
    BA..............................................      -1.3      -1.6      -2.6      -2.9      -3.1     -11.5
    OT..............................................      -1.0       0.2       0.4       1.1      -2.0      -1.3
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       3.0       2.1       1.8       1.3      -0.3       7.9
    OT..............................................       0.2       1.7       1.5       1.1      -0.4       4.0
550: Health:                                                                                                    
    BA..............................................       2.1      -0.1      -1.5      -3.1      -6.6      -9.2
    OT..............................................       2.5       0.6      -0.7      -2.4      -5.9      -6.0
570: Medicare:                                                                                                  
    BA..............................................      -6.5     -16.9     -23.0     -29.4     -40.6    -116.5
    OT..............................................      -6.5     -17.0     -26.9     -25.4     -40.6    -116.4
600: Income Security:                                                                                           
    BA..............................................       0.7       0.6      -0.3      -2.4      -4.6      -5.9
    OT..............................................       2.1       1.0      -2.9       0.3      -4.4      -3.9
650: Social Security:                                                                                           
    On-Budget:                                                                                                  
        BA..........................................      -0.3      -0.5      -0.6      -0.8      -1.0      -3.2
        OT..........................................      -0.2      -0.3      -0.5      -0.8      -0.9      -2.8
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.3      -0.5      -0.6      -0.8      -1.0      -3.2
        OT..........................................      -0.2      -0.3      -0.5      -0.8      -0.9      -2.8
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.8      -1.8      -2.6      -3.5      -4.5     -13.1
    OT..............................................      -0.5      -1.4      -4.1      -1.4      -4.3     -11.7
750: Administration of Justice:                                                                                 
    BA..............................................       0.7       0.3      -1.4      -2.0      -2.3      -4.6
    OT..............................................       0.6       0.4       0.1      -(*)      -1.9      -0.8
800: General Government:                                                                                        
    BA..............................................       0.4      -0.3      -1.2      -2.0      -3.1      -6.2
    OT..............................................      -0.3      -0.4      -0.6      -1.5      -2.8      -5.6
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................       (*)      -0.5      -2.0      -3.8      -7.4     -13.6
        OT..........................................       (*)      -0.5      -2.0      -3.8      -7.4     -13.6
    Off-Budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................       (*)      -0.5      -2.0      -3.8      -7.4     -13.6
        OT..........................................       (*)      -0.5      -2.0      -3.8      -7.4     -13.6
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On budget:                                                                                                  
        BA..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
        OT..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total                                                                                                       
        BA..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
        OT..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget                                                                                                   
        BA..........................................      -7.4     -35.1     -57.0     -81.0    -120.4    -300.8
        OT..........................................      -5.9     -30.5     -60.3     -64.0    -126.1    -286.8
    Off-budget                                                                                                  
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
        BA..........................................      -7.4     -35.1     -57.0     -81.0    -120.4    -300.8
        OT..........................................      -5.9     -30.5     -60.3     -64.0    -126.1    -286.8
Revenues:                                                                                                       
    On-budget.......................................      -7.4     -11.1     -22.0     -22.8     -19.9     -83.1
    Off-budget......................................  ........  ........  ........  ........  ........  ........
    Total...........................................      -7.4     -11.1     -22.0     -22.8     -19.9     -83.1
Deficit:                                                                                                        
    On-budget.......................................      -1.5      19.4      38.3      41.2     106.3     203.7
    Off-budget......................................      -(*)      -(*)  ........  ........  ........      -(*)
    Total...........................................      -1.5      19.4      38.3      41.2     106.3     203.7
----------------------------------------------------------------------------------------------------------------


                       1998 BUDGET RESOLUTION COMPARED TO FREEZE BASELINE--FUNCTION TOTALS                      
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       3.2       5.7       9.5      16.0      23.8      58.1
    OT..............................................       1.9       1.9       1.9       9.4       9.0      24.1
150: International Affairs:                                                                                     
    BA..............................................       0.9       0.4       0.3       0.1      -(*)       1.7
    OT..............................................       0.3       0.2       0.3       0.3       0.3       1.4
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.4      -0.5      -0.7      -0.9      -1.1      -3.5
    OT..............................................      -0.3      -0.4      -0.6      -0.8      -1.0      -3.1
270: Energy:                                                                                                    
    BA..............................................       0.4       0.6       0.3       0.1      -0.1       1.2
    OT..............................................       0.4       0.5       0.3       0.2       (*)       1.4
300: Natural Resources and Environment:                                                                         
    BA..............................................       1.5       0.9       0.2      -0.2      -0.2       2.2
    OT..............................................       0.9       1.0       1.1       0.7       0.3       4.0
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.2      -0.3      -0.4      -0.4      -1.4
    OT..............................................      -(*)      -0.1      -0.2      -0.3      -0.4      -1.1
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................       0.2       0.6       2.0      -(*)      -(*)       2.7
        OT..........................................       0.1       0.4       1.6       0.3      -0.2       2.1
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................       0.2       0.6       2.0      -(*)      -(*)       2.7
        OT..........................................       0.1       0.4       1.6       0.3      -0.2       2.1
400: Transportation:                                                                                            
    BA..............................................      -0.6       0.7       0.6       0.8       1.1       2.6
    OT..............................................       1.0       1.7       2.0       2.0       1.9       8.6
450: Community and Regional Development:                                                                        
    BA..............................................      -1.0      -1.1      -1.8      -1.8      -1.8      -7.6
    OT..............................................      -1.0       0.4       0.8       1.7      -1.1       0.9
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       3.3       4.4       5.3       6.0       5.7      24.6
    OT..............................................      -(*)       3.0       3.9       4.8       4.6      16.3
550: Health:                                                                                                    
    BA..............................................       2.8       1.3       0.7      -0.2      -2.9       1.8
    OT..............................................       2.9       1.5       1.0       (*)      -2.7       2.6
570: Medicare:                                                                                                  
    BA..............................................      -6.4     -16.7     -22.6     -28.9     -40.0    -114.6
    OT..............................................      -6.4     -16.8     -26.6     -25.0     -40.0    -114.6
600: Income Security:                                                                                           
    BA..............................................       1.4       2.1       1.9       0.6      -0.8       5.2
    OT..............................................       2.5       2.0      -1.4       2.5      -1.5       4.0
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      -0.2      -0.3      -0.3      -0.3      -0.3      -1.4
        OT..........................................      -0.1      -0.1      -0.2      -0.3      -0.3      -1.0
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.2      -0.3      -0.3      -0.3      -0.3      -1.4
        OT..........................................      -0.1      -0.1      -0.2      -0.3      -0.3      -1.0
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.1      -0.4      -0.6      -0.7      -1.0      -2.8
    OT..............................................       0.1      -0.2      -2.2       1.2      -0.9      -1.9
750: Administration of Justice:                                                                                 
    BA..............................................       1.4       1.8       0.9       1.1       1.7       7.0
    OT..............................................       1.1       1.6       2.0       2.7       1.8       9.2
800: General Government:                                                                                        
    BA..............................................       0.8       0.5       (*)      -0.3      -1.0       (*)
    OT..............................................      -(*)       0.3       0.5       (*)      -0.8       (*)
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................       0.3       0.7       0.9       1.4       1.2       4.6
        OT..........................................       0.3       0.7       0.9       1.4       1.2       4.6
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................       0.3       0.7       0.9       1.4       1.2       4.6
        OT..........................................       0.3       0.7       0.9       1.4       1.2       4.6
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
        OT..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
        OT..........................................      -0.6      -4.1      -4.1      -5.1     -15.4     -29.2
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................       6.6      -3.6      -7.8     -12.7     -31.4     -48.9
        OT..........................................       3.0      -6.4     -18.9      -4.1     -45.3     -71.8
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)       (*)  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................       6.6      -3.6      -7.8     -12.7     -31.4     -48.8
        OT..........................................       3.1      -6.4     -18.9      -4.1     -45.3     -71.7
Revenues:                                                                                                       
    On-budget.......................................      -7.4     -11.1     -22.0     -22.8     -19.9     -83.1
    Off-budget......................................  ........  ........  ........  ........  ........  ........
    Total...........................................      -7.4     -11.1     -22.0     -22.8     -19.9     -83.1
Deficit:                                                                                                        
    On-budget.......................................     -10.4      -4.7      -3.0     -18.7      25.4     -11.4
    Off-budget......................................      -(*)      -(*)  ........  ........  ........      -(*)
    Total...........................................     -10.5      -4.7      -3.0     -18.7      25.4     -11.4
----------------------------------------------------------------------------------------------------------------


                     1998 BUDGET RESOLUTION COMPARED TO PRESIDENT'S REQUEST--FUNCTION TOTALS                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       2.6       1.8  ........       (*)  ........       4.4
    OT..............................................       1.0       2.8       (*)       0.8      -4.8      -0.2
150: International Affairs:                                                                                     
    BA..............................................      -4.0      -1.5      -0.6      -0.5      -0.6      -7.1
    OT..............................................      -0.2      -1.1      -0.3      -0.4      -0.5      -2.4
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.2      -0.3      -0.3      -0.5      -0.7      -1.9
    OT..............................................      -0.1      -0.2      -0.3      -0.4      -0.6      -1.5
270: Energy:                                                                                                    
    BA..............................................       (*)      -(*)      -0.1      -0.1       0.6       0.4
    OT..............................................      -(*)      -(*)      -0.1      -0.1       0.6       0.4
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.4      -0.2      -0.3      -0.6      -0.7      -1.4
    OT..............................................       0.4      -(*)      -0.1      -0.4      -0.6      -0.8
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.1      -(*)      -0.1      -0.1      -0.4
    OT..............................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.3
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................      -0.1      -(*)      -0.1      -(*)      -(*)      -0.3
        OT..........................................       0.3       0.4       0.3       0.3       0.3       1.6
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................      -0.1      -(*)      -0.1      -(*)      -(*)      -0.2
        OT..........................................       0.3       0.4       0.3       0.3       0.3       1.7
400: Transportation:                                                                                            
    BA..............................................       0.4       3.8       4.1       4.8       5.6      18.8
    OT..............................................       0.8       2.3       2.0       1.9       1.7       8.7
450: Community and Regional Development:                                                                        
    BA..............................................      -8.5      -0.1      -0.1      -0.2      -0.3      -9.3
    OT..............................................      -1.0      -1.1      -0.7      -0.3      -0.3      -3.3
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      -4.8      -1.8      -2.3      -1.5      -1.7     -12.0
    OT..............................................      -1.1      -2.6      -2.9      -2.7      -1.4     -10.7
550: Health:                                                                                                    
    BA..............................................      -1.9      -3.6      -1.4      -0.5       2.0      -5.5
    OT..............................................      -1.7      -3.5      -1.3      -0.3       2.1      -4.6
570: Medicare:                                                                                                  
    BA..............................................      -3.8      -6.9      -5.1      -6.8     -11.3     -33.8
    OT..............................................      -3.8      -6.9      -9.0      -2.8     -11.3     -33.7
600: Income Security:                                                                                           
    BA..............................................       0.2      -0.3      -1.1      -1.9      -3.7      -6.8
    OT..............................................      -0.4      -0.8      -3.8       0.6      -3.8      -8.2
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.4
        BA..........................................      -(*)      -(*)      -0.1      -0.1      -0.1      -0.3
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.4
        OT..........................................      -(*)      -(*)      -0.1      -0.1      -0.1      -0.3
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.4       0.3       0.1       0.1      -0.2      -(*)
    OT..............................................      -0.1       0.4      -1.5       1.9      -0.1       0.6
750: Administration of Justice:                                                                                 
    BA..............................................       (*)      -0.4      -0.5      -0.7      -0.8      -2.4
    OT..............................................  ........      -0.3      -0.4      -0.6      -0.7      -2.0
800: General Government:                                                                                        
    BA..............................................      -0.2      -0.3      -0.4      -0.6      -1.4      -2.9
    OT..............................................      -0.1      -0.2      -0.4      -0.6      -1.4      -2.6
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................      -0.6      -1.6      -2.2      -2.2      -2.7      -9.3
        OT..........................................      -0.6      -1.6      -2.2      -2.2      -2.7      -9.3
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.6      -1.6      -2.2      -2.2      -2.7      -9.3
        OT..........................................      -0.6      -1.6      -2.2      -2.2      -2.7      -9.3
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................      -(*)      -0.3       1.1       2.1      -2.0       0.9
        OT..........................................      -(*)      -0.3       1.1       2.1      -2.0       0.9
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -(*)      -0.3       1.1       2.1      -2.0       0.9
        BA..........................................      -(*)      -0.3       1.1       2.1      -2.0       0.9
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................     -21.1     -11.4      -9.1      -9.3     -18.1     -69.0
        OT..........................................      -6.8     -12.8     -19.5      -3.0     -25.5     -67.8
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................     -21.0     -11.3      -9.1      -9.3     -18.1     -68.9
        OT..........................................      -6.8     -12.8     -19.5      -3.0     -25.6     -67.7
Revenues:                                                                                                       
    On-budget.......................................       2.7      -6.1     -16.9     -13.2     -10.4     -44.1
    Off-budget......................................  ........  ........  ........  ........  ........  ........
    Total...........................................       2.7      -6.1     -16.9     -13.2     -10.4     -44.1
Deficit:                                                                                                        
    On-budget.......................................       9.5       6.7       2.6     -10.2      15.1      23.7
    Off-budget......................................      -(*)      -(*)  ........  ........  ........      -(*)
    Total...........................................       9.4       6.7       2.6     -10.2      15.1      23.7
----------------------------------------------------------------------------------------------------------------


                   1998 BUDGET RESOLUTION COMPARED TO PRESIDENT'S ALTERNATIVE--FUNCTION TOTALS                  
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       2.6       1.8  ........      11.4      11.7      27.6
    OT..............................................       1.0       2.8       (*)       8.2       4.9      16.9
150: International Affairs:                                                                                     
    BA..............................................      -4.0      -1.5      -0.6       0.3       0.2      -5.6
    OT..............................................      -0.2      -1.1      -0.3       0.1       0.1      -1.4
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.2      -0.3      -0.3       0.2       (*)      -0.6
    OT..............................................      -0.1      -0.2      -0.3       (*)      -(*)      -0.6
270: Energy:                                                                                                    
    BA..............................................       (*)      -(*)      -0.1       0.1       0.8       0.8
    OT..............................................      -(*)      -(*)      -0.1       (*)       0.8       0.7
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.4      -0.2      -0.3       0.3       0.2       0.4
    OT..............................................       0.4     -0(*)      -0.1       0.1       0.1       0.4
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.1      -(*)       0.1       (*)      -0.1
    OT..............................................      -(*)      -0.1      -0.1       0.1       (*)      -(*)
370: Commerce and Housing Credit:                                                                               
    On-budget:                                                                                                  
        BA..........................................      -0.1      -(*)      -0.1       0.1       0.1       (*)
        OT..........................................       0.3       0.4       0.3       0.5       0.5       1.9
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................      -0.1      -(*)      -0.1       0.1       0.1       0.1
        OT..........................................       0.3       0.4       0.3       0.5       0.5       1.9
400: Transportation:                                                                                            
    BA..............................................       0.4       3.8       4.1       5.4       6.3      20.0
    OT..............................................       0.8       2.3       2.0       2.6       2.9      10.5
450: Community and Regional Development:                                                                        
    BA..............................................      -8.5      -0.1      -0.1       0.1      -(*)      -8.6
    OT..............................................      -1.0      -1.1      -0.7      -0.2      -0.1      -3.1
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      -4.8      -1.8      -2.3       0.5       0.3      -8.0
    OT..............................................      -1.1      -2.6      -2.9      -2.1       0.4      -8.4
550: Health:                                                                                                    
    BA..............................................      -1.9      -3.6      -1.4       0.5       6.1      -0.4
    OT..............................................      -1.7      -3.5      -1.3       0.1       6.1      -0.2
570: Medicare:                                                                                                  
    BA..............................................      -3.8      -6.9      -5.1      -6.7      -4.7     -27.1
    OT..............................................      -3.8      -6.9      -9.0      -2.7      -4.7     -27.0
600: Income Security:                                                                                           
    BA..............................................       0.2      -0.3      -1.1      -0.3       2.5       1.0
    OT..............................................      -0.4      -0.8      -3.8       1.4       1.9      -1.8
650: Social Security:                                                                                           
    On-budget:                                                                                                  
        BA..........................................      -0.1      -0.1      -0.1       (*)      -(*)      -0.2
        OT..........................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.1      -0.1      -0.1       (*)       (*)      -0.2
        OT..........................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.4       0.3       0.1       0.9       0.6       1.6
    OT..............................................      -0.1       0.4      -1.5       2.6       0.7       2.0
750: Administration of Justice:                                                                                 
    BA..............................................       (*)      -0.4      -0.5       0.3       0.2      -0.4
    OT..............................................  ........      -0.3      -0.4       0.1       0.2      -0.3
800: General Government:                                                                                        
    BA..............................................      -0.2      -0.3      -0.4      -0.1      -1.0      -1.9
    OT..............................................      -0.1      -0.2      -0.4      -0.1      -0.9      -1.7
900: Net Interest:                                                                                              
    On-budget:                                                                                                  
        BA..........................................      -0.6      -1.6      -2.2       0.3       0.1      -4.1
        OT..........................................      -0.6      -1.6      -2.2       0.3       0.1      -4.1
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -0.6      -1.6      -2.2       0.3       0.1      -4.1
        OT..........................................      -0.6      -1.6      -2.2       0.3       0.1      -4.1
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
950: Undistributed Offsetting Receipts:                                                                         
    On-budget:                                                                                                  
        BA..........................................      -(*)      -0.3       1.1       2.1       7.4      10.3
        OT..........................................      -(*)      -0.3       1.1       2.1       7.4      10.3
    Off-budget:                                                                                                 
        BA..........................................  ........  ........  ........  ........  ........  ........
        OT..........................................  ........  ........  ........  ........  ........  ........
    Total:                                                                                                      
        BA..........................................      -(*)      -0.3       1.1       2.1       7.4      10.3
        OT..........................................      -(*)      -0.3       1.1       2.1       7.4      10.3
                                                     -----------------------------------------------------------
Total Spending:                                                                                                 
    On-budget:                                                                                                  
        BA..........................................     -21.1     -11.4      -9.2      15.5      30.9       4.7
        OT..........................................      -6.8     -12.8     -19.6      13.1      20.3      -5.8
    Off-budget:                                                                                                 
        BA..........................................       (*)       (*)  ........  ........  ........       (*)
        OT..........................................       (*)       (*)  ........  ........  ........       (*)
    Total:                                                                                                      
        BA..........................................     -21.0     -11.3      -9.2      15.5      30.9       4.8
        OT..........................................      -6.8     -12.8     -19.6      13.1      20.3      -5.7
Revenues:                                                                                                       
    On-budget.......................................       2.7      -6.1     -15.3     -16.3     -34.2     -69.2
    Off-budget......................................  ........  ........  ........  ........  ........  ........
    Total...........................................       2.7      -6.1     -15.3     -16.3     -34.2     -69.2
Deficit:                                                                                                        
    On-budget.......................................       9.5       6.7       4.3     -29.4     -54.5     -63.4
    Off-budget......................................      -(*)      -(*)  ........  ........  ........      -(*)
    Total...........................................       9.4       6.7       4.3     -29.4     -54.5     -63.5
----------------------------------------------------------------------------------------------------------------


                                  1998 BUDGET RESOLUTION--DISCRETIONARY TOTALS                                  
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     265.8     269.0     271.5     275.4     281.8     289.6
    OT..............................................     267.5     266.8     266.5     269.0     270.7     273.1
150: International Affairs:                                                                                     
    BA..............................................      18.1      19.0      18.6      18.5      18.3      18.2
    OT..............................................      19.2      19.2      18.8      18.8      18.5      18.4
250: Science, Space and Technology:                                                                             
    BA..............................................      16.6      16.2      16.2      15.9      15.8      15.6
    OT..............................................      17.0      16.8      16.5      16.0      15.8      15.6
270: Energy:                                                                                                    
    BA..............................................       4.3       4.8       4.9       4.6       4.4       4.2
    OT..............................................       4.9       5.0       5.1       4.8       4.6       4.4
300: Natural Resources and Environment:                                                                         
    BA..............................................      21.5      22.8      22.2      21.6      21.2      21.2
    OT..............................................      21.5      21.4      21.7      21.9      21.8      21.5
350: Agriculture:                                                                                               
    BA..............................................       4.2       4.1       4.0       3.9       3.8       3.8
    OT..............................................       4.2       4.1       4.1       3.9       3.9       3.8
370: Commerce and Housing Credit:                                                                               
    BA..............................................       2.8       3.1       3.5       5.0       3.0       2.9
    OT..............................................       2.8       3.1       3.4       4.6       3.2       2.7
400: Transportation:                                                                                            
    BA..............................................      13.8      13.6      15.0      14.8      15.1      15.3
    OT..............................................      36.9      38.3      38.9      39.3      39.4      39.4
450: Community and Regional Development:                                                                        
    BA..............................................       9.3       8.3       8.2       7.5       7.5       7.6
    OT..............................................      11.7      10.0      10.9      11.0      11.3       8.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      42.4      46.7      47.0      47.9      48.5      49.2
    OT..............................................      40.3      43.2      46.1      47.1      47.8      48.6
550: Health:                                                                                                    
    BA..............................................      25.0      24.9      24.7      24.6      24.4      24.2
    OT..............................................      23.8      24.6      24.8      24.9      24.6      24.3
570: Medicare:                                                                                                  
    BA..............................................       2.6       2.7       2.7       2.7       2.6       2.6
    OT..............................................       2.7       2.7       2.6       2.7       2.7       2.6
600: Income Security:                                                                                           
    BA..............................................      26.6      32.9      35.7      37.7      38.7      39.6
    OT..............................................      40.9      41.3      41.6      41.3      41.2      40.8
650: Social Security:                                                                                           
    BA..............................................       3.5       3.3       3.2       3.2       3.2       3.1
    OT..............................................       3.4       3.4       3.3       3.3       3.2       3.1
700: Veterans Benefits:                                                                                         
    BA..............................................      18.9      18.5      18.4      18.3      18.2      18.0
    OT..............................................      19.3      19.3      18.6      18.3      18.2      17.9
750: Administration of Justice:                                                                                 
    BA..............................................      22.9      24.4      24.8      23.9      24.1      24.7
    OT..............................................      20.4      22.2      24.2      25.0      25.7      24.7
800: General Government:                                                                                        
    BA..............................................      11.8      12.6      12.3      11.8      11.5      11.4
    OT..............................................      11.9      11.9      12.2      12.4      11.9      11.4
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................     510.1     526.9     533.0     537.2     542.0     551.1
    OT..............................................     548.5     553.3     559.3     564.3     564.4     560.8
Defense:                                                                                                        
    BA..............................................     265.8     269.0     271.5     275.4     281.8     289.6
    OT..............................................     267.5     266.8     266.5     269.0     270.7     273.1
Nondefense:                                                                                                     
    BA..............................................     244.3     257.9     261.5     261.8     260.2     261.5
    OT..............................................     281.0     286.4     292.8     295.3     293.7     287.7
----------------------------------------------------------------------------------------------------------------


                                BUDGET RESOLUTION BASELINE--DISCRETIONARY TOTALS                                
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     265.8     273.3     281.4     289.7     298.4     307.5
    OT..............................................     267.5     269.8     276.5     286.9     289.0     300.8
150: International Affairs:                                                                                     
    BA..............................................      18.1      18.6      19.3      19.8      20.4      21.0
    OT..............................................      19.2      19.1      19.3      19.7      19.9      20.4
250: Science, Space and Technology:                                                                             
    BA..............................................      16.6      17.1      17.6      18.0      18.5      19.1
    OT..............................................      17.0      17.4      17.6      17.8      18.3      18.8
270: Energy:                                                                                                    
    BA..............................................       4.3       4.4       4.6       4.7       4.8       5.0
    OT..............................................       4.9       4.7       4.7       4.7       4.8       4.9
300: Natural Resources and Environment:                                                                         
    BA..............................................      21.5      22.2      22.9      23.6      24.4      25.2
    OT..............................................      21.5      21.1      21.8      22.7      23.7      24.4
350: Agriculture:                                                                                               
    BA..............................................       4.2       4.3       4.4       4.6       4.7       4.9
    OT..............................................       4.2       4.3       4.4       4.5       4.7       4.8
370: Commerce and Housing Credit:                                                                               
    BA..............................................       2.8       2.9       3.0       3.1       3.2       3.3
    OT..............................................       2.8       2.9       3.0       3.1       3.2       3.3
400: Transportation:                                                                                            
    BA..............................................      13.8      14.6      15.1      15.5      16.0      16.5
    OT..............................................      36.9      37.7      38.4      39.3      40.5      41.7
450: Community and Regional Development:                                                                        
    BA..............................................       9.3       9.6       9.8      10.1      10.4      10.7
    OT..............................................      11.7      11.1      10.7      10.5      10.2      10.4
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      42.4      43.5      44.7      45.9      47.1      48.4
    OT..............................................      40.3      42.8      44.1      45.5      46.6      47.9
550: Health:                                                                                                    
    BA..............................................      25.0      25.7      26.4      27.2      28.0      28.8
    OT..............................................      23.8      25.0      25.9      26.7      27.4      28.2
570: Medicare:                                                                                                  
    BA..............................................       2.6       2.7       2.8       3.0       3.1       3.2
    OT..............................................       2.7       2.7       2.8       2.9       3.1       3.2
600: Income Security:                                                                                           
    BA..............................................      26.6      34.9      37.7      40.6      43.0      45.4
    OT..............................................      40.9      41.9      43.1      44.1      45.0      46.1
650: Social Security:                                                                                           
    BA..............................................       3.5       3.6       3.7       3.8       3.9       4.1
    OT..............................................       3.4       3.6       3.7       3.8       3.9       4.1
700: Veterans Benefits:                                                                                         
    BA..............................................      18.9      19.0      19.7      20.3      21.0      21.8
    OT..............................................      19.3      19.5      19.5      20.1      20.7      21.5
750: Administration of Justice:                                                                                 
    BA..............................................      22.9      23.7      24.5      25.3      26.1      26.9
    OT..............................................      20.4      21.6      23.8      24.9      25.7      26.6
800: General Government:                                                                                        
    BA..............................................      11.8      12.2      12.6      13.0      13.5      13.9
    OT..............................................      11.9      12.2      12.6      13.0      13.4      13.7
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................     510.1     532.3     550.2     568.3     586.7     605.6
    OT..............................................     548.5     557.3     571.8     590.2     600.1     620.7
Defense:                                                                                                        
    BA..............................................     265.8     273.3     281.4     289.7     298.4     307.5
    OT..............................................     267.5     269.8     276.5     286.9     289.0     300.8
Nondefense:                                                                                                     
    BA..............................................     244.3     259.1     268.8     278.6     288.3     298.1
    OT..............................................     281.0     287.5     295.3     303.3     311.1     320.0
----------------------------------------------------------------------------------------------------------------


                                      FREEZE BASELINE--DISCRETIONARY TOTALS                                     
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA........................................................     265.8     265.8     265.8     265.8     265.8
    OT........................................................     264.9     264.6     267.1     261.3     264.1
150: International Affairs:                                                                                     
    BA........................................................      18.1      18.2      18.2      18.2      18.2
    OT........................................................      18.9      18.6      18.5      18.2      18.2
250: Science, Space and Technology:                                                                             
    BA........................................................      16.6      16.6      16.6      16.6      16.6
    OT........................................................      17.1      16.9      16.6      16.6      16.6
270: Energy:                                                                                                    
    BA........................................................       4.3       4.3       4.3       4.3       4.3
    OT........................................................       4.6       4.6       4.5       4.4       4.4
300: Natural Resources and Environment:                                                                         
    BA........................................................      21.6      21.6      21.6      21.6      21.6
    OT........................................................      20.7      20.8      21.1      21.3      21.3
350: Agriculture:                                                                                               
    BA........................................................       4.2       4.2       4.2       4.2       4.2
    OT........................................................       4.2       4.2       4.2       4.2       4.2
370: Commerce and Housing Credit:                                                                               
    BA........................................................       2.8       2.8       2.8       2.8       2.8
    OT........................................................       2.8       2.8       2.8       2.8       2.8
400: Transportation:                                                                                            
    BA........................................................      14.2      14.2      14.2      14.2      14.2
    OT........................................................      37.3      37.2      37.2      37.3      37.5
450: Community and Regional Development:                                                                        
    BA........................................................       9.3       9.3       9.3       9.3       9.3
    OT........................................................      11.0      10.5      10.1       9.6       9.5
500: Education, Training, Employment and Social Services:                                                       
    BA........................................................      43.2      42.4      42.4      42.4      42.4
    OT........................................................      43.0      42.9      43.0      42.9      42.9
550: Health:                                                                                                    
    BA........................................................      25.0      25.0      25.0      25.0      25.0
    OT........................................................      24.7      24.9      25.0      25.0      25.0
570: Medicare:                                                                                                  
    BA........................................................       2.6       2.6       2.6       2.6       2.6
    OT........................................................       2.6       2.6       2.6       2.6       2.6
600: Income Security:                                                                                           
    BA........................................................      34.3      36.3      38.4      40.0      41.6
    OT........................................................      41.5      42.2      42.6      42.8      43.2
650: Social Security:                                                                                           
    BA........................................................       3.5       3.5       3.5       3.5       3.5
    OT........................................................       3.5       3.5       3.5       3.5       3.5
700: Veterans Benefits:                                                                                         
    BA........................................................      18.3      18.3      18.3      18.3      18.2
    OT........................................................      18.9      18.2      18.1      18.1      18.1
750: Administration of Justice:                                                                                 
    BA........................................................      23.0      23.0      23.0      23.0      23.0
    OT........................................................      21.0      22.6      23.0      23.0      23.0
800: General Government:                                                                                        
    BA........................................................      11.8      11.8      11.8      11.8      11.8
    OT........................................................      11.9      11.9      11.9      11.9      11.7
920: Allowances:                                                                                                
    BA........................................................  ........  ........  ........  ........  ........
    OT........................................................  ........  ........  ........  ........  ........
                                                               -------------------------------------------------
Total Discretionary:                                                                                            
    BA........................................................     518.6     519.9     522.0     523.6     525.1
    OT........................................................     548.6     548.9     551.7     545.5     548.5
Defense:                                                                                                        
    BA........................................................     265.8     265.8     265.8     265.8     265.8
    OT........................................................     264.9     264.6     267.1     261.3     264.1
Nondefense:                                                                                                     
    BA........................................................     252.8     254.0     256.2     257.8     259.3
    OT........................................................     283.7     284.3     284.6     284.2     284.4
----------------------------------------------------------------------------------------------------------------


                                    PRESIDENT'S BUDGET--DISCRETIONARY TOTALS                                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................     263.1     266.4     269.7     275.4     281.8     289.6
    OT..............................................     267.7     265.8     263.8     269.0     269.8     277.9
150: International Affairs:                                                                                     
    BA..............................................      18.1      23.0      20.1      19.1      18.8      18.8
    OT..............................................      19.2      19.3      19.9      19.1      18.9      18.9
250: Science, Space and Technology:                                                                             
    BA..............................................      16.6      16.4      16.4      16.2      16.2      16.2
    OT..............................................      17.0      17.0      16.7      16.2      16.2      16.2
270: Energy:                                                                                                    
    BA..............................................       4.3       4.7       4.9       4.7       4.5       4.4
    OT..............................................       4.9       5.1       5.1       4.9       4.7       4.6
300: Natural Resources and Environment:                                                                         
    BA..............................................      21.4      22.4      22.4      21.9      21.8      21.9
    OT..............................................      21.5      21.1      21.7      22.1      22.2      22.1
350: Agriculture:                                                                                               
    BA..............................................       4.1       4.1       4.0       3.9       3.9       3.9
    OT..............................................       4.1       4.2       4.1       4.0       3.9       3.9
370: Commerce and Housing Credit:                                                                               
    BA..............................................       2.8       3.2       3.6       5.1       3.1       3.1
    OT..............................................       2.8       3.1       3.4       4.6       3.3       2.8
400: Transportation:                                                                                            
    BA..............................................      13.8      13.5      14.9      14.7      15.0      15.2
    OT..............................................      37.1      37.5      37.1      37.2      37.5      37.8
450: Community and Regional Development:                                                                        
    BA..............................................       9.3      16.7       8.3       7.7       7.8       7.9
    OT..............................................      11.7      11.1      12.0      11.6      11.6       8.7
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................      42.4      46.5      47.5      48.5      49.5      50.4
    OT..............................................      40.3      43.2      46.4      47.5      48.5      49.6
550: Health:                                                                                                    
    BA..............................................      25.0      25.2      25.1      25.1      25.1      25.1
    OT..............................................      23.8      24.8      25.1      25.2      25.1      25.1
570: Medicare:                                                                                                  
    BA..............................................       2.6       2.8       2.8       2.7       2.7       2.7
    OT..............................................       2.7       2.7       2.7       2.7       2.7       2.7
600: Income Security:                                                                                           
    BA..............................................      26.4      32.9      36.1      38.9      40.4      41.8
    OT..............................................      40.9      41.8      42.4      41.5      42.6      42.8
650: Social Security:                                                                                           
    BA..............................................       3.5       3.3       3.3       3.2       3.2       3.3
    OT..............................................       3.4       3.4       3.4       3.3       3.2       3.3
700: Veterans Benefits:                                                                                         
    BA..............................................      18.9      18.8      18.7      18.7      18.7      18.7
    OT..............................................      19.3      18.4      18.8      18.6      18.6      18.5
750: Administration of Justice:                                                                                 
    BA..............................................      22.9      24.4      25.2      24.4      24.8      25.5
    OT..............................................      20.4      22.2      24.4      25.4      26.3      25.4
800: General Government:                                                                                        
    BA..............................................      11.8      12.8      12.5      12.1      11.8      11.8
    OT..............................................      11.9      12.0      12.3      12.6      12.2      11.8
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................     507.1     537.1     535.5     542.3     549.2     560.3
    OT..............................................     548.9     552.4     559.2     565.7     567.4     572.3
Defense:                                                                                                        
    BA..............................................     263.1     266.4     269.7     275.4     281.8     289.6
    OT..............................................     267.7     265.8     263.8     269.0     269.8     277.9
Nondefense:                                                                                                     
    BA..............................................     244.1     270.7     265.8     266.9     267.3     270.7
    OT..............................................     281.2     286.6     295.4     296.7     297.5     294.4
----------------------------------------------------------------------------------------------------------------


                        PRESIDENT'S ALTERNATIVE BUDGETARY POLICIES--DISCRETIONARY TOTALS                        
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA........................................................     266.4     269.7     275.4     270.4     277.9
    OT........................................................     265.8     263.8     269.0     262.4     268.2
150: International Affairs:                                                                                     
    BA........................................................      23.0      20.1      19.1      18.1      18.0
    OT........................................................      19.3      19.9      19.1      18.5      18.4
250: Science, Space and Technology:                                                                             
    BA........................................................      16.4      16.4      16.2      15.6      15.6
    OT........................................................      17.0      16.7      16.2      15.8      15.7
270: Energy:                                                                                                    
    BA........................................................       4.7       4.9       4.7       4.3       4.2
    OT........................................................       5.1       5.1       4.9       4.6       4.4
300: Natural Resources and Environment:                                                                         
    BA........................................................      22.4      22.4      21.9      20.9      21.0
    OT........................................................      21.1      21.7      22.1      21.7      21.4
350: Agriculture:                                                                                               
    BA........................................................       4.1       4.0       3.9       3.7       3.8
    OT........................................................       4.2       4.1       4.0       3.8       3.8
370: Commerce and Housing Credit:                                                                               
    BA........................................................       3.2       3.6       5.1       2.9       2.9
    OT........................................................       3.1       3.4       4.6       3.2       2.7
400: Transportation:                                                                                            
    BA........................................................      13.5      14.9      14.7      14.4      14.6
    OT........................................................      37.5      37.1      37.2      36.8      36.7
450: Community and Regional Development:                                                                        
    BA........................................................      16.7       8.3       7.7       7.4       7.6
    OT........................................................      11.1      12.0      11.6      11.5       8.6
500: Education, Training, Employment and Social Services:                                                       
    BA........................................................      46.5      47.5      48.5      47.5      48.4
    OT........................................................      43.2      46.4      47.5      48.0      47.8
550: Health:                                                                                                    
    BA........................................................      25.2      25.1      25.1      24.1      24.2
    OT........................................................      24.8      25.1      25.2      24.7      24.3
570: Medicare:                                                                                                  
    BA........................................................       2.8       2.8       2.7       2.6       2.6
    OT........................................................       2.7       2.7       2.7       2.6       2.6
600: Income Security:                                                                                           
    BA........................................................      32.9      36.1      38.9      38.7      40.1
    OT........................................................      41.8      42.4      41.5      41.8      41.6
650: Social Security:                                                                                           
    BA........................................................       3.3       3.3       3.2       3.1       3.1
    OT........................................................       3.4       3.4       3.3       3.1       3.1
700: Veterans Benefits:                                                                                         
    BA........................................................      18.8      18.7      18.7      17.9      17.9
    OT........................................................      18.4      18.8      18.6      17.9      17.8
750: Administration of Justice:                                                                                 
    BA........................................................      24.4      25.2      24.4      23.8      24.5
    OT........................................................      22.2      24.4      25.4      25.5      24.5
800: General Government:                                                                                        
    BA........................................................      12.8      12.5      12.1      11.3      11.4
    OT........................................................      12.0      12.3      12.6      11.7      11.4
920: Allowances:                                                                                                
    BA........................................................  ........  ........  ........  ........  ........
    OT........................................................  ........  ........  ........  ........  ........
                                                               -------------------------------------------------
Total Discretionary:                                                                                            
    BA........................................................     537.1     535.5     542.3     526.9     537.6
    OT........................................................     552.4     559.2     565.7     553.7     552.7
Defense:                                                                                                        
    BA........................................................     266.4     269.7     275.4     270.4     277.9
    OT........................................................     265.8     263.8     269.0     262.4     268.2
Nondefense:                                                                                                     
    BA........................................................     270.7     265.8     266.9     256.5     259.8
    OT........................................................     286.6     295.4     296.7     291.3     284.5
----------------------------------------------------------------------------------------------------------------


                        1998 BUDGET RESOLUTION COMPARED TO BASELINE--DISCRETIONARY TOTALS                       
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................      -4.3      -9.9     -14.4     -16.6     -17.9     -63.0
    OT..............................................      -3.0      -9.9     -17.9     -18.3     -27.7     -76.8
150: International Affairs:                                                                                     
    BA..............................................       0.4      -0.7      -1.3      -2.0      -2.8      -6.4
    OT..............................................       (*)      -0.5      -0.9      -1.4      -1.9      -4.6
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.9      -1.4      -2.1      -2.8      -3.5     -10.6
    OT..............................................      -0.5      -1.1      -1.8      -2.5      -3.2      -9.0
270: Energy:                                                                                                    
    BA..............................................       0.3       0.3      -0.1      -0.4      -0.7      -0.6
    OT..............................................       0.4       0.4       0.1      -0.2      -0.5       0.1
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.6      -0.7      -2.1      -3.2      -4.0      -9.4
    OT..............................................       0.3      -0.1      -0.8      -1.8      -3.0      -5.5
350: Agriculture:                                                                                               
    BA..............................................      -0.2      -0.5      -0.7      -0.9      -1.1      -3.5
    OT..............................................      -0.1      -0.3      -0.6      -0.8      -1.1      -3.0
370: Commerce and Housing Credit:                                                                               
    BA..............................................       0.2       0.5       1.9      -0.3      -0.4       1.9
    OT..............................................       0.2       0.4       1.5       (*)      -0.6       1.5
400: Transportation:                                                                                            
    BA..............................................      -1.1      -0.1      -0.8      -1.0      -1.2      -4.1
    OT..............................................       0.6       0.6      -(*)      -1.1      -2.3      -2.3
450: Community and Regional Development:                                                                        
    BA..............................................      -1.3      -1.6      -2.6      -2.9      -3.1     -11.5
    OT..............................................      -1.0       0.2       0.4       1.1      -2.0      -1.3
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       3.3       2.4       2.0       1.4       0.8       9.7
    OT..............................................       0.4       2.0       1.6       1.2       0.7       5.8
550: Health:                                                                                                    
    BA..............................................      -0.8      -1.7      -2.6      -3.5      -4.6     -13.2
    OT..............................................      -0.4      -1.0      -1.8      -2.8      -3.9     -10.0
570: Medicare:                                                                                                  
    BA..............................................       (*)      -0.1      -0.3      -0.4      -0.6      -1.5
    OT..............................................       (*)      -0.2      -0.3      -0.4      -0.6      -1.4
600: Income Security:                                                                                           
    BA..............................................      -2.0      -2.0      -2.9      -4.3      -5.8     -16.9
    OT..............................................      -0.6      -1.5      -2.7      -3.8      -5.3     -14.0
650: Social Security:                                                                                           
    BA..............................................      -0.3      -0.5      -0.6      -0.8      -1.0      -3.2
    OT..............................................      -0.2      -0.3      -0.5      -0.8      -0.9      -2.8
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.5      -1.2      -2.0      -2.9      -3.8     -10.4
    OT..............................................      -0.2      -0.9      -1.7      -2.6      -3.6      -9.0
750: Administration of Justice:                                                                                 
    BA..............................................       0.7       0.3      -1.4      -2.0      -2.3      -4.6
    OT..............................................       0.6       0.4       0.1      -(*)      -1.9      -0.8
800: General Government:                                                                                        
    BA..............................................       0.4      -0.3      -1.2      -2.0      -2.6      -5.7
    OT..............................................      -0.3      -0.4      -0.6      -1.5      -2.3      -5.1
920: Allowances:                                                                                                
    BA..............................................      ----      ----      ----      ----      ----      ----
    OT..............................................      ----      ----      ----      ----      ----      ----
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................      -5.5     -17.2     -31.1     -44.7     -54.5    -153.0
    OT..............................................      -4.0     -12.5     -25.9     -35.7     -59.9    -138.0
Defense:                                                                                                        
    BA..............................................      -4.3      -9.9     -14.4     -16.6     -17.9     -63.0
    OT..............................................      -3.0      -9.9     -17.9     -18.3     -27.7     -76.8
Nondefense:                                                                                                     
    BA..............................................      -1.2      -7.3     -16.8     -28.1     -36.7     -90.0
    OT..............................................      -1.0      -2.5      -8.0     -17.4     -32.3     -61.2
----------------------------------------------------------------------------------------------------------------


                    1998 BUDGET RESOLUTION COMPARED TO FREEZE BASELINE--DISCRETIONARY TOTALS                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       3.2       5.7       9.5      16.0      23.8      58.1
    OT..............................................       1.9       1.9       1.9       9.4       9.0      24.1
150: International Affairs:                                                                                     
    BA..............................................       0.9       0.4       0.3       0.1      -(*)       1.7
    OT..............................................       0.3       0.2       0.3       0.3       0.3       1.4
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.4      -0.5      -0.7      -0.9      -1.1      -3.5
    OT..............................................      -0.3      -0.4      -0.6      -0.8      -1.0      -3.1
270: Energy:                                                                                                    
    BA..............................................       0.4       0.6       0.3       0.1      -0.1       1.2
    OT..............................................       0.4       0.5       0.3       0.2       (*)       1.4
300: Natural Resources and Environment:                                                                         
    BA..............................................       1.3       0.7       (*)      -0.4      -0.4       1.2
    OT..............................................       0.7       0.8       0.9       0.5       0.1       3.0
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.2      -0.3      -0.4      -0.4      -1.4
    OT..............................................      -(*)      -0.1      -0.2      -0.3      -0.4      -1.1
370: Commerce and Housing Credit:                                                                               
    BA..............................................       0.3       0.7       2.2       0.2       0.1       3.5
    OT..............................................       0.2       0.6       1.8       0.4      -0.1       2.9
400: Transportation:                                                                                            
    BA..............................................      -0.6       0.8       0.6       0.9       1.2       2.8
    OT..............................................       1.0       1.7       2.1       2.1       2.0       8.8
450: Community and Regional Development:                                                                        
    BA..............................................      -1.0      -1.1      -1.8      -1.8      -1.8      -7.6
    OT..............................................      -1.0       0.4       0.8       1.7      -1.1       0.9
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       3.5       4.6       5.4       6.1       6.8      26.4
    OT..............................................       0.2       3.2       4.1       4.9       5.7      18.1
550: Health:                                                                                                    
    BA..............................................      -0.1      -0.3      -0.4      -0.6      -0.9      -2.2
    OT..............................................      -(*)      -0.1      -0.1      -0.4      -0.7      -1.4
570: Medicare:                                                                                                  
    BA..............................................       0.1       0.1       0.1       0.1       (*)       0.4
    OT..............................................       0.1       (*)       0.1       0.1       (*)       0.4
600: Income Security:                                                                                           
    BA..............................................      -1.3      -0.5      -0.7      -1.3      -2.0      -5.8
    OT..............................................      -0.2      -0.6      -1.2      -1.7      -2.4      -6.1
650: Social Security:                                                                                           
    BA..............................................      -0.2      -0.3      -0.3      -0.3      -0.3      -1.4
    OT..............................................      -0.1      -0.1      -0.2      -0.3      -0.3      -1.0
700: Veterans Benefits:                                                                                         
    BA..............................................       0.1       0.1       (*)      -0.1      -0.3      -0.1
    OT..............................................       0.4       0.4       0.2       0.1      -0.2       0.9
750: Administration of Justice:                                                                                 
    BA..............................................       1.4       1.8       0.9       1.1       1.7       7.0
    OT..............................................       1.1       1.6       2.0       2.7       1.8       9.2
800: General Government:                                                                                        
    BA..............................................       0.8       0.5       (*)      -0.3      -0.4       0.6
    OT..............................................      -(*)       0.3       0.5       (*)      -0.3       0.6
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................       8.2      13.1      15.2      18.4      25.9      80.9
    OT..............................................       4.7      10.4      12.6      18.9      12.3      58.9
Defense:                                                                                                        
    BA..............................................       3.2       5.7       9.5      16.0      23.8      58.1
    OT..............................................       1.9       1.9       1.9       9.4       9.0      24.1
Nondefense:                                                                                                     
    BA..............................................       5.1       7.5       5.7       2.4       2.2      22.8
    OT..............................................       2.8       8.5      10.7       9.5       3.3      34.9
----------------------------------------------------------------------------------------------------------------


                   1998 BUDGET RESOLUTION COMPARED TO PRESIDENT'S BUDGET--DISCRETIONARY TOTALS                  
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       2.6       1.8  ........  ........  ........       4.4
    OT..............................................       1.0       2.8       (*)       0.8      -4.8      -0.2
150: International Affairs:                                                                                     
    BA..............................................      -3.9      -1.5      -0.6      -0.5      -0.6      -7.1
    OT..............................................      -0.1      -1.1      -0.3      -0.4      -0.5      -2.4
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.2      -0.3      -0.3      -0.5      -0.7      -1.9
    OT..............................................      -0.1      -0.2      -0.3      -0.4      -0.6      -1.5
270: Energy:                                                                                                    
    BA..............................................       (*)      -(*)      -0.1      -0.1      -0.2      -0.4
    OT..............................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.4
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.4      -0.2      -0.3      -0.6      -0.7      -1.4
    OT..............................................       0.3      -0.1      -0.2      -0.4      -0.6      -1.0
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.1      -0.1      -0.1      -0.2      -0.5
    OT..............................................      -(*)      -(*)      -0.1      -0.1      -0.1      -0.3
370:Commerce and Housing Credit:                                                                                
    BA..............................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.4
    OT..............................................      -(*)      -(*)      -0.1      -0.1      -0.1      -0.3
400 Transportation:                                                                                             
    BA..............................................       (*)       (*)       0.1       0.1       0.1       0.3
    OT..............................................       0.8       1.8       2.1       1.9       1.6       8.2
450: Community and Regional Development:                                                                        
    BA..............................................      -8.4      -0.1      -0.2      -0.2      -0.3      -9.3
    OT..............................................      -1.0      -1.1      -0.7      -0.3      -0.3      -3.3
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       0.3      -0.4      -0.7      -1.0      -1.2      -3.1
    OT..............................................       (*)      -0.3      -0.5      -0.8      -1.0      -2.5
550: Health:                                                                                                    
    BA..............................................      -0.3      -0.3      -0.5      -0.7      -1.0      -2.8
    OT..............................................      -0.2      -0.2      -0.4      -0.5      -0.9      -2.1
570 Medicare:                                                                                                   
    BA..............................................      -(*)      -(*)       0.1      -0.1       0.1      -0.3
    OT..............................................      -(*)      -(*)      -(*)      -0.1      -0.1      -0.2
600: Income Security:                                                                                           
    BA..............................................       0.1      -0.4      -1.2      -1.7      -2.2      -5.3
    OT..............................................      -0.6      -0.8      -0.1      -1.4      -2.0      -4.9
650: Social Security:                                                                                           
    BA..............................................      -(*)      -0.1      -0.1      -0.1      -0.1      -0.4
    OT..............................................      -(*)      -(*)      -0.1      -0.1      -0.1      -0.3
700: Veterans Benefits;                                                                                         
    BA..............................................      -0.3      -0.3      -0.4      -0.5      -0.8      -2.2
    OT..............................................       0.9      -0.2      -0.3      -0.4      -0.7      -0.7
750: Administration of Justice:                                                                                 
    BA..............................................  ........      -0.4      -0.5      -0.7      -0.8      -2.4
    OT..............................................  ........      -0.3      -0.4      -0.6      -0.7      -2.0
800: General Government:                                                                                        
    BA..............................................      -0.2      -0.2      -0.2      -0.3      -0.5      -1.4
    OT..............................................      -0.1      -0.1      -0.2      -0.3      -0.4      -1.1
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................     -10.2      -2.5      -5.1      -7.2      -9.3     -34.2
    OT..............................................       0.8       0.1      -1.4      -3.0     -11.5     -14.9
Defense:                                                                                                        
    BA..............................................       2.6       1.8  ........  ........  ........       4.4
    OT..............................................       1.0       2.8       (*)       0.8      -4.8      -0.2
Nondefense:                                                                                                     
    BA..............................................     -12.8      -4.3      -5.1      -7.2      -9.3     -38.6
    OT..............................................      -0.2      -2.6      -1.4      -3.8      -6.7     -14.7
----------------------------------------------------------------------------------------------------------------


                1998 BUDGET RESOLUTION COMPARED TO PRESIDENT'S ALTERNATIVE--DISCRETIONARY TOTALS                
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      Total 
----------------------------------------------------------------------------------------------------------------
050: National Defense:                                                                                          
    BA..............................................       2.6       1.8  ........      11.4      11.7      27.6
    OT..............................................       1.0       2.8       (*)       8.2       4.9      16.9
150: International Affairs:                                                                                     
    BA..............................................      -3.9      -1.5      -0.6       0.3       0.2      -5.6
    OT..............................................      -0.1      -1.1      -0.3       0.1       0.1      -1.3
250: Science, Space and Technology:                                                                             
    BA..............................................      -0.2      -0.3      -0.3       0.2       (*)      -0.6
    OT..............................................      -0.1      -0.2      -0.3       (*)      -(*)      -0.6
270: Energy:                                                                                                    
    BA..............................................       (*)      -(*)      -0.1       0.1       (*)       (*)
    OT..............................................      -(*)      -0.1      -0.1       (*)       0.1      -0.1
300: Natural Resources and Environment:                                                                         
    BA..............................................       0.4      -0.2      -0.3       0.3       0.2       0.3
    OT..............................................       0.3      -0.1      -0.2       0.1       0.1       0.3
350: Agriculture:                                                                                               
    BA..............................................      -0.1      -0.1      -0.1       (*)      -(*)      -0.2
    OT..............................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
370: Commerce and Housing Credit:                                                                               
    BA..............................................      -(*)      -0.1      -0.1       0.1       (*)      -0.1
    OT..............................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
400: Transportation:                                                                                            
    BA..............................................       (*)       (*)       0.1       0.7       0.7       1.5
    OT..............................................       0.8       1.8       2.1       2.6       2.7      10.0
450: Community and Regional Development:                                                                        
    BA..............................................      -8.4      -0.1      -0.2       0.1      -(*)      -8.6
    OT..............................................      -1.0      -1.1      -0.7      -0.2      -0.1      -3.1
500: Education, Training, Employment and Social                                                                 
 Services:                                                                                                      
    BA..............................................       0.3      -0.4      -0.7       1.0       0.8       0.9
    OT..............................................       (*)      -0.3      -0.5      -0.2       0.7      -0.1
550: Health:                                                                                                    
    BA..............................................      -0.3      -0.3      -0.5       0.3       (*)      -0.8
    OT..............................................      -0.2      -0.2      -0.4      -0.1      -(*)      -0.8
570: Medicare:                                                                                                  
    BA..............................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
    OT..............................................      -(*)      -(*)      -(*)       (*)       (*)      -(*)
600: Income Security:                                                                                           
    BA..............................................       0.1      -0.4      -1.2      -(*)      -0.5      -2.0
    OT..............................................      -0.6      -0.8      -0.1      -0.6      -0.8      -2.9
650: Social Security:                                                                                           
    BA..............................................      -(*)      -0.1      -0.1       (*)       (*)      -0.1
    OT..............................................      -(*)      -(*)      -0.1       (*)       (*)      -0.1
700: Veterans Benefits:                                                                                         
    BA..............................................      -0.3      -0.3      -0.4       0.3       (*)      -0.7
    OT..............................................       0.9      -0.2      -0.3       0.2       0.1       0.7
750: Administration of Justice:                                                                                 
    BA..............................................  ........      -0.4      -0.5       0.3       0.2      -0.4
    OT..............................................  ........      -0.3      -0.4       0.1       0.2      -0.3
800: General Government:                                                                                        
    BA..............................................      -0.2      -0.2      -0.2       0.1  ........      -0.5
    OT..............................................      -0.1      -0.1      -0.2       0.1       (*)      -0.2
920: Allowances:                                                                                                
    BA..............................................  ........  ........  ........  ........  ........  ........
    OT..............................................  ........  ........  ........  ........  ........  ........
                                                     -----------------------------------------------------------
Total Discretionary:                                                                                            
    BA..............................................     -10.2      -2.5      -5.1      15.1      13.4      10.8
    OT..............................................       0.8       0.1      -1.4      10.7       8.1      18.3
Defense:                                                                                                        
    BA..............................................       2.6       1.8  ........      11.4      11.7      27.6
    OT..............................................       1.0       2.8       (*)       8.2       4.9      16.9
Nondefense:                                                                                                     
    BA..............................................     -12.8      -4.3      -5.1       3.7       1.7     -16.8
    OT..............................................      -0.2      -2.6      -1.4       2.4       3.2       1.4
----------------------------------------------------------------------------------------------------------------


                                            CREDIT LEVELS BY FUNCTION                                           
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year--                           
                                                     --------------------------------------------------  5-year 
                                                        1998      1999      2000      2001      2002     totals 
----------------------------------------------------------------------------------------------------------------
Direct loans........................................      34.0      33.4      34.9      36.1      37.4     175.8
Loan guarantees.....................................     315.7     324.9     328.2     332.2     335.3   1,636.3
                                                     -----------------------------------------------------------
050: National Defense:                                                                                          
    Loan guarantees.................................       0.6       0.8       1.1       1.1       1.1       4.7
150: International Affairs:                                                                                     
    Direct loans....................................       2.0       2.0       2.1       2.1       2.2      10.4
    Loan guarantees.................................      12.8      13.1      13.4      13.8      14.2      67.3
270: Energy:                                                                                                    
    Direct loans....................................       1.1       1.1       1.1       1.1       1.2       5.6
300: Natural Resources and Environment:                                                                         
    Direct loans....................................       0.1       0.1       0.1       0.1       0.1       0.5
350: Agriculture:                                                                                               
    Direct loans....................................       9.6      11.0      11.1      11.0      11.0      53.7
    Loan guarantees.................................       6.4       6.4       6.5       6.6       6.7      32.6
          370: Commerce and Housing Credit:                                                                     
    Direct loans....................................       4.7       1.9       2.2       2.6       2.7      14.1
    Loan guarantees.................................     245.5     253.5     255.2     258.0     259.9   1,272.1
400: Transportation:                                                                                            
    Direct loans....................................       0.2       0.1       0.1       0.1       0.1       0.6
450: Community and Regional Development:                                                                        
    Direct loans....................................       2.9       2.9       3.0       3.1       3.2      15.1
    Loan guarantees.................................       2.4       2.4       2.4       2.5       2.5      12.2
500: Education, Training, Employment, and Social                                                                
 Services:                                                                                                      
    Direct loans....................................      12.3      13.1      13.9      14.7      15.4      69.4
    Loan guarantees.................................      20.7      21.9      23.3      24.5      25.7     116.1
550: Health:                                                                                                    
    Loan guarantees.................................       0.1       0.0       0.0       0.0       0.0       0.1
600: Income Security:                                                                                           
    Direct loans....................................       0.1       0.1       0.1       0.1       0.2       0.6
    Loan guarantees.................................       0.1       0.1       0.1       0.1       0.1       0.5
700: Veterans Benefits and Services:                                                                            
    Direct loans....................................       1.0       1.1       1.2       1.2       1.3       5.8
    Loan guarantees.................................      27.1      26.7      26.2      25.6      25.1     130.7
----------------------------------------------------------------------------------------------------------------

  V. Budget Resolutions: Enforcement, Reconciliation, and Other Issues

                     contents of budget resolution

Enforcement

    A budget resolution does not become law and cannot amend 
law. Therefore, it cannot extend the Budget Enforcement Act as 
called for in the Balanced Budget Agreement. However, a budget 
resolution's miscellaneous provisions can affect the 
consideration of legislation to implement and enforce aspects 
of the Balanced Budget Agreement. The reported budget 
resolution reduces the deficit and provides for a balanced 
budget by fiscal year 2002. During the Senate's consideration 
of this resolution; the committee urges the defeat of any 
amendment that would cause the deficit to be increased for any 
year relative to the budget resolution's levels or would result 
in a deficit in fiscal year 2002. The budget resolution 
includes the following provisions to implement and enforce a 
balanced budget by 2002:

Reconciliation

    The reported resolution calls for two reconciliation bills. 
Committees would be reconciled for changes in spending and 
revenue levels for 2002 and the sum of years 1998 through 2002.
    The reported resolution would reconcile committees for 
direct spending reductions in this first reconciliation bill. 
The reported resolution directs committees to complete action 
on this first bill and report legislation to the Budget 
Committee by June 20, 1997.
    The reported resolution would reconcile the Senate Finance 
Committee to reduce revenues in a second reconciliation bill 
and directs the Committee to complete action on this second 
bill by June 27, 1997. The budget resolution's directive of two 
reconciliation bills assumes that an accommodation can be 
reached for this second bill that the Budget Act would apply to 
the tax provisions as if they were considered with the spending 
in the first reconciliation bill.
    The reported resolution includes a reconciliation 
instruction for the first reconciliation bill calling for the 
debt limit to be increased to a level sufficient to allow 
Treasury to meet its projected borrowing requirements through 
December 15, 1999.

                                                     RECONCILIATION INSTRUCTIONS BY SENATE COMMITTEE                                                    
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Committee                                                         1998       1999       2000       2001       2002       Total  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  FIRST RECONCILIATION                                                                                                                  
                                                                                                                                                        
Agriculture, Nutrition and Forestry.....................  OT                               0.300      0.300      0.300      0.300      0.300       1.500
Banking, Housing and Urban Affairs......................  DR                              -0.136     -0.233     -0.365     -0.422     -0.434      -1.590
Commerce, Science and Transportation....................  OT                           .........     -3.549     -3.549     -4.549    -14.849     -26.496
Energy and Natural Resources............................  OT                           .........     -0.001     -0.002     -0.004     -0.006      -0.013
Finance.................................................  OT                              -1.100    -12.710    -19.128    -26.837    -40.946    -100.721
Government Affairs......................................  DR                              -0.632     -0.839     -1.042     -1.185     -1.769      -5.467
Labor and Human Resources...............................  OT                              -0.242     -0.247     -0.158     -0.088     -1.057      -1.792
Veterans Affairs........................................  OT                              -0.247     -0.540     -0.659     -0.606     -0.681      -2.733
      Total First Reconciliation........................  DR                              -2.057    -17.819    -24.603    -33.391    -59.442    -137.312
                                                                                                                                                        
                  SECOND RECONCILATION                                                                                                                  
                                                                                                                                                        
Finance.................................................  Rev                             -7.400    -11.300    -22.400    -23.400    -20.500     -85.000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: OT=outlays, DR=deficit reduction, Rev=revenues.                                                                                                   

                           discretionary caps

    The reported resolution establishes limits on discretionary 
spending through 2002. It provides that a future budget 
resolution or an appropriations measure that would cause these 
limits to be exceeded would be subject to a 60 vote point of 
order in the Senate. The enforcement of the discretionary 
limits beyond 1998 are dependent on the enactment of 
reconciliation legislation called for by the resolution.
    The reported resolution also establishes separate caps on 
defense and non-defense (``firewalls'') for FY 1998 and 1999, 
which are enforced by a 60 vote point of order in the Senate.

                                               DISCRETIONARY CAPS                                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Defense:                                                                                                        
    BA........................................................     269.0     271.5     275.4     281.8     289.6
    OT........................................................     266.8     266.5     269.0     270.7     273.1
Nondefense:                                                                                                     
    BA........................................................     257.9     261.5     261.8     260.2     261.5
    OT........................................................     286.4     292.8     295.3     293.7     287.7
Total Discretionary:                                                                                            
    BA........................................................     526.9     533.0     537.2     542.0     551.1
    OT........................................................     553.3     559.3     564.3     564.4     560.8
----------------------------------------------------------------------------------------------------------------

                             Pay-as-You-Go

    The committee notes that in the fiscal year 1996 budget 
resolution (House Concurrent Resolution 67) the pay-as-you-go 
[PAYGO] point of order for the Senate was extended through the 
end of fiscal year 2002. Consequently it was determined that it 
is not necessary to include the language in the text of this 
year's resolution. In order to emphasize the overall goal of 
balancing the budget set out in this resolution and that the 
pay-as-you-go discipline is still in effect, the text of 
section 202 from House Concurrent Resolution 67 is provided 
herein:

SEC. 202. EXTENSION OF PAY-AS-YOU-GO POINT OF ORDER.

    (a) Purpose.--The Senate declares that it is essential to--
          (1) ensure continued compliance with the balanced 
        budget plan set forth in this resolution; and
          (2) continue the pay-as-you-go enforcement system.
    (b) Point of Order.--
          (1) In general.--It shall not be in order in the 
        Senate to consider any direct spending or revenue 
        legislation that would increase the deficit for any one 
        of the three applicable time periods as measured in 
        paragraphs (5) and (6).
          (2) Applicable time periods.--For purposes of this 
        subsection the term ``applicable time period'' means 
        any one of the three following periods:
                  (A) The first year covered by the most 
                recently adopted concurrent resolution on the 
                budget.
                  (B) The period of the first five fiscal years 
                covered by the most recently adopted concurrent 
                resolution on the budget.
                  (C) The period of the five fiscal years 
                following the first five fiscal years covered 
                in the most recently adopted concurrent 
                resolution on the budget.
          (3) Direct-spending legislation.--For purposes of 
        this subsection and except as provided in paragraph 
        (4), the term ``direct-spending legislation'' means any 
        bill, joint resolution, amendment, motion, or 
        conference report that affects direct spending as that 
        term is defined by and interpreted for purposes of the 
        Balanced Budget and Emergency Deficit Control Act of 
        1985.
          (4) Exclusion.--For purposes of this subsection, the 
        terms ``direct-spending legislation'' and ``revenue 
        legislation'' do not include--
                  (A) any concurrent resolution on the budget; 
                or
                  (B) any provision of legislation that affects 
                the full funding of, and continuation of, the 
                deposit insurance guarantee commitment in 
                effect on the date of enactment of the Budget 
                Enforcement Act of 1990.
          (5) Baseline.--Estimates prepared pursuant to this 
        section shall--
                  (A) use the baseline used for the most 
                recently adopted concurrent resolution on the 
                budget; and
                  (B) be calculated under the requirements of 
                subsections (b) through (d) of section 257 of 
                the Balanced Budget and Emergency Deficit 
                Control Act of 1985 for fiscal years beyond 
                those covered by that concurrent resolution on 
                the budget.
          (6) Prior surplus.--If direct spending or revenue 
        legislation increases the deficit when taken 
        individually, then it must also increase the deficit 
        when taken together with all direct spending and 
        revenue legislation enacted since the beginning of the 
        calendar year not accounted for in the baseline under 
        paragraph (5)(A), except that the direct spending or 
        revenue effects resulting from legislation enacted 
        pursuant to the reconciliation instructions included in 
        that concurrent resolution on the budget shall not be 
        available.
    (c) Waiver.--This section may be waived or suspended in the 
Senate only by the affirmative vote of three-fifths of the 
Members, duly chosen and sworn.
    (d) Appeals.--Appeals in the Senate from the decision of 
the Chair relating to any provision of this section shall be 
limited to 1 hour, to be equally divided between, and 
controlled by, the appellant and the manager of the bill or 
joint resolution, as the case may be. An affirmative vote of 
three-fifths of the Members of the Senate, duly chosen and 
sworn, shall be required in the Senate to sustain an appeal of 
the ruling of the Chair on a point of order raised under this 
section.
    (e) Determination of Budget Levels.--For purposes of this 
section, the levels of new budget authority, outlays, and 
revenues for a fiscal year shall be determined on the basis of 
estimates made by the Committee on the Budget of the Senate.
    (f) Conforming Amendment.--Section 23 of the House 
Concurrent Resolution 218 (103d Congress) is repealed.
    (g) Sunset.--Subsections (a) through (e) of this section 
shall expire September 30, 2002.

Other

    The reported resolution includes an allowance to provide an 
upward adjustment to the budget authority discretionary 
spending limits if the Appropriations Committee approves of 
U.S. participation in the International Monetary Fund (IMF) New 
Arrangements to Borrow (NAB) and for a potential increase in 
the U.S. quota subscription. This additional budget authority 
will not increase outlays or the deficit.
    The reported resolution includes an allowance that 
effectively fences the additional funding assumed for Section 8 
Housing Assistance contract renewals.
    The reported resolution assumes additional mandatory 
spending for environmental programs as part of legislation to 
reform the Superfund program to facilitate the cleanup of 
hazardous waste sites.
    The reported resolution includes an allowance that 
effectively fences additional funding for Federal land 
acquisition and exchanges.
    The reported resolution provides for an upward adjustment 
to the discretionary caps and other levels in the resolution to 
accommodate appropriations for arrearages for international 
organizations, international peacekeeping, and multilateral 
development banks.
    The reported resolution includes a reserve fund that allows 
the discretionary caps and the spending levels in the 
resolution to be adjusted for additional funding for an 
intercity passenger rail fund. These adjustments could only 
occur if they would not result in an increase in the deficit.
    The reported resolution includes a reserve fund that allows 
the discretionary caps and the spending levels in the 
resolution to be adjusted for additional funding for mass 
transit programs. These adjustments could only occur if they 
would not result in an increase in the deficit.
    The reported resolution includes a reserve fund that allows 
the discretionary caps and the spending levels in the 
resolution to be adjusted for additional funding for highway 
programs. These adjustments could only occur if they would not 
result in an increase in the deficit.
    The Budget Enforcement Act (BEA) set caps on discretionary 
spending and a pay-as-you-go requirement, which expire in FY 
1998. A budget resolution cannot amend a law and cannot extend 
the BEA. However, the Balanced Budget Agreement calls for the 
extension of the BEA through 2002 and a revision of the BEA's 
asset sale scoring rule to prohibit the crediting of savings 
associated with asset sales that would lead to a long-term 
financial loss to the federal government.

                VI. Text of Bipartisan Budget Agreement

               bipartisan budget agreement--May 16, 1997

    I. Bipartisan Budget Agreement between the President and 
the Leadership of Congress.
    II. Summary Tables.
    III. Description of Agreement by Major Category: A. 
Discretionary Programs; and B. Mandatory Programs.
    IV. Budget Process.
    V. Letters pertaining to tax issues.

bipartisan budget agreement between the president and the leadership of 
                                congress

    1. The elements of this Bipartisan Budget Agreement provide 
for deficit reduction amounts that are estimated to result in a 
Balanced Budget by fiscal year 2002.
    2. The Bipartisan Budget Agreement is approved by the 
President, the Speaker of the House of Representatives, the 
Senate Majority Leader, and the Senate Minority Leader. The 
President and the Congressional leadership agree to engage in a 
coordinated effort seeking to enact the Bipartisan Budget 
Agreement. Their coordinated effort shall seek to produce 
support for the Agreement by a majority of Democrats and 
Republicans in both the House and the Senate. This agreement 
represents commitments to good faith efforts; it does not 
purport to amend or suspend rules of the House or Senate. If 
bills, resolutions, or conference reports are deemed to be 
inconsistent, remedial efforts shall be made by all parties to 
assure consistency. Such efforts shall include bipartisan 
Leadership consultation and concurrence on amendments and 
scheduling as necessary.
    3. Agreed upon budget levels are shown on the tables 
included in this agreement, including deficit reduction levels, 
major category levels for discretionary, mandatory, and tax and 
receipt changes.
    4. Discretionary priority spending will be protected by the 
amounts set forth in this Agreement.
    5. Agreed budget process items will be included in the 
budget resolution (as appropriate) and reconciliation, and are 
set forth in the budget process description included in this 
Agreement.
    6. An increase in the debt limit sufficient to extend the 
limit at least to December 15, 1999 will be included in a 
reconciliation bill carrying out this Agreement.
    7. Both Houses shall pass the 1998 budget resolution with 
reconciliation instructions fully reflecting the Bipartisan 
Budget Agreement. Such budget resolution shall contain 602(a) 
allocations consistent with this Agreement and shall instruct 
appropriate Committees to report, with or without a 
recommendation, legislation necessary to implement this 
Agreement. Conference reports on the reconciliation bills and 
appropriations bills that reflect the Bipartisan Budget 
Agreement shall be voted in both Houses of Congress.
    8. It is the intention of leaders that Congress shall 
present the revenue reconciliation bill to the President after 
the spending reduction reconciliation bill. This assumes a good 
faith effort by all parties to enable such a legislative 
process to succeed.
    9. If during the reconciliation process it is determined 
that the target of a balanced budget in fiscal year 2002 cannot 
be achieved, all parties to the agreement commit to seeking 
additional savings necessary to achieve balance.
    10. To the extent possible, efforts will be exercised to 
exclude other mandatory savings and appropriations riders 
unacceptable to the Congressional Leadership or the 
Administration, as so identified in official Administration 
announcements, letters, Statements of Administration Policy, or 
other communications.

                             SUMMARY OF DEFICIT REDUCTION IN BUDGET RESOLUTION MARK                             
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                          5-yr. 
                                                     1997    1998    1999    2000     2001      2002      total 
----------------------------------------------------------------------------------------------------------------
Baseline deficits: \1\............................      67      89     109     121        95       105  ........
Discretionary:                                                                                                  
    Defense.......................................  ......      -3     -10     -18       -18       -28       -77
    Nondefense....................................  ......      -1      -3      -8       -17       -32       -61
Mandatory:                                                                                                      
    Presidential initiatives......................  ......       6       6       7         7         6        31
    Medicare......................................  ......      -7     -17     -23       -29       -40      -115
    Medicaid......................................  ......  ......      -2      -2        -4        -6       -14
    Other mandatory...............................  ......      -1      -6     -14         1       -19       -40
Revenues:                                                                                                       
    Net tax relief................................  ......       7      11      22        23        21        85
    Total policy changes..........................  ......       1     -19     -36       -37       -99      -190
    Debt service..................................  ......       0      -0      -2        -4        -7       -14
    Total deficit reduction.......................       1     -19     -38     -41      -106      -204          
    Resulting deficit/surplus.....................      67      90      90      83        53        -1  ........
----------------------------------------------------------------------------------------------------------------
\1\ Baseline includes fiscal dividend, CBO revenue update, and assumes discretionary spending increases at the  
  rate of inflation. Prepared by SBC majority Staff, May 15, 1997.                                              
                                                                                                                
Note: Details may not add to totals due to rounding. All totals shown on a unified budget basis. Revenue        
  reduction shown as positive because it increases the deficit.                                                 


                                                                                  LONG RANGE SUMMARY, 1997-2007                                                                                 
                                                                                    [In billions of dollars]                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Agreement                                                Projections                             Totals       
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
                                                           1997       1998       1999      2000      2001      2002      2003       2004       2005      2006      2007     `98-`02    `98-`07  
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Current Services Deficit..............................       67.2       89.0      109.1     121.3      94.5     104.9     103.2      108.6      133.3     127.8     117.0  ........  ...........
Discretionary savings:                                                                                                                                                                          
    Defense...........................................  .........       -3.0       -9.9     -17.9     -18.3     -27.7     -32.1      -33.0      -34.0     -35.0      36.1     -76.8       -247.0
    Nondefense........................................  .........       -1.0       -2.5      -8.0     -17.4     -32.3     -36.5      -39.9      -42.6     -45.1     -47.5     -61.2       -272.8
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, discretionary savings.................  .........       -4.0      -12.5     -25.9     -35.7     -59.9     -68.6      -72.9      -76.6     -80.1     -83.6    -138.0       -519.9
Mandatory savings:                                                                                                                                                                              
    Medicare, net.....................................  .........       -6.5      -16.8     -22.7     -29.0     -40.0     -50.0      -60.0      -65.0     -70.0     -74.0    -115.0       -434.0
    Medicaid, net.....................................  .........  .........       -1.5       2.4      -3.6      -6.2      -7.1       -8.6      -10.2     -12.0     -13.9     -13.7        -65.5
    Other mandatory:                                                                                                                                                                            
        Spectrum......................................  .........  .........       -3.5      -3.5      -4.5     -14.8      -1.9       -1.0       -1.0      -1.0      -1.0     -26.3        -32.3
        Other.........................................  .........       -1.3       -2.1     -10.9       5.5      -4.4      -1.6       -3.2      -17.7      -4.9      12.3     -13.3        -28.2
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, mandatory savings.....................  .........       -7.8      -23.9     -39.5     -31.6     -65.4     -60.6      -72.8      -93.9     -87.9     -76.6    -166.3       -559.9
Debt service, net.....................................  .........        0.0       -0.5      -2.0      -3.8      -7.4     -12.5      -18.2      -25.0     -32.5     -39.9     -13.6       -141.6
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, savings proposals.....................  .........      -11.8      -36.8     -67.4     -71.1    -132.8    -141.6     -163.9     -195.5    -200.5    -200.0    -319.9     -1,221.4
Domestic initiatives..................................  .........        5.9        6.1       6.7       6.5       6.0       6.6        7.0        7.0       7.0       7.0      31.2         65.8
Net tax cut...........................................  .........        7.4       11.3      22.4      23.4      20.5      27.2       28.5       31.4      36.2      41.6      85.0        249.9
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Total changes...................................  .........        1.5      -19.4     -38.3     -41.2    -106.3    -107.8     -128.4     -157.1    -157.3    -151.4    -203.7       -905.7
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Resulting deficit/surplus (-)...................       67.2       90.4       89.7      83.0      53.3      -1.3      -4.6      -19.8      -23.9     -29.5     -34.4  ........  ...........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: 2000 and 2005 have 13 benefit payments and 2001 and 2007 have 11. The baseline has been adjusted to reflect normalization to 12 benefit payments in each year.                            


                               DOMESTIC INITIATIVES AND RESTORATIONS IN AGREEMENT                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                           5-yr 
                                                              1998     1999     2000     2001     2002    total 
----------------------------------------------------------------------------------------------------------------
Assistance to immigrants:                                                                                       
    Elderly/Disabled:                                                                                           
         Medicaid.........................................      0.4      0.4      0.3      0.3      0.3      1.7
        SSI...............................................      1.7      1.6      1.6      1.2      1.2      7.5
    Disabled kids (SSI only) \1\..........................       .1       .1       .1       .1       .1       .3
    Refugees/asylees......................................      0.0      0.0      0.0      0.0      0.0       .2
                                                           -----------------------------------------------------
      Subtotal, immigrants................................      2.2      2.2      2.0      1.7      1.6      9.7
Nutrition assistance:                                                                                           
    Add work slots for 18-50's............................       .2       .2       .2       .2       .2      1.0
    15% exemption for 18-50's.............................       .1       .1       .1       .1       .1       .5
                                                           -----------------------------------------------------
      Subtotal, nutrition assistance......................       .3       .3       .3       .3       .3      1.5
Welfare to work add to TANF...............................       .7       .7      1.0       .6  .......      3.0
                                                           -----------------------------------------------------
      Subtotal, immigrants, nutrition, and work...........      3.2      3.3      3.4      2.4      2.0     14.2
Children's Health.........................................      2.3      2.7      3.2      3.7      3.9     16.0
Federal land acquisition & exchange \2\...................       .3       .2       .2       .1  .......       .7
Environmental reserve.....................................       .2       .2       .2       .2       .2      1.0
Offset low-income Medicare premiums.......................       .2       .3       .3       .3       .4      1.5
                                                           -----------------------------------------------------
      Total, Domestic Initiatives and restorations........      6.2      6.7      7.3      6.7      6.5     33.4
----------------------------------------------------------------------------------------------------------------
\1\ Medicaid costs reflected in elderly/disabled medicaid line.                                                 
\2\ Discretionary.                                                                                              


                                                           AGREEMENT ON DISCRETIONARY FUNDING                                                           
                                                                [In millions of dollars]                                                                
                               [For functions specified below, Implementing legislation will protect the function levels]                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   FY 1998               FY 1999               FY 2000               FY 2001               FY 2002      
                                           -------------------------------------------------------------------------------------------------------------
                                                BA         OL         BA         OL         BA         OL         BA         OL         BA         OL   
--------------------------------------------------------------------------------------------------------------------------------------------------------
050--National Defense.....................    269,000    266,823    271,500    266,518    275,367    268,995    281,847    270,663    289,610    273,100
Non-Defense Discretionary.................    257,857    286,445    261,499    292,803    261,826    295,270    260,185    293,733    261,464    287,699
                                           -------------------------------------------------------------------------------------------------------------
      Total Discretionary.................    526,857    553,268    532,999    559,321    537,193    564,265    542,032    564,396    551,074    560,799
                                           =============================================================================================================
Protected Functions:                                                                                                                                    
    150--International Affairs............     19,038     19,179     18,601     18,842     18,533     18,809     18,348     18,505     18,218     18,442
    300--Natural Resources and Environment     22,807     21,393     22,222     21,657     21,586     21,944     21,185     21,822     21,152     21,472
    400--Transportation...................     13,556     38,267     14,974     38,933     14,788     39,310     15,066     39,418     15,347     39,418
    500--Education, Training, Employment                                                                                                                
     and Social Services..................     46,721     43,185     47,015     46,107     47,858     47,065     48,478     47,776     49,199     48,559
    750--Administration of Justice........     24,405     22,170     24,795     24,191     23,887     24,996     24,094     25,683     24,675     24,713
                                           -------------------------------------------------------------------------------------------------------------
      Subtotal, Protected Functions.......    126,527    144,194    127,607    149,730    126,632    162,125    127,170    153,204    128,591    152,604
    All Other.............................    400,330    409,074    405,392    409,591    410,561    412,140    414,862    411,192    422,483    408,195
                                           -------------------------------------------------------------------------------------------------------------
      Total Discretionary Spending........    526,857    553,268    532,999    559,321    537,193    564,265    542,032    564,396    551,074    560,799
                                           =============================================================================================================
Anomalies Included Above:                                                                                                                               
    Subsidized Housing (Function 600).....      5,682  .........      9,652  .........     12,047  .........     13,295  .........     14,504  .........
    Fixed Assets (Up-Front Funding and                                                                                                                  
     Advance Appropriations)                                                                                                                            
        050--Defense......................      2,218  .........  .........  .........  .........  .........  .........  .........  .........  .........
        250--General Science, Space, and                                                                                                                
         Technology.......................  .........  .........      2,735  .........      2,226  .........      1,817  .........      1,271  .........
        270--Energy.......................        110  .........         52  .........          8  .........  .........  .........  .........  .........
        300--Environment..................         51  .........        581  .........        458  .........        253  .........         84  .........
        370--Commerce and Housing Credit..  .........  .........        724  .........        551  .........        480  .........        375  .........
        400--Transportation...............  .........  .........        675  .........        724  .........        424  .........        206  .........
        550--Health.......................  .........  .........        129  .........         71  .........  .........  .........  .........  .........
        750--Administration of Justice....  .........  .........         48  .........  .........  .........  .........  .........  .........  .........
        800--General Government...........  .........  .........        500  .........  .........  .........  .........  .........  .........  .........
                                           -------------------------------------------------------------------------------------------------------------
            Total, Anomalies..............      8,061  .........     15,096  .........     16,085  .........     16,269  .........     16,440  .........
                                           -------------------------------------------------------------------------------------------------------------
            Total Discretionary Less                                                                                                                    
             Anomalies....................    518,796    553,268    517,803    559,321    521,108    564,265    525,763    564,396    534,634    560,799
--------------------------------------------------------------------------------------------------------------------------------------------------------

              Protected Domestic Discretionary Priorities

     (Funded at levels proposed in the President's FY 1998 budget.)

    Department of Commerce.--National Institute of Standards 
and Technology (NIST).
    Department of Education.--Education Reform (includes 
Technology Literacy Challenge Fund), Bilingual and Immigrant 
Education, Pell ($300 increase in 1998 maximum award amount, to 
$3,000), Child literacy initiatives consistent with the goals 
and the concepts of the President's America Reads program.
    Department of Health and Human Services.--Head Start.
    Department of the Interior.--National Park Service: 
Operation of the National Park System, Land Acquisition and 
State Assistance, and Everglades Restoration Fund (including 
Corps of Engineers); Bureau of Indian Affairs, Tribal Priority 
Allocations.
    Department of Labor.--Training and Employment Services, 
including Job Corps.
    Department of Treasury.--Community Development Financial 
Institution Fund.
    Environmental Protection Agency.--EPA Operating Program; 
Superfund appropriations will be at the President's level if 
policies can be worked out.
    Violent Crime Reduction Trust Fund, including COPS.--

                                                SPECTRUM AUCTIONS                                               
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                 5-year  10-year
                                                     1998     1999     2000     2001     2002   savings  savings
----------------------------------------------------------------------------------------------------------------
Spectrum.........................................  .......     -3.5     -3.5     -4.5    -14.8    -26.3    -32.3
----------------------------------------------------------------------------------------------------------------
Note.--Estimates for 1998-2002 were developed by the Congressional Budget Office (CBO). CBO has not formally    
  provided estimates for 2003-2007. Tentative estimates for 2003-2007 are provided.                             

    Four auction proposals and a penalty fee are assumed with 
expected receipts totaling $26.3 billion over five years and 
$32.3 billion over ten years (CBO scoring).
    1. Auction of 78 Megahertz (MHz) of spectrum currently 
allocated to analog broadcasting: Codify current Federal 
Communications Commission (FCC) plans to reclaim surplus 
``analog'' broadcast spectrum after broadcasters have migrated 
to new digital channels.
    2. Auction of 36 MHz of spectrum currently allocated to 
television channels 60-69: 24 MHz will be reserved for public 
safety uses (e.g., police and emergency vehicle 
communications).
    3. Broaden and Extend FCC Auction Authority: Expand the 
FCC's current authority to auction non-broadcast spectrum and 
extend FCC auction authority beyond 1998, when it currently 
expires. This proposal continues a policy to allocate spectrum 
via auctions.
    4. Auction ``Vanity'' Toll Free Telephone Numbers: 
Authorize the FCC to award new generations of toll-free vanity 
telephone numbers (e.g., 1-888-BALANCE) through an auction.
    5. Spectrum Penalty: As authorized by current law, a 
penalty fee would be levied against those entities who received 
``free'' spectrum for advanced, advertiser-based television 
services, but failed to utilize it fully.

                                                  STUDENT LOANS                                                 
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-yr      10-yr  
                                        1998       1999       2000       2001       2002     savings    savings 
----------------------------------------------------------------------------------------------------------------
Total, Student Loans savings.......       -242       -240       -151        -81     -1,050      1,763     -1,996
----------------------------------------------------------------------------------------------------------------

    The Agreement provides for outlay savings of $1.763 billion 
over five years and $1,996 billion over ten years from the 
student loan programs: savings will be achieved without 
increasing costs, reducing benefits, or limiting access to 
loans for student sand their families; savings will be derived 
as follows: (a) $1,000 million over five years from guaranty 
agency reserves. (b) $603 million over five years, and $606 
million over ten years, from section 458. (c) $160 million over 
five years and $390 million over ten years from elimination of 
the $10 per loan fee paid to institutions participating in the 
direct loan program.

                                            CIVIL SERVICE RETIREMENT                                            
                                   [Deficit reduction in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                            5-yr        10-yr   
                                       1998     1999     2000       2001        2002      savings      savings  
----------------------------------------------------------------------------------------------------------------
Increased Agency Contributions.....     -597     -591     -586         -582       -577       -2,933       -2,933
Increased Employee Contributions...  .......     -214     -423         -571       -621       -1,829       -1,985
----------------------------------------------------------------------------------------------------------------

    Increase agency contributions (except Postal Service and 
D.C.) for Civil Service Retirement System (CSRS) by 1.51 
percentage points effective October 1, 1997 through September 
30, 2002.
    Phase in increased employee contributions to the Civil 
Service Retirement System (CSRS) and Federal Employees 
Retirement System (FERS).
    Employee contributions would increase 0.25 percentage 
points January 1, 1999; an additional 0.15 percentage points 
January 1, 2000; and a final 0.10 percentage points for a total 
cumulative increase of 0.50 percentage points January 1, 2001. 
Increased contributions remain in effect through December 31, 
2002.
    Legislation provides that agency contributions to FERS 
would remain unaffected by this change.
    The CBO March Baseline is explicitly assumed for all Civil 
Service Retirement options, including any potential FEHB 
options.

                                               U.S. POSTAL SERVICE                                              
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                            5-year      10-year 
                                      1998       1999       2000       2001       2002      savings     savings 
----------------------------------------------------------------------------------------------------------------
End Transitional Payment for                                                                                    
 Worker's Compensation...........  .........        -25        -33        -32        -31        -121        -261
----------------------------------------------------------------------------------------------------------------

    The proposal would repeal the payment to the U.S. Postal 
Service (USPS) to finance workers compensation benefits for 
employees injured before the USPS was created in 1971. USPS 
would be required to pay these costs out of the Postal Fund.

                                         VETERANS HOME LOAN BENEFIT FUND                                        
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                              5-year    10-year 
                                        1998       1999       2000       2001       2002     savings    savings 
----------------------------------------------------------------------------------------------------------------
Allow VA to use refund offset to                                                                                
 collect deficiency balances.......        -90          0          0          0          0        -90        -90
----------------------------------------------------------------------------------------------------------------

    This provision would allow VA to collect outstanding VA 
loan guaranty debts by Federal salary offset or Federal income 
tax offset. Currently VA is prohibited from using non-VA 
Federal offsets to satisfy debts unless the debtor consents in 
writing, or if a court has determined that the debtor is liable 
to VA for the deficiency.
    This will save the program $90 million in outlays in the 
first year of implementation.

                                          VETERANS COMPENSATION PROGRAM                                         
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                            5-year     10-year  
                                      1998       1999       2000       2001       2002     savings     savings  
----------------------------------------------------------------------------------------------------------------
Round down monthly compensation                                                                                 
 benefits after applying COLA....        -23        -51        -88       -101       -128       -391       -1,469
----------------------------------------------------------------------------------------------------------------

    Authorizes VA to permanently round-down monthly 
compensation benefit payments to the nearest dollar after 
applying the annual COLA in each year, an extension of current 
law.
    The practice of rounding down monthly benefit checks is 
consistent with all other major pension programs including 
veterans pensions and military and civilian retirement 
benefits.

                                           MEDICAL CARE COST RECOVERY                                           
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Mandatory Admin. savings from moving                                                                            
 receipts to discretionary................      -118      -123      -128      -133      -139      -641    -1,427
----------------------------------------------------------------------------------------------------------------

    This proposal allows Medical Care to retain user fees to 
offset the cost of care provided in VA facilities. Currently, 
all receipts in excess of administrative costs are returned to 
Treasury. Under this structure, the administrative costs of 
debt collection are mandatory spending. Allowing the 
discretionary VA Medical Care account to retain all of these 
receipts and fund the cost of this activity out of its 
collections will result in a mandatory savings of $641 million 
over five years and $1,427 million over ten years.

                                            VETERANS PENSION PROGRAM                                            
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                5-year   10-year
                                                    1998     1999     2000     2001     2002   savings   savings
----------------------------------------------------------------------------------------------------------------
Extension of OBRA provisions for VA pensions                                                                    
 (see note 1)...................................  .......     -133     -211     -143     -190     -677    -1,866
----------------------------------------------------------------------------------------------------------------

    There are two OBRA savings provisions related to the 
veterans pension program. The overwhelming majority of the 
above savings are attributed to the $90 benefit limit described 
below.
          This provision extends the current limitation on VA 
        pension benefits to Medicaid-eligible recipients in 
        nursing homes. Under this provision veterans get to 
        keep a greater monthly benefit (the $90 VA benefit). 
        The full cost of the beneficiaries' nursing home care 
        would be paid by the Medicaid program, where costs are 
        shared with the states.
          This provision extends authorization for VA to match 
        income information submitted by beneficiaries with IRS 
        and SSA records.
    Note 1: The savings reflected in the table are net of 
Medicaid costs.

                                          VETERANS HOUSING BENEFIT FUND                                         
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                5-year   10-year
                                                        1998    1999    2000    2001    2002   savings   savings
----------------------------------------------------------------------------------------------------------------
Extend loan asset sale authority.....................      -5      -5      -5      -5      -5      -25       -50
----------------------------------------------------------------------------------------------------------------

    This provision would extend VA's authority to guarantee VA 
securities issued in the secondary market directly, thereby 
enhancing their value.
    To cover obligations of VA's home loan program, VA secures 
its direct or ``vendee'' loans and guarantees the certificates 
sold to investors. VA has its own securitization vehicle which 
issues multiple-class pass-through securities and is taxed as a 
Real Estate Mortgage Investment Conduit (REMIC). VA's REMIC 
currently carries the full faith and credit of the United 
States.

----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Extend higher loans fees/resale loss                                                                            
 provisions (OBRA) and increase home loan                                                                       
 fees for nonveterans.....................       -11      -228      -227      -224      -219      -909    -1,993
----------------------------------------------------------------------------------------------------------------

    This includes two proposals--extend OBRA provisions and 
increase the fee for nonveterans financing through ``vendee'' 
loans.
    The OBRA provisions permanently extend three provisions 
that sunset September 30, 1998. This extends VA's authority to:
          (1) Charge borrowers using VA's home loan guaranty 
        program a 2% instead of 1.25% percent fee,
          (2) Charge veterans who use the loan guarantee 
        benefit more than once a funding fee of 3 percent to 
        reduce losses, and
          (3) Include expected losses on the resale of 
        foreclosed properties.
    Second, this provision increases the fee for nonveterans 
using VA's vendee loan program to match FHA fees. When VA takes 
possession of properties resulting from defaulted veterans 
loans, the homes are ultimately sold to the general public. VA 
finances these properties through its vendee loan program, 
charging fees that are lower than those offered to veterans. 
this provision would raise these fees to 2.25%--the same up-
front funding fee that the general public pays for FHA loans.

                                             FHA ASSIGNMENT PROGRAM                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Extend FHA assignment.....................      -136      -145      -147      -128      -110      -666    -1,126
----------------------------------------------------------------------------------------------------------------

    This assumes continuation of current law policy to provide 
FHA with tools to encourage lenders to forbear for only up to 1 
year. This would improve the targeting and efficiency of HUD's 
current program, and allow FHA homeowners experiencing 
temporary economic distress to stay in their homes.

                                              VESSEL TONNAGE DUTIES                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Extend vessel tonnage fees................  ........       -49       -49       -49       -49      -196      -441
----------------------------------------------------------------------------------------------------------------

    This proposal would extend vessel tonnage duties at their 
current levels through 2002. These duties, which would 
otherwise be reduced after 1998, are collected by the U.S. 
Customs Service from commercial vessels entering U.S. ports 
from foreign ports, based on their cargo-carrying capacity.

                              LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY                              
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Lease excess SPR capacity.................  ........        -1        -2        -4        -6       -13       -43
----------------------------------------------------------------------------------------------------------------

    Proposal would lease excess Strategic Petroleum Reserve 
storage capacity to foreign nations for storage of their crude 
oil.
    Proposal assumes that a total of five million barrels of 
oil are stored with a fee of $1.20 per barrel.

                                             UNEMPLOYMENT TRUST FUND                                            
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Raise UTF ceilings........................  ........  ........      -200      -208      -216      -624      -624
----------------------------------------------------------------------------------------------------------------

    Increases the ceilings of the Federal FUTA-funded accounts 
in the Unemployment Trust Fund to increase trust fund solvency.

                                              UNEMPLOYMENT BENEFITS                                             
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
UI benefits integrity.....................      -118      -158      -160      -162      -165      -763    -1,658
----------------------------------------------------------------------------------------------------------------

    Provides savings in mandatory unemployment insurance (UI) 
benefits due to increased discretionary spending on UI 
integrity activities (e.g., increased eligibility reviews, tax 
audits).
    Assumes President's Budget requested level of funding for 
UI integrity ($89 million in 1998) is provided in addition to 
continuing integrity activities already funded in the base UI 
administrative grants to obtain these savings.

                                 VA MEDICAL CARE COST RECOVERY AND SSA USER FEES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Estimated spending associated with the VA user fee proposal:                                                    
    BA....................................       604       628       654       681       710     3,277     7,282
    OL....................................       544       620       651       678       707     3,200     7,788
Estimated spending associated with the SSA user fee proposal:                                                   
    BA....................................        35        75        80        90       100       380     1,065
    OL....................................        33        73        80        89        99       374     1,054
----------------------------------------------------------------------------------------------------------------

    The proposals described below are included in the 1998 
budget and are assumed in the Budget Agreement.

VA medical care cost recovery fees

    The 1998 Budget included a proposal to shift existing 
offsetting receipts from the mandatory side to the 
discretionary side. The Agreement assumes that Medical Care 
Cost Recovery fees are available to support discretionary 
spending associated with VA Medical Care
    The shift of the offsetting receipts from mandatory 
spending to discretionary spending has been incorporated into 
the Budget Committee's adjusted baseline.

SSA fees

    The Agreement assumes a proposal to increase existing fees 
to offset SSA-related spending.

                                            EARNED INCOME TAX CREDIT                                            
                               [Deficit reduction savings in millions of dollars]                               
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Earned income tax credit..................  ........       -13       -36       -37       -38      -124      -332
----------------------------------------------------------------------------------------------------------------

    Treasury announced a package of legislative initiatives in 
April concurrent with the release of an IRS study on EITC 
noncompliance levels. Final scoring is not available.
    Other mutually acceptable EITC reforms targeted to reducing 
noncompliance and fraud may also be considered within these 
total savings targets.

                                          THE SMITH-HUGHES ACT OF 1918                                          
                                     [Outlay savings in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                              1998      1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Repeal appropriations under Smith Hughes..        -1        -7        -7        -7        -7       -29       -64
----------------------------------------------------------------------------------------------------------------

    Eliminate the mandatory appropriation under the Smith-
Hughes Act of 1918 in favor of increased discretionary spending 
on job training and vocational education in the 
Administration's GI Bill for America's Workers.
    Eliminating this program would save $29 million over five 
years and $64 million over ten years.
    Activities funded under the Smith-Hughes Act can be 
supported by the Department of Education's vocational education 
program.

                                           ENVIRONMENTAL RESERVE FUND                                           
                                    [Outlay increases in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                                       1998    1999    2000    2001    2002   spending  spending
----------------------------------------------------------------------------------------------------------------
Orphan share spending...............................     200     200     200     200     200       950     2,028
----------------------------------------------------------------------------------------------------------------

    The proposal would provide new mandatory spending for 
orphan shares at Superfund hazardous waste cleanup sites. 
Orphan shares are portions of financial liability at Superfund 
sites allocated to non-Federal parties with limited or no 
ability to pay.
    The funds will be reserved for this purpose based on the 
assumption of a policy agreement on orphan share spending.

                                PRIORITY FEDERAL LAND ACQUISITIONS AND EXCHANGES                                
                                    [Outlay increases in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                                       1998    1999    2000    2001    2002   spending  spending
----------------------------------------------------------------------------------------------------------------
Priority Federal land acquisitions and exchanges....     300     150     150     100  ......       700       700
----------------------------------------------------------------------------------------------------------------

    Under this proposal, up to $315 million would be available 
from the Land and Water Conservation Fund (LWCF) to finalize 
priority Federal land exchanges in FY 1998 and FY 1999.
    Funding from the LWCF for other high priority Federal land 
acquisitions and exchanges (totaling $385 million) would be 
available in fiscal years 1999 through 2001.
    The funding will be allocated to function 300 as a reserve 
fund exclusively for this purpose.

                        Major Mandatory Programs

                                                    MEDICARE                                                    
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                               1998     1999      2000      2001      2002     savings   savings
----------------------------------------------------------------------------------------------------------------
Medicare, net...............................    -6.5     -16.8     -22.7     -29.0     -40.0    -115.0    -434.2
----------------------------------------------------------------------------------------------------------------

    Reduce projected Medicare spending by $115 billion over 
five years.
    Extend solvency of the Part A Trust Fund for at least 10 
years through a combination of savings and structural reforms 
(including the home health reallocation).
    Structural reforms will include provisions to give 
beneficiaries more choices among competing health plans, such 
as provider sponsored organizations and preferred provider 
organizations.
    The Medicare program reforms provide beneficiaries with 
comparative information about their options, such as now 
provided Federal employees and annuitants in the FEHB program.
    Maintain the Part B premium at 25 percent of program costs 
and phase in over seven years the inclusion in the calculation 
of the Part B premium the portion of home health expenditures 
reallocated to Part B.
    Reform managed care payment methodology to address 
geographic disparities.
    Reform payment methodology by establishing prospective 
payment systems for areas such as home health providers, 
skilled nursing facilities, and outpatient departments.
    Funding for new health benefits including: (1) expanded 
mammography coverage; (2) coverage for colorectal screenings; 
(3) coverage for diabetes self-management; and (4) higher 
payments to provides for preventive vaccinations to the extent 
it will lead to greater use by beneficiaries. Invest $4 billion 
over five years (and $20 billion over ten years) to limit 
beneficiary copayments for outpatient services, unless there is 
a more cost-effective way to provide such services to 
beneficiaries as mutually agreed.

                                                    MEDICAID                                                    
                                     [Outlay savings in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                               5-year    10-year
                                                       1998    1999    2000    2001    2002   spending  spending
----------------------------------------------------------------------------------------------------------------
Medicaid, net.......................................     0.0    -1.5    -2.4    -3.6    -6.2     -13.6     -65.5
----------------------------------------------------------------------------------------------------------------

    Include net Medicaid savings of $13.6 billion over five 
years.
    Net Medicaid savings include a higher match for D.C., an 
inflation adjustment for programs in Puerto Rico and other 
territories, Part B premium interactions, and $1.5 billion to 
ease the impact of increasing Medicare premiums on low-income 
beneficiaries.
    The $13.6 billion in Medicaid savings do not reflect the 
health care investments for children's coverage, protections 
for legal immigrants under welfare reform, or the extension of 
veterans' Medicaid income protections.
    Savings derived from reduced disproportionate share 
payments and flexibility provisions.
    Include provisions to allow States more flexibility in 
managing the Medicare program, including repeal of the Boren 
amendment, converting current managed care and home/community-
based care waiver process to State Plan Amendment, and 
elimination of unnecessary administrative requirements.

                                   IMMIGRATION, NUTRITION, ASSISTANCE AND WORK                                  
                                    [Outlay increases in billions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                         5-year        10-year  
                                               1998    1999    2000    2001    2002   expenditures  expenditures
----------------------------------------------------------------------------------------------------------------
Immigrants..................................     2.2     2.1     2.0     1.6     1.6         9.7          16.5  
Nutrition assistance........................     0.3     0.3     0.3     0.3     0.3         1.5           3.1  
Welfare to work.............................     0.7     0.7     1.0     0.6  ......         3.0           3.0  
                                             -------------------------------------------------------------------
      Total.................................     3.2     3.3     3.4     2.4     2.0        14.2          22.5  
----------------------------------------------------------------------------------------------------------------

Immigrants

    Eligibility for legal immigrants.--Restore SSI and Medicaid 
eligibility for all disabled legal immigrants who are or become 
disabled and who entered the U.S. prior to August 23, 1996. 
Those disabled legal immigrants who entered the U.S. after 
August 22, 1996, and are on the rolls before June 1, 1997 shall 
not be removed.
    Refugees and asylees.--Lengthen the exemption for refugees 
and asylees from the first 5 years in the country to 7 years in 
order to provide SSI and Medicaid.

Nutrition Assistance

    Redirect existing food stamps employment and training funds 
and add $750 million in new capped mandatory funding to create 
additional work slots for individuals subject to the time 
limits.
    Permit States to exempt 15 percent of the individual who 
would lose benefits because of the time limits (beyond the 
current waiver policy), at a total cost of $0.5 billion.

Welfare to Work

    Add $3.0 billion in capped mandatory spending through 2001 
to TANF, allocated to States through a formula and targeted 
within a State to areas with poverty and unemployment rates at 
least 20 percent higher than the State average. A share of 
funds would go to cities/counties with large poverty 
populations commensurate with the share of long-term welfare 
recipients in those jurisdictions.

                                                CHILDREN'S HEALTH                                               
                                    [Outlay increases in billions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                         5-year        10-year  
                                               1998    1999    2000    2001    2002   expenditures  expenditures
----------------------------------------------------------------------------------------------------------------
Children's health...........................     2.3     2.7     3.2     3.7     3.9        16.0          38.9  
----------------------------------------------------------------------------------------------------------------

    Spend $16 billion over five years (to provide up to 5 
million additional children with health insurance coverage by 
2002)
    The funding could be used for one or both of the following, 
and for other possibilities, if mutually agreeable:
          1. Medicaid, including outreach activities to 
        identify and enroll eligible children and providing 12-
        month continuous eligibility; and also to restore 
        Medicaid for current disabled children losing SSI 
        because of the new, more strict definition of childhood 
        eligibility; and
          2. A program of capped mandatory grants to States to 
        finance health insurance coverage for uninsured 
        children.
    The resources will be used in the most cost-effective 
manner possible to expand coverage and services for low-income 
and uninsured children with a goal of up to 5 million currently 
uninsured children being served.

                             budget process

    Extend discretionary caps to 2002.
          Extend and revise discretionary caps for 1998-2002 at 
        agreed levels shown in tables included in this 
        agreement, and extend current law sequester enforcement 
        mechanism.
          Within discretionary caps, establish separate 
        categories (firewalls) for Defense and Non-Defense 
        Discretionary (NDD) at agreed levels shown in agreement 
        tables for each year 1998-1999 with associated 
        sequester firewall enforcement as provided in BEA for 
        1990-93.
          Retain current law on separate crime caps (VCRTF) at 
        levels shown in agreement tables.
          Extend and update special allowance for outlays; 
        extend existing adjustment for emergencies.
          Cap adjustment for exchanges of monetary assets, such 
        as New Arrangements to Borrow, and for international 
        organization arrears.
    Extend PAYGO to 2002.
    Revise the asset sales rule, which prohibits scoring the 
proceeds of asset sales, to score if net present value of all 
associated cash flows would not increase the deficit; scoring, 
if allowed, based on cash effect, not NPV.
    The Superfund tax shall not be used as a revenue offset.
    Reduce paygo balances to zero, including those derived from 
budget agreement.
    Provide for debt limit increase sufficient to extend limit 
to December 15, 1999.
                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Hon. William J. Clinton,
President of the United States,
The White House, Washington, DC.
    Dear Mr. President: We would like to take this opportunity 
to confirm important aspects of the Balanced Budget Agreement. 
It was agreed that the net tax cut shall be $85 billion through 
2002 and not more than $250 billion through 2007. We believe 
these levels provide enough room for important reforms, 
including broad-based permanent capital gains tax reductions, 
significant death tax relief, $500 per child tax credit, and 
expansion of IRAs.
    In the course of drafting the legislation to implement the 
balanced budget plan, there are some additional areas that we 
want to be sure the committees of jurisdiction consider. 
Specifically, it was agreed that the package must include tax 
relief of roughly $35 billion over five years for post-
secondary education, including a deduction and a tax credit. We 
believe this package should be consistent with the objectives 
put forward in the HOPE scholarship and tuition tax proposals 
contained in the Administration's FY 1998 budget to assist 
middle-class parents.
    Additionally, the House and Senate Leadership will seek to 
include various proposals in the Administration's FY 1998 
budget (e.g., the welfare-to-work tax credit, capital gains tax 
relief for home sales, the Administration's EZ/EC proposals, 
brownfields legislation, FSC software, and tax incentives 
designed to spur economic growth in the District of Columbia), 
as well as various pending congressional tax proposals.
    In this context, it should be noted that the tax-writing 
committees will be required to balance the interests and 
desires of many parties in crafting tax legislation within the 
context of the net tax reduction goals which have been adopted, 
while at the same time protecting the interests of taxpayers 
generally.
    We stand to work with you toward these ends. Thank you very 
much for your cooperation.
            Sincerely,
                                   Newt Gingrich,
                                           Speaker.
                                   Trent Lott,
                                           Senate Majority Leader.
                                ------                                

                             Congress of the United States,
                                      Washington, DC, May 15, 1997.
Hon. Erskine Bowles,
Chief of Staff to the President,
The White House, Washington, DC.
    Dear Mr. Bowles: We are writing to express our desire for 
continued cooperation between Congressional staff and the staff 
of the various Administration agencies during the development 
of the current budget agreement.
    Much of the most difficult work in connection with the 
budget agreement will involve the development of the revenue 
provisions that will satisfy the parameters of the agreement. 
Historically, the staff of the Joint Committee on Taxation has 
provided technical legal and quantitative support to the House 
and Senate. The Budget Act requires the use of Joint Committee 
on Taxation revenue estimates. Ken Kies and his staff are 
committed to facilitating our work on the tax provisions of 
this budget agreement. You can be assured that they will 
cooperate with Administration counterparts in receiving 
Administration input as they carry out their statutory 
responsibilities.
    The revenue estimating staffs of the Joint Committee on 
Taxation and the Office of Tax Analysis at Treasury have a long 
history of cooperation and communication among analysts. It is 
our understanding that steps have already been taken to insure 
that the cooperative efforts of these two staffs will be 
intensified during the current budget process. It is also our 
understanding that the professional staffs at the Office of Tax 
Analysis at Treasury and the Joint Committee on Taxation will 
consult and share information necessary to understand fully the 
basis of their revenue estimates and to minimize revenue 
estimating differences. The proposal shall not cause costs to 
explode in the outyears.
    Now that we have agreed upon the overall parameters of this 
significant agreement, an inordinate number of details 
concerning specific provisions must be drafted and analyzed by 
the JCT and the committees of jurisdiction. We look forward to 
working with the Administration.
            Sincerely,
                                   Newt Gingrich,
                                           Speaker.
                                   Trent Lott,
                                           Senate Majority Leader.


                     Committee Views and Estimates

    Section 301(c) of the Congressional Budget Act requires the 
committees of the Senate to report to the Budget Committees the 
views and estimates of budget requirements for matters within 
their jurisdictions to assist the Budget Committees in 
preparing the budget resolution.
    Following are the views and estimates received from the 
various committees:

                                       U.S. Senate,
          Committee on Agriculture, Nutrition, and Forestry
                                 Washington, DC, February 28, 1997.
Senator Pete V. Domenici, Chairman,
Senator Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, Washington, DC.
    Dear Senators Domenici and Lautenberg: This letter provides 
the views of the Senate Committee on Agriculture, Nutrition, 
and Forestry regarding the FY 1998 Budget Resolution. These 
views are provided in response to your January 22 letter and 
are in accordance with the requirements of the Congressional 
Budget Act, as amended.
    Members of the Committee believe that Congress should 
continue efforts to balance the federal budget by 2002. As a 
capital intensive industry, U.S. agriculture has much to gain 
from the lower interest rates that will accompany a balanced 
budget. We are encouraged that the Congressional Budget 
Office's preliminary baseline released last month projects 
sharply reduced federal deficits compared to CBO projections 
last spring. The Congress and the Administration deserve credit 
for restraining the growth in federal spending. Legislation 
enacted last year contributed cumulative savings of $74 billion 
over the FY 1996-2002 period. The Agriculture Committee 
accounted for $28 billion, or 38 percent of this total, by 
reducing mandatory programs within its jurisdiction through 
enactment of the Federal Agriculture Improvement and Reform Act 
of 1996 and the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996.

                                     RECENT CHANGES IN CBO'S DEFICIT OUTLOOK                                    
                                   [By fiscal year, in billions of dollars] a                                   
----------------------------------------------------------------------------------------------------------------
                                                                                  Actual                        
                                                         -------------------------------------------------------
                                                           1996    1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
May 1996................................................     144     171     194     219     244     259     285
January 1997............................................     107     124     120     147     171     167     188
    Change..............................................     -37     -47     -74     -72     -73     -92     -97
----------------------------------------------------------------------------------------------------------------
a FY 1998 discretionary spending is capped by the Budget Enforcement Act in FY 1998. In later years, CBO assumes
  it grows at the rate of projected inflation.                                                                  

    Obviously, much more needs to be done. The Congress and the 
Administration must work together to provide tax relief and 
spending restraint within a balanced budget framework. In 
general, the President's FY 1998 budget is a constructive first 
step in this year's budget process. Recent testimony by CBO 
Director, June O'Neill, revealed significant differences 
between CBO and OMB estimates and therefore differences on the 
eventual deficit effects of the President's budget plan.

         MANDATORY PROGRAMS UNDER THE COMMITTEE'S JURISDICTION

    CBO's January 1997 baseline projects that mandatory 
spending under the Agriculture Committee's jurisdiction will 
total $224 billion over FY 1998-2002. Food and nutrition 
programs account for $184.3 billion, or 82.3 percent of the 
total. The other $39.7 billion or 17.7 percent, is in three 
areas. Farm and conservation programs, which underwent dramatic 
reforms in last year's farm bill, including Agricultural Market 
Transition Payments, commodity price-support, trade, crop 
insurance, environmental cost share, land retirement, rural 
development, and agricultural research programs and account for 
a combined $48.3 billion over the next five years. Various 
mandatory activities of the Forest Service and other Department 
of Agriculture agencies account for another $5.5 billion. 
Finally, CBO projects repayments of $14.1 billion on certain 
Farm Service Agency, P.L. 480, and Rural Utilities Service 
loans.

Farm and Conservation Program Spending

    Over the FY 1996-2002 period, CBO's new baseline projects 
that farm and conservation program spending will be $1.8 
billion lower than the December 1995 CBO baseline, adjusted for 
enactment of the 1996 farm bill. Actual FY 1996 and estimated 
1997 outlays are substantially lower than projected last year 
because high commodity prices in 1996 reduced outlays for the 
Commodity Credit Corporation's dairy and tobacco price-support 
and marketing loan programs. In addition, a correction for 
previous overestimates of subsidy rates in the CCC's export 
credit guarantee program substantially reduced FY 1996 outlays.

                CHANGES IN CBO BASELINE PROJECTIONS FOR MANDATORY FARM AND CONSERVATION PROGRAMS                
                                [Outlays by fiscal year, in billions of dollars]                                
----------------------------------------------------------------------------------------------------------------
                                                        Actual                                Cumulative a      
                               ---------------------------------------------------------------------------------
                                 1996    1997    1998    1999    2000    2001    2002    1996-2002    1998-2002 
----------------------------------------------------------------------------------------------------------------
Dec. 1995--Adjusted for the                                                                                     
 Farm Bill....................    10.5    10.4    10.4    10.2     9.6     8.4     8.1         67.5         46.6
Jan. 1997.....................     8.2     9.2    10.7    10.7     9.8     8.8     8.3         65.7         48.3
    Change a..................    -2.2    -1.2     0.3     0.5     0.3     0.4     0.2         -1.8         1.6 
----------------------------------------------------------------------------------------------------------------
a Note.--Totals or changes may not add due to rounding.                                                         

    While significant, these temporary factors that have 
reduced near term spending have probably run their course. Over 
the FY 1998-2002 period covered by this year's budget 
resolution, CBO projects that farm and conservation program 
mandatory spending will be up by $1.6 billion compared to the 
December 1995 baseline, adjusted for enactment of the farm 
bill.
    The Conservation Reserve Program's Expanding Baseline.--The 
main reason for this increase is that the CBO now projects USDA 
to use its authority to enroll significantly more acreage in 
the CRP than was expected last March, when the farm bill 
conference report was finalized. Cumulatively over the FY 1998-
2002 period, CBO expects CRP farmer rental payments and other 
costs to total $10.0 billion, $2.5 billion more than CBO's 
December 1995 baseline, adjusted for enactment of the farm 
bill.

                              CBO PROJECTIONS FOR THE CONSERVATION RESERVE PROGRAM                              
                                                [By fiscal year]                                                
----------------------------------------------------------------------------------------------------------------
                                                                                                     Cumulative 
                                            1996    1997    1998    1999    2000    2001    2002   1998-2002 \1\
----------------------------------------------------------------------------------------------------------------
Dec. 1995--Adjusted for the Farm Bill:                                                                          
    Outlays ($bil.)......................     1.8     1.8     1.6     1.5     1.5     1.5     1.5          7.5  
    Enrolled Acres (mil.)................    35.7    29.7    25.3    22.0    19.7    19.3    18.3  .............
January 1997 actual:                                                                                            
    Outlays ($bil.)......................     1.7     1.9     1.8     2.3     2.0     2.1     1.8         10.0  
    Enrolled Acres (mil.)................    33.5    32.4    30.0    31.0    31.5    32.0    32.3  .............
Change: \1\                                                                                                     
    Outlays ($bil.)......................    -0.1     0.1     0.2     0.8     0.5     0.6     0.3          2.5  
    Enrolled Acres (mil.)................    -2.2     2.7     4.7     9.0    11.8    12.7    14.0  .............
----------------------------------------------------------------------------------------------------------------
\1\ Totals or changes may not add due to rounding.                                                              

    Recent actions by the Administration may cause CBO to raise 
its acreage and spending estimates when it releases its revised 
baseline later this winter. On February 19, USDA issued final 
CRP regulations which included changes that will significantly 
expand the amount of cropland eligible to be offered for CRP 
enrollment, including, presumably, most of the approximately 22 
million acres currently enrolled in contracts scheduled to 
expire at the end of FY 1997.
    The President's budget assumed that the CRP will attain its 
maximum 36.4 million acre level. We have written to Secretary 
Glickman expressing our concern whether the final CRP rule 
honors the intent of Congress to enroll only the most 
environmentally beneficial land in the CRP. This policy raises 
significant questions at a time when world agricultural markets 
are projected to remain relatively tight with the emergence of 
China as a major grain importer, and when agriculture is under 
continued scrutiny for its potential adverse impacts on the 
environment. In short, we have similar concerns to those voiced 
by Senators Domenici, Cochran, and Bumpers in their February 7 
letter to Secretary Glickman.
    The President's Farm Safety Net Proposals.--The President 
proposes legislation to authorize a nationwide farm revenue 
insurance program through the Federal Crop Insurance 
Corporation beginning in crop year 1998. The proposal would 
allow the Department of Agriculture to expand federally 
subsidized, privately developed revenue insurance products, 
government developed products, or both. The proposal appears to 
give the Department authority to offer revenue insurance for 
virtually all crops covered under federal crop insurance on a 
national basis. The Office of Management and Budget estimates 
that the national program will increase mandatory spending by 
$288 million in budget authority and $267 million in outlays 
over the FY 1998-2002 period. The President also proposes 
legislation to partially offset these costs by reducing the 
crop insurance program's loss ratio.
    USDA is presently carrying out a significant expansion of 
federally backed revenue insurance crops under current law. In 
early February, USDA announced a major expansion of Crop 
Revenue Coverage, a privately developed revenue insurance 
program, which will be available for 1997 crop corn and 
soybeans this spring in states representing approximately 80 
percent of national production, and for wheat, cotton, and 
grain sorghum in states representing 40 to 50 percent of 
production for these crops. USDA appears to have every 
intention of continuing this expansion in 1998 and beyond. The 
potential costs to the taxpayer of this expansion remain 
unclear, but the Congress will begin to have some estimates 
when CBO incorporates the CRC expansion decision into its 
revised baseline.
    The Crop Insurance Program's Discretionary Budget 
Problem.--Private sales agents and insurance companies 
administer federal crop insurance on the federal government's 
behalf. In exchange for private delivery, USDA reimburses 
agents' sales commissions and company administrative expenses 
based on a percentage of insurance premiums. For the 1995-1997 
crops, these delivery costs, half of which are agents' sales 
commissions, received mandatory funding through the Federal 
Crop Insurance Corporation. Only salaries and expenses of 
USDA's Risk Management Agency, which oversees federal crop 
insurance, relied on discretionary appropriations ($64 million 
in FY 1997).
    But under current law, mandatory funding for agents' sales 
commissions ends beginning in FY 1998. As a result, agents' 
sales commissions of approximately $200 million, under the 
current law reimbursement rate, must be provided in the FY 1998 
Agriculture Appropriations bill even though available 
discretionary funding will likely be no greater than last year. 
The President lessens the funding problem by proposing 
legislation to permanently reduce the maximum administrative 
expense reimbursement rate to 24.5 percent of premium, down 
from current law's 28 percent for 1998 crops and 27.5 percent 
for 1999 and later crops. Under the President's proposal, the 
rate reduction is used solely to lessen the need for 
discretionary appropriations to fund agents' sales commissions. 
Taking into account the proposed rate reduction, the President 
requests a total of $218 million in discretionary funding, $150 
million for agents' sales commissions and the remaining $68 
million for RMA salaries and expenses.
    Section 118 of the Federal Crop Insurance Reform and 
Department of Agriculture Reorganization Act of 1994 directed 
the General Accounting Office and USDA to jointly evaluate the 
financial arrangements between USDA and insurance providers for 
delivering federal crop insurance. The GAO/USDA report, which 
is due to be released this April, will likely help in 
evaluating the proposed reduction in the current law 
reimbursement rate.

                    THE PRESIDENT'S PROPOSED SPENDING FOR THE FEDERAL CROP INSURANCE PROGRAM                    
                               [OMB estimated spending in millions by fiscal year]                              
----------------------------------------------------------------------------------------------------------------
                                                   Actual                                                       
                                                    1996      1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                                                                                                
(6)Mandatory spending                                                                                           
FCIC Fund:                                                                                                      
    BA..........................................     1,650    1,785    1,610    1,527    1,594    1,678    1,776
    OT..........................................     1,760    1,729    1,679    1,570    1,555    1,626    1,716
                                                                                                                
                                                                                                                
(6)Discretionary spending                                                                                       
Administrative Expenses: \1\                                                                                    
    BA..........................................     (\2\)       64      218      218      218      218      218
    OT..........................................         9       60      147      218      218      218      218
Total:                                                                                                          
    BA..........................................     1,650    1,849    1,828    1,745    1,812    1,896    1,994
    OT..........................................     1,769    1,789    1,826    1,788    1,773    1,844    1,934
----------------------------------------------------------------------------------------------------------------
\1\ Private agents' sales commissions and RMA salaries and expenses.                                            
\2\ In FY 1996 RMA function was performed by the Farm Service Agency.                                           
Note: BA is budget authority and OT is outlays.                                                                 

    Food and Nutrition Programs.--Because of the combination of 
federal welfare reform legislation, state reform efforts, and 
continuing economic expansion with relatively strong employment 
growth, CBO projects that mandatory food and nutrition spending 
will grow, on average, at a modest annual rate of 3.0 percent 
over the next seven years.

                  CBO JAN. 1997 BASELINE PROJECTIONS FOR MANDATORY FOOD AND NUTRITION PROGRAMS                  
                                [Outlays by fiscal year, in billions of dollars]                                
----------------------------------------------------------------------------------------------------------------
                                                                                      Actual                    
                                                                ------------------------------------------------
                                                                  1996   1997   1998   1999   2000   2001   2002
----------------------------------------------------------------------------------------------------------------
Food Stamp Program.............................................   25.5   24.8   25.3   26.5   27.6   28.7   29.5
Child Nutrition Program........................................    7.9    8.2    8.5    8.9    9.4    9.8   10.3
    Total a....................................................   33.3   33.0   33.7   35.4   36.9   38.5   39.8
----------------------------------------------------------------------------------------------------------------
a Totals may not add due to rounding.                                                                           

    The President is proposing ``Add-backs'' of about $3.7 
billion over the FY 1998-2002 period in Food Stamp spending as 
part of his initiative to modify welfare reform. The 
Administration wants to (1) slightly increase the excess 
shelter deduction cap in FY 1998 and FY 2000, then eliminate it 
in FY 2002; (2) index the standard deduction for inflation 
beginning FY 2002; (3) increase and index the limit on asset 
value of a motor vehicle; (4) change the work requirement for 
18-50-year-olds without dependents, from the welfare reform 
law's limit of 3 months of Food Stamp assistance in 3 years to 
6 months in 1 year, denying benefits to persons who turn down a 
job or a federally funded work slot; and (5) a five-week delay 
(to September 30, 1997) in the partial ban on Food Stamps for 
legal immigrants. The bulk of the cost of the President's 
proposal is related to changing the welfare reform bill's work 
requirement for 18-50-year-olds without dependents.

       Discretionary Programs Under the Committee's Jurisdiction

    The Agriculture Committee has authorizing jurisdiction over 
programs which received a combined $16.4 billion in 
discretionary appropriations in FY 1997, most which are funded 
in the Agriculture Appropriations bill. A variety of natural 
resources and environmental programs, food inspection, and 
nutrition programs account for 60 percent of this total. 
Agricultural research and extension, information collection, 
and the operating budgets of USDA agencies responsible for 
administering and analyzing federal farm and rural development 
programs account for 25 percent. Community development and 
international assistance programs account for 15 percent.
            New User Fee Proposal to Pay for FSIS In-Plant Inspections
    The President proposes a new user fee of $390 million 
beginning in FY 1998, to pay the in-plant costs of inspection 
performed by USDA's Food Safety Inspection Service. This user 
fee proposal would result in industry paying about 70 percent 
of the total cost of the meat, poultry, and egg products 
inspection system.
            Special Supplemental Nutrition Program for Women, Infants 
                    and Children (WIC)
    In pursuit of the President's goal of full funding for the 
WIC program, the Administration has requested a $100 million 
supplemental to support the current caseload through FY 1997. 
Assuming approval of this supplemental, the President has made 
an additional request of $233 million to achieve full funding 
for the WIC program in FY 1998. This request of increased 
funding would allow 7.5 million participants to be served by 
the WIC program. This year, the committee will begin reviewing 
the funding formula and eligibility criteria, among other 
issues, in preparation for reauthorization of the Child 
Nutrition Act of 1996. Our Committee has found the WIC program 
to be a cost effective means of improving the nutrition and 
health of women, infants, and children at risk.
            Agricultural Research, Extension, and Education
    Agricultural research, extension and education play a vital 
role in ensuring a productive, efficient and competitive 
agricultural sector in our nation. As we move further into the 
global marketplace, our nation's farmers need the assurance 
that high quality agricultural research will enable them to 
remain internationally competitive. In addition, agricultural 
research can be instrumental in developing new markets, uses, 
and products from agricultural commodities and in spurring 
economic growth and new jobs in rural areas. This year our 
committee will undertake a thorough review of the current 
agricultural research system in preparation for reauthorizing 
research programs.
            Food Aid
    U.S. food aid commitments have steadily decreased over 
recent years. This President's budget proposal reduces P.L. 
Title I (long-term concessional sales) by almost $100 million. 
The U.S. Department of Agriculture estimates that the total 
food aid budget will ship almost 1 million tons of food 
assistance less than it did just a few years ago. This not only 
prevents U.S. farmers from exporting more agricultural 
commodities, but gives the appearance that there is a lack of 
commitment to foreign assistance.
            USDA's Farm Service Agency Salaries and Expense 
                    Appropriation
    The Department of Agriculture argues that large savings 
have been achieved in FSA's budget through workforce reductions 
and field office closures and consolidations. The Department 
also says that the 1996 farm bill, which has significantly 
reduced FSA's workload, will permit additional reductions in 
the agency's workforce. However, appropriations for FSA have 
not declined significantly. The President is requesting $773 
million for FY 1998 FSA salaries and expenses, down only 
slightly from last year's appropriation of $746 million.
            GPRA, ITMRA, and the Department of Agriculture
    The Committee has received from USDA draft copies of the 
strategic plans required under the Government Performance and 
Results Act of 1993. Many of these are very preliminary. The 
Committee intends in the next few months to initiate a formal 
effort to review these plans and consult with USDA regarding 
the final product. In this process we will ensure that ``input 
to outcome'' measures are used to provide meaningfulperformance 
based budgeting. USDA has also provided to the Committee a preliminary 
draft of an information technology architecture which, according to the 
Information Technology Management Reform Act of 1996, should be a plan 
that designs information technology systems within USDA that facilitate 
the goals of the strategic plans required by GPRA. The Committee 
intends to oversee this process to ensure that the information 
technology architecture actually provides systems to carry out the 
goals of the strategic plans.

                          concluding comments

    Finally, a comment about budget process. The farm bill ends 
the dairy price support program in 1999. In order to receive 
full budget credit for ending this mandatory program, the 
Committee was required to include language which effectively 
amended Section 257 of the Budget Act. We recommend that your 
Committee consider permitting authorizing Committees to receive 
full budget credit for terminating a mandatory program without 
having to amend or reference the Budget Act.
    The Agriculture Committee made major contributions to 
deficit reduction last year with enactment of the 1996 farm 
bill and welfare reform legislation. The Committee will closely 
monitor spending on the Conservation Reserve and the Federal 
Crop Insurance programs. The Committee is aware that overall 
discretionary spending will be restrained in the years ahead. 
As your Committee considers the aggregate discretionary 
spending levels in the 1998 budget resolution, we ask that you 
keep in mind the need to accommodate a continued strong U.S. 
role in international food aid, as well as the critical 
importance of securing future productivity gains through 
agricultural research, especially competitive grants. As 
always, the Agriculture Committee is prepared to do its share 
to help restrain federal spending.
            Sincerely,
                                   Richard G. Lugar,
                                           Chairman.
                                   Tom Harkin,
                                           Ranking Minority Member.
                                ------                                

                                       U.S. Senate,
                               Committee on Armed Services,
                                    Washington, DC, March 14, 1997.
Sen. Pete V. Domenici, Chairman,
Sen. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget,
U.S. Senate, Washington, DC.
    Dear Pete and Frank: In accordance with your request, I am 
forwarding my recommendations, agreed to by all Republican 
Members of the Committee, for the Fiscal Year 1998 Budget 
Resolution.
    The defense budget must provide sufficient resources to 
meet our national security requirements and preserve the United 
States' position as a world leader. I propose setting the 
budget authority for fiscal year 1998 at $268.2 billion, as in 
the budget resolution, and increasing outlays by $4.3 billion 
to $267.3 billion. At this level of funding, an appropriate 
balance can be maintained between quality of life for our 
military personnel and their families, as well as current and 
future readiness.
    The defense budget, as proposed, confronts the Congress 
with a serious dilemma. Hearings held by the Armed Services 
Committee confirm a shared concern by senior military and 
civilian officials in DoD, that increased modernization funding 
is essential for the future readiness of our military forces. 
The procurement budget is at its lowest level since 1950 with 
procurement accounts declining 69 percent since 1985. The 
Chairman of the Joint Chiefs of Staff, General Shalikashvili, 
again highlighted this problem at a recent hearing where he 
stated, ``The most challenging problem, however, remains the 
continuing underfunding of our acquisition accounts.'' We 
cannot continue to defer our modernization requirements.
    Quality of life for our military personnel and their 
families remains an important bipartisan priority for this 
Committee. I am committed to providing equitable pay and 
benefits and restoring funding for the maintenance of troop 
billets and family housing to more acceptable levels.
    In a recent posture hearing, General Shalikashvili 
requested the Congress avoid further changes to the military 
retirement system. Changing the military retirement system or 
delaying cost of living allowances (COLAs) have far-reaching 
morale and retention implications. As you know, the Committee 
has little flexibility in meeting any reconciliation 
instructions in this account.
    The Administration's budget request contains several policy 
changes that contribute to sharply increased budget authority 
for the Department of Energy (DOE). The DOE budget request 
reflects full funding for capital construction projects and 
support for privatization initiatives. While the Committee has 
been consistently supportive of such projects, I believe 
strongly that the defense function as a whole should be 
appropriately adjusted in accordance with these newly 
instituted accounting procedures, since the Administration's 
new funding policies were not considered in previous budget 
resolutions.
    Over the next couple of months, the Committee will continue 
to review the defense budget request in an effort to address 
our national security requirements, current and future. I will 
work to reduce defense spending that does not contribute 
directly to the national security of the United States and to 
reevaluate the budget impacts of peacekeeping roles, policies, 
and operations.
    The Republican Members of the Committee are unified in 
supporting increased funding levels for our Armed Forces. They 
agree with the proposed funding level and are prepared to 
assist you in achieving this objective.
    I look forward to working with you on a Budget Resolution 
for Fiscal Year 1998 which supports the elements essential for 
a strong national defense.
            Sincerely,
                                          Strom Thurmond, Chairman.
                                ------                                

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                 Washington, DC, February 28, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Member,
Committee on the Budget, Washington, DC.
    Dear Senators Domenici and Lautenberg: This letter 
transmits the views and estimates of the Committee on Banking, 
Housing, and Urban Affairs regarding the funding of programs in 
our jurisdiction, as required by Section 301 of the 
Congressional Budget Act of 1974.
            Mass Transit
    The appropriate role for the federal government in funding 
our transportation system is among the most critical issues 
facing the 105th Congress. Congress must reauthorize the 
Intermodal Surface Transportation and Efficiency Act of 1991 
(ISTEA) which expires on September 30, 1997. The Committee has 
jurisdiction over the mass transit portion of the highway trust 
fund account, and will work on reauthorizing that portion of 
the bill.
    The President's FY 1998 Budget proposes level (or no-
growth) funding for transit of $4.38 billion. This level is not 
sufficient to meet transit needs. Accordingly, we urge the 
Budget Committee to fund mass transit spending at no less than 
the Congressional Budget Office baseline estimates through FY 
2002. We ask that the Budget Committee give particular 
consideration to increasing outlay levels above the baseline 
estimates in order to prevent an increasing discrepancy between 
authorized and appropriated levels.
            Housing and Community Development Programs
    Developing a strategy for restructuring the Department of 
Housing and Urban Development's (HUD) multifamily mortgage 
portfolio is a priority for the Committee. We will propose 
legislation that will seek to reduce the costs of renewing 
oversubsidized section 8 contracts while protecting the Federal 
Housing Administration (FHA) insurance fund and minimizing the 
liability of the federal taxpayer.
    Project-based section 8 assistance for these properties is 
provided under housing assistance payment contracts that are 
generally 20 years in duration. In many cases, contract rents 
on these multifamily properties far exceed market-area rents. 
Budget authority for the entire term of the contract is 
provided in discretionary appropriations in the year the 
contract is initiated. In FY 1997, about $3.6 billion was 
required to renew expiring section 8 contracts. Without changes 
in policy which will reduce rents and, therefore, subsidies, 
this number will grow to about $10 billion in FY 1998 and $16 
billion in FY 2002, nearly equivalent to HUD's total FY 1997 
discretionary budget authority.
    A debt restructuring strategy would reduce the 
discretionary costs of renewing project-based contracts by 
refinancing the outstanding mortgage debt supported by the 
section 8 payments. With reduced monthly debt service payments, 
contracts may be renewed at lower rent levels which are 
sufficient to continue to preserve the existing affordable 
housing stock.
    Nevertheless, restructuring insured debt may produce 
consequences through the creation of ``cancellation of 
indebtedness income'', which may discourage project owners from 
voluntarily restructuring. The Committee prefers that these 
transactions be tax-neutral in order to achieve maximum 
discretionary savings. However, the Committee notes that tax 
deferral legislation may be necessary for a debt restructuring 
strategy to be fully effective.
    The Committee recognizes that the cost of renewing expiring 
section 8 rental assistance contracts will begin to grow 
substantially in FY 1998 and the years beyond. However, in the 
interest of preserving existing affordable housing 
opportunities, the Committee urges that it be the policy of the 
Congress to renew all expiring contracts and provide adequate 
funding for renewals, while the authorizing committee acts on 
policy changes that will reduce contract renewal costs.
    The overall goal of the Committee is to consolidate HUD's 
housing and community development programs (where appropriate), 
to provide for greater responsibility and flexibility at the 
State and local level, and to facilitate private sector 
participation in developing solutions to the affordable housing 
and community development needs of the nation. These goals 
reflect the Committee's concern about HUD's capacity to carry 
out its mission, particularly in an era of government 
downsizing. As discussed in the 1994 report of the National 
Academy of Public Administration, the number of HUD programs 
has grown from 50 in 1980 to about 240 today. HUD continues to 
demonstrate that it has limited management capacity to 
administer this multitude of complex programs.
    The Committee believes that an essential component of 
restructuring housing and community development programs is the 
enactment of public housing reforms that will allow public 
housing authorities to operate their programs more effectively 
and cost-efficiently, and with less regulation by HUD. 
Enactment of this legislation will help reduce HUD's 
administrative burden, allowing it to more effectively focus 
its limited staff resources where they are needed. Reforms will 
also help to improve the quality of life in the nation's public 
housing stock. The Committee anticipates early action on a 
public housing reform bill similar to that which passed the 
Senate last year (S. 1260).
    Finally, the Committee asks the Budget Committee to be 
cognizant of the fact that many HUD programs have sustained 
major funding reductions in recent years, and that even as 
programs are reformed, adequate resources will be necessary to 
ensure that the Department's programs can fulfill their basic 
missions.
            Examination Fees for State-Chartered Banks
    The Committee in the past has opposed a new Federal 
examination fee for state chartered banks. This proposal was 
submitted by the Administration in several previous budgets and 
was rejected by this Committee each time. The Administration 
has renewed its proposal to raise over $400 million by FY 2002 
through the imposition of this fee on state-chartered banks.
    Committee members continue to express several concerns with 
this proposal. First, it would undermine the ``dual banking'' 
system. Second, it would create an inequity for state-chartered 
banks which already pay fees to their state regulators. Third, 
the banking industry as a whole, including state-chartered 
banks, pays all the expenses of the Federal Deposit Insurance 
Corporation (FDIC) through insurance premium assessments and 
through forgone interest on mandated sterile reserves held by 
the Federal Reserve System.
            National Flood Insurance Program
    This year, the Committee has as one of its priorities the 
reauthorization of the National Flood Insurance Program (NFIP) 
administered by the Federal Emergency Management Agency (FEMA). 
The Committee asks the Budget Committee to be cognizant of the 
fact that the premiums on structures built before January 1, 
1975 or built before the community in which they are located 
adopted its ``Flood Insurance Rate Map'' (FIRM), sometimes 
referred to as ``pre-FIRM'' structures, have already been 
increased by FEMA in FY 1996 by 10%. Furthermore, these 
premiums were increased again in FY 1997 by 13%. FEMA will 
continue to monitor the loss histories of several classes of 
properties, including those of pre-FIRM structures, in order to 
determine the advisability of recalculating premiums for FY 
1998 and beyond.
    The Committee is concerned that further increases in pre-
FIRM premiums, beyond those currently anticipated under the 
existing structure of the program, may prove detrimental to the 
NFIP by deterring full participation in the program--ultimately 
resulting in greater costs to the federal government through 
disaster assistance payments. The Committee notes that a number 
of studies which were required under the Flood Insurance Reform 
Act of 1994 are expected to be completed this year. These 
studies will assist the Committee in analyzing the success of 
the 1994 reforms, as well as the advisability of further 
changes to this important program.
            Securities and Exchange Commission Funding
    The Committee has in the past opposed proposals to raise 
fees collected by the Securities and Exchange Commission (SEC). 
Instead, the Committee has endeavored to reduce these fees, 
which amounted to more than twice the annual budget of the SEC 
and which seemed, therefore, inconsistent with the definition 
of a ``user fee.''
    During the last Congress, legislation was successfully 
enacted that will, over a series of years, steadily reduce the 
level of fees collected by the SEC and bring them more in line 
with the Commission's budget. Under provisions of Title IV of 
the National Securities Markets Improvement Act of 1996 (P.L. 
104-290), an explicit, declining schedule for securities 
registration fees is mandated. In FY 1998, the rate for 
securities registration fees assessed as offsetting collections 
is $95 per $1,000,000 of the maximum aggregate price at which 
securities are proposed to be offered. That rate will be 
reduced in fiscal year 1999 to $78 per $1,000,000, and will 
eventually reach a level of $0 in FY 2006 and thereafter.
    This schedule of fee reductions, assuming no increase in 
other SEC fees in FY 1998 and thereafter, was carefully 
negotiated among the relevant authorizing and appropriations 
committees of both Houses of Congress, the Securities and 
Exchange Commission, and the President, and will successfully 
resolve the problem of providing adequate resources for the SEC 
without imposing excessive costs on capital formation.
            International Finance Programs
    Authorization for the U.S. Export-Import Bank 
(``Eximbank'') expires on September 30, 1997. The Committee 
intends to reauthorize this important program. The governments 
of the European Union countries and Japan regularly provide 
export financing assistance to their exporters. The Eximbank's 
direct loans, loan guarantees and export credit insurance 
permit U.S. exporters to compete on a level playing field 
against their heavily subsidized foreign counterparts in 
emerging markets in South America, Asia and Africa.
    The Committee requests that the Budget Committee assume 
reauthorization of Eximbank and maintain adequate funding 
levels for this important program.
            Sincerely,
                                      Alfonse M. D'Amato, Chairman.
                                ------                                

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                 Washington, DC, February 27, 1997.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget.

Hon. Frank R. Lautenberg,
Committee on the Budget, U.S. Senate,
Washington, DC.
    Dear Senators Domenici and Lautenberg: In accordance with 
section 301(d) of the Congressional Budget Act, we are 
submitting the views and estimates of the Committee on Energy 
and Natural Resources on portions of the budget for fiscal year 
1998 within the jurisdiction of this Committee.
    We appreciate your consideration of our views and look 
forward to working with you and your Committee on the FY 1998 
budget.
            Sincerely,
                                   Frank H. Murkowski,
                                           Chairman.
                                   Dale Bumpers,
                                           Ranking Democratic Member.

    Committee on Energy and Natural Resources, United States Senate

 views and estimates on the fiscal year 1998 budget--February 27, 1997

    The Committee continues to support the overall goal of a 
balanced budget by 2002.
    The Committee does not support the President's proposal to 
sell oil from the Strategic Petroleum Reserve.
    The Committee does not contemplate reporting any measures 
that would create unfunded mandates.
                                ------                                

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                     Washington, DC, March 5, 1997.
Hon. Pete V. Domenici,
Chairman, Committee on the Budget,
U.S. Senate, Washington, DC.
    Dear Chairman Domenici: In response to your letter of 
January 22, 1997, I have prepared the following views and 
estimates report for programs under the jurisdiction of the 
Committee on Environment and Public Works. As in previous 
years, a brief summary of the Committee's legislative 
initiatives for this year is included as well.

                      new legislative initiatives

    There are five principle legislative initiatives before the 
Committee on Environment and Public Works this year: (1) to 
provide States and localities greater control over shipments of 
solid waste; (2) to enact a new ISTEA (Intermodal Surface 
Transportation Efficiency Act) bill before the deadline of 
October 1, 1997; (3) to consider proposals to reform the 
Endangered Species Act; (4) likewise, to consider proposals to 
reform the Superfund cleanup program; and (5) to consider 
targeted reforms to improve the Clean Water Act, including the 
Act's Section 404 wetlands program.
    Beyond these specific legislative efforts, the Committee 
will continue to conduct oversight on the EPA's recently 
proposed regulations to significantly tighten particulate and 
ozone standards under the Clean Air Act. We will also review 
implementation of certain provisions of the 1996 Coast Guard 
Reauthorization and the 1996 Water Resources Development Act.

                    specific discretionary programs

1. Environmental Protection Agency (EPA)

    The EPA budget is divided into three primary categories: 
water infrastructure (clean water and drinking water State 
revolving funds); operating programs; and Superfund and leaking 
underground storage tank funds. The total EPA budget request 
for fiscal year 1998 is $7.645 billion, an increase of $846 
million over the current funding level for fiscal year 1997. In 
broad terms, I support the President's request for EPA.
            Water infrastructure
    The fiscal year 1998 request for the water infrastructure 
account, which capitalizes State revolving loan funds for 
wastewater treatment and safe drinking water, is $2.078 
billion, an overall reduction of $158 million from the current 
fiscal year.
    This $2.078 billion total includes two key elements:
    (1) Clean Water State Revolving Fund (SRF)--for which 
$1.075 billion is requested in fiscal year 1998. The Clean 
Water SRF has been instrumental in helping municipalities meet 
the requirements of the Water Pollution Prevention and Control 
Act and a major contributor to the clean-up of our limited 
water resources. The Federal government has used this loan fund 
and its predecessor grant program to contribute more than $65 
billion to State and local governments since the early 1970's. 
This is a program that has proven to be cost effective and of 
tremendous environmental benefit.
    (2) Drinking Water State Revolving Fund (SRF)--for which 
$725 million is requested in fiscal year 1997. Important 
amendments to the Safe Drinking Water Act were enacted into law 
last year. These resources will allow states to fund both the 
construction of needed infrastructure improvements for drinking 
water systems and the restructuring of small systems to improve 
compliance.
            Operating programs
    The President's fiscal year 1998 request for the operating 
programs account, which includes EPA's administration and 
enforcement of the air, water quality, drinking water, 
hazardous waste, pesticides, radiation, multimedia and toxic 
substances programs, is $3.402 billion, some $300 million more 
than current funding levels. In general, I support the 
operating programs request and applaud EPA's efforts to target 
resources to the most serious health risks.
            Superfund and L.U.S.T. Trust Funds
    The Presidents fiscal 1998 request for Superfund 
discretionary spending is $2.094 billion, an increase of $700 
million over the fiscal 1997 discretionary spending level of 
$1.394 billion. The proposed increase for Superfund, which 
comprises most of the overall agency increase from the current 
year level, has been requested to attain goals announced by 
President Clinton on August 28, 1996, in Kalamazoo, Michigan. 
The President's goals include accelerating the pace of 
Superfund cleanups so that an additional 250 sites can reach 
the status of ``construction completed'' by the end of fiscal 
year 2000--and to increase spending for so-called 
``brownfields'' redevelopment initiatives. Further, the 
Administration is requesting an additional $200 million in new 
fiscal year 1998 mandatory spending for the purpose of 
extending so-called ``orphan share funding'' to make 
settlements at Superfund sites fairer to settling parties.
    Until we enact legislation to fix the many problems that 
plague the Superfund program, I recommend maintaining Superfund 
discretionary spending at the fiscal 1997 level of $1.394 
billion. This level of funding is adequate to maintain the 
current pace of activity in the Superfund program. It may even 
permit acceleration of the pace of cleanup and increased 
funding for new initiatives, including brownfields 
redevelopment, if the Administration's claims of significant 
reductions in average site cleanup costs prove accurate.
    On January 21, 1997, Senator Smith and I introduced S.8, 
the ``Superfund Cleanup Acceleration Act of 1997.'' We held a 
hearing on S.8 on March 5, 1997, and expect to commence 
bipartisan negotiations on Superfund reform soon. The funding 
increases sought by the Administration are premature in light 
of the ongoing Superfund reauthorization policy debate. I 
believe that these reauthorization negotiations are the 
appropriate forum for the Administration to articulate its 
vision for the future of the Superfund program. Further, it is 
not appropriate to simply increase the level of spending for 
Superfund without significant reform. Superfund remains a 
legislatively flawed program, and, despite the Administration's 
attempts to correct or ameliorate some of Superfund's glaring 
problems with administrative initiatives, I do not believe we 
should be increasing Superfund spending levels until we enact 
needed legislatve reform and can be sure that the funds will be 
spent to clean up sites rather than paying for lawyers.
            L.U.S.T.
    The President's fiscal 1998 request for the Leaking 
Underground Storage Tank (L.U.S.T.) trust fund is $71.2 
million, an increase of $11.2 million over the fiscal 1997 
appropriation of $60.0 million. A portion of the fiscal 1998 
request is dedicated to new, expanded use of the trust fund 
monies. While I welcome program improvements and look forward 
to learning more about the Administration's plan, I am 
reluctant to endorse a diversion of trust fund monies away from 
the core program which has provided direct assistance to the 
States and Tribal entities.

2. Federal highways

    The Intermodal Surface Transportation Efficiency Act of 
1991 (ISTEA) was enacted on December 18, 1991. ISTEA expires on 
September 30, 1997. New authorizing legislation must be passed 
by October 1 of this year for States and local governments to 
receive transportation funding when the new fiscal year begins. 
The Committee will be developing ISTEA reauthorization 
legislation in the spring of this year. The overall level of 
funding for the nation's surface transportation program is one 
of the most critical issues of the ISTEA reauthorization.
    As part of the fiscal 1998 budget, the President has 
requested total obligations of $20.183 billion for the Federal 
Highway Administration (FHWA), a $58 million decrease from the 
fiscal 1997 enacted level. The $20.183 billion request for FHWA 
includes an obligation limitation of $18.170 billion for 
Federal-aid highways. The President also has requested $1.515 
billion for categories not subject to the spending limitation, 
including minimum allocation, demonstration projects, and 
emergency relief.
    I do not believe that the President's budget provides 
adequate funding for surface transportation programs under my 
committee's jurisdiction. I recommend that all of the incoming 
Highway Trust Fund taxes be spent--that is--spending from the 
Highway Trust Fund should be equal to the amount of Highway 
Trust Fund receipts collected for the prior year. I believe 
that this proposal is a reasonable way to balance the competing 
pressures of balancing the budget with concerns about the 
growing balances of the Highway Trust Fund.
            1997 Supplemental budget request
    The President's budget also includes a supplemental budget 
request of $318 million in additional Federal-aid highway 
obligation authority for 1997 and makes the additional funding 
available to a select group of States which were affected 
adversely by a Department of Treasury accounting error. I agree 
with the Administration's decision to correct the error. I do 
not believe that additional funding should be provided to 
States that would have benefitted had the accounting error not 
occurred.

3. Tennessee Valley Authority (TVA)--Economic Development 
        Administration (EDA)--Appalachian Regional Commission (ARC)

    It is my view that Congress should determine whether there 
is a compelling need for continued federal participation in 
programs carried out by the TVA, EDA and ARC. With respect to 
the TVA, in particular, I want to commend the Agency for its 
recent proposal to eliminate federal funding for its 
appropriated programs by fiscal 1999. Although the details of 
the proposal are not clear at this time, it represents a 
necessary first step in reducing federal participation in TVA 
programs. The Committee will continue to monitor TVA's progress 
on this important initiative.

4. U.S. Army Corps of Engineers (Civil Works)

    The President's fiscal year 1998 request for the civil 
works program of the Army Corps of Engineers is $3.694 billion. 
Of that amount, $634 million, or 17 percent, would be derived 
from user fees and trust funds, including fuel and ad valorem 
taxes.
    In the fiscal 1998 request, I am encouraged that the 
Administration has increased funding for various Army Corps 
environmental projects and initiatives, totaling $365.2 
million. However, I am disappointed that the President did not 
propose funds for coastal storm protection--particularly since 
the Water Resources Development Act of 1996 specifically called 
for continuation of this vital program.

5. General Services Administration (Public Buildings Service)

    The President's fiscal year 1998 request for the Public 
Buildings Service (PBS) totals $4.864 billion. Of this amount, 
$84 million is requested in direct appropriations. The 
remaining $4.78 billion is to be derived from the Federal 
Buildings Fund (FBF) administered by GSA. The overall PBS 
fiscal 1998 request is $687 million less than the current year 
funding level of $5.551 billion.
    For the repairs and alterations account, $434 million is 
requested. Of this amount, $84 million is requested in direct 
appropriations. The remaining $350 million for repairs and 
alterations is to be derived from the FBF. For the construction 
and acquisition account, $680.54 million is requested for 
fiscal 1998. All of these funds are to be derived from the FBF. 
No direct appropriations request is made for the construction 
and acquisition category.
    As the result of lower-than-expected rental receipts from 
fiscal years 1996 and 1997, the FBF is in shortfall by some 
$680 million. As a result, the Administration has chosen to 
make no direct appropriation request in fiscal 1998 for the 
construction and acquisition account. It is my intention to 
ensure that the agency implements procedures immediately to 
improve FBF forecasting so that such shortfalls are prevented 
in the future. As highlighted above, the PBS has requested FBF 
expenditure of $680.54 million to fund ongoing construction and 
acquisition projects.

                               conclusion

    In crafting the fiscal year 1998 budget resolution, it is 
incumbent upon the Congress to not only downsize the federal 
bureaucracy through consolidation, and in some cases, a 
complete closure of agencies and programs that have outlived 
their usefulness--but also to ensure that government is more 
responsive to its citizenry. It is my hope that the fiscal year 
1997 Budget Resolution will initiate a multi-year plan to 
eliminate the federal debt with thoughtful, government-wide 
spending reductions.
    Thank you for your consideration of my views and do not 
hesitate to get in touch if you have any questions regarding 
this submittal.
            Sincerely,
                                                    John H. Chafee.
                                ------                                

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                 Washington, DC, February 27, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Member,
Committee on the Budget, Washington, DC.
    Dear Chairman Domenici and Senator Lautenberg: I write in 
response to your request for the views and estimates of the 
Senate Foreign Relations Committee on the FY 1998 budget for 
international affairs. As you know, on February 6, the 
President submitted his request for a total of $19.3 billion in 
spending for the so-called ``150 account'', encompassing 
programs under our jurisdiction, plus an additional $900 
million over three years to pay our arrearages to the United 
Nations and affiliated agencies. Although this request exceeds 
the level of 150 funding envisioned under last year's budget 
resolution, I believe this increase represents an essential 
adjustment to the overall composition of discretionary 
spending. The level requested by the President should be seen 
as the absolute minimum required to effectively carry out the 
national interests of the United States.
    Funding for international affairs has declined 
precipitously over the past decade by almost every measure, 
despite the important new opportunities and shifts in 
priorities that have occurred since the end of the Cold War. 
The $18.3 billion spent for international affairs last year, if 
adjusted for inflation, is 25 percent less than the average 
over the previous twenty years, and nearly one-third below the 
spending levels of a decade ago. Yet our international 
responsibilities have hardly diminished. Indeed, because we 
have significantly reduced our military presence overseas, we 
must retain a robust diplomatic presence around the world.
    In fact, an independent, bipartisan blue ribbon panel 
jointly sponsored by the Brookings Institution and the Council 
on Foreign Relations recently sounded the following alarm, with 
which I agree: ``The cuts already made in the international 
affairs discretionary account have adversely affected, to a 
significant degree, the ability of the United States to protect 
and promote its economic, diplomatic and strategic agendas 
abroad. Unless this trend is reversed, American vital interests 
will be jeopardized.''
    Diplomacy, as our nation's first line of defense, must be 
seen as an integral part of our overall national security 
strategy. In a world where the health, safety, prosperity and 
security of American citizens is threatened more by 
transnational problems--terrorism, drug trafficking, 
environmental degradation, proliferation of weapons of mass 
destruction, economic instability, rapid population growth and 
the spread of disease--than by traditional military means, 
American international leadership is increasingly essential. 
Effective diplomacy cannot be conducted ``on the cheap,'' as 
our new Secretary of State warned during her confirmation 
hearing, and achieving our foreign policy objectives will 
require the availability of increased funding, the training and 
retention of additional skilled personnel, and the meeting of 
our international financial obligations.
    While I agree that our foreign policy programs should 
undergo rigorous examination to eliminate duplication and 
waste, I also believe that any organizational restructuring 
must be designed to improve our diplomatic capabilities rather 
than to diminish our international presence.
    I hope you will find these comments helpful as you prepare 
specific recommendations for the FY 1998 budget, and look 
forward to working with your Committee as the process 
continues.
    With best regards,
            Sincerely,
                                      Joseph R. Biden, Jr.,
                                           Ranking Minority Member.
                                ------                                

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                 Washington, DC, February 28, 1997.
Hon. Pete Domenici,
Chairman, Committee on the Budget, Washington, DC.
    Dear Pete: Pursuant to Section 301(d) of the Congressional 
Budget Act, we are submitting the Views and Estimates with 
respect to federal spending in the jurisdiction of the Senate 
Committee on Governmental Affairs.
    The President's FY 1998 budget recommends a number of 
proposals that would affect federal employee pay and 
retirement. As a group, federal employees and retirees have 
been asked to bear a significant share of the deficit reduction 
burden for more than a decade. Taking previous cuts into 
consideration, it should be acknowledged that they deserve a 
budget slightly more lenient than those they have been 
subjected to in the past.
    The Committee recognizes the President's effort to set 
forth a ``federal employee budget package'' designed to achieve 
a certain level of budget savings. However, it is difficult to 
endorse any specific proposals at this time of the potential 
for budgetary savings from a recalculation of the Consumer 
Price Index (CPI).
    A number of federal programs include automatic cost-of-
living adjustments (COLAs) which are linked to the CPI--most 
notably civil service retirement. Should the Senate recommend a 
CPI adjustment, it would be the Committee's intent to work with 
the Budget Committee so that any savings accrued from a 
recalculation would be credited proportionately to the 
Governmental Affairs Committee.
    The President's federal employee retirement and pay-related 
proposals are:

                        Civil Service Retirement

Employee contributions

    The President's budget proposes to increase employee 
contributions to both the Civil Service Retirement System 
(CSRS) and the Federal Employees Retirement System (FERS), 
which increases revenues by $1.8 billion over the period 1998 
to 2002. Employee contributions would be increased by 0.25 
percent of salary on January 1, 1999, an additional 0.15 
percent in January 2000, and an additional 0.10 percent in 
January 2001 for a cumulative increase of 0.50 percent for 
2001, which remains in effect through December 31, 2002.

Agency contributions

    The President's budget proposal calls for agencies to 
increase contributions for CSRS employees by 1.51 percent each 
year beginning October 1, 1997, through September 30, 2002, for 
a savings of $30 billion over the five-year period. As has been 
the case with similar proposals in the past, no additional 
appropriations would be made to the agencies to cover the cost 
of these payments and the full amount would have to be absorbed 
by the agencies. This will necessarily result in offsetting 
program or manpower cuts across government.

Retiree cost-of-living adjustment (COLA)

    The President proposes to reinstate a three-month delay in 
COLAs from January to April for the years 1998 through 2002 for 
federal civilian and foreign service retirees, saving $1.5 
billion over the five-year period.
    This Committee recognizes and supports the need for deficit 
reduction as an issue of utmost importance and supports the 
premise that deficit reduction must be shared in as fair manner 
as possible. To that end, we oppose the provision in the 
President's budget which would single out only civilian and 
foreign service retirees for a COLA delay. We believe that all 
federal retirees should be treated equally on the question of 
timing for COLAs. It is a simple matter of fairness that no one 
category of federal retirees should be singled out for unequal 
treatment.

                          Federal Employee Pay

    The President proposes to give federal employees a COLA 
increase of 2.8 percent in January 1998. However, the President 
does not specify his intention as to whether the COLA should be 
paid in the form of nationwide cost-of-living adjustments or in 
the form of locality pay adjustments. The Committee will make a 
recommendation at the appropriate time.

                 Federal Employees Health Benefit Plan

    The Committee notes that the President's budget also 
assumes a savings starting in January 1999 when employees will 
be required to pay a greater share of their health care 
premiums when the ``Phantom 6'' formula expires. The Office of 
Personnel Management has estimated this will shift 
approximately $4 billion of health care premium costs over five 
years from the government to the employee.

                         Government Performance

    Over the years this Committee has been consistently working 
to create a leaner, more efficient government. Legislation 
reported out of the Governmental Affairs Committee has 
established a new framework for government accountability. It 
is noted that your guidance to all Senate committees suggested 
a review of agency strategic plans and performance goals as 
required by the Government Performance and Results Act (GPRA). 
GPRA, along with financial management, procurement acquisition 
and information technology management reforms will be driving 
federal agencies to modernize and improve both performance and 
accountability.
    GPRA compliance will be fully implemented to accompany the 
1999 budget submissions. We have been working with agencies on 
the development of their strategic plans, and we have been 
holding briefings for Senate staff to provide a greater 
understanding of the value of this new information. It is noted 
that legislation you have introduced to institute biennial 
budgeting would statutorily link GPRA with the budget. We will 
work with the Budget Committee in support of this effort. The 
savings achieved by this Committee government-wide are not 
credited as a budget savings but should be considered in the 
larger context for their value.
    The Committee is committed to reducing the deficit in as 
fair a manner as possible. We recognize the need for possible 
adjustments in federal employee programs in the coming years as 
we move forward in achieving a balanced budget. However, we 
should not lose sight of the fact that federal employees are a 
resource. A quality federal workforce is necessary for the 
successful implementation of the broad array of federal 
programs across government. The public expects the efficient 
delivery of services from the federal government, and we must 
ensure that the federal government can attract and retain the 
talent needed in support of that mission.
    We appreciate the opportunity to comment on the areas 
within the jurisdiction of the Committee on Governmental 
Affairs and look forward to working with you in the year ahead.
            Sincerely,
                                   Fred Thompson,
                                           Chairman.
                                   John Glenn,
                                           Ranking Member.
                                ------                                

                                       U.S. Senate,
                               Committee on Indian Affairs,
                                    Washington, DC, March 12, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Chairman Domenici and Senator Lautenberg: This letter 
is in response to your request for the views and estimates of 
the Committee on Indian Affairs on the President's Budget 
Request for fiscal year 1998 for Indian programs.
    On February 26, 1997, the Committee held a hearing on the 
President's Budget Request to receive oral and written 
testimony from the Department of Interior, the Indian Health 
Service, and numerous other Federal agencies and tribal 
organizations.

Overall Federal spending patterns on Indians and non-Indians

    As in previous years, the Committee requested the Library 
of Congress to prepare an analysis of the Federal spending 
trends on programs for American Indians and Alaska Natives over 
the past twenty-three years, as well as well as a comparison of 
this spending relative to spending for other Americans. We have 
attached a copy of the Library of Congress report for your 
reference.
    The Library of Congress study reveals that despite the 
efforts of the Committee on the Budget and the Committee on 
Appropriations to respond to the acute needs of Indians and 
Native communities, the gap between what the Federal government 
has annually spent overall on Indians, in contrast to the funds 
which the United States has spent on non-Indians for purposes 
other than the national defense, has steadily worsened for 
Indians since 1985.
    The Administration's fiscal year 1998 budget request seeks 
measurable increases in absolute dollars for many Indian 
programs. It also proposes to spend a significantly larger 
portion of these funds at the local level in Indian Reservation 
or Native American communities. In 1994 constant dollars, the 
fiscal year 1998 budget request for Indian programs overall 
would effect a modest reversal of the growing gap between the 
funds the United States annually spends on non-Indians and 
those it applies to the benefit of Native Americans. Given the 
harsh conditions and continuing needs that exist in much of 
Indian Country, the Committee supports the overall Indian 
program funding levels requested by the Administration for 
fiscal year 1998.
    In its action on the fiscal year 1997 budget, the Congress 
applied minor increases in absolute dollars for many Indian 
programs with an emphasis of directing, where possible, greater 
resources to priorities identified by tribal governments for 
the provision of fundamental governmental services at the local 
level and which typically are spent under the direct control of 
Indian tribes. The Administration's fiscal year 1998 budget 
request seeks to continue efforts to acknowledge and fund 
priorities identified by tribal governments, while also 
continuing with reform initiatives to streamline the 
administration of services.
    Tribal governments are, of course, the governments closest 
to the American Indians and Alaska Natives who suffer the most 
dire and unmet needs. Yet most of the Federal funds that have 
been made available for Native Americans in the past two 
decades have tended to result in an expanded Federal 
bureaucracy rather than an increase in tribally-controlled 
budgets. For Indian people, this fact has compounded their 
problems, as their tribal governments face greatly increased 
responsibilities without corresponding financial support.

Relative need for Federal spending on Indians

    When compared with all other citizens of the United States, 
American Indians and Alaska Natives continue to suffer that 
worst conditions of unemployment, dilapidated and overcrowded 
housing, poor health, inadequate education, deteriorating or 
non-existent social and physical infrastructure systems, and 
other social and economic factors that seriously, and sometimes 
critically, erode the dignity and quality of life.
    1990 census data released by the Bureau of the Census last 
year confirms these conclusions in the area of housing: 18% of 
all American Indian households on Reservations are ``severely 
crowded.'' The comparable figure for non-Indians is 2%. 
Likewise, while 33% of all Reservation households are 
considered ``crowded'', the comparable figure for all 
households nationally is 5%. Approximately 90,000 Indian 
families are homeless or underhoused. One out of every five 
Indian homes lacks complete plumbing facilities.
    According to the Census Bureau, nearly one in three Native 
Americans lives in poverty. The number of Indian families below 
the poverty line is nearly three times the national average. 
One-half of all Indian households headed by a female live in 
poverty. One-half of the Indian children under the age of six 
living on reservations live in poverty. For every $100 earned 
by U.S. families, Indian families earn $62. The average per 
capita annual income for an Indian living on the reservation is 
$4,478. Poverty in Indian country is a persistent, everyday 
reality.
    Poor health is the twin sister of poverty. Tuberculosis 
strikes down Native Americans at four times the national 
mortality rate for this disease. The Indian mortality rate for 
diabetes exceeds the national average by 139 percent. Indians 
are four times more likely to die from alcoholism than are 
other Americans. Fetal Alcohol Syndrome rates among Native 
Americans are six times the national average. In some Indian 
communities, reported cases indicate that child abuse has 
victimized as many as one-fourth of the children. By all 
measures the health status of Native Americans lags 
significantly behind every other group of Americans.
    In recent decades, there have been two basic justifications 
given for the Federal funding of Indian programs. The first can 
be understood as a desire by the United States to address the 
compelling human needs revealed in statistical surveys like 
those summarized above. Tribal and Federal officials continue 
to inform the Committee on Indian Affairs of the existence of 
an overwhelming backlog of underdeveloped social, physical, and 
human infrastructure in Indian Country, which they attribute to 
years of Federal under funding and relative Federal neglect. 
The second basis for Federal funding of Indian programs can be 
understood as one expression of the unique, government-to-
government relationship between the United States and each 
tribal government arising from well-settled principles of 
Federal Indian law. The courts have construed this law on the 
basis of treaties, agreements, statutes, Executive Orders, 
course of dealings, and jurisprudential precedence, which 
typically have relied on a rationale that the Indian tribes 
transferred to the United States land or other resources in 
return for peace appropriations.

A. Committee recommendations on the Indian health service budget 
        request

    Within the Department of Health and Human Services, for 
fiscal year 1998, the Administration has requested $2.122 
billion in budget authority for the Indian Health Service 
(IHS). This amount represents an increase of $68 million from 
FY97 enacted levels. This request represents a 3% increase for 
Indian Health programs. The requested increase is comprised of 
approximately $30 million for services and $40 million for 
facilities.
    While the budget request reflects the resources needed to 
maintain the FY97 level of services provided to approximately 
1.4 million American Indians and Alaska Natives, Tribal and 
Federal officials have informed the Committee of several 
factors that should be considered in determining adequate 
funding levels for effective service delivery: (a) the 
increasingly acute levels of unmet need for health care in 
Indian Country; (b) the expanding population growth of the 
Indian beneficiaries requiring service; and (c) higher than 
average inflationary costs in the field of rural health care 
delivery.
            1. Population growth
    The IHS fiscal year 1998 budget justification indicates 
there are about 1.4 million American Indians and Alaska Natives 
served by IHS funded operations. The Library of Congress 
reports that this service population is growing at an annual 
rate of 3.8%, creating an annual average increase of 
approximately 38,679 additional Indians to be served. Currently 
the IHS per capita health care expenditure is approximately 
$1,578, compared to the U.S. civilian per capita expenditure of 
$3,920. It is anticipated that a nearly $60 million increase 
for the additional patients associated with population growth 
would be required simply to maintain existing service levels 
for all American Indians and Alaska Natives at the current 
growth rate of 3.8%.
            2. Contract support requirements
    The fiscal year 1998 IHS budget request seeks an increase 
of $12 million for contract support costs. The Administration 
has informed the Committee that this request will meet existing 
requirements and allow expanded numbers of Indian tribes to 
assume the operation of programs and activities previously 
administered by ISH. For fiscal year 1998, and estimated $796 
million will be transferred directly to tribes and tribal 
organizations under self determination contracts/grants and 
self-governance compacts, a $40 million increase from FY97 
levels. The Committee comments the Administration for making 
this cost item a priority in its budget request.
            3. Sanitation and health facility construction
    In fiscal year 1990, Congress directed the IHS to prepare a 
10-year plan to address the backlog of sanitation deficiencies 
for existing Indian homes and communities. Since then, annual 
appropriations have not met the level of need identified each 
year, and additionally, population growth, inflation, and more 
stringent environmental regulation have increased the backlog 
of need. IHS now estimates the backlog at $630 million. To meet 
the ten-year plan by the year 2000 would require annual funding 
levels of $146.5 million simply to meet the needs of existing 
housing. The Administration request is $247 million, an 
increase of $39 million over the FY97 levels. Given the 
constraints on increases in Federal spending, the Committee 
commends the Administration for making this matter a priority.
    The Administration has requested $24 million for new health 
facility construction projects in fiscal year 1998 and, 
notably, $10 million to meet the obligation of several 
facilities coming on line. The Administration's 5-Year Planned 
Construction Budget has estimated the cost of projects already 
on the IHS new health care facilities and staff quarters new 
construction priority lists at more than $600 million.
    The Committee wishes to emphasize that it desires to work 
with the Committee on the Budget, the Committee on 
Appropriations, the Congressional Budget Office, and the Office 
of Management and Budget in the immediate future to explore 
alternative financing mechanisms or other cost effective and 
aggressive means to address the overwhelming backlog of need 
for construction of new or replacement sanitation and health, 
facilities,by leveraging private capital investment, including 
consideration of how capital leases are scored, a Federally-guaranteed 
loan program, or a tribal investment bank that would result in the 
construction of much-needed facilities far more quickly than is now 
possible under the present discretionary appropriations structures.

B. Committee recommendations on the Bureau of Indian Affairs budget 
        request

    The Bureau of Indian Affairs (BIA) fiscal year 1998 
request, within the Department of the Interior, would provide 
for $1.73 billion in current budget authority, a $126.1 million 
increase over FY97 enacted levels. The requested increases are 
primarily allocated to the Tribal Priority Allocation (TPA) 
account, $76.5 million over the FY97 enacted level, to contract 
supports costs, and to construction accounts.
    For fiscal year 1998, the BIA has requested $105.8 in 
contract support costs, which is an increase of $10 million 
from last year's funding level. Of this $10 million increase, 
$5 million was transferred from the Indian Self-Determination 
Fund. Although the President's request reflects an increase, it 
is again estimated that contract support costs will not be 
funded at 100% of the need. By failing to meet 100% of the 
need, Indian tribes contracting or compacting BIA programs will 
be required to utilize badly-needed program funds to meet their 
contract support costs. This will result in reduced services to 
tribal members on the reservation. Continuing contract support 
shortfalls could create a significant disincentive to Indian 
tribal governments seeking to expand their contracting or 
compacting under the Indian Self-Determination Act and Tribal 
Self-Governance.
    As education is a priority for many Indian communities, the 
BIA's fiscal year 1998 budget request reflects an increase of 
$16.8 million for School Operations, for a total of $467 
million for FY 1998. In addition, the BIA budget request also 
proposes an increase of $49.1 million for maintenance and 
construction of educational facilities.
    In general, the Committee generally commends the 
Administration for its fiscal year 1998 budget request for the 
BIA and urges the Committee on Budget to strongly consider 
these priorities.

C. Committee recommendations on other agencies' budget requests

            1. Department of Housing and Urban Development (HUD)
    Fiscal Year 1998 will be a crucial year for Indian housing 
programs at HUD. The Native American Housing Assistance and 
Self-Determination Act of 1996 (NAHASDA), signed by the 
President on October 26, 1996 and scheduled to take effect on 
October 1 of this year, marks a radical departure from the 
heavily bureaucratic structure used by HUD to provide housing 
assistance to Native American families in the past. The $485 
million request by the administration to fund the block grant 
provided for under NAHASDA represents roughly level funding of 
Indian housing programs. This Committee strongly encourages the 
Budget Committee to consider funding efforts to help alleviate 
the tremendous need for housing construction and improvement in 
Indian Country. At the very least, this should entail no 
consideration of reducing the funds available for Indian 
housing block grant below the level requested by the 
Administration.
    The Committee also supports the Administration's funding 
request for the Indian Community Development Block Grant set-
aside. Though statutorily the Indian set-aside is only 1 
percent, HUD has for two years provided one and half percent 
for this set-aside. CDBG is designed to focus resources on 
communities in need of development resources while providing 
local flexibility. Clearly, the challenges facing economic 
development efforts in Indian Country merit these funds, as 
Indian communities face poverty rates more than twice that of 
the rest of America as well as double the rates of unemployment 
and far lower median incomes.
    While we are concerned that funding levels should represent 
the needs of Native American communities, the Committee is 
cognizant of the importance of maximizing dollars spend on 
Indian housing, what the President terms ``doing more with 
less.'' NAHASDA provides such an opportunity through a loan 
guarantee authority, authorized under Title VI. This new 
authority, patterned after the very successful Section 108 loan 
guarantee program utilized with Community Development Block 
Grant funds, allows more money to be used for Indian housing 
for fewer appropriated dollars.
    Despite the President's challenge to utilize public-private 
partnerships to solve problems, the Administration budget 
provides no funding for a credit subsidy for Title VI 
guarantees. This subsidy, required under the 1990 Credit Reform 
Act, is necessary before any guarantees can be made. The 
Committee urges the Budget Committee to provide funding for 
Title VI loan guarantees--even if only on a limited basis--so 
that partnerships between tribal governments and private 
markets can start the very difficult and important work of 
improving housing conditions for Native American families in a 
responsible, economically sound manner.
            2. Department of Education
    Many American Indian and Alaska Native children attend 
public schools, which are supported in large part by various 
programs administered through the U.S. Department of Education, 
as are schools funded through the BIA. The Administration's 
budget request for fiscal year 1998 for Indian education 
programs under the Department of Education seeks $62.6 million 
of which approximately $59.7 million will be committed to 
Formula Grants to Local Education Agencies. The purpose of 
these funds is to support financial support for elementary and 
secondary school programs that serve Indian students.
    The committee again encourages full funding for the Indian 
programs within the Department of Education.
            3. Administration for Native Americans (ANA)
    The President's request for the Administration for Native 
Americans (ANA) is $34.9 million for FY 1998, a level equal to 
the FY 1997 enacted levels.
    The ANA fosters tribal self-sufficiency by providing 
critical funds for tribal governance efforts, social and 
economic development projects, environmental compliance 
measures, and efforts to preserve Native languages.
    In light of the acute tribal need for seed capital, 
employment, and governance initiatives, the Committee generally 
commends the Administration for its request, and recommends 
that the ANA program be maintained and strengthened in the 
future.
            4. Environmental Protection Agency (EPA)
    The focus of the Environmental Protection Agency's efforts 
for State and Tribal Assistance Grants (STAG) continues to be 
capacity building for tribal partners. The Administration's 
stated policy, of turning authority for running environmental 
programs over to the tribes themselves whenever feasible, is 
consistent with this Committee's goals of strengthening the 
government-to-government relationship between tribes and the 
federal government.
    Of more than $41 million in increases to the STAG account, 
$31 million is for tribal priorities. Water quality issues, 
which for many tribes is their first priority for environmental 
issues, receives a $9,829,300 increase through the Section 106 
pollution control program, designed to identify and monitor 
risks to water quality on reservations. This crucial program 
represents the only increase in STAG water program funding.
    The problem of leaking underground storage tanks continues 
to plague Indian communities. The tanks, found commonly at gas 
stations, can be costly and require increased resources if they 
are to be dealt with effectively. The budget proposal includes 
$450,000 for underground tank clean-up, but this amount is 
clearly not enough to fully address the problem.
    The committee strongly encourages that funding for EPA 
programs take into consideration the importance of the Indian 
General Assistance Program grants as a tool for tribes to 
locate and deal with environmental concerns. Particularly for 
smaller tribes, the flexibility of this grant has meant that 
tribal priorities take precedence over bureaucratic concerns. 
Considering the Administration's goal of dealing with ``worst 
sites first,'' the usefulness of this grant cannot be 
overstated.

D. Conclusion

    The Committee on Indian Affairs, in its March 11, 1997 
business meeting, favorably adopted the foregoing letter of 
recommendations on the budget views and estimates.
    We very much appreciate the opportunity to provide this 
information on the President's Budget Request for Indian 
programs for fiscal year 1998 to the Committee on the Budget 
and look forward to working with you in the coming year.
            Sincerely,
                                   Ben Nighthorse Campbell,
                                           Chairman.
                                   Daniel K. Inouye,
                                           Vice-Chairman.
                                ------                                

                    Congressional Research Service,
                                       Library of Congress,
                                 Washington, DC, February 24, 1997.
To: Senate Committee on Indian Affairs. Attention: Gary Bohnee.

From: Roger Walke, Specialist in American Indian Policy, Government 
        Division.

Subject: Indian-Related Federal Spending Trends, FY 1975-1998.\1\
---------------------------------------------------------------------------
    \1\ Andorra Bruno, Analyst in American National Government, 
assisted in gathering data for FY 1975-1995. Garrine Laney, Analyst in 
American National Government, and Megan Perry, Intern, assisted in 
gathering the data for FY 1975-1991.
---------------------------------------------------------------------------
    This memorandum responds to your request that CRS update 
its analysis of Indian-related budget authority to include 
fiscal years 1975-1998. The Committee has previously published 
these CRS analyses in the appendix of its recurring committee 
print entitled Budget Views and Estimates for fiscal years 1989 
and 1991-1993.\2\ The Committee has also included the CRS 
analyses in its materials printed in the Senate Budget 
Committee reports on the concurrent budget resolutions for 
fiscal years 1995-1997.\3\
---------------------------------------------------------------------------
    \2\ S.Prt. 100-116, S.Prt. 101-89, Prt. 102-32, and S.Prt. 102-91, 
respectively.
    \3\ S.Rept. 103-238, S.Rept. 104-82, and S.Rept. 104-271, 
respectively.
---------------------------------------------------------------------------
    The memorandum summarizes trends in most Indian-related 
areas of the federal budget over the period FY 1975-1998. The 
budget items selected usually account for two-thirds to three-
quarters or more of total federal spending each year on 
American Indians and Alaska Natives.
    The trends are summarized in tables 1-4, and selected 
trends are illustrated in graphs 1-26. Both tables and graphs 
are based on the data in appendix tables 1 and 2. For each 
budget area, tables 1-4 show the following measures: the 
average level of spending in each year over the time period; 
the annual change (i.e., the annual trend) in such spending; 
the ratio of the annual change in spending to the average level 
of spending (called the ``change ratio''); and an indicator of 
the consistency of the annual change.
    Table 1 covers the period FY1975-1998, using current 
dollars. Table 2 covers the same period using constant, or 
inflation-adjusted, 1994 dollars. Tables 3 and 4 present the 
same current- and constant-dollar data for the period FY1982-
1998.
    The analysis presented here emphasizes constant-dollar 
figures. Since such figures are adjusted for the effects of 
inflation, they are better indicators of real changes in 
spending.
    This memorandum is not intended to be a complete analysis 
of all the Indian-related budget items selected. Rather it 
compares trends in major budget items affecting the nation's 
Indian population (particularly those programs targeting 
Indians in federally recognized tribes), on the one hand, with 
trends in parallel budget items affecting the entire U.S. 
population. The discussion that follows is organized in three 
parts: methodology and sources; budget trends in education, 
health, housing, and economic development and employment 
training; and overall trends.

                        methodology and sources

    The Indian-related budget items chosen for this analysis 
are the Bureau of Indian Affairs (BIA), and some of its 
components, in the Department of the Interior (DOI); the Indian 
Health Service (IHS) and the Administration for Native 
Americans (ANA) in the Department of Health and Human Services 
(HHS); the Office of Indian Education in the Department of 
Education; the Indian Housing Development program in the 
Department of Housing and Urban Development (HUD); \4\ and the 
Indian and Native American Employment and Training Program 
(INAP) \5\ in the Department of Labor. According to figures 
from the Office of Management and Budget, these agencies 
annually accounted for about 72 percent of estimated Indian-
related spending government-wide in the period FY1988-1997.
---------------------------------------------------------------------------
    \4\ HUD's Indian Housing Development program, which funded new 
Indian housing, has been consolidated along with most other HUD 
programs for Indian housing into a new Native American Housing Block 
Grant (NAHBG) Program, created by the Native American Housing 
Assistance and Self-Determination Act of 1996 (P.L. 104-330, 25 USC 
4101 et seq.) Under the NAHBG program, recipients (tribes and tribally-
designated housing entities) may spend block grants to provide and 
maintain low-income housing according to their own plans and needs. HUD 
proposes a total appropriation of $485 million for the NAHBG program 
for FY1998, and estimates that $193 million of that amount might be 
spent on the ``Development/HOME'' portion of NAHBG (U.S. Department of 
Housing and Urban Development, Congressional Justifications for 1998 
Estimates. Part 1. February 1997. Exhibit I, p. B-1). To maintain the 
time-series for Indian Housing Development in this memo, we use the 
``Development/HOME'' figure for FY1998.
    \5\ The Indian and Native American Employment and Training Program 
was authorized by Section 401 of the Job Training Partnership Act 
(JTPA) of 1982 (P.L. 97-300) and began its expenditures in FY1984. 
JTPA's predecessor, the Comprehensive Employment and Training Act 
(CETA), included a similar Indian employment and training program. This 
memo uses CETA Indian program spending for the period FY1975-1983 and 
INAP spending for FY1984 to the present.
---------------------------------------------------------------------------
    For the BIA program categories chosen for the analysis--
education, economic development, natural resources, and tribal 
(formerly ``Indian'') services--the memo contains a break in 
the continuity of the time-series data. The BIA restructured 
its budget presentation for FY1994, based on recommendations 
from the Joint Tribal/BIA/DOI Advisory Task Force on Bureau of 
Indian Affairs Reorganization. The general categories of 
education, economic development, natural resources, and Indian 
services, under which specific programs were grouped in 
previous budget presentations, are not used as general 
categories in the restructured budget presentation (instead 
they are used as subcategories within the BIA's new general 
categories). While the BIA applied this restructured 
presentation to its FY 1993 budget, it did not do so for 
earlier years. Hence, the time-series data for BIA component 
programs are internally consistent for FY1975-1992 and for 
FY1993-1998 but may not be consistent between the two time 
periods.
    In this memo we re-grouped FY1993-1998 data for the 
relevant BIA programs into the general categories of education, 
economic development, natural resources, and Indian 
services.\6\ We stress that re-grouping data for the BIA 
components for FY1993-1998 means that the figures for the 
components for these years are estimates and that they are not 
necessarily consistent with earlier years. Hence computations 
and statistics for these BIA components for the periods FY1975-
1998 and FY1982-1998 are also estimates.
---------------------------------------------------------------------------
    \6\ The re-grouped figures for FY1993-1994 for these BIA components 
generally produced budget figures that were markedly higher than 
figures for FY1992. This suggests that analytical statistics for these 
BIA components based on the FY1975-1998 time series may be skewed, 
either up or down.
---------------------------------------------------------------------------
    Spending by agencies is measured in this memo in terms 
either of appropriations (or budget authority) or of outlays, 
depending on data availability and on past usage in the 
Committee's study FY1989. Indian housing spending data have 
been available as ``use of budget authority,'' and we include 
data for both outlays and budget authority in measuring federal 
spending on housing in general. (Annual outlay and budget 
authority figuresmay diverge from each other more in housing, 
with its multi-year spending patterns, than in other budget areas.)
    To adjust for inflation, current-dollar figures were 
changed into constant dollars. The base year for the constant 
dollars was 1994, and the inflation index used to compute 
constant dollars from current-dollar figures was the Chain-Type 
Price Index for Gross Domestic Product (GDP). The Chain-Type 
Price Index is a new index introduced in 1995 by the Bureau of 
Economic Analysis of the Department of Commerce to measure real 
GDP, essentially replacing the Implicit Price Deflator. (For 
further discussion of the Chain-Type Price Index, see CRS 
Report No. 95-892 E, A New Measure of Real GDP.) We use the 
Chain-Type Price Index instead of the Consumer Price Index 
(CPI) because the former accounts for inflation in the entire 
economy rather than just in consumer purchases, and hence is 
more appropriate for the full range of Indian budget areas.

Statistical Measures

    The average, or mean, level of spending during the period 
FY1975-1998 was computed by dividing total spending over the 
time period by the number of years.
    Annual change (annual trend) and trend consistency over the 
FY1975-1998 period were both determined by a time-series linear 
regression analysis. Such an analysis attempts to find the best 
straight line illustrating the relationship between a variable 
(here, a budget item) and time. The annual change is a 
``slope'' of such a straight line. The slope, or annual change, 
shows how much the spending on a budget item changes for every 
year that passes. (The slope is also known technically as a 
``coefficient of X'' or the ``regression coefficient.'') Trend 
consistency is the ``coefficient of determination,'' or r\2\, 
generated by a regression analysis. Here, r\2\ can be 
interpreted as follows: if the r\2\ is high (i.e., closer to 
1), then the trend, whether up or down, is very consistent; if 
the r\2\ is low (closer to 0), then the trend is very 
irregular.
    Change ratio denotes the annual change divided by the 
average level of spending. This is to control for the fact that 
the size of a budget item's annual change varies with the total 
amount of dollars spent by an agency. For instance, an annual 
change of $10 million for an agency whose average spending is 
$100 billion a year constitutes a much lower increase, 
proportionately, than the same $10 million increase for an 
agency whose average spending is $50 million a year. The change 
ratio allows one agency's annual change to be compared to that 
of another agency while taking relative budget size into 
account.

Sources

    Sources for budget data are the respective agencies and the 
annual Budget of the United States Government submitted by the 
President. Budget data collected included historical 
appropriations and outlays and FY1998 budget estimates, by 
agency and by budget function \7\ category. Agencies previously 
contacted include the BIA, IHS, ANA, HUD, Education Department, 
Interior Department, and Labor Department. HUD was not able to 
provide Indian Housing Development Program data for FY1975 and 
FY1977 because the data had been archived.
---------------------------------------------------------------------------
    \7\ Budget functions represent classifications of budget 
expenditures by major objectives and operations, regardless of the 
agency responsible. Budget functions are further divided into budget 
subfunctions.
---------------------------------------------------------------------------
    U.S. population data came from the Statistical Abstract of 
the United States and the Census Bureau's Current Population 
Reports (Series P-25, No. 1130). We used the figure for total 
U.S. population, including Armed Forces abroad. Indian 
population estimates came from the Indian Health Service and 
are based on that agency's service population. IHS population 
estimates are updated annually.
    Historical figures for the Chain-Type Price Index for GDP 
were obtained from Economic Report of the President (February 
1997); estimates for 1996 are projections for 1997 and 1998 
came from the U.S. Congressional Budget Office's The Economic 
and Budget Outlook: Fiscal Years 1998-2007 (January 1997).

                               education

    Education data from table 1 show that Indian education 
spending appears to have been growing from FY1975 to FY1998. 
The annual change for BIA education, for instance, shows an 
increase of $14.6 million per year, for a positive change ratio 
of 4.25.\8\ These figures, however, are in current dollars. 
Inflation has not been taken into account. The constant-dollar 
figures in table 2 do not take inflation into account. These 
data show that BIA education has actually fallen by $1.4 
million a year, for a negative change ratio of -0.31, during 
the period FY1975-1998. This pattern--an increase in current 
dollars and an actual decline in constant dollars--is repeated 
in most Indian-related budget areas.
---------------------------------------------------------------------------
    \8\ Excludes BIA construction for education. As noted above, the 
time series for BIA education is not internally consistent because of 
BIA budget restructuring for FY1993-1998. In addition, FY1991 
appropriations for BIA education programs included forward funding of 
$208,900,000 for the 1991-1992 school year (July-June). For this 
analysis, these funds have been included under FY1991.
---------------------------------------------------------------------------
    Table 2 shows that the U.S. Department of Education budget 
has averaged $24.1 billion in constant 1994 dollars during 
FY1975-1998 and has grown at a rate of $417.1 million a year 
(1.73 change ratio), but with some annual variation 
(r2 of .636). In contrast, Office of Indian 
Education (OIE) programs in the Department of Education, which 
averaged $94.5 million a year in constant dollars, fell $3.2 
million a year over the same time period (-3.42 change ratio). 
The r2 figure for the OIE in the Education 
Department (.803) suggests that OIE spending has fallen fairly 
consistently over the time period.
    Table 4 compares budget trends in constant dollars during 
the period FY1982-1998. The Department of Education has 
averaged $25.1 billion during that period, with an increase of 
$564.8 million a year (2.25 change ratio). BIA education 
increased $11.1 million a year (2.64 change ratio) in FY1982-
1998, faster than the Education Department as a whole, while 
the Office of Indian Education in the Education Department fell 
$2.7 million a year (-3.29 change ratio).
    Graphs 1-3 illustrate the trends in education in constant 
dollars for FY1975-1998. Graph 1 shows the generally upward, 
but fluctuating, trend for the Department of Education budget. 
Graph 2 shows a long downward trend and then a recovery for BIA 
education, while graph 3 illustrates that the OIE in the 
Department of Education had a long-term downward trend, 
followed by a leveling-off, and then a recent fall.

                                 health

    Federal health outlays, as measured by the health budget 
function (shown in table 2), averaged $65 billion in constant 
1994 dollars during FY1975-1998, increasing at a rate of $4.2 
billion a year, for a change ratio of 6.40. Expenditures of the 
Department of Health and Human Services (HHS)--excluding Social 
Security payments and Social Security Administration 
administrative costs (but including other HHS non-health 
spending)--averaged $185.3 billion in the same time period, 
increasing at $10.8 billion a year (5.85 change ratio). Indian 
Health Service appropriations, in constant dollars, also 
increased during FY1975-1998, but at a lower rate than those of 
HHS or the health budget function. IHS's annual increase was 
$51.3 million, a change ratio of 3.74, on an average level of 
$1.4 billion.
    Spending on the health budget function during FY1982-1998, 
shown in table 4, was at an average level of $76.1 billion in 
constant dollars during the period, with an annual increase of 
$6.1 billion (8.03 change ratio). HHS outlays averaged $217.8 
billion in FY1982-1998, increasing $13.9 billion annually (6.37 
change ratio). IHS spending during the same period had a lower 
gain than these two measures, showing a change ratio of 4.63, 
based on annual increases of $69.8 million and an average 
spending level of nearly $1.5 billion per year.
    Graphs 4-6 depict the trends in the HHS, health function, 
and IHS budgets for the years FY1975-1998, in constant dollars. 
They show that the increase over time was more consistent for 
HHS (r2 of .936) than for the federal health budget 
function (r2 of .853) or the IHS (r2 of 
.843).

                          housing9

    Federal housing expenditure trends differ for outlays and 
budget authority during FY1978-1998. Outlays have generally 
risen, on either side of a sudden jump in FY1985, while budget 
authority fell from FY1978 before leveling off after the FY1985 
surge. The trend in Indian Housing Development expenditures (as 
measured in ``use of budget authority'') differs sharply from 
that for federal outlays for housing and more closely resembles 
that for federal housing budget authority, except that Indian 
housing development has fallen more steeply. Table 2 shows that 
Department of Housing and Urban Development (HUD) outlays 
averaged $24 billion in constant dollars from FY1978 to FY1998 
and increased at an annual rate of $384.8 million, for a 
positive change ratio of 1.60. Outlays for the federal housing 
assistance subfunction increased even faster, rising $868.9 
million a year on an average level of $18.5 billion, for a 
positive change ratio of 4.68. Budget authority for HUD, 
however, fell $2 billion a year in constant dollars, for a 
negative -6.53 change ratio on average spending of $31.3 
billion. Budget authority in constant dollars for the housing 
assistance subfunction showed the same pattern, falling $1.6 
billion a year on average spending of $24.1 billion for a 
negative change ratio of -6.70. The Indian Housing Development 
program, as measured by annual budget authority for new 
construction, decreased in constant dollars at an annual rate 
of $59.9 million on average spending of $499.6 million, for a 
negative change ratio of -11.99, a more steeply declining rate 
than for federal housing budget authority as a whole. Graphs 7 
and 8 illustrate the trends in both outlays and budget 
authority for HUD and the housing assistance subfunction. Graph 
9 depicts the trend for the Indian Housing Development program. 
Graph 10 combines HUD and housing assistance subfunction 
outlays with Indian housing development budget authority.\10\
---------------------------------------------------------------------------
    \9\ The time period for housing data is shortened from FY1975-1998 
to FY1978-1998 because of missing data for Indian housing development 
in FY1975 and FY1977.
    \10\ Budget authority data for HUD and the housing assistance 
subfunction were not included in graph 10 because they caused scaling 
problems in the graph.
---------------------------------------------------------------------------
    Housing trends during FY1982-1998 are mixed compared with 
those for the longer period (see table 4). Indian Housing 
Development program expenditures in constant dollars decreased 
less rapidly than in FY1978-1998, falling at an annual rate of 
$24.8 million (-8.14 change ratio) on an average level of 
$304.2 million. Overall HUD outlays in constant dollars, on the 
other hand, rose more slowly than in FY1978-1998, increasing 
only $252.5 million a year (1.01 change ratio) on an average 
level of $25 billion. Housing assistance subfunction outlays in 
constant dollars grew faster than HUD spending--a change ratio 
of 3.33 based on increases of $688.7 million a year with an 
average level of $20.7 billion--but still lagged behind the 
rate for FY1978-1998. Budget authority trends for HUD and the 
housing assistance subfunction, in constant dollars, were more 
positive in the FY1982-1998 period than in the loner FY1978-
1998 period. As graphs 7 and 8 show, the greatest fall in 
budget authority for HUD and the housing assistance subfunction 
occurred before FY1984. (The decline in Indian Housing 
Development budget authority, as graph 9 shows, extended until 
FY1990.) During FY1982-1998, HUD's budget authority in constant 
dollars declined $460.4 million a year on average spending of 
$23.8 billion, a negative change ratio of -1.94, while housing 
assistance subfunction budget authority, in constant dollars, 
fell less rapidly than in FY1978-1998, going down $171.8 
million a year on average spending of $17.7 billion, for a 
change ratio of -0.97.

            economic development and employment and training

    Economic development spending, in constant dollars, has 
declined during the period fiscal year 1975-1998 in both the 
overall U.S. budget and the Indian-related budget. Here we 
compare the U.S. community and regional development budget 
function with the BIA economic development program \11\ and 
with the Administration for Native Americans, which provides 
funding for social and economic development projects to Indian 
tribal governments and non-governmental Indian organizations. 
Measured in constant dollars, all three economic development 
programs have lost ground, but the Indian-related ones have 
fallen slightly faster. Table 2 shows that the U.S. community 
and regional development function has declined at an annual 
rate of $364.7 million, for a change ratio of -3.14, while 
averaging $11.6 billion a year in spending during this period. 
ANA expenditures, with an average level of $46.1 million, have 
decreased by $2.1 million a year, for a negative change ratio 
of -4.54. The BIA economic development program has fallen most 
rapidly, declining by $4.6 million a year--a negative change 
ratio of -5.51--on an average spending level of $84.1 million. 
Graphs 11-13, and the respective r\2\s for the community and 
regional development function (.315), BIA economic development 
(.684), and ANA (.698), all show that the decline during fiscal 
year 1975-1998 has been more consistent for the Indian-related 
programs.
---------------------------------------------------------------------------
    \11\ As noted above, the time series for BIA economic development 
is not internally consistent because of BIA budget restructuring for 
fiscal year 1993-1998.
---------------------------------------------------------------------------
    Economic development spending during the fiscal year 1982-
1998 period; measured in constant dollars, continued to decline 
for Indian but not national economic development, as shown in 
table 4, although not as fast as in the longer period. The 
Federal community and regional development function rose during 
this period by $10.9 million a year (change ratio of 0.12) on 
average spending of $9.4 billion. ANA spending fell by a 
negative change ratio of -1.39 ($0.5 million a year) on an 
average level of $36.1 million. BIA economic development went 
down the fastest, being reduced by a change ratio of -3.37 
($2.1 million a year) on average spending of $62 million. The 
downward trends during this period were fairly consistent for 
ANA but very inconsistent for the other two economic 
development measures.
    Employment and training expenditures, in constant dollars, 
also declined during fiscal year 1975-1998 for both general 
U.S. programs and Indian-related programs. The Federal training 
and employment subfunction fell at an annual rate of $493.4 
million, producing a negative change ratio of -5.13 on average 
spending of $9.6 billion. The U.S. Department of Labor fell at 
a slower rate, its larger annual decrease (-$840.8 million) 
generating a smaller change ratio (-2.14) on higher average 
spending ($39.3 billion). The Indian and Native American 
Employment and Training Program (INAP) in the Labor Department 
had the largest negative change ratio, -8.86, based on an 
annual decrease of $11.8 million and average spending of $133.2 
million. \12\ Graphs 14-16 depict these declines in employment 
and training expenditures.
---------------------------------------------------------------------------
    \12\ As noted above, the time series used here includes CETA Indian 
programs for fiscal year 1975-1983 and the INAP proper for fiscal year 
1984-1998.
---------------------------------------------------------------------------
    The fiscal year 1982-1998 period saw a lessening of the 
rates of decline in employment and training expenditures in 
constant dollars for the Labor Department, the training and 
employment subfunction, and INAP, as table 4 shows. The Labor 
Department's negative change ratio shrank to -1.08 because its 
annual decrease in constant dollars was only $380.1 million on 
average spending of $35.3 billion. The training and employment 
subfunction showed a negative change ratio of -0.47, based on 
an annual decrease of $31.8 million and average spending of 
$6.8 billion, both in constant dollars. INAP fell at a far 
higher rate than the Labor Department or the training and 
employment subfunction during fiscal year 1982-1998, losing 
$3.5 million in constant dollars annually in spending for a 
negative change ratio of -4.89, based on average spending of 
$71.9 million.

                          overall budget areas

    This section compares trends over the time period for the 
total BIA budget, overall Indian-program spending, \13\ and the 
Federal non-defense budget \14\ as a whole, using both current 
and constant dollars. For the BIA, table I and graph 17 
indicate an increase in spending in current dollars during 
fiscal year 1975-1998, with spending going up by $43.5 million 
a year (change ratio of 3.58) with an average level of $1.2 
billion. Table 2 and graph 18, however, show that in constant 
dollars there was actually a decline in the BIA budget of $11.5 
million a year (-0.72 change ratio), on an average spending 
level of $1.6 billion. A steady increase (r\2\ of .854) in 
current dollars becomes, when corrected for inflation, an 
uneven decline (r\2\ of .157) in constant dollars. As graph 18 
shows, the unevenness results from a lengthy decline (in 
constant dollars) followed by an uneven rise.
---------------------------------------------------------------------------
    \13\ ``Overall Indian-program spending'' means here the six major 
Indian programs covered in this memo.
    \14\ The Federal non-defense budget used here excludes both 
national defense expenditures and net interest payments on the national 
debt.
---------------------------------------------------------------------------
    Overall Federal non-defense spending, however, departs from 
the pattern for Indian-related spending. Federal spending as a 
whole in current dollars went up during the period fiscal year 
1975-1998, at a rate of $40.7 billion a year (6.28 change 
ratio) with an average level of $648.6 billion (see table 1). 
In constant dollars, Federal spending still went up, at a rate 
of $20.7 billion (2.59 change ratio) on an average level of 
nearly $800 billion (see table 2). Graphs 19 and 20 illustrate 
these upward trends in current and constant dollars.
    The overall Indian-related budget follows the same pattern 
as the BIA. Current-dollar spending during the FY1975-1998 
period, as shown in table 1, went up at a rate of $108.7 
million a year, a change ratio of 3.81, on an average spending 
level of $2.9 billion. Constant-dollar spending, however, is 
shown in table 2 to have gone down at a rate of $14.7 million a 
year (-0.40 negative change ratio) on an average spending level 
of $3.7 billion. The small size of the negative change ratio in 
constant dollars, and the inconsistency of the related trend 
(r2 of .026), result from the same pattern as for 
the BIA--a long fall followed by a recent uneven upward trend. 
Graphs 21 and 22 demonstrate the two trends.
    Population data can be used to get a simple comparison of 
per-capita Federal spending between the overall U.S. population 
and the Indian population. Table I includes population data 
similar to the budget data. The data (which include projections 
for 1997 and 1998) show that overall United States population 
increased at a rate of 2,354,194 people a year (0.97 change 
ratio) during the period 1975-1998, with an average level of 
242,492,000 people. The Indian population (as measured by the 
IHS service population) is much smaller, with an average level 
of 1,035,524, but it has grown much faster, increasing at an 
annual rate of 38,498 persons, for a change ratio of 3.72.
    To get a measure of per-capita Federal spending for each of 
the two groups, we took each year in the fiscal year 1975-1998 
period and divided the overall Federal non-defense budget by 
the total U.S. population, and the overall Indianbudget by the 
Indian population. Graphs 23A and 23B illustrate the resulting trends 
for current and constant dollars, respectively. They show that during 
the first ten years of the period the federal government spent more per 
capita on Indians than on the population as a whole. After 1985, 
however, Indians received less expenditure per capita, under major 
Indian-related programs, than the population as a whole. Throughout the 
1975-1998 period, per-capita spending in constant dollars on the U.S. 
population as a whole consistently increased, whereas per-capita 
spending in constant dollars on Indians through major Indian-related 
programs began to fall after 1979, leveling out only after 1990. Graphs 
23C and 23D display the two populations' growth trends over the 1975-
1998 period.

                                summary

    The data show that Indian-related spending, corrected for 
inflation, has been going down in almost all areas. Among the 
Indian-related items examined for the FY1997-1998 period, as 
measured in constant dollars, only the IHS and two program 
areas within the BIA, natural resources and tribal services 
(which here includes the BIA's Housing Improvement Program), 
have avoided this trend.\15\ In the FY 1982-1998 period, 
however, the BIA natural resources program area changes to a 
negative trend.
---------------------------------------------------------------------------
    \15\ As noted above, the time series for BIA natural resources and 
tribal services is not internally consistent because of BIA budget 
restructuring for FY1993-1998.
---------------------------------------------------------------------------
    The overall downward trend in federal Indian spending is 
not obvious if one looks only at current-dollar data. One has 
to look instead at constant-dollar figures. The tables and 
graphs show that, in constant dollars, overall Indian spending 
has tended to go down over the full course of the FY1975-1998 
period, while overall federal non-defense spending has gone up. 
The latter years of this period, after 1990, have seen an 
uneven upward trend in overall Indian spending in constant 
dollars, through not yet enough to bring the annual change and 
change ration to positive numbers.
    When one looks not only at overall Indian spending but also 
at its major components--BIA, IHS, Office of Indian Education 
in the Education Department, Indian Housing Development program 
in HUD, ANA, and INAP--one sees from table 2 and graph 24 that, 
in constant dollars, all major spending items except IHS have 
declined during the period FY1975-1998. Moreover, a comparison 
in constant dollars of overall Indian spending and its major 
components, on the one hand, with comparable budget items in 
the full federal budget, on the other, indicates that most 
Indian-program spending areas have lagged behind their 
equivalent federal spending areas. (See graph 25.) This is true 
even of IHS.
    If BIA spending and overall Indian spending were both to 
decline in constant dollars at the same rates of annual change 
during the period FY1999-2005 as they did during FY1975-1998 
(-$11.5 million and -$14.7 million, respectively, in constant 
dollars), as shown in graph 26, then by FY2005 overall Indian-
program spending in 1994 dollars would have fallen from a 
proposed $3.825 billion in FY1998 to $3.722 billion in FY2005. 
BIA spending in 1994 dollars would have fallen from a proposed 
$1.58 billion in FY1998 to $1.5 billion in FY2005.
    If you have any questions, or if I can be of further 
assistance, please call me at 707-8641.



        TABLE 1.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CURRENT DOLLARS, FY 1975-1998 \1\        
                                          [Dollar figures in millions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                                                        Trend   
                                                             Average       Annual     Change ratio   consistency
                                                            level (A)    change (B)       (B/A)        (r\2\)   
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.............................     $19,275.7      $1,058.8          5.49          .942
    Education function..................................      35,643.0       1,542.8          4.33          .882
    Indian Education Office (U.S. Dept. of Education)...          68.3           0.4          0.65          .093
    BIA education \2\...................................         342.7          14.6          4.25          .720
Health:                                                                                                         
    U.S. Dept. of Health & Human Services (excluding                                                            
     Social Security Admin.)............................     158,931.8      14,410.1          9.07          .931
    Health function.....................................      56,226.8       5,444.4          9.68          .887
    Indian Health Service...............................       1,133.2          82.6          7.29          .938
Housing:                                                                                                        
    U.S. Dept. of Housing & Urban Devt. (outlays) \3\...      20,207.2       1,005.6          4.98          .794
    U.S. Dept. of Housing & Urban Devt. (B.A.) \3\......      23,433.0        -486.1         -2.07          .168
    Housing assistance subfunction (outlays) \3\........      16,213.0       1,234.6          7.61          .844
    Housing assistance subfunction (B.A.) \3\...........      17,970.7        -367.2         -2.04          .110
    Indian Housing Devt. Pgm. in HUD (B.A.) \3\.........         342.6         -27.5         -8.02          .611
Economic Development and Training and Employment:                                                               
    Community & regional development function...........       8,428.8         116.6          1.38          .114
    Administration for Native Americans (HHS)...........          32.4           0.1          0.17          .014
    BIA economic development \2\........................          58.0          -0.7         -1.15          .116
    U.S. Dept. of Labor.................................      29,100.1         633.9          2.18          .354
    Training & employment subfunction...................       6,666.8         -40.6         -0.61          .023
    Indian & Native Am. Training & Emplt. (DOL) \4\.....          84.9          -4.2         -4.91          .319
Natural Resources:                                                                                              
    U.S. Dept. of the Interior..........................       5,165.9         203.2          3.93          .938
    Natural resources function..........................      15,469.3         630.2          4.07          .932
    BIA natural resources \2\...........................         112.2           4.6          4.14          .682
Overall:                                                                                                        
    BIA Total...........................................       1,213.2          43.5          3.58          .854
    BIA tribal services \2\.............................         319.0          19.2          6.01          .933
    Overall Indian budget...............................       2,853.1         108.7          3.81          .792
    Federal non-defense budget \5\......................     648,565.3      40,718.4          6.28          .981
Population:                                                                                                     
    U.S. population.....................................   242,492,000     2,354,194          0.97          .999
    Indian population (IHS ests.).......................     1,035,524        38,498          3.72          .989
----------------------------------------------------------------------------------------------------------------
\1\ See Appendix table 1 for data used to calculate these figures.                                              
\2\ Inconsistent time series from FY 1993 on, because of BIA budget restructuring. ``BIA education'' excludes   
  BIA education construction.                                                                                   
\3\ Covers only FY 1978-1998. B.A. = budget authority.                                                          
\4\ FY 1975-1983: CETA Indian program. FY 1984-1998: Indian & Native American Training & Employment Program.    
\5\ Excludes national defense outlays and net interest payments on national debt.                               


     TABLE 2.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CONSTANT 1994 DOLLARS, FY 1975-1998 \1\     
                           [Constant dollars based on Chain-Type Price Index for GDP]                           
                                          [Dollar figures in millions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                                                        Trend   
                                                             Average       Annual     Change ratio   consistency
                                                            level (A)    change (B)       (B/A)        (r\2\)   
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.............................     $24,139.1        $417.1          1.73          .636
    Education function..................................      46,028.3          79.2          0.17          .008
    Indian Education Office (U.S. Dept. of Education)...          94.5          -3.2         -3.42          .803
    BIA education \2\...................................         447.3          -1.4         -0.31          .012
Health:                                                                                                         
    U.S. Dept. of Health & Human Services (excluding                                                            
     Social Security Admin.)............................     185,344.5      10,849.7          5.85          .936
    Health function.....................................      65,045.0       4,160.1          6.40          .853
    Indian Health Service...............................       1,369.6          51.3          3.74          .843
Housing:                                                                                                        
    U.S. Dept. of Housing & Urban Devt. (outlays) \3\...      24,031.4         384.8          1.60          .252
    U.S. Dept. of Housing & Urban Devt. (B.A.) \3\......      31,332.7      -2,045.9         -6.53          .528
    Housing assistance subfunction (outlays) \3\........      18,548.9         868.9          4.68          .613
    Housing assistance subfunction (B.A.) \3\...........      24,120.9      -1,616.5         -6.70          .443
    Indian Housing Devt. Pgm. in HUD (B.A.) \3\.........         499.6         -59.9        -11.99          .644
Economic Development and Training and Employment:                                                               
    Community & regional development function...........      11,633.7        -364.7         -3.14          .315
    Administration for Native Americans (HHS)...........          46.1          -2.1         -4.54          .698
    BIA economic development \2\........................          84.1          -4.6         -5.51          .684
    U.S. Dept. of Labor.................................      39,253.4        -840.8         -2.14          .370
    Training & employment subfunction...................       9,610.7        -493.4         -5.13          .486
    Indian & Native Am. Training & Emplt. (DOL) \4\.....         133.2         -11.8         -8.86          .471
Natural Resources:                                                                                              
    U.S. Dept. of the Interior..........................       6,690.7          -2.7         -0.04          .001
    Natural resources function..........................      20,047.9          -8.2         -0.04          .001
    BIA natural resources \2\...........................         142.5           1.2          0.84          .076
Overall:                                                                                                        
    BIA Total...........................................       1,593.5         -11.5         -0.72          .157
    BIA tribal services \2\.............................         396.7           8.6          2.16          .671
    Overall Indian budget...............................       3,724.2         -14.7         -0.40          .026
    Federal non-defense budget \5\......................     799,955.7      20,691.1          2.59          .950
----------------------------------------------------------------------------------------------------------------
\1\ See Appendix table 2 for data used to calculate these figures.                                              
\2\ Inconsistent time series from FY 1993 on, because of BIA budget restructuring. ``BIA education'' excludes   
  BIA education construction.                                                                                   
\3\ Covers only FY 1978-1998. B.A. = budget authority.                                                          
\4\ FY 1975-1983: CETA Indian program. FY 1984-1998: Indian & Native American Training & Employment Program.    
\5\ Excludes national defense outlays and net interest payments on national debt.                               


          TABLE 3.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CURRENT DOLLARS, FY1982-1998 1         
                                          [Dollar figures in millions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                                                        Trend   
                                                             Average       Annual     Change Ratio   Consistency
                                                            Level (A)    Change (B)       (B/A)         (r 2)   
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.............................     $22,652.5      $1,183.7          5.23          .916
    Education function..................................      39,818.4       2,042.1          5.14          .946
    Indian Education Office (U.S. Dept. of Education)...          70.2          -0.1         -0.19          .006
    BIA education 2.....................................         379.9          21.9          5.77          .766
Health:                                                                                                         
    U.S. Dept. of Health & Human Services (excluding                                                            
     Social Security Admin.)............................     202,071.2      18,535.8          9.17          .958
    Health function.....................................      71,436.8       7,594.0         10.63          .948
    Indian Health Service...............................       1,381.3         103.0          7.46          .950
Housing:                                                                                                        
    U.S. Dept. of Housing & Urban Devt. (outlays) 3.....      22,345.1         931.6          4.17          .655
    U.S. Dept. of Housing & Urban Devt. (B.A.) 3........      20,758.0         261.1          1.26          .066
    Housing assistance subfunction (outlays) 3..........      18,767.4       1,195.9          6.37          .731
    Housing assistance subfunction (B.A.) 3.............      15,614.5         353.8          2.27          .122
    Indian Housing Devt. Pgm. in HUD (B.A.) 3...........         253.2         -11.9         -4.69          .426
Economic Development and Training and Employment:                                                               
    Community & regional development function...........       8,315.6         302.3          3.64          .460
    Administration for Native Americans (HHS)...........          31.7           0.6          1.76          .776
    BIA economic development 2..........................          53.5           0.0          0.03          .000
    U.S. Dept. of Labor.................................      31,087.9         683.0          2.20          .198
    Training & employment subfunction...................       5,974.9         163.9          2.74          .808
    Indian & Native Am. Training & Emplt. (DOL) 4.......          61.3          -1.0         -1.67          .545
Natural Resources:                                                                                              
    U.S. Dept. of the Interior..........................       5,832.0         211.0          3.62          .932
    Natural resources function..........................      17,362.1         751.2          4.33          .946
    BIA natural resources 2.............................         133.4           1.8          1.37          .190
Overall:                                                                                                        
    BIA Total...........................................       1,338.8          55.6          4.15          .832
    BIA tribal services 2...............................         378.6          22.8          6.02          .911
    Overall Indian budget...............................       3,136.6         146.1          4.66          .867
    Federal non-defense budget 5........................     781,517.1      45,724.3          5.85          .976
Population:                                                                                                     
    U.S. population.....................................   250,601,706     2,418,544          0.97          .998
    Indian population (IHS ests.).......................     1,166,091        39,856          3.42         .981 
----------------------------------------------------------------------------------------------------------------
1 See Appendix table 1 for data used to calculate these figures.                                                
2 Inconsistent time series from FY1993 on, because of BIA budget restructuring. ``BIA education'' excludes BIA  
  education construction.                                                                                       
3 Covers only FY1978-1998. B.A. = budget authority.                                                             
4 FY1975-1983: CETA Indian program. FY1984-1998: Indian & Native American Training & Employment Program.        
5 Excludes national defense outlays and net interest payments on national debt.                                 


       TABLE 4.--TRENDS IN SELECTED ELEMENTS OF THE FEDERAL BUDGET IN CONSTANT 1994 DOLLARS, FY1982-1998 1      
                           [Constant dollars based on Chain-Type Price Index for GDP]                           
                                          [Dollar figures in millions]                                          
----------------------------------------------------------------------------------------------------------------
                                                                                                        Trend   
                                                             Average       Annual     Change Ratio   Consistency
                                                            Level (A)    Change (B)       (B/A)         (r 2)   
----------------------------------------------------------------------------------------------------------------
Education:                                                                                                      
    U.S. Dept. of Education.............................     $25,146.9        $564.8          2.25          .713
    Education function..................................      44,250.4         932.1          2.11          .795
    Indian Education Office (U.S. Dept. of Education)...          81.2          -2.7         -3.29          .726
    BIA education 2.....................................         420.3          11.1          2.64          .415
Health:                                                                                                         
    U.S. Dept. of Health & Human Services (excluding                                                            
     Social Security Admin.)............................     217,832.4      13,876.5          6.37          .959
    Health function.....................................      76,090.6       6,108.2          8.03          .942
    Indian Health Service...............................       1,506.8          69.8          4.63          .902
Housing:                                                                                                        
    U.S. Dept. of Housing & Urban Devt. (outlays) 3.....      25,035.1         252.5          1.01          .081
    U.S. Dept. of Housing & Urban Devt. (B.A.) 3........      23,752.6        -460.4         -1.94          .132
    Housing assistance subfunction (outlays) 3..........      20,679.1         688.7          3.33          .365
    Housing assistance subfunction (B.A.) 3.............      17,736.9        -171.8         -0.97          .021
    Indian Housing Devt. Pgm. in HUD (B.A.) 3...........         304.2         -24.8         -8.14          .619
Economic Development and Training and Employment:                                                               
    Community & regional development function...........       9,379.4          10.9          0.12          .001
    Administration for Native Americans (HHS)...........          36.1          -0.5         -1.39          .728
    BIA economic development 2..........................          62.0          -2.1         -3.37          .384
    U.S. Dept. of Labor.................................      35,339.8        -380.1         -1.08          .054
    Training & employment subfunction...................       6,768.4         -31.8         -0.47          .096
    Indian & Native Am. Training & Emplt. (DOL) 4.......          71.9          -3.5         -4.89          .855
Natural Resources:                                                                                              
    U.S. Dept. of the Interior..........................       6,556.6          36.0          0.55          .280
    Natural resources function..........................      19,416.9         242.4          1.25          .636
    BIA natural resources 2.............................         152.4          -2.3         -1.51          .209
Overall:                                                                                                        
    BIA Total...........................................       1,498.9          16.0          1.06          .262
    BIA tribal services 2...............................         418.2          12.4          2.96          .737
    Overall Indian budget...............................       3,499.2         -54.3          1.55          .448
    Federal non-defense budget 5........................     863,968.8      24,533.9          2.84         .944 
----------------------------------------------------------------------------------------------------------------
1 See Appendix table 2 for data used to calculate these figures.                                                
2 Inconsistent time series from FY1993 on, because of BIA budget restructuring. ``BIA education'' excludes BIA  
  education construction.                                                                                       
3 Covers only FY1978-1998. B.A. = budget authority.                                                             
4 FY1975-1983: CETA Indian program. FY1984-1998: Indian & Native American Training & Employment Program.        
5 Excludes national defense outlays and net interest payments on national debt.                                 


                       APPENDIX TABLE 1.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CURRENT DOLLARS, FY1975-1998                      
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Indian                                         Indian &                   
                                             Bureau of     Indian Health     Education    Indian Housing    Admin. for        Native                    
               Fiscal year                Indian Affairs      Service        Office in     Devt. Pgm. in      Native       American E&T   Overall Indian
                                            (Approps.)      (Approps.)      Educ. Dept.   HUD (B.A., New     Americans    in Labor Dept.      Budget    
                                                                            (Approps.)     Construction)    (Approps.)      (Approps.)                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975....................................        $738,236        $293,103         $42,034             N/A         $32,000         $62,304      $1,167,677
1976....................................         808,095         338,926          57,055         511,200          41,000          80,198       1,836,474
1977....................................         787,359         509,055          57,212             N/A          33,000         236,525       1,623,151
1978....................................         897,740         513,267          59,732         696,900          33,000          77,160       2,277,799
1979....................................       1,031,195         569,153          71,735         874,300          33,100         208,684       2,788,167
1980....................................         994,227         620,871          75,900         847,900          33,800         183,835       2,756,533
1981....................................       1,098,447         869,762          81,680         471,500          33,800         146,817       2,702,006
1982....................................         970,360         676,157          77,852         494,300          28,000          77,436       2,324,105
1983....................................       1,149,902         752,916          69,185         340,600          28,000          77,355       2,417,958
1984....................................         957,593         832,407          68,780         368,100          29,000          62,243       2,318,123
1985....................................       1,019,411         862,203          67,404         290,200          29,000          62,243       2,330,461
1986....................................         995,693         867,177          64,187         299,500          27,742          59,567       2,313,866
1987....................................       1,036,253         940,750          64,036         245,000          28,989          61,484       2,376,512
1988....................................       1,071,406       1,008,818          64,234         247,800          29,679          59,713       2,481,650
1989....................................       1,122,966       1,081,993          71,553         102,699          29,975          58,996       2,468,182
1990....................................       1,355,720       1,250,133          73,620         136,099          31,709          58,193       2,905,474
1991....................................       1,558,541       1,577,549          75,364         216,083          33,375          59,624       3,520,536
1992....................................       1,536,954       1,705,954          76,570         239,797          33,920          63,000       3,656,195
1993....................................       1,548,709       1,858,630          80,583         257,610          34,502          61,871       3,841,905
1994....................................       1,778,653       1,947,175          83,500         263,000          30,984          63,895       4,167,207
1995....................................       1,729,398       1,960,074          81,041         248,006          38,382          59,787       4,116,688
1996....................................       1,591,403       1,983,963          52,497         163,000          34,933          52,502       3,878,298
1997E...................................       1,605,674       2,054,000          60,993         200,000          34,933          52,502       4,008,102
1998P...................................       1,731,779       2,122,000          62,600       1 193,000          34,933          52,502       4,196,814
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 APPENDIX TABLE 1.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CURRENT DOLLARS, FY1975-1998--Continued                 
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    U.S. Dept.                          
                                                      BIA       BIA Tribal      BIA      BIA Natural   U.S. Dept.     of HHS                            
                                                   Education     Services     Economic    Resources        of        (except     U.S. Dept.   U.S. Dept.
                   Fiscal year                     Program 2    Program 2,   Devt. Pro-   Program 2    Education    Soc. Sec.      of HUD       of HUD  
                                                   (Approps.)       3        gram 2, 4    (Approps.)   (Outlays)     Admin.)     (Outlays)      (B.A.)  
                                                                (Approps.)   (Approps.)                             (Outlays)                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975............................................     $226,495      $98,703      $44,223      $31,337   $7,331,000   33,751,000   $7,512,000          N/A
1976............................................      243,590      137,616       52,441       36,012    7,897,000   40,261,000    7,026,000   29,200,000
1977............................................      236,700      159,118       73,966       45,536    8,717,000   46,493,000    5,808,000   33,818,000
1978............................................      258,203      189,086       76,422       76,967    9,828,000   51,752,000    7,650,000   37,994,000
1979............................................      262,242      205,198       83,162       75,338   12,167,000   57,820,000    9,220,000   31,142,000
1980............................................      270,033      201,128       77,971       74,237   14,612,000   68,255,000   12,735,000   35,852,000
1981............................................      270,183      227,249       73,365       85,711   16,973,000   80,821,000   14,880,000   34,220,000
1982............................................      265,606      235,315       52,884       84,743   14,707,000   88,408,000   15,232,000   20,911,000
1983............................................      298,143      277,865       59,821      119,241   14,433,000   95,008,000   15,814,000   16,561,000
1984............................................      255,754      254,355       59,009       99,657   15,424,000  102,375,000   16,663,000   18,148,000
1985............................................      269,644      241,807       71,002      124,101   16,596,000  114,271,000   28,720,000   31,398,000
1986............................................      257,299      254,152       60,810      135,179   17,577,000  122,943,000   14,139,000   15,928,000
1987............................................      277,783      275,367       38,025      144,428   16,670,000  131,414,000   15,484,000   14,657,000
1988............................................      238,434      340,025       39,543      146,010   18,145,000  140,039,000   18,938,000   14,949,000
1989............................................      268,503      315,973       45,299      181,696   21,468,000  152,699,000   19,680,000   14,347,000
1990............................................      287,384      322,629       36,496      125,719   22,972,000  175,531,000   20,167,000   17,315,000
1991............................................      544,545      364,060       42,408      139,694   25,196,000  198,110,000   22,751,000   27,634,000
1992............................................      416,859      432,045       48,072      139,932   25,832,000  231,560,000   24,470,000   24,966,000
1993............................................      454,694      454,705       68,440      137,662   30,109,000  253,835,000   25,181,000   26,468,000
1994............................................      498,675      527,999       67,614      148,338   24,557,000  278,901,000   25,845,000   26,322,000
1995............................................      510,968      538,285       66,622      150,321   31,205,000  303,081,000   29,044,000   19,800,000
1996............................................      502,483      499,437       51,862      128,626   29,727,000  319,803,000   25,508,000   21,093,000
1997E...........................................      544,696      520,312       49,959      127,648   28,340,000  351,086,000   29,928,000   19,386,000
1998P...........................................      566,364      582,477       52,119      134,928   32,134,000  376,147,000   32,302,000   23,003,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 APPENDIX TABLE 1.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CURRENT DOLLARS, FY1975-1998--Continued                 
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Housing      Housing      Economic    Training &
                                             U.S. Dept.   U.S. Dept.   Education    Health  Function   Assistance   Assistance  Development   Employment
                Fiscal Year                 of Interior    of Labor     Function       (Outlays)      Subfunction  Subfunction    Function   Subfunction
                                             (Outlays)    (Outlays)    (Outlays)                       (Outlays)      (B.A.)     (Outlays)    (Outlays) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975......................................   $2,221,000  $17,610,000  $16,022,000        $12,930,000   $2,058,000          N/A   $4,322,000   $4,063,000
1976......................................    2,433,000   25,526,000   18,910,000         15,734,000    2,499,000  $19,421,000    5,442,000    6,288,000
1977......................................    3,213,000   22,269,000   21,104,000         17,302,000    2,968,000   28,629,000    7,021,000    6,877,000
1978......................................    3,874,000   22,712,000   26,710,000         18,524,000    3,677,000   32,300,000   11,841,000   10,784,000
1979......................................    4,168,000   22,459,000   30,223,000         20,494,000    4,367,000   24,780,000   10,480,000   10,833,000
1980......................................    4,472,000   29,510,000   31,843,000         23,169,000    5,632,000   27,932,000   11,252,000   10,345,000
1981......................................    4,456,000   29,821,000   33,709,000         26,866,000    7,752,000   26,927,000   10,568,000    9,241,000
1982......................................    3,944,000   30,387,000   27,029,000         27,445,000    8,738,000   14,608,000    8,347,000    5,464,000
1983......................................    4,547,000   37,604,000   26,606,000         28,641,000    9,998,000   10,498,000    7,560,000    5,295,000
1984......................................    4,943,000   24,292,000   27,579,000         30,417,000   11,270,000   12,671,000    7,673,000    4,644,000
1985......................................    4,820,000   23,699,000   29,342,000         33,542,000   25,263,000   26,879,000    7,680,000    4,972,000
1986......................................    4,785,000   23,941,000   30,585,000         35,936,000   12,383,000   11,643,000    7,233,000    5,257,000
1987......................................    5,046,000   23,253,000   29,724,000         39,967,000   12,656,000    9,864,000    5,051,000    5,084,000
1988......................................    5,143,000   21,743,000   31,938,000         44,487,000   13,906,000    9,698,000    5,294,000    5,215,000
1989......................................    5,207,000   22,549,000   36,674,000         48,390,000   14,715,000    9,568,000    5,362,000    5,292,000
1990......................................    5,790,000   25,215,000   38,755,000         57,716,000   15,891,000   11,135,000    8,498,000    5,619,000
1991......................................    6,088,000   33,954,000   43,354,000         71,183,000   17,175,000   19,721,000    6,811,000    5,934,000
1992......................................    6,539,000   47,078,000   45,248,000         89,497,000   18,904,000   19,736,000    6,838,000    6,479,000
1993......................................    6,784,000   44,651,000   50,012,000         99,415,000   21,542,000   21,170,000    9,052,000    6,700,000
1994......................................    6,900,000   37,047,000   46,307,000        107,122,000   23,884,000   21,109,000   10,454,000    7,097,000
1995......................................    7,378,000   32,092,000   54,263,000        115,418,000   27,520,000   15,322,000   10,641,000    7,430,000
1996......................................    6,725,000   32,492,000   52,001,000        119,378,000   26,754,000   16,430,000   10,685,000    7,030,000
1997E.....................................    7,404,000   32,874,000   51,291,000        127,630,000   29,046,000   15,235,000   12,752,000    6,835,000
1998P.....................................    7,101,000   35,624,000   56,204,000        138,241,000   29,401,000   20,159,000   11,435,000    7,226,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                 APPENDIX TABLE 1.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CURRENT DOLLARS, FY1975-1998--Continued                 
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Natural     Total Federal                              Overall                  Chain-Type   Chain-Type
                                                Resources     Non-Defense    U.S. Total     Indian      U.S. Per    Indian Per  Price Index  Price Index
                 Fiscal Year                     Function     Budget \5\     Population   Population     Capita       Capita      for GDP      for GDP  
                                                (Outlays)      (Outlays)                  (IHS data)  Expenditure  Expenditure   (1992=100)   (1994=100)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975.........................................   $7,346,000    $222,579,000  215,973,000      587,468       $1,031       $1,988         42.2         40.2
1976.........................................    8,184,000     255,446,000  218,035,000      611,296        1,172        3,004         44.6         42.5
1977.........................................   10,032,000     282,076,000  220,239,000      635,313        1,281        2,555         47.5         45.2
1978.........................................   10,983,000     318,793,000  222,585,000      726,551        1,432        3,135         50.9         48.5
1979.........................................   12,135,000     344,507,000  225,055,000      790,486        1,531        3,527         55.3         52.7
1980.........................................   13,858,000     404,414,000  227,726,000      828,609        1,776        3,327         60.4         57.5
1981.........................................   13,568,000     451,962,000  229,966,000      849,315        1,965        3,181         66.1         63.0
1982.........................................   12,998,000     475,402,000  232,188,000      871,167        2,047        2,668         70.2         66.9
1983.........................................   12,672,000     508,649,000  234,307,000      902,701        2,171        2,679         73.2         69.7
1984.........................................   12,593,000     513,352,000  236,348,000      936,942        2,172        2,474         75.9         72.3
1985.........................................   13,357,000     564,247,000  238,466,000      961,881        2,366        2,423         78.6         74.9
1986.........................................   13,639,000     581,083,000  240,651,000      986,551        2,415        2,345         80.6         76.8
1987.........................................   13,363,000     583,513,000  242,804,000    1,011,837        2,403        2,349         83.1         79.1
1988.........................................   14,606,000     622,290,000  245,021,000    1,038,121        2,540        2,391         86.1         82.0
1989.........................................   16,182,000     670,846,000  247,342,000    1,073,886        2,712        2,298         89.7         85.4
1990.........................................   17,080,000     769,611,000  249,907,000    1,207,236        3,080        2,407         93.6         89.1
1991.........................................   18,559,000     856,567,000  252,618,000    1,242,719        3,391        2,833         97.3         92.7
1992.........................................   20,025,000     883,910,000  255,391,000    1,269,823        3,461        2,879        100.0         95.2
1993.........................................   20,239,000     919,517,000  258,132,000    1,299,415        3,562        2,957        102.6         97.7
1994.........................................   21,064,000     977,132,000  260,682,000    1,340,666        3,748        3,108        105.0        100.0
1995.........................................   22,078,000   1,011,494,000  263,168,000    1,376,692        3,844        2,990        107.6        102.5
1996.........................................   21,614,000   1,053,492,000  265,557,000    1,405,437        3,967        2,759        109.9        104.7
1997E........................................   22,773,000   1,116,458,000  267,645,000    1,434,529        4,171        2,794        112.4        107.0
1998P........................................   22,314,000   1,178,228,000  270,002,000    1,463,938        4,364        2,867        115.2        109.7
--------------------------------------------------------------------------------------------------------------------------------------------------------


                    APPENDIX TABLE 2.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CONSTANT 1994 DOLLARS, FY1975-1998                   
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Indian                                         Indian &                   
                                             Bureau of     Indian Health     Education    Indian Housing    Admin. for      Native Arm.                 
               Fiscal year                Indian Affairs      Service        Office in     Devt. Pgm. in      Native       E&T in Labor   Overall Indian
                                            (Approps.)      (Approps.)      Educ. Dept.    HUD (B.A. New     Americans         Dept.          Budget    
                                                                            (Approps.)     Construction)    (Approps.)      (Approps.)                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975....................................      $1,836,843        $729,285        $104,587              NA         $79,621        $155,022      $2,905,357
1976....................................       1,902,466         797,920         134,322       1,203,498          96,525         188,807       4,323,537
1977....................................       1,740,478       1,125,279         126,469              NA          72,947         522,845       3,588,018
1978....................................       1,851,919       1,058,802         123,219       1,437,613          68,075         159,171       4,698,800
1979....................................       1,957,965       1,080,670         136,206       1,660,063          62,848         396,235       5,293,988
1980....................................       1,728,375       1,079,329         131,945       1,473,998          58,758         319,581       4,791,986
1981....................................       1,744,886       1,381,619         129,749         748,979          53,691         233,219       4,292,143
1982....................................       1,451,393       1,011,346         116,445         739,338          41,880         115,823       3,476,225
1983....................................       1,649,450       1,080,002          99,241         488,566          40,164         110,960       3,468,382
1984....................................       1,324,733       1,151,551          95,150         509,229          40,119          86,107       3,206,890
1985....................................       1,361,809       1,151,798          90,044         387,672          38,740          83,149       3,113,211
1986....................................       1,297,119       1,129,697          83,618         390,167          36,140          77,600       3,014,342
1987....................................       1,309,345       1,188,673          80,912         309,567          36,629          77,687       3,002,813
1988....................................       1,306,593       1,230,266          78,334         302,195          36,194          72,821       3,026,402
1989....................................       1,314,509       1,266,547          83,758         120,216          35,088          69,059       2,889,176
1990....................................       1,520,840       1,402,393          82,587         152,675          35,571          65,281       3,259,346
1991....................................       1,681,879       1,702,391          81,328         233,183          36,016          64,342       3,799,140
1992....................................       1,613,802       1,791,252          80,399         251,787          35,616          66,150       3,839,005
1993....................................       1,584,936       1,902,107          82,468         263,636          35,309          63,318       3,931,774
1994....................................       1,778,653       1,947,175          83,500         263,000          30,984          63,895       4,167,207
1995....................................       1,687,610       1,912,712          79,083         242,013          37,455          58,342       4,017,214
1996....................................       1,520,449       1,895,506          50,156         155,732          33,376          50,161       3,705,380
1997E...................................       1,499,962       1,918,772          56,977         186,833          32,633          49,045       3,744,223
1998P...................................       1,578,444       1,934,115          57,057     175,911 \1\          31,840          47,853       3,825,221
--------------------------------------------------------------------------------------------------------------------------------------------------------


               APPENDIX TABLE 2.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CONSTANT 1994 DOLLARS, FY1975-1998--Continue              
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    U.S. Dept.                          
                                                    BIA       BIA Tribal   BIA Economic  BIA Natural   U.S. Dept.     of HHS                            
                                                 Education     Services        Devt.      Resources        of        (except     U.S. Dept.   U.S. Dept.
                  Fiscal year                   Program \2\  Program 2, 3  Program 2, 4  Program \2\   Education    Soc. Sec.      of HUD       of HUD  
                                                 (Approps.)   (Approps.)    (Approps.)    (Approps.)   (Outlays)     Admin.)     (Outlays)      (B.A.)  
                                                                                                                    (Outlays)                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975..........................................     $563,554      $245,588      $110,034      $77,971  $18,240,640  $83,977,607  $18,690,995           NA
1976..........................................      573,474       323,984       123,460       84,782   18,591,592   94,784,865   16,541,031  $68,744,395
1977..........................................      523,232       351,735       163,504      100,659   19,269,158  102,774,000   12,838,737   74,755,579
1978..........................................      532,639       390,060       157,649      158,773   20,273,870  106,757,564   15,780,943   78,376,621
1979..........................................      497,928       389,616       157,903      143,047   23,101,899  109,784,810   17,506,329   59,130,380
1980..........................................      469,428       349,643       135,546      129,054   25,401,656  118,655,215   22,138,659   62,325,497
1981..........................................      429,186       360,986       116,540      136,152   26,961,649  128,384,342   23,636,914   54,358,548
1982..........................................      397,274       351,967        79,100      126,752   21,997,650  132,234,188   22,782,906   31,277,137
1983..........................................      427,664       398,577        85,809      171,042   20,703,074  136,281,967   22,684,016   23,755,533
1984..........................................      353,810       351,875        81,633      137,865   21,337,549  141,625,494   23,051,581   25,105,929
1985..........................................      360,211       323,025        94,850      165,784   22,170,229  152,652,099   38,366,412   41,943,893
1986..........................................      335,191       331,091        79,219      176,102   22,898,077  160,161,476   18,419,293   20,749,876
1987..........................................      350,989       347,937        48,046      182,490   21,063,177  166,046,570   19,564,621   18,519,675
1988..........................................      290,773       414,665        48,223      178,061   22,128,049  170,779,268   23,095,122   18,230,488
1989..........................................      314,301       369,868        53,026      212,688   25,129,766  178,744,649   23,036,789   16,794,147
1990..........................................      322,386       361,924        40,941      141,031   25,769,872  196,909,776   22,623,237   19,423,878
1991..........................................      587,638       392,871        45,764      150,749   27,189,928  213,787,770   24,551,439   29,820,863
1992..........................................      437,702       453,647        50,476      146,929   27,123,600  243,138,000   25,693,500   26,214,300
1993..........................................      465,330       465,341        70,041      140,882   30,813,304  259,772,661   25,770,029   27,087,135
1994..........................................      498,675       527,999        67,614      148,338   24,557,000  278,901,000   25,845,000   26,322,000
1995..........................................      498,621       525,278        65,012      146,689   30,450,976  295,757,481   28,342,193   19,321,561
1996..........................................      480,079       477,169        49,550      122,891   28,401,592  305,544,268   24,370,701   20,152,548
1997E.........................................      508,835       486,057        46,670      119,244   26,474,199  327,971,797   27,957,651   18,109,698
1998P.........................................      516,217       530,904        47,504      122,981   29,288,802  342,842,318   29,441,927   20,966,276
--------------------------------------------------------------------------------------------------------------------------------------------------------


              APPENDIX TABLE 2.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CONSTANT 1994 DOLLARS, FY1975-1998--Continued              
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Housing      Housing      Economic    Training &
                                                   U.S. Dept.   U.S. Dept.   Education      Health     Assistance   Assistance  Development   Employment
                   Fiscal year                    of Interior    of Labor     Function     Function   Subfunction  Subfunction    Function   Subfunction
                                                   (Outlays)    (Outlays)    (Outlays)    (Outlays)    (Outlays)      (B.A.)     (Outlays)    (Outlays) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975............................................   $5,526,185  $43,816,351  $39,865,166  $32,171,801   $5,120,616           NA  $10,753,791  $10,109,360
1976............................................    5,727,915   60,094,843   44,519,058   37,041,928    5,883,296  $45,722,085   12,811,883   14,803,587
1977............................................    7,102,421   49,226,211   46,650,947   38,246,526    6,560,842  $63,285,158   15,520,105   15,201,789
1978............................................    7,991,552   46,851,866   55,099,214   38,212,574    7,585,167   66,630,648   24,426,424   22,245,972
1979............................................    7,913,924   42,643,671   57,385,443   38,912,658    8,291,772   47,050,633   19,898,734   20,568,987
1980............................................    7,774,172   51,300,497   55,356,209   40,277,235    9,790,728   48,557,285   19,560,596   17,983,858
1981............................................    7,078,366   47,370,726   53,546,823   42,676,702   12,314,070   42,773,601   16,787,292   14,679,349
1982............................................    5,899,145   45,450,641   40,427,991   41,050,214   13,069,658   21,849,573   12,484,829    8,172,650
1983............................................    6,522,336   53,940,164   38,164,344   41,083,402   14,341,393   15,058,607   10,844,262    7,595,287
1984............................................    6,838,142   33,605,534   38,152,767   42,078,854   15,590,909   17,529,051   10,614,822    6,424,506
1985............................................    6,438,931   31,658,969   39,197,328   44,808,015   33,748,282   35,907,061   10,259,542    6,641,985
1986............................................    6,233,561   31,188,648   39,843,983   46,814,888   16,131,700   15,167,680    9,422,643    6,848,449
1987............................................    6,375,812   29,381,047   37,557,401   50,499,819   15,991,336   12,463,538    6,382,130    6,423,827
1988............................................    6,271,951   26,515,854   38,948,780   54,252,439   16,958,537   11,826,829    6,456,098    6,359,756
1989............................................    6,095,151   26,395,151   42,929,431   56,643,813   17,224,916   11,200,000    6,276,589    6,194,649
1990............................................    6,495,192   28,286,058   43,475,160   64,745,513   17,826,442   12,491,186    9,533,013    6,303,365
1991............................................    6,569,784   36,641,007   46,784,892   76,816,187   18,534,173   21,281,655    7,350,000    6,403,597
1992............................................    6,865,950   49,431,900   47,510,400   93,971,850   19,849,200   20,722,800    7,179,900    6,802,950
1993............................................    6,942,690   45,695,468   51,181,871  101,740,497   22,045,906   21,665,205    9,263,743    6,856,725
1994............................................    6,900,000   37,047,000   46,397,000  107,122,000   23,884,000   21,109,000   10,454,000    7,097,000
1995............................................    7,199,721   31,316,543   52,951,812  112,629,089   26,855,019   14,951,766   10,383,875    7,250,465
1996............................................    6,425,159   31,043,312   49,682,484  114,055,414   25,561,146   15,697,452   10,208,599    6,716,561
1997E...........................................    6,916,548   30,709,698   47,914,190  119,227,313   27,133,719   14,231,984   11,912,456    6,385,009
1998P...........................................    6,472,266   32,469,792   51,227,604  126,000,911   26,797,786   18,374,089   10,422,526    6,586,198
--------------------------------------------------------------------------------------------------------------------------------------------------------


              APPENDIX TABLE 2.--BUDGET DATA FOR SELECTED ELEMENTS OF THE FEDERAL BUDGET, IN CONSTANT 1994 DOLLARS, FY1975-1998--Continued              
                                                [Dollar amounts in thousands, except per capita figures]                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Natural    Total Federal Non-   Overall                                                                   
                                             Resources     Defense Budget     U.S. Per    Indian Per                                                    
                Fiscal year                   Function     \5\ (Outlays)       Capita       Capita                                                      
                                             (Outlays)                      Expenditure  Expenditure                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975......................................  $18,277,962       $553,810,308       $2,564       $4,946                                                    
1976......................................   19,267,265        601,386,323        2,758        7,073                                                    
1977......................................   22,176,000        623,536,421        2,831        5,648                                                    
1978......................................   22,656,483        657,627,996        2,955        6,467                                                    
1979......................................   23,041,139        654,127,215        2,907        6,697                                                    
1980......................................   24,090,894        703,037,583        3,087        5,783                                                    
1981......................................   21,552,799        717,942,663        3,122        5,054                                                    
1982......................................   19,441,453        711,071,368        3,062        3,990                                                    
1983......................................   18,177,049        729,619,467        3,114        3,842                                                    
1984......................................   17,421,146        710,170,751        3,005        3,423                                                    
1985......................................   17,843,321        753,765,076        3,161        3,237                                                    
1986......................................   17,767,928        756,993,983        3,146        3,055                                                    
1987......................................   16,884,657        737,290,794        3,037        2,968                                                    
1988......................................   17,812,195        758,890,244        3,097        2,915                                                    
1989......................................   18,942,140        785,271,237        3,175        2,690                                                    
1990......................................   19,160,256        863,345,673        3,455        2,700                                                    
1991......................................   20,027,698        924,352,878        3,659        3,057                                                    
1992......................................   21,026,250        928,105,500        3,634        3,023                                                    
1993......................................   20,712,427        941,026,170        3,646        3,026                                                    
1994......................................   21,064,000        977,132,000        3,748        3,108                                                    
1995......................................   21,544,517        987,052,695        3,751        2,918                                                    
1996......................................   20,650,318      1,006,521,019        3,790        2,636                                                    
1997E.....................................   21,273,710      1,042,954,537        3,897        2,610                                                    
1998P.....................................   20,338,281      1,073,905,729        3,977        2,613                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ HUD estimate of ``Development/HOME'' portion of budget authority for the new Native American Housing Block Grant program. Block grant recipients may
  spend more or less than HUD estimate. See text.                                                                                                       
\2\ Inconsistent time series from FY1993 on, because of BIA budget restructuring. ``BIA Education Program'' excludes BIA education construction.        
\3\ Includes Tribal Services (with Housing Improvement Program) and Navajo-Hopi Settlement programs.                                                    
\4\ Includes Road Maintenance program.                                                                                                                  
\5\ Excludes national defense outlays and net interest payments on national debt.                                                                       
N/A   Not Available.                                                                                                                                    
E   Estimate.                                                                                                                                           
P   Proposed amounts and projections.                                                                                                                   
B.A.   Budget authority.                                                                                                                                
HUD   Department of Housing and Urban Development.                                                                                                      
E&T   Employment and Training.                                                                                                                          
GDP   Gross Domestic Product.                                                                                                                           

                                       U.S. Senate,
                                Committee on the Judiciary,
                                    Washington, DC, March 19, 1997.
Hon. Pete V. Domenici, Chairman,

Hon. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete and Frank: Thank you for your January 22, 1997, 
letter requesting our views pursuant to Section 301(d) of the 
Congressional Budget Act. As you know, the Committee on the 
Judiciary has jurisdiction over Administration of Justice 
programs.
    Balancing the federal budget will, of course, require us to 
make tough choices about spending priorities. We share your 
view that we can make changes to produce savings throughout the 
government. No department should be exempt from scrutiny.
    Some of the funding increases sought by the Department of 
Justice (DOJ) reflect what appear to be reasonable efforts to 
deal with the major crime problems facing our nation: drug use, 
juvenile crime, and violent crime. By contrast, other funding 
requests sought by DOJ, whether they be enhancements to 
existing programs or the establishment of entirely new 
programs, appear unwarranted. We do need to look especially 
vigorously at DOJ's request for the funding of new or recently-
established programs.

               State and Local Law Enforcement Assistance

    In addition to the state incarceration and truth-in-
sentencing grants that I already have discussed, I also am 
quite concerned with proposals in the President's budget 
relating to state and local law enforcement assistance. 
Foremost among my concerns is the President's proposal for the 
Byrne grant program. As you know, this highly successful and 
popular program provides needed assistance to state and local 
law enforcement for a wide variety of programs and services
    The President's budget proposes a $1.3 million cut in the 
Byrne formula grant program for FY 1998. More critically, the 
President also proposes deriving the entire $495.5 million in 
formula grants, as well as $74.1 million in discretionary 
grants, from the Violent Crime Reduction Trust Fund (VCRTF), 
reducing direct appropriations for these grants by $361 
million.
    In the 1994 crime law, Congress provided that, for FY 1998, 
$75 million would be authorized for the Byrne program from the 
VCRTF. But Congress's intent was that those funds supplement 
Byrne grants that would be appropriated in direct 
appropriations. Appropriating Byrne grants entirely from the 
VCRTF, in essence, amounts to cutting this program and puts the 
program at risk when the VCRTF expires after FY 2000.
    Further, the President proposes a hard earmark of $30 
million from the Byrne grants for state drug treatment and 
aftercare programs. I oppose such an earmark for these funds, 
particularly since they are in addition to a proposed $61.8 
million grant program for the same purpose.
    The President also proposes zero funding for the Local Law 
Enforcement Block Grant program, which provides assistance on a 
formula basis to local law enforcement agencies. Eliminating 
this program, which was funded at $503 million in FY 1996 and 
$514.6 million in FY 1997, represents a severe blow to federal 
efforts to assist our communities in the war against crime. 
Those funds should be restored.
    Finally, the President proposes a $44 million increase to 
the drug court program, for an increase of 249% over FY 1997 
levels. The President also proposes $49 million for a new 
``Violent Youth Court'' program. I believe that such funding 
levels are unwarranted for these untested programs, and that 
they risk inappropriately entangling the federal government in 
the open-ended funding of state judicial systems.

                                Drug Use

    After years without leadership on the fight against drugs, 
the administration is now requesting a significant increase for 
drug enforcement related activities. We welcome the spirit with 
which these requests are made. During this administration, the 
number of 12 to 17-year-olds using marijuana increased from 1.6 
million in 1992 to 2.9 million in 1994. The category of 
``recent marijuana use'' increased a staggering 200 percent 
among 14 to 15-year-olds over the same period. Since 1992, 
there has been a 52% jump in the number of high-school seniors 
using drugs monthly. Even as worrisome, declines are noted in 
peer disapproval of drug use. In 1996 all measures of marijuana 
use showed an increase at all three grade levels (8, 10, and 
12) evaluated. For eighth-graders, annual prevalence has 
tripled from 6% in 1991 to 18% in 1996. Among tenth-graders, 
annual prevalence more than doubled from a low point of 15% in 
1992 to 34% in 1996. Among twelfth graders, it increased by 
nearly two-thirds, from a low point of 22% in 1992 to 36% in 
1996. Even more alarming is the continuing rise in daily use of 
marijuana, largely seen as a ``gateway'' drug to even more 
lethal drugs such as cocaine and heroin. Nearly one in twenty 
twelfth graders (4.9%) use marijuana today on a daily basis. In 
just the last year the number of eighth-graders using marijuana 
daily has nearly doubled. Annual prevalence of LSD, cocaine, 
hallucinogens other than cocaine, and methamphetamine rose in 
all three grade levels in 1996, and heroin use is up between 
two and two-and-one-half times what it was just three years 
ago.
    We are pleased that the administration has taken heed of 
Congress's warnings and is requesting increased funding for 
federal law enforcement initiatives to combat drug trafficking, 
distribution, and abuse. DOJ seeks a 4.2% increase in resources 
dedicated to fighting drug trafficking and abuse, or $288 
million, from $6.9 billion in FY 1997 to $7.25 billion in FY 
1998. In its budget, DOJ seeks an increase in DEA's funding of 
$91.8 million, from $1.054 billion in FY 1997 to $1.146 billion 
in FY 1998. In particular, DOJ seeks funding for additional 
Drug Enforcement Administration (DEA) agents, including DEA 
agents that will fight drug trafficking on the Southwest 
Border; additional Federal Bureau of Investigation (FBI) 
agents; and additional Border Patrol agents; as well as 
additional lawyers in the United States Attorneys' Offices. DOJ 
also has sought additional funding for a comprehensive 
initiative to fight methamphetamine production and trafficking, 
as well as to combat a resurgent use of heroin, DOJ 1998 Budget 
Summary 101-02, 105, goals that I believe need and deserve our 
support. As a general proposition, I believe that this 
Administration needs to enhance its effort to fight drug 
trafficking and abuse, and I support reasonable efforts in that 
direction.
    At the same time, I am concerned about how the 
Administration proposes to use some of these funds. For 
example, although the Southwest Border initiative is a 
reasonable program addressed to drug trafficking in the areas 
on and near the border with Mexico, DOJ seeks an increase of 
numerous positions and funds for its Legal Attache Program for 
new offices in countries such as Kazakhstan and Uzbekistan. DOJ 
1998 Budget Summary 90. Those areas contribute to the drug 
problem in this country, but not nearly as much as countries 
like Mexico. I therefore question whether we need to expand the 
Department's presence into such regions.
    From FY 1996 levels, DOJ requested a 100% increase in 
funding for Drug Courts for FY 1997. Again, for FY 1998, DOJ 
has requested another 150% increase, a total of $75 million, in 
funding from FY 1997 levels. DOJ seeks a $33 million increase 
for the Office of Justice Programs Residential Substance Abuse 
Treatment of State Prisoners Program. I am concerned both that 
these programs are better left to state funding and also that 
these programs have not proved effective. DOJ seeks an increase 
to the Edward Byrne Memorial Grant Programs for matters such as 
evaluation of state drug testing programs, which should be 
funded for the States, and to fund new demonstration projects, 
without proof that past funding of such programs has proved 
effective. Furthermore, the Byrne program is a law enforcement 
program. Congress should assess whether the administration's 
growing pattern of funding social programs through our law 
enforcement agencies and programs is appropriate. DOJ seeks 
additional funding for Criminal Division attorneys to 
``coordinate'' the Southwest Border Initiative and to 
``review'' capital cases. In my view, those are the type of 
activities far better handled by Assistant U.S. Attorneys in 
the field, rather than in Washington, D.C. Congress should 
assess whether the Administration's growing practice of funding 
social programs through law enforcement agencies and programs 
is appropriate.

                              youth crime

    The prevalence of youth crime is a major concern to every 
citizen and parent in the nation. Consider the following: In 
1994, law enforcement agencies made more than 2.7 million 
arrests of persons under age 18. In 1994, 3,700 juveniles were 
arrested for murder or nonnegligent manslaughter; 6,000 
juveniles were arrested for forcible rape; 55,200 for robbery; 
and 85,300 for aggravated assault. More than 748,000 juveniles 
were arrested in 1994 for property crime, such as burglary, 
larceny-theft, motor vehicle theft, and arson.
    It was because of this trend that I introduced S. 10, the 
Violent and Repeat Juvenile Offender Act of 1997. That bill 
would authorize $500 million in funding for various initiatives 
that would address youth crime, such as programs that enhance 
the identification, investigation, prosecution, and punishment 
of juvenile offenders; programs that require juvenile offenders 
successfully to complete school or vocational training; 
programs designed to collect and share information useful in 
the identification, investigation, prosecution, and punishment 
of juvenile offenders; and programs that share such information 
among law enforcement agencies and with schools and educational 
institutions. It is these bipartisan programs which we expect 
to pass this year and which should be considered as part of our 
budget plan. Moreover, I consider that we should put federal 
funds into proven crime-fighting programs, such as the Boys & 
Girls Club Programs. It was for that reason that I have 
sponsored legislation that would see to the creation of 2500 
Boys and Girls Clubs by the year 2002.

                             Violent crime

    Violent crime continues to menace our citizens. In order to 
address that problem, we offered S. 3, the Republican Omnibus 
Crime Control bill.
    The highlights authored by DOJ show that it has a total 
budget request for antiterrorism efforts of $67 million. 
Funding has been requested for more FBI agents, Criminal 
Division attorneys, Assistant U.S. Attorneys, and additional 
OJP programs. Moreover, DOJ has requested a 5% increase in 
funding for U.S. Attorneys for the FY 1997 Budget. For the FY 
1998 budget, there was another 8% increase. They are requesting 
a total of 628 new positions for U.S. Attorneys and support 
staff for FY 1998 with a total FTE increase of 318.
    I support additional funding for Assistant United States 
Attorneys. But some of the additional funding that DOJ requests 
for headquarters attorneys is unnecessary. For example, DOJ 
requests additional attorneys to review capital prosecutions. 
Yet, in that area we can easily reduce the budget, by 
authorizing U.S. Attorneys to decide whether individual cases 
should be prosecuted as capital cases, rather than have the 
Attorney General make all such decisions. DOJ also proposes 
stationing three additional attorneys overseas, establishing a 
Multi-Lateral Issues Team for International Law Problems, and 
other new attorneys for the G7/G8 Summit, even though all such 
positions appear quite unnecessary in light of other budget 
demands. Finally, DOJ proposes increasing the number of 
personnel who administer grant programs. DOJ 1998 Budget 
Summary 154. I believe that more should be done to reduce the 
federal administrative costs of grant programs before we 
authorize new positions.

                         violence against women

    DOJ has requested an increase in funding of 26% for 
Violence Against Women programs for FY 1998. Since FY 1996, DOJ 
has increased its funding requests for these programs by 42%.
    I have long supported our efforts to reduce the number of 
women who suffer from violent crime, and I have supported 
funding for the Violence Against Women Act. In our effort to 
combat violence against women, however, the Budget Committee 
should consider whether other social service agencies 
adequately fund shelters for battered women.

                          District of Columbia

    Recently, Franklin Raines, the Director of the Office of 
Management and Budget (OMB), released a proposal for reform of 
the District of Columbia government. Mr. Raines also testified 
at a hearing on the OMB proposal held on February 27, 1996, 
before the Subcommittee on the District of Columbia of the 
House Committee on Government Reform and Oversight. Several 
aspects of that proposal involve matters that effect the 
administration of justice in the District. It is with respect 
to those aspects of Mr. Raines' proposal that I wish to 
comment.
    OMB proposes that the Federal Government invest $3.9 
billion to enhance, streamline, and improve the District of 
Columbia government. The plan proposes that the following be 
spent on the courts and corrections specifically: (1) $885 
million be spent on prison renovation and construction; (2) 
$891 million to operate prison facilities; and (3) $681 million 
to operate the court system. OMB does not recommend using 
federal funds to improve the Metropolitan Police Department.
    OMB proposes that the federal government take 
responsibility for the District's prisoners by providing 
funding for the construction of new facilities, although no 
specifics have been mentioned as to where those facilities 
would be; and providing funding for renovations to existing 
facilities, such as the prison at Lorton, which would continue 
to be used to house District inmates and also would be 
expanded. OMB plans to appoint a receiver to oversee D.C. 
Corrections for a period of three to five years. The Bureau of 
Prisons would then assume responsibility and would have the 
authority to transfer District inmates to other Federal 
facilities if necessary. OMB also proposes that the federal 
government accept all current prisoners. New prisoners would 
only be accepted if they are sentenced according to the Federal 
Sentencing Guidelines. OMB, however, also envisions the 
adoption of sentencing guidelines that are consistent with the 
existing Federal Sentencing Guidelines, but that are unique to 
the District of Columbia. After the transition period, the 
federal government would assume the District's parole system 
and community corrections program.
    Since the rising cost of maintaining and operating the 
prison has put a considerable strain on the District's budget, 
OMB has proposed that the Bureau of Prisons assume 
responsibility for District's inmates and take over the 
operation of Lorton prison. I have concerns about the 
District's corrections crisis, but DOJ has reduced the overall 
amount of funding requested for the construction of federal 
prisons. For FY 1997, the DOJ request for funding for prison 
construction was down 11.6%. Similarly, for FY 1998, DOJ has 
again decreased its request by another 36%. The number of 
inmates in Federal prisons continues to grow, however, and 
overcrowding has become an issue. The District of Columbia also 
has an overcrowding problem due, in large part, to 
inefficiencies with the administration of its correctional 
facilities, specifically the Lorton prison. The Budget 
Committee should first ensure that there is adequate funding 
for federal prisons before we take on the responsibility of 
Lorton inmates.
    In addition to proposals for the federal government funding 
and assuming control of the administration of corrections for 
the District of Columbia, OMB also has suggested that the 
federal government fund the District's local court system. The 
proposal provides that the local courts are run efficiently and 
should remain ``self-managed,'' but that funding for the local 
courts should pass through the Administrative Office of the 
U.S. Courts (AO). This proposal needs to be evaluated 
carefully, given concerns that have been expressed by the AO 
that it is being given an additional funding oversight 
responsibility without the ability to ensure that funds are 
spent properly. I strongly agree with the AO's assessment. 
Either the AO should be given authority to police the use of 
federal funds or some other account should be found through 
which to fund the District courts.
    DOJ seeks the creation of new ``investigator'' positions 
for the U.S. Attorney's Office in the District of Columbia, the 
type of responsibility performed by the Metropolitan Police 
Department or, in limited instances, by the FBI. DOJ 1998 
Budget Summary 67. I have made no secret of my concern for 
Public Safety in the District. The positions that DOJ is 
requesting for ``investigators'' would not be necessary if the 
Metropolitan Police Department (MPD) was functioning properly. 
The OMB proposal for the District of Columbia does not make 
suggestions as to how to address the issue of public safety, 
and I understand that the Administration has taken the position 
that the administration of policing services is better 
addressed by local officials. Under ordinary circumstances, I 
would agree with Mr. Raines, but DOJ is now requesting federal 
funds for investigators to do the work that local police 
officers should be doing. In light of the fact that two-thirds 
of the District's criminal justicesystem (the courts and the 
prisons) would be transferred to federal accounts under the OMB 
proposal, I believe that Congress should evaluate whether additional 
federal oversight and assistance of the MPD is warranted.

                 immigration and naturalization service

    In FY 1996, DOJ requested 25% above FY 1995 levels for the 
Immigration and Naturalization Service (INS). Again in FY 1997, 
DOJ requested another 16% above FY 1996 levels. Now for FY 
1998, DOJ is again requesting another increase in funding for 
INS at 13% above FY 1997 levels.
    I agree there is a need for enforcement of the nation's 
immigration laws. I am pleased to see that DOJ has proposed 
additional agents to enhance border patrol, which is vitally 
important in reducing illegal immigration and curbing drug 
trafficking in the southwest border regions. But while the need 
for highly trained INS agents is necessary at the southwest 
borders, there also is a need for agents to provide the 
enforcement of immigration laws in the interior states. Even 
though INS agents have worked hard to stop illegal aliens at 
the southwest border, many of these aliens have made their way 
into interior states, such as my state of Utah, and I believe 
that there is an urgent need for INS to address this problem by 
allocating significant resources to interior enforcement.

                          state prison grants

    I am concerned that the President's budget falls far short 
in needed assistance to States for the incarceration of violent 
criminals, as authorized by the Violent Offender Incarceration 
and Truth-in-Sentencing Incentive Grants program. The 
President's budget proposes an appropriation of $697.1 million 
for these grants in FY 1998. Although this represents a $37.8 
million increase over FY 1997 levels, it is far short of the 
authorized amount of $2.5 billion, and it is far short of what 
is needed as well.
    Moreover, the proposed budget diverts $150 million from the 
state prison grant program to supplement the State Criminal 
Alien Assistance Program (SCAAP). I strongly support the SCAAP, 
which, as you know, reimburses States for costs that they incur 
incarcerating illegal aliens who commit crimes in this country. 
I believe, however, that funding for this program should not 
come at the expense of much needed violent incarceration 
grants, which benefit all our states.
    Finally, I am extremely concerned that the Administration 
proposes to divert grant monies intended for the construction 
of prisons to fund state drug testing and treatment programs. 
The Administration proposes this diversion on top of a proposed 
$32.3 million increase in separate grants for state prison drug 
treatment programs. Federal grants for the incarceration of 
violent criminals should be used for construction and expansion 
of state correctional facilities, not for drug treatment 
programs.

                               the courts

    The President's Budget also includes $3.63 billion for 
outlays associated with the Judiciary. This includes salaries 
and expenses necessary for the operation of the federal courts, 
expenses for the operation of the Federal Public Defender and 
Community Defender organizations, fees of jurors and 
commissioners, expenses for court security, expenses for 
collection of filing fees, funds for operation of the Judicial 
Information Technology Fund, salaries and expenses for the 
Administrative Office of the United States Courts and for the 
Federal Judicial Center, payments to Judicial Retirement Funds, 
funding for the United States Sentencing Commission, and funds, 
to be derived from the Violent Crime Reduction Trust Fund, to 
meet the increased demands for judicial activities resulting 
from the Violent Crime Control and Law Enforcement Act of 1994. 
The Judiciary Committee has no objection to these figures.
    I should note for you that those figures do reflect 
increased salaries called for by a bill, proposed by the 
Administrative Office of the Courts, which I have introduced. I 
believe that the Budget Committee should plan for increased 
outlays as the Committee will work to enact this program.

                      patent and trademark office

    I have been concerned for a number of years about the 
patent surcharge and the amount of money taken from the Patent 
and Trademark Office (PTO) and used for other purposes. 
Inventors pay a surcharge on patent applications, yet this 
money is not used entirely to maintain and approve the patent 
examination process. Instead, it is redirected to fund other 
programs. Last year, for example, $61 million of the $115 
million so raised was used to fund the Legal Services Program 
and public broadcasting. Using patent surcharge funds for non-
PTO purposes makes the surcharge a special tax on inventors. In 
effect, inventors are asked to bear more of the burden of 
deficit reduction than their fellow citizens. This year the 
Clinton Administration proposes to increase the surcharge 
diversion to $92 million.
    Failure to appropriate back the bulk of the proceeds of 
this fund causes our inventors significant harm by making the 
patent examination process less efficient. The PTO, for 
example, projects that the Administration's budget proposal 
will result in the elimination of 339 patent examiner 
positions, with a subsequent increase in patent pendency, which 
is already 18 months on average. Furthermore, important 
advances in automation will have to be put on hold.
    The PTO is entirely self-funded--a model for other agencies 
to follow. Yet, the Administration penalizes this fiscal 
responsibility by taking more and more of the money that it 
raises. No one questions the value of our patent system. The 
funds to support it ought not to be used for other programs, 
and especially not for programs whose value has come under 
serious question.
    Thank you again for contacting me on this matter and your 
patience in awaiting my reply. I look forward to working 
closely with you on this matter and other issues.
            Sincerely,
                                            Orrin G. Hatch,
                                                          Chairman.
                                ------                                

                                       U.S. Senate,
                    Committee on Labor and Human Resources,
                                    Washington, DC, March 14, 1997.
Hon. Pete Domenici,
Chairman, Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete: Thank you for seeking the views and estimates of 
the Senate Committee on Labor and Human Resources as you begin 
to develop the 1998 budget resolution.
    The Labor and Human Resources Committee is cognizant of the 
need for greater efficiency and reform in government. We look 
forward to working with the budget and appropriations committee 
to ensure that authorized funding levels for the programs under 
our jurisdiction are consistent with overall discretionary 
limits.

                               oversight

    The Committee will work actively to fulfill its oversight 
responsibilities in an effort to consolidate redundant programs 
and strengthen programs which need reform. We will work closely 
with the departments and agencies under our jurisdiction to 
utilize the tools provided under the Government Performance and 
Results Act (GPRA). We are scheduling consultations with these 
departments and agencies and will work to ensure that their 
missions are focused, their goals are clearly established, and 
their implementation strategies (and funding expectations) are 
reasonable and appropriate.
    The Committee also has a very ambitious legislative 
calendar for this year. It will utilize the reauthorization 
process, in conjunction with GPRA, to evaluate and strengthen 
programs under its jurisdiction.

                     national institutes of health

    The committee is continuing efforts begun last Congress to 
reauthorize the National Institutes of Health. Three board 
issues have emerged in our discussions: First, that a careful 
balance must be drawn between our commitment to clinical 
research and our commitment to basic research; second, a need 
for administrative simplification and efficiency to free up 
scarce dollars for grantmaking; and finally concern about the 
education and preparation of future biomedical researchers. We 
will address these issues as part of our effort to strengthen 
our nation's biomedical research capacity.

                         workforce development

    This nation faces a crisis in both education and workforce 
development. A study conducted by the Committee for Economic 
Development estimates that each year's class of high school 
dropouts costs over $240 billion in lost incomes and taxes 
throughout the course of their lifetimes. An additional $10 
billion is spent paying for crime, drug, and prison expenses 
for each class of dropouts. These figures provide a powerful 
and pragmatic illustration of the importance of preserving our 
commitment to education and workforce development. It is our 
responsibility, however, to ensure that these funds are used 
efficiently and effectively. I intend to continue efforts begun 
by the committee last year to review existing workforce 
development programs and mold them into a simple integrated 
workforce development system. These efforts will result in a 
comprehensive vocational and adult education and job training 
system that is responsive to the needs of all those who seek 
its services.

                    higher education reauthorization

    The committee has begun its in-depth review of the programs 
included in the Higher Education Act, which must be 
reauthorized during the 105th Congress. The largest title of 
this Act, Title IV, authorizes the major student financial aid 
programs. These programs make it possible for millions of 
Americans--from all walks of life--to attend public and private 
colleges and universities. This opportunity has economic 
consequences for the economy and for the budget. An individual 
with a bachelor's degree earns more than one-and-a-half times 
what a person with a high school diploma earns.
    Last Congress, the final version of the Balanced Budget Act 
contained student loan savings of approximately $5 billion over 
seven years. I strongly request and recommend that the student 
loan programs not be targeted for savings during the upcoming 
budget process. Any bill that proposes significant cuts in 
student loan programs will lead to another fight over the 
future of guaranteed versus direct loans. Based on our 
experience during the 104th Congress, it is clear that this 
debate will not be productive either in terms of achieving a 
balanced budget or serving students and their families.

              individuals with disabilities education act

    Last Congress, the committee reported legislation which 
restructured and consolidated fourteen discretionary grant 
programs that had expired and made revisions to the permanently 
authorized State preschool and elementary and secondary grant 
program for students with disabilities.Under Republican 
congressional leadership, funding for disability programs has grown 
substantially. Last Congress IDEA funding was increased 24 percent.
    ``The Safe and Affordable Schools Act of 1997,'' S. 1, is 
among the top legislative priorities of Senate Republicans. A 
particularly important provision of this bill would increase 
the federal share of IDEA funding in order to honor the 
commitment made when Public Law 94-142 was enacted that the 
federal government would provide 40 percent of the cost of 
educating disabled students. Currently, the federal effort 
($4,036,000 in fiscal year 1997) represents about seven percent 
of that cost. Under S. 1, federal funding would be phased up to 
the 40-percent level over a seven-year period. Specifically, it 
provides for the following funding levels: FY 1998: $4,107,522; 
FY 1999: $5,607,522; FY 2000: $7,107,522; FY 2001: $8,607,522; 
FY 2002: $10,107,522; FY 2003: $11,607,522; FY 2004: 
$13,107,522. I request that the allocation for function 500 be 
increased to reflect this priority.

                             fda user fees

    The President's budget for fiscal year 1998 proposes $131 
million in new user fees on FDA regulated products. For a 
number of reasons, the Committee on Labor and Human Resources 
is not prepared to endorse these new fees, and I urge the 
Budget Committee to reject them as well. Unlike the existing 
fees authorized under the Prescription Drug User Fee Act 
(PDUFA), these new fees would not be linked to specific service 
improvements. Rather, the $131 million would substitute for 
appropriated funds for the agency's basic operations, including 
enforcement. Given the implications of having an agency which 
regulates the safety and efficacy of one-quarter of the 
nation's products being substantially funded by the industries 
it regulates, this is not a step to be taken lightly.

                                 taxes

    The President's budget proposal includes a request for an 
additional $38.6 billion over five years in tax expenditures to 
support education. Although the Committee on Labor and Human 
Resources does not have jurisdiction over tax proposals, it 
does have primary jurisdiction over education policy. I believe 
it is important to offer some comments.
    First of all, I share the President's commitment to a 
budget which increases the federal resources committed to 
education, and I hope that priority will be maintained during 
budget deliberations. I am encouraged that education is among 
the five issues identified by the White House and congressional 
leadership as being an area where bipartisan consensus can be 
achieved. I look forward to working with you and others to see 
that such a consensus is developed.
    Having said that, I believe it is equally important that 
decisions regarding the allocation of these additional 
resources be based on sound education policy. The President's 
education proposals are too heavily weighted on the tax 
expenditure side to represent an optimal allocation of support 
for education. These tax expenditure proposals pose other 
problems as well. They place unnecessary administrative burdens 
on the Internal Revenue Service and on education institutions 
by tying eligibility for tax breaks to factors such as grade 
point averages. Moreover, they are not targeted towards the 
activities and individuals where the needs are greatest, and it 
would be difficult to correct that problem within the confines 
of the tax code. The committee will explore one aspect of this 
issue at a hearing later this week which will compare the Pell 
Grant population with the expected beneficiaries of the 
President's tax proposals.
    There appears to be agreement that some increase in 
education tax expenditures is appropriate. S. 1 includes a 
number of tax proposals, the cost of which is approximately 20-
percent of the President's package--a level of tax expenditures 
which I believe is reasonable. Consistent with S. 1, I would 
suggest that the budget committee reduce by 80-percent the 
level of tax expenditures assumed for education in the 
President's budget and increase the function 500 account by 
that same amount. This proposal would permit us to meet the 
full federal commitment under IDEA, to expand the Pell Grant 
program, and to enhance education programs serving young 
children without jeopardizing the budgetary balance we all wish 
to achieve.
    It is my strong belief that these and similar discretionary 
spending initiatives will allow us to balance the budget and 
advance our goals for education.
    The committee looks forward to continuing to work with you 
throughout the fiscal year 1998 budget process.
            Sincerely,
                                   James M. Jeffords, U.S. Senator.
                                ------                                

                                       U.S. Senate,
                               Committee on Small Business,
                                    Washington, DC, March 13, 1997.
Hon. Pete Domenici, Chairman,
Hon. Frank Lautenberg, Ranking Minority Member,
Committee on the Budget, Washington, DC.
    Dear Pete and Frank: As the Chairman of the Committee on 
Small Business, I am submitting the following views and 
estimates letter on the President's FY 1998 budget request for 
the Small Business Administration and other matters under the 
Committee's jurisdiction in compliance with Section 301(d) of 
the Congressional Budget Act.
    In March 1995, the Committee's views and estimates letter 
to you commented that it was time for the Small Business 
Administration to reevaluate the programs it administers to 
determine if they are truly needed federal responsibilities 
and, if so, where they are being administered as effectively 
and efficiently as possible. I viewed FY 1996 as an opportunity 
to undertake a thorough top-to-bottom review to ``rethink'' 
SBA, which would include its mission and purpose, its 
customers, and results Congress expects from funded programs 
and initiatives.
    Reaching this goal has not been easy. In 1995, after the 
Administration submitted its Fiscal Year 1996 budget request, 
it subsequently announced its intention to undertake a 
significant reorganization of SBA, including elimination of 
certain field offices and adjustments to select program 
activities. For the most part, little was done to ``reinvent'' 
the Agency, and no serious effort was made to implement its 
plans.
    I continue to support the fundamental mission of SBA, and I 
continue to believe that SBA can be restructured and made more 
efficient in achieving this mission. If SBA were to centralize 
its loan supervision function while enhancing its bank 
examination efforts, the workload in SBA's field offices would 
be reduced dramatically, allowing it to shift some surplus 
resources to high priority areas within the agency at the same 
time savings can be achieved.
    Historical evidence indicates that the federal government 
sustains a lower loss rate on its SBA loan guarantees when the 
originating lending institutions, rather than SBA, perform the 
loan review and approval process; therefore, the taxpayer and 
the federal government would win twice if these reforms were 
adopted: first with a lower loan loss rate, and second with a 
reduced payroll accompanied by significant administrative and 
organizational savings. I am pleased to see that SBA has begun 
to adopt this point of view and has instituted a program to 
place a greater responsibility on small business lenders. SBA's 
FY 1998 budget request includes funds to implement this 
program.
    In 1995, then Ranking Committee Member, Dale Bumpers, and I 
recommended reducing the annual function 370 budget authority 
in FY 1996-FY 2000 from $706 million to $586 million, a 
reduction of $120 million per year. This reduction was a 17% 
cut from SBA's FY 1995 BA. We believed these savings could be 
accomplished consistent with a Congressional demand for capable 
performance of SBA's necessary and appropriate core functions. 
The five year savings we projected last year would total $600 
million.
    The final funding level approved by Congress for SBA under 
Function 370 was $530 million for FY 1997. Furthermore, the 
Administration recently requested $530 for Function 370 for FY 
1998. However, this budget request includes insufficient funds 
for SBA's two largest programs: the 7(a) guaranteed business 
loan program and the Small Business Development Center (SBDC) 
program.
    In order for the Senate Committee on Small Business to deal 
fairly with these programs that are very important to the 
success of many small businesses, it is likely Congress will be 
called upon to provide additional funding for SBA in FY 1998 
over the amount requested by the President's budget request. 
Therefore, I am comfortable reiterating the vision for SBA that 
was set forth in March 1995, which reduced the Function 370 
budget authority from FY 1996-FY 2000 to $586 million annually.
    To develop a coherent, multi-year strategy to reduce the 
size of SBA while maintaining the delivery of programs deemed 
critical to small business, SBA needs to combine an orderly 
downsizing with the adoption of improved agency operating 
procedures and management information systems to allow it to 
deliver its key programs more effectively. This strategy must 
be executed with special effort and a sense of urgency at SBA 
because of the acknowledged deficiencies in some of the credit 
programs. Senate and House Appropriations Committees will need 
to impose explicit, targeted reductions in SBA's organization 
and personnel if we are to meet the funding goals outlined for 
SBA. Concurrently, Congress will need to fund improvements in 
SBA's information systems to complete the progression to a more 
streamlined SBA. These objectives can be accomplished within 
the funding levels contained in this budget recommendation.
    Bipartisan activities in the Committee during the 104th 
Congress serve as ample evidence of our shared commitment to 
important priorities of America's small businesses and 
entrepreneurs. In good conscience, I do not believe the 
interest of small businesses are served by managing the budget 
of the Small Business Administration in a ``yo-yo'' like 
manner. I believe that we need to adhere to the six-year budget 
plan that was set forth in March 1995. Further, I believe the 
Committee can work with SBA in order to redirect and fine tune 
its priorities and become both increasingly more responsive to 
small business and more effective and efficient in its day-to-
day operations.
    I look forward to the opportunity to work with you to 
develop this portion of the Budget Resolution for FY 1998.
            Sincerely,
                                     Christopher S. Bond, Chairman.
                                ------                                

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                    Washington, DC, April 24, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, Washington, DC.
    Dear Pete and Frank: Pursuant to section 301(d) of the 
Congressional Budget Act of 1974, and with the approval of the 
undersigned members of the Committee on Veterans' Affairs, the 
Committee on Veterans' Affairs (hereafter, ``Committee'') 
hereby reports to the Committee on the Budget its views and 
estimates on the FY1998 budget for veterans' programs within 
the Committee's jurisdiction. This report is submitted in 
fulfillment of the Committee's obligation to provide 
recommendations for programs in Function 700 (Veterans' 
Benefits and Services) and for certain veterans' programs 
included in Function 500 (Education, Training, Employment, and 
Social Services).

                            I. Introduction

    We have carefully reviewed the Administration's proposed 
FY1998 budget for veterans' programs. We have also carefully 
reviewed the testimony of witnesses at the Committee's hearing 
of February 26, 1997, on the proposed budget. At that hearing, 
testimony was received from the Secretary of Veterans Affairs, 
and VA witnesses were questioned at length by the Committee's 
members. Written statements were also accepted from the Chief 
Judge of the U.S. Court of Veterans Appeals and the Assistant 
Secretary of Labor for Veterans' Employment and Training. In 
addition, The American Legion, the Veterans of Foreign Wars, 
the Disabled American Veterans, AMVETS, and the Paralyzed 
Veterans of America testified before the Committee, and the 
Noncommissioned Officers Association of the United States 
presented a written statement. Further, many of the Committee's 
members have requested information, in writing from hearing 
witnesses, and Committee staff has engaged in informal briefing 
sessions with representatives of the Office of Management and 
Budget and directly affected government agencies. While 
responses to some of the Committee members' written questions 
have not yet been received as of the date of this submission, 
we endeavor to offer our views based on the information that is 
currently available and the analysis that is currently 
possible.

                          II. General Comments

    In preparing these comments, the Committee's members have 
kept in mind the fiscal limitations within which we must 
operate if we are to get Federal spending under control and 
thereby reduce the Federal deficit and debt. We believe that 
the Government can be fiscally responsible while still 
fulfilling its commitments to the most deserving among us--
including our Nation's veterans. We also are mindful of the 
fact that uncontrolled Federal spending threatens the long-term 
health of the Nation's economy and, in turn, could adversely 
affect the provision of veterans' benefits. This, we recognize 
that those who have worn the uniform in defense of the Nation 
seek, as we do, to protect the health of the Nation's economy.

                       a. cost-savings provisions

    The Committee is pleased to note that the Administration 
recommends the enactment of a number of cost-savings provisions 
which have previously been approved by the Committee and were 
contained in Title X of H.R. 2491, the ``Balanced Budget Act of 
1995.'' These provisions are the following:
    Extension of the authority of the Department of Veterans 
Affairs (VA) to require that certain veterans' make copayments 
for outpatient medications and per diem payments for nursing 
home and hospital care;
    Extension of VA's medical care cost recovery authority;
    Extension of VA's income verification authority;
    Extension of VA's authority to limit pensions paid to VA 
beneficiaries who are receiving Medicaid-covered nursing home 
care;
    Extension of certain additional home loan guaranty program 
fees;
    Extension of procedures applicable to liquidation sales on 
defaulted home loans guaranteed by VA;
    Extension of VA's enhanced loan asset sale authority; and
    Rounding down annual compensation, dependency and indemnity 
compensation, and other cost-of-living adjustments.
    Further, the Administration proposes that certain 
restrictions on measures that can be taken to collect loan 
guaranty debts be removed, so that debtors' Federal wages and 
income taxes can be attached, and, in addition, proposes that 
certain vendee funding fees be increased from 1.0% to 2.25%.
    These provisions, all of which except for the vendee loan 
provision were contained in the ``Balanced Budget Act of 1995'' 
as sent to the President, would have resulted in savings of 
over $3.2 billion over a seven year period. Since many, 
however, would not have yielded actual savings until after FY 
1998, over $2.6 billion in potential savings still can be 
garnered if VA's proposals are enacted during 1997 or early 
1998.
    The Committee, of course, does not yet know what 
reconciliation instructions it will receive this year. We note, 
however, that the Administration proposes measures which, for 
the most part, have previously been approved by the Committee 
and the Congress. These measures, if approved again, would 
address the lion's share of what we expect the Committee will 
be charged to accomplish in terms of savings for FY 1998 and 
beyond. As is noted above, the Committee's members--and 
veterans--recognize the need for all to share the burden in 
meeting our government's fiscal responsibilities.

                     b. other general observations

    As we have noted in recent years, there is bipartisan 
consensus that non-discretionary veterans' spending does not 
display the spiraling growth patterns found in other aspects of 
the Federal budget. That being the case, the Committee 
concludes that veterans' programs are not among the chief 
factors in looming Federal deficits; budgetary categories which 
display unrestrained growth patterns are. Having said that, we 
believe further efficiencies both in the administration of 
veterans' benefits programs, and in the provision of veterans' 
health care, can be identified which will control the rate of 
VA budgetary growth. We are determined to preserve scarce funds 
for the benefit of direct beneficiaries.
    We acknowledge the leadership of the veterans' community 
which has expressed a willingness to support limits on the rate 
of growth of veterans' entitlements--if the growth of other 
Federal entitlements is similarly restrained. Veterans will 
pull their weight in such a concerted effort.

                    c. overall spending projections

Mandatory Spending

    The fact that veterans' entitlements spending is not 
spiraling out of control is reflected in the President's budget 
by the anticipated continuation of spending patterns displayed 
in the past. VA obligations to make cash transfers for 
compensation and pension benefits--benefits which comprise 
almost 90% of VA's entitlements spending--are expected to 
increase in FY 1998 at the rates of 1.65% and 1.23% 
respectively. And while obligations for VA's chief readjustment 
benefit, the All-Volunteer Force Educational Assistance 
Program, better known as the Montgomery GI Bill (``MGIB''), are 
expected to increase at a rate of 7.2% to $1.06 billion, VA's 
appropriations request for readjustment benefits in the 
aggregate is smaller than its FY 1997 appropriation and only 
1.54% higher than its FY 1996 appropriation.
    The Committee notes that the growth of proposed spending is 
so restrained despite proposed full cost-of-living adjustment 
increases in compensation, pension, MGIB, and other benefits, 
effective January 1998. Such restrained growth demonstrates the 
validity of the Committee's view that veterans' entitlements 
spending is not the cause of looming budget deficits. Absent a 
mobilization or national emergency that would markedly alter 
the size or composition of the veterans population, we expect 
the historical trend of entitlements spending increases below 
the Consumer Price Index (CPI) rate--despite full CPI benefits 
adjustments--to continue. And, of course, despite this 
restrained growth in spending, the Committee expects to adopt 
cost-savings measures, such as those proposed by VA and 
outlined above, which would further reduce the rate of growth 
in VA mandatory spending.

Discretionary Spending

    VA's proposals for discretionary spending--spending, 
principally, on VA-provided medical care--give the Committee 
greater concern. VA proposes budget authority of $17.550 
billion for medical care spending in FY 1998, but requests that 
its FY 1998 appropriation for such spending actually be cut 
from the FY 1997 level of $17.013 billion to $16.959 billion. 
VA proposes, further, that its medical care appropriation be 
maintained at that $16.959 billion level through FY 2002.
    VA proposes to augment its proposed FY 1998 nominal cut, 
and its proposed out-year real dollar cuts, by tapping two non-
appropriated funding sources: first, by retaining all medical 
care cost recovery (``MCCR'') receipts starting in FY 1998 
(rather than, as now, turning over receipts which exceed VA 
collectioncosts to the Treasury); and, second by phasing in a 
pilot program, starting in FY 1999, under which VA would be reimbursed 
by Medicare for providing non-service-connected health care to 
Medicare-eligible veterans who choose to receive such care from VA 
(VA's ``Medicare subvention'' proposal). Access to both outside funding 
sources would first require legislation, the passage of which is, as 
discussed below, not assured. But even with such legislation and the 
funding streams that legislation would generate, projected out-year 
medical care spending would rise by only one-half of one percent in FY 
1999, and at an average rate of less than 1.6% from FY 2000-2002, while 
simultaneously, the number of unique patients VA treats is projected to 
rise at an average annual rate of over 3.5%. Such spending increases 
will not even cover the cost of cost-of-living adjustments, estimated 
by VA to be $387.9 million for FY 1998, to VA's 225,000+medical care 
employees.
    The Congress enacted eligibility reform legislation, Public 
Law 104-262, based in part on VA's assurances that (1) it could 
provide more or better care to more patients within existing 
resources if only it were freed from archaic eligibility 
standards which, VA said, ``turned modern medicine on its 
head'' by encouraging inpatient care and discouraging 
outpatient care; and (2) expanded eligibility standards would 
not generate demand that would exceed VA capacity. The 
Committee's eligibility reform legislation, however, contained 
two safeguards: first, the legislation requires VA to set up an 
annual enrollment system starting in FY 1999 and, second, the 
legislation caps the amount authorized for annual medical care 
appropriations (at $17.9 billion in FY 1998). Even with these 
safeguards, the Committee remains concerned that expanded 
eligibility standards could generate demand that could severely 
challenge proposed slow growth medical care funding in the out 
years.
    This budget proposal, even assuming the enactment of MCCR 
and Medicare subvention legislation, does not allow even for 
slow growth in real terms. The Committee, therefore, remains 
very concerned that VA's health care spending projections, 
particularly in the out years, are unrealistic. The fact that 
this year's out-year projections differ substantially from 
those presented by the Administration last year, as the 
Secretary then stated they would, does not increase the 
Committee's confidence that VA out-year projections can be 
viewed as real planning tools.
    The Committee notes one other concern. VA is currently 
initiating a medical care resource reallocation plan which will 
result in actual cuts in some regions of the Nation. The 
Committee is of the view that resources should be allocated 
equitably so that similar veterans will have similar access to 
VA care without regard to the region where they live. VA's 
health care funding must grow sufficiently to allow such 
allocations without undue disruption in any region.

                      III. Veterans' Medical Care

    a. projected by 1998 medical care spending and proposed funding 
                               mechanisms

    As noted above, the Committee is very concerned about 
projected out-year spending for VA medical care. With respect 
to FY 1998, however, it is less concerned about the amount of 
projected spending, $17.573 billion, than it is about the 
proposed sources of funding.
    While VA proposes to expand $17.573 billion on medical care 
in FY 1998, an increase of 2.84% over FY 1997 spending, it does 
not request appropriations in that amount. Rather, it requests 
appropriations of $16.959 billion, a decrease from its $17.013 
billion medical care appropriation in FY 1997, and requests 
legislative authority to retain all MCCR receipts and, later, 
Medicare subvention receipts. It estimates that net MCCR 
receipts will amount to $468 million in FY 1998, and that net 
receipts will rise over time to $768 million in FY 2002.
    MCCR receipts currently are paid over to the Treasury 
annually, though VA retains its costs, estimated at $123 
million in FY 1998, in collecting such receipts. The Committee 
agrees with VA that, as a matter of policy, a case can be made 
for VA retaining all collected receipts. Further, the Committee 
observes that VA, and individual VA medical centers of Veterans 
Integrated Service Networks (``VISNs'') or both, would be more 
energized to collect such funds aggressively were they to be 
allowed to benefit directly from their efforts by retaining 
funds so collected.
    Implementing VA's proposal, however, is not as 
straightforward as it might initially appear. The Committee 
understands that, whatever the merits of VA's MCCR proposal as 
a matter of general policy, its effect would be to divert funds 
otherwise payable to the General Fund in the Treasury to a new 
account that would be used to fund VA medical care. This 
diversion, under current score-keeping rules, would be subject 
to the Budget Enforcement Act's ``pay-go'' offset rules. In its 
budget submission, VA proposes no VA mandatory account offsets, 
stating that ``[o]ffsetting mandatory savings to support this 
proposal are included in the President's budget.''
    The Committee supports VA retention of MCCR receipts as a 
matter of policy, but not if other VA benefits are required to 
be cut to offset such retentions. Thus, the Committee would not 
object if the offset were to come from non-Function 700 
accounts. If, however, offsets from VA benefits were to be 
required in order to allow VA to retain MCCR receipts, the 
Committee would strenuously object. The better course, in our 
judgment, would be for VA's FY 1998 projected medical care 
spending needs--atminimum, $17,573 billion, as set forth in the 
President's budget--to be financed fully with appropriated funds. In 
our view, the goal of balancing the budget could still be met while 
allowing VA medical care appropriations to increase to at least that 
amount.

                   B. MEDICAL AND PROSTHETIC RESEARCH

    In FY 1997, VA requested a medical research appropriation 
of $257 million, the same amount it had received in FY 1996, 
and an amount that was within $5.6 million of VA's FY 1995 
funding for medical and prosthetic research. VA received an 
appropriation of $262 million, more than it has requested. In 
its FY 1998 proposed budget, VA requests a cut in research 
funding, suggesting an appropriation of $234 million, down 
10.69% from FY 1997 funding. It offers no explanation.
    By letter to the President in January 1997, the Chairman 
and Ranking Minority Member of the Committee, along with 
Senators James M. Jeffords and Patrick Leahy, requested FY 1998 
funding for VA medical and prosthetic research of $280 million. 
They noted that the past pattern of ``flat'' research funding 
had reduced VA's ability to respond to new challenges such as 
the illnesses of Persian Gulf War veterans. They argued, 
further, that added funding was needed both to conduct more 
research on conditions that directly affect veterans, and to 
reinvigorate VA research as an incentive to attract top 
physicians into VA careers.
    In the Committee's view, the issues raised by the authors 
of the January 1997 letter are valid. The Committee, therefore, 
supports a research appropriation of $280 million. At minimum, 
FY 1997 funding of $262 million must be maintained. We strongly 
oppose VA's plan to cut spending on medical and prosthetic 
research.
    The Committee does note, with approval, VA's plans to 
emphasize Persian Gulf veterans health research, outcomes and 
nursing research, research related to environment hazards, and 
research on the possible human reproductive system consequences 
of traumatic military experience.

                        C. CONSTRUCTION PROGRAMS

    The Committee notes that VA's major construction proposal 
for FY 1998 includes no request for new hospital construction. 
It also contains no request for further funding of previously 
authorized projects in progress, except for the seismic 
correction project in Memphis.
    The Committee has authorized a number of major construction 
projects with the expectation that they will be completed. 
While we understand that VA's current efforts to reorganize 
itself around the VISN model, to implement eligibility reform, 
and to better rationalize care within the existing capital base 
might be reason for a pause, we still expect that these 
projects will be completed.

                    IV. Veterans' Benefits Programs

          A. COMPENSATION, PENSION, AND READJUSTMENT BENEFITS

    Obligations for compensation and pension benefits will rise 
at rates of 1.65% and 1.23% respectively in FY 1998, and VA's 
appropriations request for readjustment benefits is smaller 
than last year's. As noted above, veterans' entitlements cannot 
be properly characterized as being among those which are 
experiencing unrestrained growth. We expect this slow growth 
pattern to continue for so long a period as there are no major 
military mobilizations.

                     V. General Operating Expenses

                  A. VETERANS BENEFITS ADMINISTRATION

    The Veterans Benefits Administration (VBA), the VA 
operating entity charged with the administration of veterans' 
benefits programs, continues to make significant progress in 
reversing the backlog of pending benefits claims. It projects 
continued progress, despite a 4.5% cut in projected staffing.
    VBA's past restructuring efforts have been uneven, but it 
appears now that the business process reengineering initiatives 
that VBA has initiated may bear tangible fruit. The Committee 
hopes so. It will closely monitor those activities, and VBA's 
information resources management activities, as part of, and 
separate from, its oversight of VBA implementation of the 
Government Performance and Results Act.

                     B. BOARD OF VETERANS' APPEALS

    For the first time in three years, the Board of Veterans' 
Appeals (BVA) does not request funding for increased staff. The 
Committee expected otherwise in light of the Board's progress 
in increasing its production of decisions to the point where it 
might begin to make actual cuts in its case inventory backlog. 
Based on BVA's projection that its decision production level 
will drop slightly in FY 1998, the momentum that BVA has 
regained will, it appears, stall.
    The Committee is highly concerned that BVA anticipates no 
further improvement in decision-making productivity and that, 
accordingly, progress that has been made in cutting BVA's 
response time will not continue. While it acknowledges the 
progress that has been made, the Committee believes it still 
takes too long for a veteran to get a decision from the Board. 
The Committee will closely study the recommendations of the 
Veterans' Claims Adjudication Commission, and other proposals, 
in an effort to find solutions. We do not believe that BVA's 
apparent ``stand pat'' stance is the answer.

                         C. The General Counsel

    Improvements in adjudication productivity at the Board of 
Veterans' Appeals appear to have caused a sharp increase in 
appeals filed (from 1,464 in FY 1995 to a projected 2,400 in FY 
1997) before the Court of Veterans Appeals. A near doubling of 
the Court's caseload appears to have taxed the resources of 
VA's Office of the General Counsel, which represents the 
Secretary before the Court of Veterans Appeals. The Court has 
displayed recent impatience--as it should--with routine and 
repeated General Counsel requests for extensions in time to 
file required papers before the Court. Despite the Court's 
prodding, however, the Committee is concerned that recently 
reversed patterns of growing adjudication backlogs are about to 
be repeated at the Court of Veterans Appeals due to General 
Counsel staffing shortfalls.
    As a temporary expedient, General Counsel attorneys who 
devote their time to other forms of legal service might be 
reassigned to Court of Veterans Appeals work--though, clearly, 
such attorneys will not be equipped to assume the duties of 
seasoned appellate litigators. The Committee does not doubt 
that the Office of the General Counsel, like all VA staff 
offices, can benefit further from self-evaluation and 
reengineering. We question, however, whether such efforts will 
suffice in light of projected caseloads.
    Notwithstanding the foregoing, the General Counsel is 
slated to sustain a 4.5% reduction in personnel resources. As 
has been stated, the General Counsel can undoubtedly increase 
productivity and ``work smarter.'' We do not see, however, how 
the General Counsel can deal with this caseload with dwindling 
resources. The Committee, therefore, would advocate at this 
time that General Counsel personnel cuts be deferred.

                             VI. Conclusion

    On balance, the Committee is satisfied with the budget 
proposals presented. They restrain budgetary growth and, thus, 
reflect a consensus that progress must be made toward a 
balanced budget. The major reservation that can be expressed is 
VA's proposed mechanism for funding minimal growth in medical 
care spending. Based on the Committee's current understanding 
of Budget Enforcement Act scoring standards, it is our judgment 
that such spending should be financed with appropriated funds, 
not from retained medical care cost recovery money.
    These views reflect the best judgment of the Committee on 
Veterans' Affairs as of this date. If we or the Committee staff 
can pro- 
vide further assistance in your consideration of this report, 
please feel free to call on us.
            Sincerely,
                                   John D. Rockefeller IV,
                                           Ranking Minority Member.
                                   Bob Graham,
                                           Member.
                                   Daniel K. Akaka,
                                           Member.
                                   Paul Wellstone,
                                           Member.
                                   Arlen Specter,
                                           Chairman.
                                   Strom Thurmond,
                                           Member.
                                   Frank H. Murkowski,
                                           Member.
                                   James M. Jeffords,
                                           Member.
                                   Patty Murray,
                                           Member.
                                   Ben Nighthorse Campbell,
                                           Member.
                                   Larry E. Craig,
                                           Member.
                                ------                                

                                               U.S. Senate,
                                    Washington, DC, April 24, 1997.
Chairman Arlen Specter,
Senate Veterans' Affairs Committee,
Washington, DC.
    Dear Arlen: Enclosed is a copy of my minority views to the 
Committee's views and estimates letter concerning the FY 1998 
budget for veterans' programs within our Committee's 
jurisdiction. I have forwarded the enclosed letter to the 
Senate Budget Committee. As you can see from my letter, I have 
reservations concerning the allocation of resources and need to 
address the rather substantial equipment backlog for the 
National Cemetery System.
    I would also like to take this opportunity to share with 
you my views on committee procedure. While I understand the 
huge time commitments faced by all committee members, I also 
believe that it is important for the Committee to convene on 
issues of critical importance to the operation of the 
Department of Veterans' Affairs and the veterans' community.
    I would hope that in the future under your leadership, the 
Committee will have increased opportunities to deliberate and 
debate in the interactive forum of the Committee hearing 
process. Like you I share a deep commitment and respect for 
America's veterans. To the best of my ability, I intend to be a 
full participant in the workings of the Committee and welcome 
every opportunity to do so.
            Sincerely,
                                      Tim Hutchinson, U.S. Senator.
                                ------                                

                                               U.S. Senate,
                                    Washington, DC, April 24, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Senators Domenici and Lautenberg: Pursuant to section 
301(d) of the Congressional Budget Committee Act of 1974, I am 
writing to express my minority views in two areas which I 
differ from the full Senate Veterans' Affairs Committee 
submission of the views and estimates letter. While I wish to 
comment on two reservations with the current views and 
estimates letter, I support the views addressing: Cost-Savings 
Provisions, Mandatory Spending, Medical and Prosthetic 
Research, Construction Programs, Compensation, Pension, and 
Readjustment Benefits, Veterans Benefits Administration, Board 
of Veterans' Appeals, and the General Counsel.
    I am concerned with the wording of paragraph six, under the 
heading ``Discretionary Spending.'' This section addresses the 
medical care resource reallocation plan. From my understanding 
of section 429(a) of the FY 1997 Veterans Appropriations bill 
(P.L. 104-204), the ``Secretary of Veterans Affairs shall 
develop a plan for the allocation of resources of the 
Department of Veterans Affairs among the healthcare Networks of 
the Department so as to ensure that veterans who have similar 
economic status and eligibility priority and who are eligible 
for medical care have similar access to such care regardless of 
the region of the United States in which such veterans 
reside.'' It is my view that this requirement is not adequately 
reflected in the views and estimates submission by the 
Committee. As someone who represents a southern state, that has 
a growing population of veterans that make use of VA 
facilities, paragraph (6) of the Committee's views and 
estimates letter appears to reflect the status quo with regard 
to the allocation of resources. It is my understanding that 
P.L. 104-204, section 429(a) passed in the 104th Congress, 
readjusted resources so that states such as mine and others in 
the South and West with growing veteran populations would 
receive needed resources that they have historically been 
denied under past budgetary practices. This is a welcomed and 
necessary change.
    Understanding that such a resource shift is wrought with 
apprehension in some geographic areas, development of the 
Veterans Equitable Resource Allocation (VERA) methodology 
should provide the guarantee of similar opportunities across 
the Nation for veterans of all levels of care including the 
protection of specialized programs and the needs of veterans 
with chronic and complex needs.
    My second concern with the views and estimates letter 
submitted by the full Senate Veterans' Affairs Committee 
concerns the National Cemetery System. Over the years, the 
National Cemetery System has not received the attention that it 
deserves. The rapid decline in World War II veterans and 
continued aging of the total population of veterans, in my view 
makes a strong justification for the need for increased 
resources to a system that must face growing and permanent 
operating costs. It is for this reason that I request that an 
additional $1.5 million be allocated to reduce the equipment 
backlog that currently stands at $6.3 million.
    Thank you for your kind attention to this matter.
            Sincerely,
                                      Tim Hutchinson, U.S. Senator.
                                ------                                

                                               U.S. Senate,
                                    Washington, DC, April 16, 1997.
Hon. Pete V. Domenici, Chairman,
Hon. Frank R. Lautenberg, Ranking Minority Member,
Committee on the Budget, U.S. Senate, Washington, DC.
    Dear Pete and Frank: Along with my colleagues on the Senate 
Committee on Veterans' Affairs (hereafter, ``Committee''), I 
have signed the letter reporting to the Committee on the Budget 
our views and estimates on the FY 1998 budget for veterans' 
programs. The purpose of this letter is to clarify how I 
interpret the section of the Committee's letter that addresses 
proposed funding mechanisms for medical care spending.
    I believe that the Department of Veterans' Affairs should 
receive the funding it needs to care for veterans. I interpret 
the Committee's views and estimates letter to underscore this 
point by outlining the optimum and secondary strategies to do 
so. The optimum strategy would be to fully finance with 
appropriated funds VA's FY 1998 projected medical care spending 
needs, at minimum $17.573 billion, as set forth in the 
President's budget.
    As a matter of policy, the Committee also supports VA 
retention of medical care cost recovery (MCCR) receipts and 
believes that this is an important new external source of 
revenue for the VA--as long as offsets (cuts) do not come from 
programs in Function 700 (Veterans' Benefits and Services). The 
Committee does not, however, believe that under the current 
budget proposal the VA will be able to generate sufficient new 
revenue to meet veterans' health care needs. Therefore, the 
proposed funding strategy that supplements the requested 
appropriations of $16.959 billion with MCCR receipts is only a 
secondary strategy. To me, it follows logically that if there 
is a shortfall in 1998, or in the out years, in funding health 
care needs under this secondary strategy, we should make up the 
difference with additional appropriated funds.
    Please feel free to contact me or my staff if you have any 
questions about my ranking of these two funding strategies.
            Sincerely,
                                   Paul D. Wellstone, U.S. Senator.

                         VIII. Committee Votes

    Paragraph 7(b) of rule XXVI of the Standing Rules of the 
Senate requires the committee report accompanying a measure 
reported from the committee to include the results of each 
rollcall vote taken on the measure and any amendments thereto. 
In addition, paragraph 7(c) requires the report to include 
tabulation of the vote cast by each member of the committee on 
the question of reporting the measure.
    In accordance with the Standing Rules of the Senate, the 
following are rollcall votes taken during the Senate Budget 
Committee mark-up of the FY 1998 Budget Resolution, May 19, 
1998:
    (1) Conrad sense of the Senate on long-term entitlement 
reforms, including accuracy in determining changes in the cost-
of-living. Amendment adopted by a vote of 17 to 4:

                                                                        
          YEAS                     NAYS                                 
                                                                        
Domenici                 Gramm                    * Boxer               
Grassley                 Snowe                                          
Nickles                  Sarbanes                                       
Bond                     Durbin                                         
Gorton                                                                  
Gregg                                                                   
Abraham                                                                 
Frist                                                                   
Grams                                                                   
Smith                                                                   
Lautenberg                                                              
Hollings                                                                
Conrad                                                                  
Murray                                                                  
Wyden                                                                   
Feingold                                                                
Johnson                                                                 
                                                                        

    (2) Hollings amendment to eliminate the tax cut and 
spending increases from the President's initiatives.
    Amendment failed to voice vote.
    (3) Wyden amendment to strike all references to budget 
``firewalls'' between defense and nondefense discretionary 
spending programs and substitute levels of budget authority and 
outlays for each of the years 1998 through 2002, and the five 
year totals with corresponding levels in last year's majority 
budget resolution.
    Amendment failed by a vote of 15 to 6:

                                                                        
          YEAS                     NAYS                                 
                                                                        
Hollings                 Domenici                 * Boxer               
Sarbanes                 Grassley                                       
Wyden                    Nickles                                        
Feingold                 Gramm                                          
Johnson                  Bond                                           
Durbin                   Gorton                                         
                         Gregg                                          
                         Snowe                                          
                         Abraham                                        
                         Frist                                          
                         Grams                                          
                         Smith                                          
                         Lautenberg                                     
                         Conrad                                         
                         Murray                                         
                                                                        

    (4) Feingold sense of the Senate requesting Department of 
Defense to transmit to Congress information pertaining to plans 
to carry out three new tactical fighter aircraft programs 
concurrently.
    Amendment adopted by voice vote.
    (5) Bond-Durbin sense of the Senate that resources 
available in the budget resolution be set aside for an 
immediate 100 percent deductibility of health insurance costs 
for self-employed.
    Amendment adopted by voice vote.
    (6) Murray sense of the Senate that in order to meet 
deficit reduction targets in this resolution with respect to 
Medicaid the per capita cap should not be used as a method for 
meeting spending targets.
    Amendment adopted by voice vote.
    (7) Murray sense of the Senate that levels provided in 
function 500 through the appropriations process should be 
adequate to ensure sufficient resources are available for 
teacher training technology.
    Amendment failed by a vote of 11 to 10:

                                                                        
          YEAS                     NAYS                                 
                                                                        
Snowe                    Domenici                 * Boxer               
Lautenberg               Grassley                                       
Hollings                 Nickles                                        
Conrad                   Gramm                                          
Sarbanes                 Bond                                           
Murray                   Gorton                                         
Wyden                    Gregg                                          
Feingold                 Abraham                                        
Johnson                  Frist                                          
Durbin                   Grams                                          
                         Smith                                          
                                                                        

    (8) Murray sense of the Senate that levels provided in 
function 500 through the appropriations process should be 
adequate to ensure resources are available to provide 
appropriate services in early child development and parenting 
education.
    Amendment failed by a vote of 11 to 10:

                                                                        
          YEAS                     NAYS                                 
                                                                        
Bond                     Domenici                 * Boxer               
Snowe                    Grassley                                       
Hollings                 Nickles                                        
Conrad                   Gramm                                          
Sarbanes                 Gorton                                         
Murray                   Gregg                                          
Wyden                    Abraham                                        
Feingold                 Frist                                          
Johnson                  Grams                                          
Durbin                   Smith                                          
                         Lautenberg                                     
                                                                        

    (9) Snowe sense of the Senate that if the actual deficit is 
lower than the projected deficit in any given year, the added 
savings be devoted to further deficit reduction.
    Amendment adopted by voice vote.
    (10) Grams-Conrad-Grassley-Gorton-Smith-and the other sense 
of the Senate advising the Finance Committee to consider 
fairness in Medicare.
    Amendment adopted by voice vote.
    (11) Durbin-Gorton sense of the Senate regarding assistance 
to Lithuania and Latvia.
    Amendment adopted by voice vote.
    (12) Smith sense of the Senate regarding establishment of a 
national commission to study and make specific recommendations 
regarding effects on the cost of higher education.
    Amendment adopted by voice vote.
    (13) Nickles sense of the Senate that the President should 
propose and the Congress should enact programmatic changes 
sufficient to eliminate fraud and error in the Earned Income 
Credit and to encourage work over welfare.
    Amendment adopted by voice vote.
    (14) Nickles sense of the Senate to ensure all savings from 
Medicare reform are used to keep the Medicare program solvent.
    Amendment adopted by voice vote.
    (15) Motion to report the resolution as amended.
    Motion adopted by a vote of 17 to 4:

                                                                        
          YEAS                     NAYS                                 
                                                                        
Domenici                 Gramm                    * Boxer               
Grassley                 Grams                    ......................
Nickles                  Hollings                 ......................
Bond                     Sarbanes                 ......................
Gorton                   .......................  ......................
Gregg                    .......................  ......................
Snowe                    .......................  ......................
Abraham                  .......................  ......................
Frist                    .......................  ......................
Smith                    .......................  ......................
Lautenberg               .......................  ......................
Conrad                   .......................  ......................
Murray                   .......................  ......................
Wyden                    .......................  ......................
Feingold                 .......................  ......................
Johnson                  .......................  ......................
Durbin                   .......................  ......................
                                                                        
* By unanimous consent the committee record was held open to permit the 
  Senator to vote, so long as it would not change the outcome. The      
  Senator had not been recorded prior to completion of the committee    
  print.                                                                

            IX. Additional, Minority, and Supplemental Views

                              ----------                              


              ADDITIONAL VIEWS OF SENATOR SPENCER ABRAHAM

    Let me begin by praising Senator Domenici and the other 
negotiators for their hard work and diligence. They have worked 
for almost four months to put this resolution together and end 
the eighteen-month stalemate between the President and Congress 
over spending and taxes. Given these circumstances, I believe 
this agreement is a step in the right direction and I look 
forward to seeing many of its provisions enacted into law. On 
the other hand, while I intend to support this budget 
resolution as a whole, I want to express reservations regarding 
some of its specifics.
    First, I consider this resolution to be just a down-
payment--not a solution--to the entitlement reforms that will 
be necessary to ensure the federal government's solvency going 
into the next century. As we all know, the Baby Boom generation 
will soon begin to retire, which will place enormous pressure 
on our federal entitlement programs. According to the CBO, ``* 
* * outlays for government programs that aid the elderly 
(Social Security, Medicare, and Medicaid) will burgeon as the 
number of people eligible to receive benefits from these 
programs shoots up.''
    Medicare is the first program to experience this program 
and this resolution allows for important reforms to extend its 
solvency. That said, I believe these reforms neither go far 
enough nor call for the kinds of fundamental changes that will 
help Medicare stay solvent past the ten years targeted by this 
resolution. I encourage the Finance Committee to embrace 
reforms like MSA's, Medicare Choice, HMO's and PPO's as options 
that will increase patient options even as they hold down 
costs.
    I am also concerned that Congress' historical bias towards 
ever-increasing spending is once again on display. While 
Senator Domenici and others have worked hard to reject the 
myriad of new spending proposals requested by the 
administration, the bottom line is five-year spending under 
this resolution will increase by 17 percent between today and 
2002. That increase is faster than the rate ofinflation, and 
well above the growth rates encompassed in the past two budget 
resolutions.
    By creating new federal entitlements, this resolution opens 
the door for huge, unexpected spending increases down the road. 
I applaud efforts to improve the health of this nation's 
children, but I believe the provision to make such funding 
mandatory is counterproductive to our efforts to restrain the 
growth of government spending. For that reason, I support 
efforts to make this funding discretionary.
    Finally, I am concerned that the tax cuts called for in 
this resolution are so modest, especially in comparison to the 
spending increases included. In particular, I am concerned 
that, where, according to a USA Today poll from this March, 70 
percent of the American people believe that they need a tax 
cut, under this resolution, federal spending will grow 17 
percent over five years while the net tax cuts are less than 1 
percent of the total tax burden. Balancing the budget is one of 
my top priorities, but reducing the burden of government on 
Americans is my ultimate goal.
    Why do Americans need a tax cut? According to the 
President's own economist, the tax burden on Americans is the 
highest ever--31.7 percent. According to the National Taxpayer 
Union, the average American family now pays almost 40 percent 
of their income in state, local, and federal taxes. For all the 
talk about the ``end of big government,'' the tax burden today 
is the highest ever. And while we address that burden in a 
small, incremental way with this budget resolution, we are also 
creating the possibility for ever-more spending later on.
    I believe we need to tilt the playing field away from more 
spending and towards tax reduction. Towards that end, I have in 
mind two process reforms. First, to the extent that we enact 
capital gains reductions and other pro-grow policies this year, 
I believe we should reserve whatever excess revenues derive 
from those policies for future tax cuts or deficit reduction--
not more spending.
    This is not an idle proposition--history shows that pro-
growth tax cuts like cutting the capital gains tax rate result 
in large bonuses for the Treasury. Between 1978 and 1985, while 
the top marginal rate on capital gains was cut almost in half--
from 35 to 20 percent--total annual federal receipts from the 
tax almost tripled. They rose from $26.5 billion annually.
    Conversely, when Congress raised the rate in 1986, revenues 
actually fell well below what was anticipated. Capital gains 
revenues actually fell following the Tax Reform Act of 1986. 
Economists across-the-board predict that cutting the capital 
gains rate will result in a revenue windfall for the Treasury. 
These windfalls should be given back to the taxpayers.
    In pursuit of that goal, I intend to introduce, with a 
number of my colleagues (Senator Kyl, Ashcroft), legislation is 
to ensure that tax revenues which exceed current projections 
are reserved for tax cuts and/or deficit reduction instead of 
being spent.
    Second, we need to reform the budget rules to allow 
discretionary spending to offset tax cuts. Congress has a 
natural bias towards more spending--the rules protecting 
discretionary spending from offsetting tax cuts only exacerbate 
that bias. I intend to offer legislation to permit future tax 
cuts to be paid for through discretionary spending cuts.
    Two years ago, a Readers Digest Poll asked Americans: 
``What is the highest percentage of income that is fair for a 
family of four making $200,000 to pay in all taxes?'' The 
median response, regardless of whether the respondent was rich 
or poor, black or white, was 25 percent.
    A similar Grassroots Research poll last March discovered 
that a majority of Americans would favor a constitutional 
amendment that would prohibit federal, state, and local taxes 
from taking ``a combined total of more than 25 percent of 
anyone's income in taxes.''
    Yet, the Tax Foundation tells us that a dual-income family 
today pays an average 38.4 percent of their income in taxes to 
state, local, and federal governments. This budget starts us 
down the long road towards reducing the tax burden on American 
families--but it is just the beginning. I intend to continue 
that fight.

                                                   Spencer Abraham.


                ADDITIONAL VIEWS OF SENATOR KENT CONRAD

    The FY 1998 budget resolution reported by the Senate Budget 
Committee today will allow us to take another step towards 
reducing our nation's budget deficit. We'll try to finish the 
job Democrats begin in 1993 when we enacted a historic deficit 
reduction package without a single Republican vote--a deficit 
reduction package that has reduced the unified budget deficit 
by 77% since 1992.
    I am disappointed that this deficit reduction package is 
not bolder. We face a demographic time bomb called the baby 
boom generation. The baby boomers will begin to retire around 
the year 2012. The deficit reduction agreement makes none of 
the structural changes in entitlements that will help prepare 
our economy for this surge of retirees.
    As much as I support the deficit reduction in this package, 
I believe we have missed an opportunity to do something real 
about entitlement spending and truly balancing the budget.

                     1993 deficit reduction package

    The 1997 bipartisan agreement, which aims to balance the 
unified budget by 2002, is only possible because Democrats made 
tough choices in 1993, passing an ambitious deficit reduction 
package. In August 1993, a Democratic Congress and a Democratic 
White House passed the Omnibus Budget Reconciliation Act of 
1993, which contained $496 billion in deficit reduction over 
five years. And unlike other deficit reduction packages whose 
actual savings never matched the estimates, this package 
actually outperformed expectations.
    The plan cut spending by about $250 billion over five 
years, and it raised income taxes on the wealthiest among us. 
Much has been said about the tax increases in the 1993 deficit 
reduction bill. In my view, the tax increases in the bill were 
fair. Only the top 1.2% of taxpayers, faced an income tax rate 
increase as a result of the 1993 deficit reduction bill. but 15 
million working families received a tax cut, because of the 
earned income tax credit provisions which were included in that 
legislation. In addition, small businesses were eligible for 
the tax relief provided in that bill.
    The economic dividends of the 1993 deficit reduction 
package become clearer with each passing year. The unified 
budget deficit has declined from an all-time high of $290 
billion in 1992 to an estimated $67 billion in 1997, a decline 
of 77%. The deficit as a percent of GDP has declined from 4.7% 
to an estimated 0.9% of GDP in 1997.
    The 1993 deficit reduction plan took pressure off of 
interest rates, leading to huge increases in business 
investment and four years of sustained economic growth. Real 
business investment has increased at a 9% annual rate over the 
last four years, and the Commerce Department recently announced 
that the economy surged at a rate of 5.6% in the first quarter 
of 1997.
    Inflation and unemployment are down. Inflation, at only 
2.5%, is at its slowest pace in 31 years. The economy has 
created 12 million new jobs since President Clinton took 
office, more than 93% of which are in the private sector. In 
April 1997 the unemployment rate declined to 4.9%, its lowest 
level since 1973. The unemployment rate has been below 6% for 
32 consecutive months. Income inequality has been reduced, and 
the poverty rate declined from 15.1% in 1993 to 13.8% in 1995, 
the largest drop in nearly 30 years.
    The 1993 deficit reduction package passed without a single 
Republican vote. In fact, many on the other side said it would 
increase the deficit, increase unemployment, and crater the 
economy. They were wrong.
    According to the Office of Management and Budget, the 1993 
deficit reduction bill and the outstanding economic growth we 
have experienced since 1993 have lowered deficit projections by 
more than $2 trillion over the period 1994-2002. This deficit 
package, in comparison, will reduce the deficit by about $200 B 
through the year 2002, about one-tenth the size of that 
package.

                    1997 bipartisan budget agreement

    This bipartisan budget deal does not balance without 
counting Social Security surpluses. In the year of unified 
balance, 2002, the real deficit will be $109 billion. That is 
the deficit which will appear in the resolution, because the 
Budget Enforcement Act mandates that Congress not count Social 
Security spending and revenues in its calculation of the 
deficit.
    I am also concerned that this bipartisan budget deal 
increases the deficit for the next three years, in nominal 
dollars and as a percentage of GDP. The unified deficit in 1997 
will be $67 billion, or just 0.9% of GDP. The deficit will be 
higher than these levels for the next three years.
    The 1997 deficit reduction agreement represents a missed 
opportunity for serious entitlement reform and dealing with our 
long term fiscal imbalances. Right now the economy is booming. 
This is exactly the right time to consider structural changes 
in entitlements, which would begin to prepare our nation for 
the retirement of the baby boom generation in 1012. More 
serious spending reductions would also help to lower interest 
rates.
    Perhaps of most concern to me, budget negotiators failed to 
take a tough stand on the upward bias that currently exists in 
the Consumer Price Index. There is overwhelmingevidence that 
the Consumer Price Index, currently used to adjust tax brackets and 
various spending programs for inflation, overstates the actual change 
in the cost-of-living in the United States. The Finance Committee's 
Advisory Commission on the CPI estimated that the CPI overstates the 
cost of living in the United States by 1.1% per year. This deficit 
package should have corrected this mistake which will add nearly $1 
trillion to our national debt over the next 12 years.
    Some of the economic assumptions in this plan are highly 
suspect. CBO's last minute revenue adjustment of $45 billion 
per year may be credible for the years 1997 and 1998. Its 
credibility for the period 1999-2007 is unclear. In addition, 
the balanced budget fiscal dividend assumes lower interest 
rates will result from balancing the budget with a credible 
deficit reduction plan and path. The real debate with regard to 
the Federal Reserve's interest rate policy right now is whether 
the Fed will raise, not lower, interest rates in the next few 
months, particularly since this deficit reduction plan contains 
dramatically less savings than other proposals offered this 
year. It contains less than $200 billion of net policy savings 
over the next five years, and its savings are heavily back 
loaded.
    Despite these shortcomings, the 1997 budget deal does 
contain many good policies. It protects discretionary 
investments for programs like education and transportation. 
These infrastructure investments will benefit the economy and 
pay off many times over in the future.
    The plan expands health insurance for uninsured children 
and helps people move from welfare to work, while treating 
immigrants fairly.
    The plan also preserves the solvency of the Medicare Part A 
trust fund through the year 2007, and protects Medicaid, which 
provides health insurance for low income individuals.
    Finally, the plan provides for targeted tax relief to 
working Americans. The education tax cuts in this package will 
help provide educational opportunity, and reform of the estate 
tax, which has been unchanged for ten years, will help farm 
families keep their businesses.

                               conclusion

    Ultimately, each of us must decide if this plan is worthy 
of support. In deciding how to vote on this package, a key 
question for me was whether passage of this package was better 
policy than doing nothing at all. I believe it is a fairly 
close call.
    I have decided to support this package because it contains 
about $200 billion of net deficit reduction. From 1998 on, the 
deficit declines steadily as a percent of GDP. In addition, 
debt subject to limit as a percent of GDP also declines, from 
about 68% in 1998 to 65% by 2002.
    The plan extends Medicare solvency for ten years, and five 
million children will receive health care coverage. 
Discretionary investments in education and transportation are 
significantly increased. Important food stamp provisions I have 
worked on for two years are included in this package. Finally, 
the domestic spending levels are realistic, and the plan 
contains targeted tax relief for working families and farmers.
    Even though I favor more ambitious deficit reduction 
measures, I view this agreement as a modest step in the right 
direction. I will support this budget package and will work to 
improve it throughout the budget process this year.

                                                       Kent Conrad.


                  MINORITY VIEWS OF SENATOR ROD GRAMS

    I reluctantly oppose the FY 1998 Budget Resolution for the 
following reasons:
    First, this budget fails to shrink the size and scope of 
government and return money--and the power those dollars 
represent--to the taxpayers. In fact, it does just the 
opposite. It increases the size of government by giving 
President Clinton even more money than he originally requested 
for his budget. The President said ``the era of big government 
is over,'' but if this budget plan is implemented, reality will 
not match the rhetoric the American people hear in Washington.
    The total discretionary spending for the next year under 
this budget resolution will be $6.3 billion more than the 
President's budget request. Compared to the budget resolution 
this Committee passed last year, this budget plan has 
significantly increased discretionary spending. In the fiscal 
year 1998 alone, discretionary spending will be $26 billion 
higher than last year's budget, while the total discretionary 
spending for the next five years will be nearly $190 billion 
higher than last year's budget.
    The following are comparisons on discretionary spending:

                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                              1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
FY98 Budget Res..........................................      553.3      559.3      564.3      564.4      561  
FY98 Pres. budget........................................      547        558        564        561        567  
                                                          ------------------------------------------------------
      Difference.........................................       +6.3       +1.3       +0.3       +3.4       -6  
                                                          ======================================================
FY98 Budget Res..........................................      553.3      559.3      564.3      564.4      561  
FY97 Budget Res..........................................      527        526        526        518        516  
                                                          ------------------------------------------------------
      Difference.........................................      +26.3      +33.3      +38.3      +46.4      +45  
----------------------------------------------------------------------------------------------------------------

    In addition, nondefense discretionary spending under this 
budget will at least increase by $72 billion above the freeze 
baseline in the next five years.
    Second, this budget resolution does not balance the budget 
with steady deficit reductions each year. It only achieves 
balance on paper through the use of rosy economic scenarios 
rather than through eliminating wasteful programs and 
addressing long-term solvency of entitlement programs.
    This budget uses an uncapped inflated baseline to achieve 
balance. But as everyone knows, we can't write a household 
budget with inflated numbers or unrealistic assumptions--and we 
shouldn't write a federal budget that way either.
    A responsible budget plan must reach balance through 
steadily declining deficits each year; in other words, the 
deficit must be lower each year than the preceding one. This 
five-year budget agreement, under its own projections, does 
just the opposite; it actually increases the deficit by $23 
billion for each of the first two years, then projects enough 
of a reduction in the years 2000-02 to reach balance.
    In other words, they are claiming to balance the budget by 
immediately increasing the deficit by at least $23 billion and 
then finding the savings to eliminate the deficit in the 
following years. Like Clinton's budget, the deficit reduction 
in this budget resolution is heavily backloaded. Most of the 
deficit reduction will not occur until after President Clinton 
leaves the White House. In my view, this policy doesn't make 
sense. It's just another example of the budget tomfoolery going 
on in Washington.
    This budget plan spends all the $225 billion of the CBO's 
revenue windfall instead of using it for deficit reduction, 
payment of national debt, or tax relief. In addition, there is 
no guarantee that the new revenue receipts are real. It is 
merely an assumption that robust growth will continue.

                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                              1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Resulting Deficit.........................................      -67      -90      -90      -83      -53        1
----------------------------------------------------------------------------------------------------------------

    A good budget plan should be based on real numbers and not 
the inflated budget estimates that have been used in the past 
to justify more spending and higher taxes. This budget 
agreement, however, continues to use the inflated budget 
estimates of the past to mask the spending increases 
itcontains. I cannot support a budget that uses such gimmicks simply to 
make the numbers add up on paper.
    We adopted a policy of zero baseline budgeting two years 
ago, and in fact, this Committee has produced two balanced 
budgets by using the freeze baseline. It appears to me that the 
FY 98 budget resolution has abandoned this policy of honest 
accounting by reverting to the inflated baseline budgeting. In 
my view, this is a shift in the wrong direction.
    Returning to the inflated baseline not only breaks our 
promise to the American people, but also ensures that big 
government lives on by avoiding the hard choices to eliminate 
wasteful programs and addressing our long-term fiscal 
imbalances.
    Another point I want to make is that this budget plan 
significantly exceeds the statutory spending caps. In the 1990 
budget deal, the President and the Congress agreed to cut the 
federal deficit and restrain spending. The 1990 Budget 
Enforcement Act set caps on total discretionary spending 
through FY 1995.
    President Clinton increased the spending caps and extended 
them through FY 1998 in the Omnibus Budget Reconciliation Act 
of 1993. In 1994, Senators Exon and Grassley passed an 
amendment to lower the statutory caps.
    The statutory general purpose limits as adjusted for FY 98 
are $541 billion in outlays while the total discretionary 
spending in the FY98 budget is $553 billion in outlays. This 
means the FY 98 budget resolution significantly exceeds the 
statutory adjusted cap by at least $12 billion in outlays.
    My concern is if each time we decide we can't live with the 
statutory spending caps set by ourselves and reach a new 
agreement to raise them, how can we convince the American 
people that we will be bound by the new caps this time?
    I believe we must be honest with the American people. We 
must use zero baseline budgeting as we promised, so that we can 
rebuild the Americanpeople's confidence in the government and 
make Congress accountable to the hard-earned taxpayers' money.
    Third, tax cuts are vanishing under this budget. This 
budget resolution fails to provide meaningful, broad-based tax 
relief to working families. Although tax cuts are promised, no 
actual tax policies are specified under this budget. I have 
been a firm supporter of meaningful, broad-based tax relief for 
working families as represented by the $500 per child tax 
credit I introduced in the Senate. And rhetorically, everyone 
from my colleagues in Congress to the President has joined me 
in calling for such tax relief. But once again, a closer look 
at this budget agreement reveals that reality has not matched 
the rhetoric.
    Under the budget agreement, $135 billion has been set aside 
for tax relief. Subtract from that the $50 billion that will be 
raised through the airline ticket tax and other tax increases 
and that leaves a mere $85 billion. Subtract from that the $35 
billion promised to the President for his targeted college tax 
deduction and that leaves $50 billion, a far cry from the money 
which should be returned to the taxpayers, not spent on new 
programs.
    Even if all $50 billion were to be allocated for the $500 
per child tax credit, at best, it would still not cover half of 
the children 18 years and younger who would be eligible for the 
tax credit I introduced. And that doesn't even account for the 
fact that the $50 billion will be a major battleground for 
other tax cuts, including estate tax, capital gains tax, 
education tax credit, IRAs, home sales tax credit, the welfare-
to-work tax credit, the Administration's EZ/EC proposal, 
Brownfields legislation, FSC software, tax incentives for DC 
and a number of other pending congressional tax proposals. In 
other words, working families will be squeezed out again and 
that's something I cannot support. Many of these tax proposals 
should be adopted, but the $50 billion hardly makes a dent in 
the overall need for tax relief.
    Fourth, about $34 billion new White House spending over the 
President's budget request is also included in this budget. 
These new initiatives will erase all of the savings achieved in 
last year's welfare reform legislation. There is no commitment 
or effort to eliminate any wasteful programs in exchange.
    In addition, there are many last minute add-ons which 
include: $700 million for federal land acquisitions; $1 billion 
for environmental reserve; $1.5 billion for low-income Medicare 
beneficiaries to erase the impact of premiums increase; $1.5 
billion for nutrition assistance; and $3 billion for welfare to 
work and others. I don't think we should include these new 
spending items at all. If some of these new programs have 
merits, they should be authorized and appropriated through open 
hearings and the normal committee process.
    Fifth, the Medicare proposal with $115 billion savings in 
the budget is a short-term fix. There is no fundamental reform 
to improve Medicare and assure its viability for future 
generations. More importantly, the Medicare deal includes a 
home health care accounting change (Part A to B) that will 
simply shuffle home health care spending out of Medicare Part A 
into Part B which will be paid for mostly out of the general 
fund. In addition, price controls included in the plan would 
lead to worse care for Medicare recipients. No sound policies 
are adopted under this budget to encourage private competition 
and give more choice for Medicare recipients.
    The Medicaid savings are down from the $72 billion passed 
in the FY97 budget resolution to $13. The net savings could be 
even less. The total mandatory spending on Medicare and 
Medicaid under this budget resolution will be even higher than 
what President has requested.
    I have always said that I would support a budget plan that 
meets three specific criteria:
          (1) It must shrink the size and scope of government 
        and return money--and the power those dollars 
        represent--to the taxpayers;
          (2) It must balance the budget by the year 2002 with 
        steadily declining deficits each year, through 
        eliminating wasteful programs and addressing long-term 
        fiscal imbalances, and not through the use of rosy 
        economic scenarios; and
          (3) It must provide meaningful, broad-based tax 
        relief to working families.
    Clearly, this budget has failed to meet these criteria. In 
sum, this budget resolution is a small step forward but two 
giant steps backward. I believe this budget agreement is not in 
the best interest of working Americans, I therefore will not 
support it.

                                                         Rod Grams.


              DISSENTING VIEWS OF SENATOR PAUL S. SARBANES

    In 1993, in order to reduce the deficit the Congress by a 
narrow margin enacted a budget resolution curtailing programs 
and increasing taxes--taxes that primarily impact on those at 
the upper end of the income scale. This combination of spending 
restraint and revenue increases represents a logical way of 
dealing with the deficit issue.
    It has worked in a most impressive way. A flourishing 
economy has brought unemployment below 5% for the first time in 
24 years. Inflation is at a 31 year low. As a consequence the 
deficit declined on a steady basis from $290 billion in fiscal 
1992, to $255 billion in fiscal 1993, to $203 billion in fiscal 
1994, to $164 billion in fiscal 1995, to $107 billion in the 
last fiscal year, and is expected to be $70 billion or less for 
the current fiscal year. From $290 billion to $70 billion since 
1992. As a percent of GDP, the deficit has declined from 4.9% 
to, it is anticipated, less than 1% for the current year, the 
lowest percentage since 1974. By way of comparison, the 
Maastricht Agreement of the European Community which 
established what are regarded as tough requirements for the 
member nations has as its goal--deficits as a percent of GDP of 
below 3%.
    Thus, we have had a most impressive deficit reduction 
performance. Given this, one would think the wise policy would 
be to stay the course and finish the job.
    Instead, this budget resolution combines spending restraint 
with tax cuts. Obviously spending restraint, as in 1993, works 
in the direction of deficit reduction. But tax cuts work 
against deficit reduction and the tax cuts contained in this 
budget agreement will grow over time in a way that may well 
jeopardize the goal of reaching and staying in budget balance.
    The capital gains, inheritance, and IRA tax cuts all carry 
with them the potential for substantial increases in future 
years. In fact the budget agreement recognizes such a trend 
line by providing $85 billion net tax cuts in the first five 
years (1998-2002), and almost double that, $165 net cut, in the 
next five years (2003-2007). No agreements were made as to the 
following decade, but given that the tax cuts are put at $42 
billion in the tenth year of this program (increasing at the 
rate of $5 billion a year in the last three years) one can 
anticipate tax cuts in the vicinity of $500 billion or more, 
over half-a-trillion, in the following decade (2008-2017).
    Is it not imprudent, indeed irresponsible, to commit to 
such tax cuts before we have actually achieved budget balance 
and have a more accurate and realistic view of whether it can 
be sustained? I believe the tax reduction side of the budget 
agreement carries with it the potential of undermining the 
deficit reduction effort.
    Furthermore, the combination of program curtailment on the 
one hand and tax reduction on the other represents an 
inequitable allocation of the burden of deficit reduction. The 
program reductions will primarily impact ordinary working 
people--the tax reductions will primarily benefit those at the 
top end of the income and wealth scale. Consider that 75% of 
the benefits of a capital gains tax cut can be expected to go 
to those making over $100,000 a year, the top 5% of the 
population. The inheritance tax cut would benefit an even 
smaller percentage of the population.
    Thus, this resolution imposes further burdens on working 
people through program reductions--domestic discretionary 
programs will be 10% below the current services level (adjusted 
for inflation) in the year 2002. At the same time substantial 
tax reductions will be given to those at the apex of the income 
and wealth pyramid. This is not fair and equitable.
    A budget agreement should undertake equitable and lasting 
long-term deficit reduction. Unfortunately this resolution 
embodies neither of these attributes and therefore I do not 
support it.

                                                  Paul S. Sarbanes.