OMB COST ESTIMATE
Report No: 493
P.L. 106-65 repeals the provision in current law that reduces retirement pay for militaryretirees employed in Federal civilian positions (re-employed annuitants), resulting inestimated additional outlays from the Military Retirement Trust Fund of approximately$74 million per year starting in FY 2000. The Act also reassigns certain spectrumfrequencies that previously had been identified for auction to the Federal Government foruse by the DOD, resulting in foregone receipts estimated at $150 million over theFY 2000-2002 period. Other major pay-as-you-go provisions offset some of these costsby authorizing the Secretary of the Navy to sell specific ships to certain foreign countriesand authorizing the DOD to sell several materials contained in the National DefenseStockpile. The ship sales are estimated to increase receipts by $91 million in FY 2000and the Stockpile sales are estimated to increase receipts by $202 million over five years. The Act also contains a number of retirement reform provisions with minor pay-as-you-go impact, yielding net costs estimated at $6 million over five years.
The largest difference between OMB and CBO scoring is for the provision repealing themilitary retirement pay reduction in current law. OMB estimated the repeal wouldincrease benefit payments, and therefore direct spending by $74 million per year startingin FY 2000. CBO interpreted the increase in spending as discretionary, because theprovision ultimately requires contributions from discretionary military personnelaccounts to pay for the actuarial costs of the Military Retirement Fund. OMB believesthe repeal would have negligible impact on actuarial costs.
Another significant scoring difference results from the provision reassigning spectrumfrequencies to the Federal Government. OMB estimated the forgone spectrum auctionreceipts would cost $150 million over three years, but CBO estimated only a one timecost of $50 million in FY 2002. The difference is due to varying assumptions about thetiming of the auctions and estimated receipts for the spectrum frequencies that werereclaimed for Federal use.
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