The Administration supports budget process reform as part of a
fiscally responsible budget framework. The President's Budget for Fiscal
Year 2001 proposes such a framework that includes tools for ensuring
continued fiscal discipline. It includes proposals to: strengthen the
long-term solvency of Social Security and Medicare; eliminate the
publicly-held debt by 2013; provide tax relief; and maintain budget
discipline through extension of the discretionary spending limits and
the paygo rules and through establishment of a mechanism to ensure that
Social Security surpluses are not used for other purposes. If Congress
desires to consider broad budget process reform, these proposals would
help to preserve fiscal discipline in an era of surplus.
Base Text of H.R. 853
The Administration has serious concerns about a number of provisions
in H.R. 853.
The proposed emergency reserve fund would constrain the
flexibility that Congress and the President need to respond to
unpredictable and unforeseeable national emergencies. By attempting to
provide for an "average" level of emergencies, the provision would
make it more difficult to respond to truly large emergencies, while at
the same time encouraging spending of the full reserve even when
circumstances fail to warrant it. The provision also creates new
procedural hurdles for emergency spending that could hinder the
Nation's ability to respond to natural disasters and other urgent and
pressing needs in a timely manner. Finally, under current law,
emergency spending requires a designation by both Congress and the
President. The new reserve fund for emergencies would take away the
need for the President's designation of emergency spending. This
change would remove an existing constraint on emergency spending that
helps limit abuses of the emergency designation.
This bill would establish a timetable for the implementation of
accrual budgeting for Federal insurance programs. Adequate models to
estimate risk-assumed cost for insurance program budgeting do not yet
exist. Although the proposal is theoretically attractive, it would be
difficult to implement this title in the envisioned timeframe -- and
once used for budgeting, it would be difficult to reverse. The
Administration notes that, in parallel with credit programs,
consistent, quality estimates would require OMB and CBO access to and
review of the data and models, including data which are not public. In
addition, the suitability and impact of the provisions for each
individual Federal insurance program deserve careful consideration
before implementing accrual budgeting.
Finally, the legislation includes provisions designed to encourage
use of a freeze baseline. By understating the cost of simply
maintaining current program levels, using a freeze baseline to project
future budget surpluses and deficits would threaten fiscal discipline
and put the surplus at risk. It would also inappropriately constrain
consideration of future policy options. Further, the President's
budget already includes information on the prior year's spending,
information that is indisputably important for policymakers to
consider.
The Administration also notes that, by having a joint budget
resolution revert to a concurrent resolution after a veto, the fallback
provisions would limit the resolution's ability to actually expedite the
budget process during years when the President and Congress have serious
differences. Those are the very years in which early agreement might be
helpful in facilitating timely completion of the budget and
appropriations process.
Biennial Budgeting Amendment
The Administration supports biennial budgeting and would support
effective biennial budgeting legislation. The Administration has
testified on several occasions in support of biennial budgeting and has
included language supporting the concept in the President's Budget. The
Administration believes it offers a potentially valuable management
tool. By concentrating budget decisions in the first year of each
two-year period, biennial budgeting would free up time in the second
year that could be redirected to management, long-range planning, and
oversight.
However, the Administration is concerned that the proposed amendment
may require further refinement. The sponsors of the amendment deserve
credit for seeking to address the transition issue and delaying the
effective date to make biennial budgeting more feasible to implement in
a new Administration. The Administration looks forward to carefully
examining this and other possible transition approaches.
Several other issues also deserve close attention. Under biennial
budgeting, there would be a need for greater Executive Branch
flexibility in managing resources in response to changing circumstances
over the longer time horizon. In addition, the amendment calls for the
President to provide budget updates in February of the "off" year, in
addition to the existing summer mid-session reviews. However, it
provides no process for congressional consideration of any changes
proposed in these updates. Such a process could lay a foundation for
orderly review of additional supplemental requests and prevent the
supplemental appropriations from becoming a drawn out and expansive
process.
These issues all relate to the need for the branches to work closely
together in order to effectively implement biennial budgeting. The
Administration looks forward to working with Congress as the legislative
process continues in order to craft effective and workable legislation.
Other Amendments
Biennial budgeting would be a significant change in how Congress and
the Administration produce budgets and appropriations bills. It should
be considered carefully on its own merits and not be used as a vehicle
to carry other, more controversial or partisan budget process changes.
Several such amendments will be considered on the floor, including
proposals to: establish an automatic continuing resolution to cover
lapses in appropriations; weaken the paygo rules by providing an
exception during periods of on-budget surplus; and establish a lockbox
for funds cut from appropriations bills. Each of these proposals would
weaken rather than strengthen fiscal discipline. If any of these
amendments are included in H.R. 853, the President's senior advisers
would recommend that he veto the legislation.
An automatic continuing resolution would allow Congress to keep
appropriations on autopilot simply through inaction. It would undermine
the ability of Congress to respond to a changing world by substituting
an automatic funding mechanism for the hard work and judgment that
results from bicameral action and presidential approval. By making
inaction on the part of Congress a feasible outcome, an automatic
continuing resolution would encourage minorities of the Senate who
oppose a pending spending cut or increase to simply filibuster and block
the relevant appropriations bill, even if the change is supported by
clear majorities of both chambers and the President.
Relaxing the paygo rules to allow on-budget surpluses to be used to
finance mandatory spending or revenue legislation clearly relaxes fiscal
discipline. Further, the proposal would require an unrealistic sequester
to restore on-budget balance if the surplus estimates used at the time
spending or revenue legislation was enacted does not materialize.
Accommodating specific proposals that are part of a fiscally responsible
approach to long-term needs, such as the overall framework proposed in
the President's FY 2001 Budget, is very different than generally
eliminating this important tool for fiscal discipline. Suspending paygo
as a general rule would encourage a rush to spend the surplus before
another bill is enacted that uses the funds to finance other priorities.
The surplus would not last long under such procedures.
The appropriations lockbox could allow either the House or Senate to
unilaterally lower total discretionary spending levels previously agreed
upon by both chambers, or even by both chambers and the Executive
Branch. This could weaken fiscal discipline by producing limits so low
that Congress seeks to evade them with various gimmicks rather than
abide by them. It could make it much more difficult for the two chambers
to resolve differences between their allocations for an appropriations
bill, further slowing down the appropriations process.
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