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
removes an existing constraint on emergency spending that helps limit
abuses of the emergency designation.
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.
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 important for policymakers to consider.
We also note 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 understands that the Rules Committee intends to
make in order a biennial budgeting amendment to H.R. 853. 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. 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 proposed
changes. 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.
Moreover, there would be a need for greater Executive Branch flexibility
in managing resources in response to changing circumstances over the
longer time horizon. 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 Possible 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.
The Rules Committee may be asked to make floor amendments in order to
add several such provisions to the bill. Proposals to: establish a
lockbox for funds cut from appropriations bills; weaken the paygo rules
by providing an exception during periods of on-budget surplus; or
establish an automatic continuing resolution to cover lapses in
appropriations, could all do more to weaken than to strengthen fiscal
discipline. If these provisions are restored to H.R. 853, the
President's senior advisers would recommend that he veto the
legislation.
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