Statement of Administration Policy: H.R. 5488 - Treasury Postal Service, and General Government Appropriations Bill, FY 1993

(Senate Floor)
(Sponsors: Byrd (D), West Virginia; DeConcini (D), Arizona)

The purpose of this Statement of Administration Policy is to express the Administration's views on H.R. 5486, the FY 1993 Treasury, Postal Service and General Government Appropriations Bill, as reported by the Senate Appropriations Committee.

In his FY 1993 Budget, the President proposed to freeze domestic discretionary spending at FY 1992 levels, and to cut defense discretionary spending below the FY 1992 level. The President has stated that he will veto any bill that exceeds his request. On the basis of OMB's preliminary scoring, the version of H.R. 5488 reported by the Senate Appropriations Committee exceeds the President's request for discretionary budget authority by $355 million. If the bill presented to the President were to exceed his request for discretionary budget authority of $11,085 million, the President would veto the bill. Attached is a table that provides OMB's preliminary scoring of the bill.

The remainder of this statement discusses other Administration concerns with H.R. 5488 as reported by the Senate Appropriations Committee. The discussion addresses the Administration's priorities for program funding and provides suggestions that would lead to the development of a bill that the President could sign. The Administration urges the Senate to consider these views.

Council on Competitiveness

The Administration strongly supports the Committee action to strike language of the House bill that would prohibit the use of funds in the bill for the President's Council on Competitiveness or any successor organization. The Administration understands that an amendment may be offered that would restore the prohibition. Should such an amendment be adopted, the President's senior advisers would recommend that the President veto the bill.

The President has made regulatory reform a top Administration priority. The Council on Competitiveness has worked to ensure that the benefits of health, environmental, and safety regulations are delivered to the American public in the most efficient, effective manner.

The President's Regulatory Reform Initiative directed the Council to lead the effort in implementing reforms. These reforms are designed to stop government regulations that would slow the economy and to accelerate the implementation of regulations that promote economic growth. This effort is critical in a time of economic recovery. Reforms completed in the first 90 days of this effort will reduce private sector costs by an estimated $15 to $20 billion annually. The Council on Competitiveness is essential in helping to ensure that the Executive Branch carries out its regulatory activities with efficiency and in a manner designed to protect the public welfare.

If enacted, an amendment to eliminate funding for the Council would restrict a core function of the Presidency, namely the President's authority to select advisers to assist in supervising the Executive Branch. Such an amendment would represent a highly objectionable encroachment on the ability of the President and the Vice President to discharge their constitutional responsibilities.

Office of National Drug Control Policy (ONDCP)

The Administration would oppose any unwarranted expansion of restrictions on political activity by the Director of ONDCP and certain other ONDCP staff. The Administration understands that an amendment may be offered that would, contrary to the Hatch Act, prohibit the four ONDCP officials who are appointed by the President, with Senate confirmation, from participating in political activity. Currently, all other ONDCP staff are subject to the Hatch Act restrictions placed on virtually all Federal employees.

Singling out the President's top drug policy adviser would be unprecedented. No other officials of equivalent rank and responsibilities are subject to such restrictions. Should such an amendment be adopted, the President's senior advisers would recommend that the President veto the bill.

The Administration also strongly objects to the reductions Ln both funding and staff for the ONDCP. The Committee's actions would reduce total funding by over $1 million and Schedule C and non-career Senior Executive service staff positions by 20 percent.

Department of the Treasury

The Administration objects to language provisions of the bill that would severely constrain the Department of the Treasury's ability to manage its activities. Language directing field offices of the Criminal Investigations Division (CID) of the Internal Revenue Service (IRS) to bypass regional offices and report directly to the national CID office is especially objectionable. This mandate would inhibit the ability of the IRS, at the regional level, to develop balanced policies that adequately address the diverse responsibilities of the IRS.

Section 629 of the bill would expand the law enforcement authority of agents of the office of Foreign Assets Control. Unless this section is removed or modified acceptably, the Attorney General will recommend a veto of the bill because this section would interfere impermissibly with his responsibility to manage the investigation and prosecution of violations of Federal law.

The Committee has recommended a $100.5 million reduction from the request for Information Systems within IRS. This substantial reduction would prevent the IRS from replacing antiquated ADP equipment and would slow implementation of Tax System Modernization. As a consequence, IRS service to the taxpayers would be eroded, and productivity savings in IRS operations would be delayed.

The Administration opposes the Committee's $5 million reduction to the President's request for the Financial Management Service. This reduction would seriously hamper government-wide implementation of the Chief Financial Officers Act. The reduction would also thwart efforts to correct long-standing deficiencies and to improve Federal cash, credit, and financial management government-wide.

Postal Service Revenue Foregone

The Committee allocates $200 million in FY 1993 for payments to the Postal Service Fund for revenue foregone, $270 million below the FY 1992 level. This proposed reduction in Federal payments for subsidized postage rates for selected groups would still result in a funding level $78 million above the President's request. However, it is a good first step, particularly if combined with real program reforms. The Administration urges the Senate to approve the Postal Service reforms proposed in the President's FY 1993 Budget.

Health and Retirement Benefits

Several actions taken by the Committee related to retirement and health benefits for Federal workers are of concern to the Administration. The bill contains restrictions on the negotiating authority of the Office of Personnel Management (OPM). These restrictions would cause total Federal Employees Health Benefits (FEHB) Program premiums for Federal and postal employees and annuitants to rise by $272 million in calendar year 1993 alone.

The Administration proposes to reduce FEHB payments to doctors and to move toward uniform drug co-payment terms for all enrollees. Preventing these actions would raise Federal agency costs by as much as $1.2 billion ever a five-year period, would increase Federal payments to physicians, and would increase premiums for all FEHB enrollees. Increased outlays of $75 million in FY 1993 and additional sums in FY 1994 are included in OMB's scoring of this limitation on OPM's administrative authority.

The Administration opposes the Committee's deletion of requested language that would require the Postal Service to make payments toward the full FEHB Program and Civil Service Retirement costs for certain Postal Service annuitants. This action increases outlays by $315 million in FY 1993.

For the preceding reasons, the Administration urges the Senate to delete the restrictions on the negotiating authority of OPM. In addition, the Administration urges adoption of language that would require the Postal Service to complete its payments toward the full costs of health and retirement benefits for certain Postal Service annuitants.

Public Building Projects

The bill directs that $200 million previously appropriated for the Food and Drug Administration (FDA) be used for construction of facilities in Beltsville, Maryland; purchase of 565 acres of land in Maryland: and design of new facilities. The Administration strongly opposes this language as it is contrary to the plan the Administration proposed at the Committee's request. The Administration's plan for FDA proposes the use of government-owned land and envisions using the $200 million for design and construction. The plan does not currently include the purchase of private land.

The bill would also provide unrequested funding for additional public-building construction and capital-improvement projects of the General Services Administration. The Administration urges the Senate to delete projects that are not priority needs at this time. The bill would authorize unrequested projects at the expense of high-priority projects.

Scoring Issues

OMB has preliminarily classified as domestic spending two programs that the Committee has assumed to be defense spending: the U.S. Customs Service's P-3 aircraft operation and maintenance program ($25 million); and the ONDCP's research and development program of the Counter-Drug Technology Assessment Center ($20 million).

Additional Administration concerns with the Committee bill are contained in the attachment.

Attachments

Attachment
(Senate Floor)

ADDITIONAL CONCERNS
H.R. 5488 - TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT APPROPRIATIONS BILL, FY 1993

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Department of the Treasury

Internal Revenue Service (IRS). The Administration believes that the Committee's reduction of $17 million in Tax Law Enforcement would undermine efforts to increase revenues through audits of high-asset taxpayers. The Administration also opposes the $15 million reduction to the request for Returns Processing and Taxpayer Service, which is taken in addition to the $11 million included in the President's budget for productivity savings. This substantially reduced funding level would leave the IRS without additional funds to meet the needs of new taxpayers.

Inspector General. The Committee's reduction of $1.3 million to the request for the Inspector General (IG) account would eliminate funding for the Inspector General Auditor Training Institute. This one-time request would provide funding for establishment of a government-wide training institute for IG auditors from all Federal agencies. In addition to basic auditor training, specialized training would be offered in financial management. Future costs of the Institute would be supported through tuition charges and reimbursement from agency IGs. The Senate is urged to restore funding for the Institute.

U.S. Customs Service. The Committee has ignored all but one of the initiatives proposed for the Customs Service. The Administration worked closely with Treasury and the Customs Service to develop these initiatives, which represent the most urgent requirements given budgetary constraints. They include such priority items as: improvements to internal controls, efforts to address Southwest Border corruption, and money laundering.

While failing to fund these important initiatives, the Committee has chosen, instead, to fund inspector positions for southwest Border ports currently under construction or expansion. The Administration recognizes that staffing requirements will develop for these ports in the future, customs has considerable flexibility, however, to shift inspectors from areas of lower threat or declining workload. In addition, some of the locations cited will not be completed by FY 1993.

With regard to Customs staff increases at Southwest Border ports, both Customs and the immigration and Naturalization Service (INS) officials monitor the primary lanes at land-border ports. According to testimony by the General Accounting Office, an increase in Customs inspectors, without a commensurate increase in INS staff, would not necessarily facilitate border crossing.

The Committee has earmarked $1 million for Customs inspectors at the Honolulu airport and has imposed other staffing requirements at numerous other ports. This type of micromanagement would severely hamper Customs' ability to allocate its resources efficiently.

The Committee has divided the Customs air and marine operation and maintenance account into three components. The Administration objects to the creation of a new account strictly for the operation and maintenance of Customs P-3 surveillance aircraft. This funding arrangement would reduce Customs' flexibility to manage its programs effectively. Under certain circumstances, this could threaten conduct of missions should the level of P-3 activity suddenly change.

Administering the Public Debt. With the Committee's $6.6 million reduction, the Bureau of Public Debt would lack sufficient computer capacity to expand the use of automated systems to replace labor intensive, paper- driven processes. The reduction would bring the Bureau short of its goal of achieving compatibility with the Federal Reserve's mainframe computer. Necessary financial management system improvements would not be made. In addition, the Savings Bonds Division's Project FASTdata would be postponed as a result of this reduction.

Office of Personnel Management

Administrative Expenses. The Administration objects to the Committee's $4 million reduction to the request for administrative expenses for civil service retirement and health and life insurance benefit programs. The reduction would cause cutbacks in services to active and retired Federal employees. Cutbacks would result in delayed settlement of claims, less timely processing of retirement checks and inquiries, and a reduced capacity to resolve disputes between enrollees and health insurers.

Office of the Inspector General. The Committee has reduced funding requested for the Office of the Inspector General within OPM by $1.2 million. This would make it impossible to perform audits of agency financial statements mandated under the Chief Financial Officers (CFOs) Act of 1990. The Administration opposes these reductions, which would obstruct implementation of the CFOs Act.

Merit Systems Protection Board (MSPB). The Committee's $486 thousand funding reduction would make it extremely difficult for the MSPB to carry out its responsibilities under the Whistleblower Protection Act and to hear employee appeals in a timely fashion.

B. Language Provisions

Department of Treasury. The Administration objects to language provisions that specify levels of staff and activity for programs in the Bureau of Alcohol, Tobacco, and Firearms; the IRS; and the U.S. Customs Service. This type of micromanagement severely hampers an agency's ability to manage its programs efficiently.

Internal Revenue Service. The Committee bill places a Ceiling on resources for the information Reporting Program under Tax Law Enforcement. Though it would have only a minor effect, this ceiling is unwarranted. This program is highly cost-effective and provides the major form of enforcement coverage for individual classes of taxpayers. Perceptions that it unfairly targets lover-income taxpayers are not supported by IRS statistics.

Contrary to perception, this program naturally focuses on higher-income individuals, who are more likely to have dividend and interest income. To increase high-asset audits, the Committee is encouraged to fund fully the Administration's request for initiatives under Tax Law Enforcement.

General Services Administration (GSA). The Committee bill would direct the Public Buildings Service to enter into a 27-year lease on a building to be constructed by the Atlanta Downtown Development Corporation. The Administration opposes this expansion of leasing authority, which could potentially cause this project to be scored as a capital lease, and the lack of competition this language would direct.

FTS2000. The Administration objects to the Committee's deletion of section 622 regarding the mandatory use of the FTS2000 program. Section 622 would ensure that legislated mandatory use continues beyond March 1993 only if the program is cost-effective.

Office of Personnel Management. The Administration objects to language requiring OPM to spend $l million of its Salaries and expenses appropriation for the establishment of health promotion and disease prevention programs for Federal employees. This provision would impair OPM's ability to implement locality pay and a new pay-for-performance system, both of which are mandated by the Federal Employees Pay Comparability Act of 1990.

Resolution Trust Corporation (RTC). The Administration opposes report language that grants Federal agencies preferential treatment in sales of RTC properties. This action could complicate and delay the RTC's asset disposition process, thereby resulting in added costs.

Section 521 prohibits the use of funds to reduce the rank or rate of pay of a career appointee in the SES upon reassignment or transfer. The Administration objects to this provision because it restricts the flexibility of the Executive Branch to manage senior executive personnel effectively and efficiently.

Infringements on Executive Authority. The Administration objects to a number of provisions that purport to condition the President's authority, and the authority of affected Executive Branch officials, to use funds otherwise appropriated by this bill on the approval of various committees of the House of Representatives and the Senate. Such sections are 526, 614, and 621 of the General Provisions. The Supreme court has ruled such language unconstitutional in INS vs. Chadha.

Restrictions on the Office of Management and Budget. The Administration continues to be concerned about various restrictions on OMB's authority to study and) review certain areas. Article II of the Constitution vests all "executive power" in the President, who shall "take Care that the Laws are faithfully executed." This authorizes the President to "supervise and quid*" Executive Branch officials in "their construction of the statute" under which they act in order to secure...uniform execution of the laws." Myers vs. United States. 272 U.S. 52, 135 (1926).

In the regulatory process, the President has chosen to exercise supervisory control through delegation of this constitutional power to OMB pursuant to Executive Orders 12291 and 12498. The restrictive provisions of the Committee bill would interfere with that authority.

The attached data tables can be downloaded in PDF format by clicking this link