Statement of Administration Policy: H.R. 853 - Comprehensive Budget Process Reform Act of 2000

STATEMENT OF ADMINISTRATION POLICY

(House Rules)

(Nussle (R) Iowa and 32 cosponsors)

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.