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

STATEMENT OF ADMINISTRATION POLICY

(House)

(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 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.