Budget Enforcement in the
Fiscal Year 1994 Budget Resolution

Senate Report on H. Con. Res. 64 (103rd Congress)

Senate Budget Committee – Report on H. Con. Res. 64 (103rd Congress), H. Rept. 103-19, March 12, 1993.

H. Con. Res. 64 (103rd Congress), as adopted.


Constraints Under the 1990 Budget Law

The Budget Enforcement Act of 1990 continues to constrain the budget resolution for fiscal years 1994 and 1995. Through its maximum deficit amounts, the budget law ensures that the budget resolution may not worsen the deficit. Through the appropriations caps, the budget law ensures that the budget resolution will not allow discretionary spending in excess of the amount agreed to in 1990 (as adjusted under the law).

Within these constraints, the budget resolution plays an important role enforcing congressional priorities. The budget resolution gives Congress its own means to implement the 1990 agreement. Congress enforces the budget resolution using congressional scoring and the estimates of the Congressional Budget Office. Without a budget resolution, the Presidents Office of Management and Budget would have the sole and unquestioned power to estimate the costs of spending and enforce the law.

The 1990 law divides the budget process into two parts: one for appropriations and another for entitlements and taxes. All taxing and spending legislation (other than laws for Social Security, which Congress has taken off budget) falls into one of the two parts. A series of caps govern appropriations. A system called “pay-as-you-go” governs entitlements on taxes. This chapter will discuss in turn deficit targets, appropriations caps, and the pay-as-you-go system, focusing on the effects of the process on the budget resolution.

Deficit Targets

Deficit targets help to ensure that Congress and the President live up to the deficit reduction embodied in the 1990 act. At least through fiscal year 1994, they do not require further deficit reduction.

Revising the Targets

Under the 1990 law, the President revises the deficit targets to take into account spending and revenue changes beyond the Government’s control. Under a strict formula, the President must adjust the targets for all changes to the deficit other than those caused by legislation enacted after the 1990 law took effect. The 1990 law holds Congress and the President responsible for only the harm to the deficit that they knowingly create. If the deficit worsens due to a softening economy, the 1990 law requires the President to adjust the deficit targets so that they do not force the President and Congress to raise taxes or cut Government spending in a recession. Similarly, the deficit targets change to account for misestimates of the cost of legislation by the Office of Management and Budget.

On January 21, 1993, President Clinton decided to continue the process of annual revisions. In his budget submission in early April, President Clinton should set these revised targets for fiscal years 1994 and 1995.

Congressional Enforcement During Consideration Of The Budget Resolution

The Congressional Budget Act enforces these deficit targets during congressional consideration of the budget resolution. Section 606(c) of the Congressional Budget Act (2 U.S.C. § 665e(c) (Supp. III 1991)) creates a point of order against Senate consideration of a budget resolution (or any amendment or conference report) that causes the deficit to exceed the deficit target for the first fiscal year in the resolution (this year, fiscal year 1994). It would take 60 votes to waive the point or order.

A budget resolution may cut the deficit below the deficit targets. Nothing in the 1990 law or congressional points of order prevents further deficit reduction.

Congressional Enforcement After Adoption of the Budget Resolution

After adoption of the budget resolution, another point of order will lie against legislation that would breach this deficit target for fiscal year 1994. Specifically, section 605(b) of the amended Congressional Budget Act (2 U.S.C. §665d(b) (Supp. III 1991)) provides that after Congress has completed a budget resolution, a point of order will lie in the Senate against considering any legislation that would result in a deficit that exceeds the adjusted deficit target for the first fiscal year covered by that resolution.

Section 311(a) of the Congressional Budget Act (2 U.S.C. § 642(a) (Supp. III 1991)) also establishes a point of order against legislation that would breach the budget authority, outlay, or revenue aggregates that the budget resolution sets forth for the first year or the revenue aggregate for the 5 years that the budget resolution covers. Waiver of the point of order under section 311(a) requires 60 votes.

Appropriations Caps

The 1990 law creates a series of caps to enforce the 1990 agreement to reduce discretionary appropriations. For fiscal year 1994, the law sets forth caps for both budget authority and outlays for the total of discretionary spending. After fiscal year 1993, the law no longer mandates caps for each of three categories: defense, international, and domestic.

Across-The-Board Cuts

If Congress and the President enact appropriations that exceed any of these caps, the President must order across-the-board cuts (some call them “mini-sequesters”) in only the category that was breached. The area of spending responsible for the violation of the agreement would sustain automatic cuts bringing appropriations back down to the agreed level.

The Office of Management and Budget must estimate the cost of any appropriations bill within 5 days after its enactment, and that estimate controls the process. When a sequester (if required) takes place depends on when the spending occurs: For regular appropriations bills enacted before Congress adjourns to end a session, the sequester occurs 15 days after the end of session. For a spring supplemental appropriations bill (that is, any enacted after starting a new session but before July 1), the sequester occurs 15 days after enactment of the bill. Finally, for supplemental appropriations enacted after June 30, the law lowers the target for the next year. Consequently, either appropriations bills for the next fiscal year spend at the lower level, or a sequester occurs 15 days after the end of session under the first rule.

Congressional Enforcement

Points of order in the Senate also enforce the caps in budget resolutions and appropriations bills. Specifically, section 601(b) of the amended Congressional Budget Act (2 U.S.C. §665(b) (Supp. III 1991)) creates a point of order (except in time of declared war against considering a budget resolution that would exceed the cap for the fiscal year. This point of order would require 60 Senators to waive.

The caps provide ceilings, not floors. A budget resolution may cut the funding for the Appropriations Committee below the amount that the caps would allow. Nothing in the 1990 law prevents further deficit reduction in appropriated accounts. No points of order lie against budget resolutions for bills that cut appropriations to reduce the deficit.

The Pay-As-You-Go Process

The 1990 law calls the system governing entitlements and receipts “enforcing pay-as-you-go.” The basic rule governing the pay-as-you-go system requires Congress and the President to pay for all entitlement spending increases and tax cuts with offsetting entitlement spending cuts or tax increases for the same fiscal year. The pay-as-you-go system covers all direct spending legislation including in legislation reported by authorizing committees.

Across-the-Board-Cuts

The 1990 law requires the President to order a sequester in certain entitlements at the end of each session of Congress in which changes in law increase entitlement spending or cut taxes without

paying for them. Changes in entitlement spending or tax receipts brought on by causes other than legislation-such as a worsening economy–do not count under the pay-as-you-go system. The sequester threatens the same entitlement programs that the old Gramm-Rudman-Hollings law put in peril, must significantly medicare and farm price supports.

Congressional Enforcement

The 1990 law also calls on Congress to constrain spending through procedural hurdles, notably points of order that the Senate can waive only with the affirmative vote of 60 Senators. Points of order enforce allocations and aggregates made by the budget resolution for the first year (for all allocations and aggregates) and the total of the 5 years covered by the budget resolution (for revenues and allocations to the authorizing committees). The budget resolution divides all spending among committees in allocations that some call “crosswalks” or “302(a) allocations.” If a bill spends more in a committee’s jurisdiction (together with all other laws passed to date) than the budget resolution allocated to that committee, then any Senator may raise a point of order (under sections 302 and 602 of the Congressional Budget Act, 2 U.S.C. §§ 633 and 665a (1988 & Supp. III 1991)) requiring 60 votes to waive. Furthermore, the budget resolution sets a ceiling on total outlays from all jurisdictions, also enforceable with a 60-vote point of order.

Similarly, for revenues, the budget resolution sets a floor on the level of revenues. If a bill cuts more in taxes (together with all other laws passed to date) than the budget resolution allowed for, then any Senator may raise a point of order (under sections 311 and 605 of the Congressional Budget Act, 2 U.S.C. §§ 642 and 665d (1988 and Supp. III 1991)) requiring 60 votes to waive.

A point of order requiring 60 votes to waive lies against spending that exceeds a committee’s allocation even if the spending legislation pays for itself with new taxes. Similarly, a point of order requiring 60 votes to waive lies against tax-cutting legislation that causes revenues to fall below the revenue floor even if the tax-cutting legislation pays for itself with spending cuts. The process does not automatically give credit against a committee’s allocation for new taxes raised, nor does it automatically give credit against the revenue floor for spending cuts.

Note that the process does give a committee credit against its spending allocation for reductions in spending it makes within its jurisdiction. Consequently, a bill that pays for new spending with spending cuts within the same jurisdiction will not run afoul of the point of order. Similarly, a bill that pays for tax cuts with tax increases will not encounter the obstacle.

Reserve Funds

A budget resolution may pave the way for new spending legislation paid for with taxes, tax-cutting legislation paid for with spending cuts, or spending legislation paid for with cuts in another committee’s jurisdiction. The resolution can include language-called a reserve fund”-that allows the Budget Committee to increase a

committee’s allocation or adjust the revenue floor when a committee reports deficit-neutral legislation on a specified topic. In effect, the reserve fund allows the Senate to get credit against a committee’s allocation of spending for the deficit reduction accomplished by a tax increase or a spending cut in another committee’s jurisdiction. Similarly, the reserve fund allows the Senate to get credit against the revenue floor for the deficit reduction accomplished by a spending cut (whether in the same committee’s jurisdiction or not).

A reserve fund does not presuppose that Congress will raise taxes to pay for new spending. Under a reserve fund, a committee may pay for new spending with taxes, user fees, or spending cuts. As noted above, however, legislation that pays for spending with spending cuts within the same jurisdiction or pays for revenue cuts with revenue increases does not require a reserve fund. The reserve fund merely clears the way for the bill when the Senate pays for the spending one way or the other. The funding mechanism need not even be in the same bill with the spending; the funding may come first in a separate bill.

Every budget resolution since fiscal year 1987 has included at least one reserve fund. Not all reserve funds have led to the enactment of legislation. The reserve fund merely enables the bill to proceed; it does not force the Congress to consider it.

Reserve funds have covered the following topics (in the language of the budget resolutions): Concurrent Resolution on the Budget Fiscal Year 1993, H. Con. Res. 287, 102d Cong., 2d Sess. §9 (1992) (adopted) (initiatives to improve the health and nutrition of children and to provide for services to protect children and strengthen families; economic growth initiatives (including for unemployment compensation or other, related programs); continuing improvements in ongoing health care programs and phasing-in of health insurance coverage for all Americans; initiatives to improve educational opportunities for individuals at the early childhood, elementary, secondary, or higher education levels, or to invest in America’s children); Concurrent Resolution on the Budget-Fiscal Year 1992, H. Con. Res. 121, 102d Cong., 1st Sess., §9, 105 Stat. 2414 (1991) (adopted) (initiatives to improve the health and nutrition of children and to provide for services to protect children and strengthen families, economic recovery initiatives, continuing improvements in ongoing health care programs and phasing-in of health insurance coverage for all Americans, to expand access to early childhood development services for low-income preschoolers, and to fund surface transportation); Concurrent Resolution on the Budget–Fiscal Year 1991, H. Con. Res. 310, 101st Cong., 2d Sess., §6, 104 Stat. 5163 (1990) (children, including funding through tax credits); Concurrent Resolution on the Budget–Fiscal Year 1990, H. Con. Res. 106, 101st Cong., 1st Sess., §§ 7 and 8, 103 Stat. 2540 (1989) (children, including funding through tax credits; and Medicaid); Concurrent Resolution on the Budget–Fiscal Year 1989, H. Con. Res. 268, 100th Cong., 2d Sess., §§5 and 6, 102 Stat. 4875 (1988) (the welfare reform initiative, the medicare catastrophic health insurance initiative, and the antidrug initiative); Concurrent Resolution on the Budget–Fiscal Year 1988, H. Con. Res. 93, 100th Cong., 1st Sess., § 9, 101 Stat. 1986 (1987) (the welfare reform initiative and the medicare catastrophic health insurance initiative); Concurrent Resolution on the Budget-Fiscal Year 1987, S. Con. Res. 120, 99th Cong., 2d Sess., §§ 3 and 4, 100 Stat. 4354 (1986) (unmet critical needs requested by the President and a general revenue sharing extension); First Concurrent Resolution on the Budget-Fiscal Year 1984, H. Con. Res. 91, 98th Cong., 1st Sess., §2, 97 Stat. 1501 (1983) (loan foreclosure relief to farmers; direct loans for farm ownership, operating, or economic emergency programs; and for other purposes); see also the related provisions of Concurrent Resolution on the Budget-Fiscal Year 1988, H. Con. Res. 93, 100th Cong., 1st Sess., § 5, 101 Stat. 1986 (1987) (funding for defense).

Social Security

The 1990 law took Social Security off budget. The budget resolution may not include Social Security in the Federal budget deficit or surplus. The law requires the budget resolution to set forth the on-budget totals. The following table shows the Congressional Budget Office’s estimates of the Social Security trust fund surpluses (in billions of dollars a fiscal year):

Social Security surpluses

1994 ………………………………………….59
1995 ………………………………………….67
1996 ………………………………………….76
1997 ………………………………………….82
1998 ………………………………………….88

The “Fire Wall” Point of Order

A point of order constrains spending or tax cuts that reduce the Social Security surplus. The point of order works through the budget resolution through the process of allocations to committees. Just like the point of order on allocations to committees generally, waiving the point of order requires 60 votes. The 1990 laws also prohibits the consideration of a budget resolution reported by the Budget Committee that would decrease the Social Security surplus in any of the 5 years covered by the budget resolution. Section 12(b) of the fiscal year budget resolution extends this point of order to floor consideration of the budget resolution. See Concurrent Resolution on the Budget-Fiscal Year 1993, H. Con. Res. 287, 102d Cong., 2d Sess., § 12(b) (1992) (adopted).

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Floor Amendment of Budget Resolutions

Section 305(b) of the Congressional Budget Act prohibits amendments to a budget resolution that are not germane. The precedents on what is germane are very restrictive. Sixth Senators must vote affirmatively to waive a suspend section 305(b).

Reconciliation Instructions

Section 310(a) of the Congressional Budget Act provides for inclusion of reconciliation instructions in budget resolutions, if necessary. In these instructions, Congress may direct committees to report out legislation by a certain date to change the following:

  • new budget authority;
  • budget authority initially provided for prior years;
  • new entitlement authority; credit authority;
  • revenues;
  • deficit reduction, or the debt limit.

Reconciliation instructions have been included in budget resolutions for fiscal years 1981, 1982, 1984, 1986, 1987, 1988, 1990, and 1991. By the same light, budget resolutions did not include reconciliation instructions in many fiscal years, including fiscal years 1989, 1992, and 1993, during multi-year budget agreements.

Out-Year Reconciliation

Out-year reconciliation instructions have been included in several budget resolutions. They constitute an important means for Congress to control the budget process and establish budget priorities. In response to an inquiry from Senator Hatfield on March 26, 1981, the presiding officer stated that out-year reconciliation instructions are in order. 127 Cong. Rec. S2754 (Mar. 26, 1981).

Multi-Committee Reconciliation

Under section 310(b) of the Congressional Budget Act, multi-committee reconciliation legislation is referred to the Budget Committees. The Budget Committees package the legislation without substantive revision. The instructions may give all committees in both Houses the same reporting deadline or use different dates for different committees.

Reconciliation on the Floor

Section 310(d)(2) prohibits any amendment to a reconciliation bill or resolution that would cause deficits to increase. If an amendment decreases specific outlay reductions or revenue increases below the level provided, it must also make a reduction in other specific outlays, an increase in other specific revenues, or a combination at least equivalent to any increase in outlays or decrease in revenues that the amendment provides. A motion to strike a provision is always in order. Sixty Senators must vote affirmatively to waive or suspend section 310(d) (except during a declared war).

Section 310(e)(1) applies the provisions of section 305 (regarding germaneness and mathematical consistency) for budget resolutions and their conference reports to reconciliation bills and their conference reports. Sixty Senators must vote affirmatively to waive or suspend section 310(e)(1) as it related to germaneness or to sustain an appeal of a ruling of the chair under that section. A majority of Senators voting (a quorum being present) may waive or suspend section 310(e) as it related to mathematical consistency.

Section 310(g) prohibits any reconciliation legislation that changes the old-age, survivors, and disability insurance program established under title II of the Social Security Act. Sixty Senators must vote affirmatively to waive or suspend section 310(g) (except during a declared recession).

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