§008. BPLA §525a. Executive Order 12857 of August 4, 1993 (819-836)

Budget Process Law Annotated (1993)

BUDGET CONTROL

Executive Order 12857 of August 4, 1993

Budget Control

By the authority vested in me as President of the United States by the Constitution and the laws of the United States of America, including section 1105 of title 31, United States Code,¹⁸⁵⁷ it is hereby ordered as follows:

1856. This order appears at 58 Fed. Reg. 42,181 (1993). For history of the order, see infra note 1969.

1857. See supra pp. 788-798.

Section 1. Purpose.

The purpose of this order is to create a mechanism to monitor total costs of direct spending¹⁸⁵⁸ programs, and, in the event that actual or projected costs exceed targeted¹⁸⁵⁹ levels, to require that the budget¹⁸⁶⁰ address adjustments in direct spending.

1858. For a discussion of the meaning of “direct spending” for the purposes of this order, see infra note 1862.

1859. Section 2 of this order establishes the “direct spending targets” (see infra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1860. That is, the President’s budget submission under 31 U.S.C. § 1105 (1988 & Supp. III 1991). See supra pp. 788-798.

Sec. 2. Establishment of Direct Spending Targets.

(a) In General. The initial direct spending targets for each of fiscal years 1994 through 1997 shall equal total outlays¹⁸⁶¹ [p. 820] for all direct spending¹⁸⁶² except net interest and deposit insurance¹⁸⁶³ as determined by the Director of the Office of Management and Budget (Director) under subsection (b).

(b) Initial Report by Director.

(1) Not later than 30 days after the date of enactment of the Omnibus Budget Reconciliation Act of 1993 (OBRA),¹⁸⁶⁴ the Director¹⁸⁶⁵ shall submit [p. 821] a report to the Congress setting forth projected direct spending targets for each of fiscal years 1994 through 1997.

(2) The Director’s¹⁸⁶⁶ projections shall be based on legislation enacted as of 5 days before the report is submitted under paragraph (1). To the extent feasible, the Director shall use the same economic and technical assumptions used in preparing the concurrent resolution on the budget for fiscal year 1994 (H. Con. Res. 64).¹⁸⁶⁷

(c) Adjustments. Direct spending targets shall be subsequently adjusted by the Director¹⁸⁶⁸ under Section 6.¹⁸⁶⁹

1861. Section 3(1) of the Congressional Budget Act of 1974 provides that “[t]he terms ‘budget outlays’ and ‘outlays’ mean, with respect to any fiscal year, expenditures and net lending of funds under budget authority during such year.” See supra p. 11.

1862. Section 250(c)(8) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “direct spending” to mean:

(A) budget authority provided by law other than appropriation Acts;

(B) entitlement authority; and

(C) the food stamp program.

See supra pp. 444-445. Sections 3(9) and 401(c)(2)(C) of the Congressional Budget Act of 1974, in turn, define “entitlement authority” similarly to mean authority:

to make payments (including loans and grants), the budget authority for which is not provide d for in advance by appropriations Acts, to any person or government if, under the provisions of the law containing such authority, the United States is obligated to make such payments to persons or governments who meet the requirements established by such law

See supra pp. 18 & 252-253.

Section 13301 of the Budget Enforcement Act excluded the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund from this definition of “direct spending.” See supra pp. 745-746. By omitting the Social Security trust funds from the list of items excluded from direct spending, the executive order opens the question of whether the President intended to include Social Security in the order’s entitlement review, in contravention of the plain intent of section 13301 of the Budget Enforcement Act of 1990. The principal drafter of the House-passed legislation on which the President based the order, Congressman Charles Stenholm, certainly intended this result.

1863. Section 250(c)(19) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “deposit insurance.” See supra p. 447. Compare the similar exclusion of deposit insurance funding from the pay-as-you-go enforcement in section 252(b)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985. See supra p. 510.

1864. Pub. L. 103-66, 107 Stat. 312 (1993), enacted August 10, 1993. The Order thus required action not later than September 9, 1993.

1865. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1866. Section 2(a) of this order defines “Director to mean the Director of the Office of Management and Budget. See supra p. 820.

1867. H. Con. Res. 64, 103d Cong., 1st Seas., 139 Cong. Rec. H1747 (daily ed. Mar. 31, 1993) (adopted). For the economic assumptions, see H. Rep. 103-48 (Conference Report, p. 46), 103d Cong., 1st Sess. (1993), reprinted in 139 Cong. Rec. H1747, H1760 (daily ed. Mar. 31, 1993).

1868. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1869. See infra pp. 827-831.

Sec. 3. Annual Review of Direct Spending and Receipts by President.

As part of each budget submitted under section 1105(a) of title 31, United States Code,¹⁸⁷⁰ the Director¹⁸⁷¹ shall provide an annual review of direct spending¹⁸⁷² and receipts, which shall include [p. 822]

(1) information supporting the adjustment of direct spending targets¹⁸⁷³ pursuant to Section 6,¹⁸⁷⁴

(2) information on total outlays¹⁸⁷⁵ for programs covered by the direct spending targets,¹⁸⁷⁶ including actual outlays for the prior fiscal year and projected outlays for the current fiscal year¹⁸⁷⁷ and the 5 succeeding fiscal years, and

(3) information on the major categories of Federal receipts, including a comparison between the levels of those receipts and the levels projected as of the date of enactment of OBRA.¹⁸⁷⁸

1870. See supra p. 788.

1871. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1872. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1873. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1874. See infra pp. 827-831.

1875. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1876. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1877. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1878. The Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, 107 Stat. 312 (1993), enacted August 10, 1993.

Sec. 4. Special Direct Spending Message by President.

(a) Trigger. In the event that the information submitted under Section 3 indicates−

(1) that actual outlays¹⁸⁷⁹ for direct spending¹⁸⁸⁰ [p. 823] in the prior fiscal year exceeded the applicable direct spending target,¹⁸⁸¹ or

(2) that outlays¹⁸⁸² for direct spending¹⁸⁸³ for the current¹⁸⁸⁴ or budget year¹⁸⁸⁵ are projected to exceed the applicable direct spending targets,¹⁸⁸⁶ the Director¹⁸⁸⁷ shall include in the budget¹⁸⁸⁸ a special direct spending message meeting the requirements of subsection (b) of this Section.

(b) Contents.

(1) The special direct spending message shall include:

(A) An explanation of any adjustments to the direct spending targets¹⁸⁸⁹ pursuant to Section 6.¹⁸⁹⁰

(B) An analysis of the variance in direct spending¹⁸⁹¹ over the adjusted direct spending targets.¹⁸⁹²

(C) The President’s recommendations for addressing the direct spending overages,¹⁸⁹³ if any, in the prior, current,¹⁸⁹⁴ or budget year.¹⁸⁹⁵

(2) The recommendations may consist of any of the following:

(A) Proposed legislative changes to reduce outlays,¹⁸⁹⁶ increase revenues, or both, in order to recoup or eliminate the overage¹⁸⁹⁷ for the prior, current,¹⁸⁹⁸ and budget years¹⁸⁹⁹ in the current year, the budget year, and [p. 825] the 4 out-years.¹⁹⁰⁰

(B) Proposed legislative changes to reduce outlays,¹⁹⁰¹ increase revenues, or both, in order to recoup or eliminate part of the overage¹⁹⁰² for the prior, current,¹⁹⁰³ and budget year¹⁹⁰⁴ in the current year, the budget year, and the 4 out-years,¹⁹⁰⁵ accompanied by a finding by the President that, because of economic conditions or for other specified reasons, only some of the overage should be recouped or eliminated by outlay reductions or revenue increases, or both.

(C) A proposal to make no legislative changes to recoup or eliminate any overage,¹⁹⁰⁶ accompanied by a finding by the President that, because of economic conditions or for other specified reasons, no legislative changes are warranted.

(3) Any proposed legislative change under paragraph (2) to reduce outlays¹⁹⁰⁷ may include reductions in direct spending¹⁹⁰⁸ [p. 826] or in the discretionary spending limits¹⁹⁰⁹ under section 601 of the Congressional Budget Act of 1974.¹⁹¹⁰

1879. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1880. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1881. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1882. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1883. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1884. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1885. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1886. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1887. Section 2(a) of this order defines “Director to mean the Director of the Office of Management and Budget. See supra p. 820.

1888. That is, the President’s budget submission under 31 U.S.C. 1105 (1988 & Supp. III 1991). See supra pp. 788-798.

1889. Section 2 of this order establishes the “direct spending targets (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1890. See infra pp. 827-831.

1891. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1892. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see infra pp. 827-831).

1893. Section 4(a) implicitly defines “overage”. See supra pp. 822-823.

1894. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1895. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1896. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1897. Section 4(a) implicitly defines “overage”. See supra pp. 822-823.

1898. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1899. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1900. Section 250(c)(14) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “outyear.” See supra p. 446.

1901. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1902. Section 4(a) implicitly defines “overage”. See supra pp. 822-823.

1903. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1904. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1905. Section 250(c)(14) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “outyear”. See supra p. 446.

1906. Section 4(a) implicitly defines “overage”. See supra pp. 822-823.

1907. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1908. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1909. Section 601(a)(2) defines “discretionary spending limit”. See supra pp. 301-303.

Sec. 5. Proposed Special Direct Spending Resolution.¹⁹¹¹

If the President recommends reductions consistent with subsection 4 (b)(2)(A)¹⁹¹² or (B),¹⁹¹³ the special direct spending message¹⁹¹⁴ shall include the text of a special direct spending resolution implementing the President’s recommendations through reconciliation directives¹⁹¹⁵ instructing the appropriate [p. 827] committees of the House of Representatives and Senate to determine and recommend changes in laws within their jurisdictions to reduce outlays¹⁹¹⁶ or increase revenues by specified amounts. If the President recommends no reductions pursuant to Section 4 (b)(2)(C),¹⁹¹⁷ the special direct spending message shall include the text of a special resolution concurring in the President’s recommendation of no legislative action.

1910. See supra pp. 299-306.

1911. For the response that House rules require, see infra pp. 843-850 (those portions of H.R. 2264, 103d Cong., 1st Sess., 139 Cong. Rec. H3029, H3199-201 (daily ed. May 27, 1993) (as passed by the House of Representatives), applied to the House by H. Res. 235, 103d Cong., 1st Sess., 139 Cong. Rec. H6122 (daily ed. Aug. 3, 1993))). Note that the Senate has no comparable rules.

1912. That is, a recommendation to eliminate all of the overage. See supra p. 824.

1913. That is, a recommendation to eliminate part of the overage. See supra p. 825.

1914. Section 4 of this order defines “direct spending message”. See supra pp. 822-826.

1915. Congressional Budget Act of 1974 section 310 sets forth the reconciliation process in the context of Congress’s annual cycle of concurrent resolutions on the budget. See supra pp. 158-177. For other budget process legislation dealing with reconciliation, see Congressional Budget Act of 1974 section 300, supra p. 47 (budget timetable, including that for reconciliation); section 301(b)(2) & (3), supra pp. 58.60 (empowering budget resolutions to include reconciliation instructions, as well as a provision providing for delayed enrollment of legislation pending completion of reconciliation); section 305, supra pp. 120-142 (procedures for budget resolutions and reconciliation bills); section 313, supra pp. 198-228 (the Byrd Rule prohibiting extraneous matter in reconciliation); section 604, supra pp. 325-327 (providing an optional reconciliation process in the House of Representatives to make up the net losses created by tax-cutting legislation); section 904(c) & (d), supra pp. 361-368 (supermajority requirements for points of order and appeals, including those for reconciliation); the Balanced Budget and Emergency Deficit Control Act of 1985 section 258C, supra pp. 658-662 (providing a special the Balanced Budget and Emergency Deficit Control Act of 1985 reconciliation process to achieve savings in lieu of an impending sequester); and section 16005 of H.R. 2264, 103d Cong., 1st Seas., 139 Cong. Rec. H3029, H3199-201 (daily ed. May 27, 1993) (as passed by the House of Representatives), as applied to the House by H. Res. 235, 103d Cong., 1st Sess., 139 Cong. Rec. H6122 (daily ed. Aug. 3, 1993)), Infra pp. 844-848 (reconciliation procedures in response to special direct spending message).

1916. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1917. See supra p. 825.

Sec. 6. Adjustments to Direct Spending Targets.¹⁹¹⁸

(a) Required Annual Adjustments. Prior to the submission of the President’s budget¹⁹¹⁹ for each of fiscal years 1995 through 1997, the Director¹⁹²⁰ shall adjust the direct spending targets¹⁹²¹ in accordance with this Section. Any such adjustments shall be reflected in the targets used in the report under Section 3¹⁹²² and message (if any) under Section 4.¹⁹²³

(b) Adjustment for Increases in Beneficiaries.

(1) The Director¹⁹²⁴ shall adjust the direct spending targets¹⁹²⁵ for increases (if any) in actual or projected numbers of beneficiaries under direct spending¹⁹²⁶ programs for which the number of beneficiaries is a variable in determining costs.

(2) The adjustment shall be made by−

(A) computing, for each program under paragraph (1), the percentage change between

(i) the annual average number of beneficiaries under that program (including actual numbers of beneficiaries for the prior fiscal year and projections for the budget¹⁹²⁷ and subsequent fiscal years) to be used in the President’s budget¹⁹²⁸ with which the adjustments will be submitted, and

(ii) the annual average number of beneficiaries used in the adjustments made by the Director¹⁹²⁹ in the previous year (or, in the case of adjustments made in 1994, the annual average number of beneficiaries [p. 829] used in the Director’s¹⁹³⁰ initial report under Section 2(b)¹⁹³¹);

(B) applying the percentages computed under subparagraph (A) to the projected levels of outlays¹⁹³² for each program consistent with the direct spending targets¹⁹³³ in effect immediately prior to the adjustment; and

(C) adding the results of the calculations required by subparagraph (B) to the direct spending targets¹⁹³⁴ in effect immediately prior to the adjustment.

(3) No adjustment shall be made for any program for a fiscal year in which the percentage increase computed under paragraph (2)(A) is less than or equal to zero.¹⁹³⁵

(c) Adjustments for Revenue Legislation. The Director¹⁹³⁶ shall adjust the targets¹⁹³⁷ as follows:

(1) they shall be increased by the amount of any [p. 830] increase in receipts; or

(2) they shall be decreased by the amount of any decrease in receipts, resulting from receipts legislation enacted after the date of enactment of OBRA,¹⁹³⁸ except legislation enacted in response to the message transmitted under Section 4.¹⁹³⁹

(d) Adjustments To Reflect Congressional Decisions. Upon enactment of a reconciliation bill enacted in response to a message submitted under Section 4,¹⁹⁴⁰ the Director¹⁹⁴¹ shall adjust direct spending targets¹⁹⁴² for the current year,¹⁹⁴³ the budget year,¹⁹⁴⁴ and each outyear¹⁹⁴⁵ through 1997 by—

(1) increasing the target¹⁹⁴⁶ for the current [p. 831] year¹⁹⁴⁷ and the budget year¹⁹⁴⁸ by the amount stated for that year in that reconciliation bill (but if a separate vote was required by Congressional rules, only if that vote has occurred); and

(2) decreasing the target¹⁹⁴⁹ for the current,¹⁹⁵⁰ budget,¹⁹⁵¹ and outyears¹⁹⁵² through 1997 by the amount of reductions in direct spending¹⁹⁵³ enacted in that reconciliation bill.

(e) Designated Emergencies. The Director¹⁹⁵⁴ shall adjust the targets¹⁹⁵⁵ to reflect the costs of legislation that is designated as an emergency by Congress and the President under section 252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985.¹⁹⁵⁶

1918. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1919. That is, under 31 U.S.C. § 1105 (1988 & Supp. III 1991). See supra pp. 788-798.

1920. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1921. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1922. See supra pp. 821-822.

1923. See supra pp. 822-826.

1924. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1925. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1926. For a discussion of the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1927. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1928. That is, under 31 U.S.C. § 1105 (1988 & Supp. III 1991). See supra pp. 788-798.

1929. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1930. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1931. See supra p. 820.

1932. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1933. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1934. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1935. That is, the adjustment cannot be a downward adjustment.

1936. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1937. Section 2 of this order establishes the “direct spending targets. See supra pp. 819-821.

1938. The Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, 107 Stat. 312 (1993), enacted August 10, 1993.

1939. See supra pp. 822-826.

1940. See supra pp.822-26.

1941. Section 2(a) of this order defines “Director to mean the Director of the Office of Management and Budget. See supra p. 820.

1942. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1943. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year.” See supra p. 446.

1944. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1945. Section 250(c)(14) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “outyear.” See supra p. 446.

1946. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1947. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1948. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1949. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1950. Section 250(c)(13) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “current year”. See supra p. 446.

1951. Section 250(c)(12) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “budget year”. See supra p. 446.

1952. Section 250(c)(14) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines “outyear”. See supra p. 446.

“1953. For a discussion of-the meaning of “direct spending” for the purposes of this order, see supra note 1862.

1954. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

1955. Section 2 of this order establishes the “direct spending targets”. See supra pp. 819-821.

1956. See supra p. 517.

Sec. 7. Relationship to Balanced Budget and Emergency Deficit Control Act.¹⁹⁵⁷

Recommendations pursuant to Section 4¹⁹⁵⁸ shall include a provision specifying that reductions in outlays¹⁹⁵⁹ or increases in receipts resulting from that legislation shall not be taken into account for purposes of any budget enforcement procedures under the Balanced Budget and Emergency Deficit Control Act of 1985.¹⁹⁶⁰

1957. That is, Gramm-Rudman-Hollings.^[1] See supra pp. 405-692.

1958. See supra pp. 822-826.

1959. Section 3(1) of the Congressional Budget Act of 1974 defines “outlays”. See supra p. 11.

1960. That is, sections 251-253 of the Balanced Budget and Emergency Deficit Control Act of 1985. See supra pp. 475-533.

Sec. 8. Estimating Margin.

For any fiscal year for which the overage¹⁹⁶¹ is less than one-half of 1 percent of the direct spending target¹⁹⁶² for that year, the procedures set forth in Section 4¹⁹⁶³ shall not apply.

1961. Section 4(a) implicitly defines “overage”. See supra pp. 822-823.

1962. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see supra pp. 827-831).

1963. See supra pp. 822-826.

Sec. 9. Means-Tested Programs.

In making recommendations under Section 4,¹⁹⁶⁴ the Director¹⁹⁶⁵ shall seriously consider all other alternatives before proposing reductions in means-tested programs.

1964. See supra pp. 822-826.

1965. Section 2(a) of this order defines “Director” to mean the Director of the Office of Management and Budget. See supra p. 820.

Sec. 10. Effective Date.

This order shall take effect upon [p. 833] enactment of OBRA.¹⁹⁶⁶ This order shall apply to direct spending targets¹⁹⁶⁷ for fiscal years 1994 through 1997 and shall expire at the end of fiscal year 1997.

Signature of William J. Clinton¹⁹⁶⁸

William J. Clinton

The White House,

August 4, 1993.¹⁹⁶⁹

[Note #1969 of Executive Order 12857 extends from page 833 through page 837, to the end of the E.O.]

1966. The Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, 107 Stat. 312 (1993), enacted August 10, 1993 enacted August 10, 1993.

1967. Section 2 of this order establishes the “direct spending targets” (see supra pp. 819-821) and section 6 of this order provides for their annual adjustment (see supra pp. 827-831).

1968. Signed.

1969. For the President’s remarks on signing this Executive order, see issue 31 of the Weekly Compilation of Presidential Documents.

The Federal Register notes the following information in the margin: “[FR Doc. 93-19098 Filed 8-5-93; 10:15 am] Billing code 3195-01-P.”

This order repeats nearly verbatim House-passed language on the same subject that died in conference. See H.R. 2264, 103d Cong., 1st Sess., tit. XVI, 139 Cong. Rec. H3029, H3199-201 (daily ed. May 27, 1993) (as passed by the House of Representatives). For the text of the House-passed language, see infra note 2024. For legislative history of this language, see H. Res. 186, 103d Cong., 1st Sess., 139 Cong. Rec. H2952 (daily ed. May 27, 1993) (the House rule that provided for inclusion of the language in H.R. 2264); H. Rep. 103-112 (Conference Report, pp. 3, and 50-55, 103d Cong., 1st Sess. (1993) (the report to accompany H. Res. 186, first publishing the language); 139 Cong. Rec. H2952-70 (daily ed. May 27, 1993) (House debate on H. Res. 186); id. at S7821-30 (daily ed. June 24, 1993) (Senate debate on a Sasser amendment similar to the language); id. at S8122-25 (text of the Sasser amendment); H. Rep. 103-213 (Conference Report, pp. 936, 964-66) 103d Cong., 1st Sess. (1993) (joint statement of managers discussing the language), reprinted in 139 Cong. Rec. H6036, H6044 (daily ed. Aug. 4, 1993); cf. H. Res. 235, 103d Cong., 1^st Sess., 139 Cong. Rec. H6122 (daily ed. Aug. 3, 1993) (applying the House-passed procedures of H.R. 2264 to the House); H. Res. 240, 103d Cong., 1st Sess. § 2,139 Cong. Rec. H6110-11 (daily ed. Aug. 5, 1993) (providing for adoption of H. Res. 235); H. Rep. 103-217 (Conference Report), 103d Cong., 1^st Sess. (1993) (to accompany H. Res. 240); 139 Cong. Rec. H6110-21 (daily ed. Aug. 5, 1993) (debate on H. Res. 240).

The joint statement of managers accompanying H.R. 2264, 103d Cong., 1st Sess. § 15301, 139 Cong. Rec. H5792 (daily ed. Aug. 4, 1993), discusses entitlement review as [p. 834] follows:

Title XIV—Budget Process Provisions

Note that the House recedes to the Senate on all material related to the executive and congressional budget process. The House conferees agreed to recede based on their understanding that inclusion of that material would make the entire conference report subject to a point of order in the Senate under section 306 of the Congressional Budget Act of 1974 and thereby endanger final enactment of the reconciliation bill. Therefore, the conferees’ decisions should not be considered as necessarily judging the relative merits of the Senate and House positions.

Entitlement Review

Current Law

Current law includes no analogous provision for monitoring and budgeting federal expenditures for entitlement and mandatory programs.

The House Bill

Federal spending for entitlements and other mandatory programs represent, along with interest on the national debt, the fastest growing area of federal spending. The Congressional Budget Office projects outlays for entitlement and mandatory programs to increase by 6.4% per year (FY 1993-98). However, Congress is acutely aware that entitlement programs represent important commitments to the public in vital areas such as health, income security and economic stability.

Growth in entitlement spending has resulted in large part from the explosion in health care costs throughout society. National spending on health care currently represents more than 14% of the nation’s total economic output and is projected to rise to 18% of Gross Domestic Product by the year 2000 if corrective action is not taken. Through its various programs, the federal government pays approximately 25% of the nation’s health care costs, primarily through the medicare and medicaid entitlement programs. The social security, medicare and medicaid programs represent nearly 70% of all entitlement spending.

The House is concerned with our ability to project, monitor and pay for rising health care costs within the federal budget. Federal spending for entitlements and other mandatory programs is expected to total approximately $770 billion in 1993, representing one-half of federal outlays and more than [p. 835] 12% of our nation’s Gross Domestic Product.

The House, acknowledging the acute budgetary pressure placed on the federal government through rising health care costs, created an entitlement review process requiring the following action on the part of the President:

(1) Following enactment of reconciliation, the Office of Management and Budget sets targets for the total level of entitlement spending levels expected to result from enactment of reconciliation.

(2) The targets would be adjusted annually for:

(a) Increases in the number of beneficiaries for direct spending programs in which the number of beneficiaries is a variable in determining costs (e.g., Social Security, Medicare, Medicaid, Food Stamps, Unemployment Compensation, Federal Civilian/Military Retirement and Veterans’ Pensions/Compensation).

(b) Subsequently enacted legislation increasing or decreasing revenues and legislation designated as an “emergency” measure under the Balanced Budget and Emergency Deficit Control Act of 1985.

(3) The President’s budget must include annual review of actual and projected costs for direct spending and revenues (FY 1994-97). The report shall include: total outlays for direct spending programs and projections for the following five fiscal years; the basis of any variance from the targets, including permissible adjustments; and information regarding major categories of fiscal receipts, including any variance between projected and actual receipts.

(4) If actual outlays for direct spending programs for the prior fiscal year or projected outlays for the current fiscal year or budget year exceed the targets, the President is required to propose measures to address any overage, either through spending cuts, revenue increases or outlay target increases. However, no proposal is required if projected outlays exceed the targets by 1/2 % estimating margin of error or less.

(5) The President and Congress should “seriously consider” all other proposals (outlay target/revenue increases, discretionary cuts or non-means tested program cuts) prior to considering reductions [p. 836] for means-tested programs.

The entitlement review also requires the following action on the part of Congress:

(1) If the President identifies an overage and recommends legislation to recoup or eliminate it, the budget resolution must incorporate a title to address the overage through reconciliation. The reconciliation directive can reflect any combination of spending cuts or revenue increases, but must achieve legislative savings equal to or greater than the amount recommended by the President (up to the amount of the overage).

(2) If the budget resolution recommends recouping less than the full overage, the House Budget Committee must report a House resolution directing that the outlay target shall be increased by the amount which is not offset.

(3) If the House resolution requires raising the outlay targets, the House must vote directly on the issue by a separate vote on the House resolution. If the House rejects raising the target, the budget resolution may not be considered as reported.

(4) Points of order are created: (a) The House cannot consider the budget resolution conference report unless the overage has been fully addressed, either by increasing the target or reporting reconciliation instructions to eliminate the overage or both; (b) No appropriations bills may be considered unless a budget resolution complying with this act has been adopted for the current fiscal year. However, this point of order may be waived by vote or resolution for all appropriations bills for the fiscal year.

The Senate Bill

The Senate bill adopts no analogous provisions.

The Conference Agreement

The conference agreement does not include the House entitlement review provisions. The House conferees agreed to recede to the Senate, based on their understanding that inclusion of the entitlement review provisions would make the entire conference report subject to a point of order in the Senate and thereby endanger final enactment of the reconciliation bill, and based on their further understanding that President Clinton has agreed to establish by Executive Order a mechanism for monitoring entitlement outlays and making recommendations to address overages.

[p. 837 (Note #1969 continued)]

H.R. Conf. Rep. 103-213, 103d Cong., 1st Sess. 936, 964-66 (1993), reprinted in 139 Cong. Rec. H6036, H6044 (daily ed. Aug. 4, 1993).

For an excellent analysis of the House-passed language, see Robert Keith & Edward Davis, Budget Process Changes in the House-Passed Reconciliation Act of 1993 18-23 (June 14,1993) (Cong. Res. Serv. rep. no. 93-583 GOV), reprinted in 139 Cong. Rec. H6115-16 (daily ed. Aug. 5,1993) (debate on H. Re. 240). For a similar treatment of the language that failed in the Senate, see Edward Davis & Robert Keith, Budget Process Changes Considered by the Senate: The Reconciliation Act of 1993 10-13 (June 30,1993) (Cong. Res. Serv. rep. no. 93-625 GOV). For a history and criticism of entitlement caps generally, see William G. Dauster, Budget Process Issues for 1993, 9 J.L. & Pol. 9, 25-35 (1992). For a discussion of entitlements generally, see Kenneth r. Cahill, Entitlements and Other Mandatory Spending (Apr. 6,1993) (Cong. Res. Serv. rep. no. 93-391 EPW).

For legislative history of entitlement caps, see Leon E. Pannetta, Chairman, House Comm. on the Budget, 102d Cong., 1^st Sess., Restoring America’s Future: Preparing The Nation for the 21st Century 20-21 (Comm. Print 1991) (serial no. CP-5); Office of Management and Budget, Budget of the United States Government: . Fiscal Year 1993, pt. 1, at 9, 16-17 (1992); Office of Management and Budget, Mid-Session Review: The President’s Budget and Economic Growth Agenda 407 (1992); H.R. 4150, 102d Cong., 2d Sess. tit. XLVI (1992); S. 2217, 102d Cong., 2d Sess. tit. XLVI, 138 Cong. Rec. S1475 (daily ed. Feb. 7, 1992) (President Bush’s legislation); 138 Cong. Rec. S5414-62, S5531-35 (daily ed. Apr. 10, 1992) (debate on and text of the Domenici amendment, which Senator Domenici withdrew after the Senate voted 66-28 to except Veterans’ Compensation from the cap); 139 Cong. Rec. S3609-21, S3675-79 (daily ed. Mar. 24, 1993) (debate on and text of the Nunn-Domenici amendment, which the Senate tabled by a vote of 51-47); id. at S7703-21, S7769, S7807-08 (daily ed. June 23, 1993) (debate on and text of the Dole-Domenici amendment, which failed by a vote of 43-55 on a motion to waive the Congressional Budget Act of 1974).

[Page 837 is the last page of Executive Order 12857, concluding note #1969, which runs from page 833 through page 837.]

COUNSEL NOTES

[1] In this document, references in the original BPLA to “Gramm-Rudman-Hollings” have largely been replaced by the Act’s formal short title: “Balanced Budget and Emergency Deficit Control Act of 1985”. “Gramm-Rudman-Hollings” was a colloquialism to refer to the Act derived from major proponents of the legislation (though none was its sponsor).

Budget Control (Title Page)

Executive Order 12858

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