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Section 106
Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987

title i—deficit reduction procedures
Sec. 106. Maximum Deficit Amounts.

(a) Revision of Definition of Maximum Deficit Amount.—Paragraph (7) of section 3 of the Congressional Budget and Impoundment Control Act of 1974 is amended by striking out subparagraphs (D) through (F) and by inserting in lieu thereof the following:

“(D) with respect to the fiscal year beginning October 1, 1987, $144,000,000,000;

“(E) with respect to the fiscal year beginning October 1, 1988, $136,000,000,000;

“(F) with respect to the fiscal year beginning October 1, 1989, $100,000,000,000;

“(G) with respect to the fiscal year beginning October 1, 1990, $64,000,000,000;

“(H) with respect to the fiscal year beginning October 1, 1991, $28,000,000,000; and

“(I) with respect to the fiscal year beginning October 1, 1992, zero.”.

(b) Definition of Margin.—Section 257 of the Act is amended by inserting after paragraph (9) the following new paragraph:

“(10) The term ‘margin’ means $10,000,000,000 with respect to each of fiscal years 1988 through 1992 and zero with respect to fiscal year 1993.”.

(c) Revision of Expiration Date of the Balanced Budget and Emergency Deficit Control Act of 1985.—Subsection (b)(1) of section 275 of the Act is amended by striking out ‘‘September 30, 1991” and by inserting in lieu thereof “September 30, 1993”.

(d) Section 301(i) Point of Order.—Paragraph (2) of section 301(i) of the Congressional Budget Act of 1974 is amended by inserting “(A)” before “Paragraph” and by adding at the end thereof the following new paragraphs:

“(B) Paragraph (1) shall not apply to the consideration of any concurrent resolution on the budget for fiscal year 1988 or fiscal year 1989, or amendment thereto or conference report thereon, if such concurrent resolution or conference report provides, or in the case of an amendment if the concurrent resolution as changed by the adoption of such amendment would provide for deficit reduction from a budget baseline estimate as specified in section 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 for such fiscal year (based on laws in effect on January 1of the calendar year during which the fiscal year begins) equal to or greater than the maximum amount of unachieved deficit reduction for such fiscal year as specified in section 251(a)(3)(A) of such Act.

“(C) For purposes of the application of subparagraph (B), the amount of deficit reduction for a fiscal year provided for in a concurrent resolution, or amendment thereto or conference report thereon, shall be determined on the basis of estimates made by the Committee on the Budget of the House of Representatives or of the Senate, as the case may be.”.

(e) Section 311 (a) Point of Order in the Senate.—

(1) Section 311(a) of the Congressional Budget Act of 1974 is amended by striking out all after “in the Senate,’’ and by inserting in lieu thereof the following: would otherwise result in a deficit for such fiscal year that—

“(A) for fiscal year 1989 or any subsequent fiscal year, exceeds the maximum deficit amount specified for such fiscal year in section 3(7); and

“(B) for fiscal year 1988 or 1989, exceeds the amount of the estimated deficit for such fiscal year based on laws and regulations in effect on January 1of the calendar year in which such fiscal year begins as measured using the budget baseline specified in section 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 minus $23,000,000,000 for fiscal year 1988 or $36,000,000,000 for fiscal year 1989;

except to the extent that paragraph (1) of section 301(i) or section 304(b), as the case may be, does not apply by reason of paragraph (2) of such subsection.”.

(2) Section 254(b)(1)(E) of the Act is amended by inserting “and for fiscal year 1988 or 1989, exceed the amount of the estimated deficit for such fiscal year based on laws and regulations in effect on January 1of the calendar year in which such fiscal year begins as measured using the budget baseline specified in section 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 minus $23,000,000,000 for fiscal year 1988 or $36,000,000,000 for fiscal year 1989;” after “maximum deficit amount for such fiscal year,”.

(f) President’s Budget.—Section 1105(f) of title 31, United States Code, is amended—

(1) by redesignating paragraph (3) as paragraph (5); and (2) by inserting after paragraph (2) the following new paragraphs:

“(3) The budget transmitted pursuant to subsection (a) for a fiscal year shall include a budget baseline estimate made in accordance with section 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 and using economic and technical assumptions consistent with the current services budget submitted under section 1109 for the fiscal year. If such budget baseline estimate differs from the estimate in the current services budget, the President shall explain the differences. The budget transmitted pursuant to subsection (a) for such fiscal year shall include the information required by section 251(a)(2) of such Act (other than account-level detail) assuming that the deficit in such budget baseline were the amount estimated by the Director of the Office of Management and Budget on August 25 of the calendar year in which the fiscal year begins.

“(4) Paragraphs (1) and (2) shall not apply with respect to fiscal year 1989 if the budget transmitted for such fiscal year provides for deficit reduction from a budget baseline deficit for such fiscal year (as defined by section 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 and based on laws in effect on January 1, 1988) equal to or greater than $36,000,000,000.”.


Counsel Notes
Codification

This section is not classified to the U.S. Code.

Joint Explanatory Statement (BBEDCRA 1987)

The Joint Explanatory Statement of the Managers of Conference on the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 included this description:

1. Deficit Targets and Amount of Sequestration

Current Law

The 1985 Balanced Budget Act established (in Section 3(7) of the 1974 Budget Act) a deficit target, referred to as a “maximum deficit amount,” for each of six consecutive fiscal years, beginning with $171.9 billion for FY 1986, $144 billion for FY 1987, and declining by $36 billion a year thereafter until a balanced budget is achieved in FY 1991. The deficit targets are as follows:

FY 1986—$171.9 billion;
FY 1987—$144 billion;
FY 1988—$108 billion;
FY 1989—$72 billion;
FY 1990—$36 billion; and
FY 1991—zero.

The Act contains emergency procedures, known generally as sequestration, to eliminate the deficit excess-that amount of the estimated deficit that exceeds the deficit target. Sequestration involves the issuance of a presidential order that permanently cancels (with certain exceptions) budgetary resources in order to achieve a required amount of outlay savings. If sequestration is required for a fiscal year, the entire amount of the deficit excess for that year must be eliminated. (To eliminate a deficit excess of $20 billion, for example, budgetary resources would have to be reduced by a much greater amount in order to yield the $20 billion in aggregate required outlay reductions).

Sequestration would not occur during FY 1987-1990 if the deficit excess is $10 billion or less. (The $10 billion margin-of-error amount does not apply for FY 1991; in that year, any deficit excess would have to be eliminated.)

Provisions in the 1985 Balanced Budget Act pertaining to the deficit targets and sequestration procedures expire on September 30, 1991.

Section 301(i) of the 1974 Budget Act, as amended by the 1985 Balanced Budget Act, establishes a point of order in both Houses that bars the consideration of a budget resolution recommending a deficit level greater than the applicable maximum deficit amount. The point of order would not apply if a declaration of war by Congress is in effect.

The President’s budget also must not exceed the applicable maximum deficit amount.

Senate Amendment

The Senate amendment revises the deficit targets beginning with FY 1988 and extends them for one year, as follows:

FY 1988—$150 billion;
FY 1989—$130 billion;
FY 1990—$90 billion;
FY 1991—$45 billion; and
FY 1992—zero.

 Under the Senate amendment, if sequestration is required, the entire amount of the deficit excess must be eliminated (except possibly for FY 1989). Also, the $10 billion margin-of-error amount applies for FY 1988-1991, but not for FY 1992.

In the case of FY 1989 only, the amount of required outlay reductions is the lesser of (1) the amount of the deficit excess or (2) the amount necessary to achieve a $36 billion reduction from a current services baseline deficit. With regard to the second condition, sequestration would not occur if a report issued by the Director of the Office of Management and Budget (OMB) indicates that $36 billion in deficit reduction has been achieved. This final OMB report is issued after preliminary reports are made by the OMB Director, the Director of the Congressional Budget Office (CBO), and the Comptroller General.

To determine whether the second condition has been met, each agency estimates the amount of deficit reduction achieved below its own current services baseline deficit estimate made earlier in the year. (Current services is defined as zero percent real growth for all programs subject to appropriation.) OMB must use a baseline estimate (and corresponding economic and technical assumptions) that it is required to submit as part of the President’s annual budget in January. CBO must use a baseline deficit estimate and assumptions that it is required to include in its annual February report. After reviewing the OMB and CBO estimates, the Comptroller General must issue on March 1 his own estimate of the FY 1989 baseline deficit and corresponding assumptions.

The Senate amendment changes the expiration date for provisions dealing with the deficit targets and sequestration procedures to September 30, 1992.

The Senate amendment modifies Section 301(i) of the 1974 Budget Act to make the point of order apply to a FY 1989 budget resolution only if it causes the deficit target to be exceeded and recommends reducing the deficit for that year by less than $36 billion. Also, the Senate amendment establishes a new Section 301(j) which states that the determination of revenue, outlay, and deficit levels under the section shall be based on estimates provided by the House and Senate Budget Committees.

Conference Agreement

The conference agreement revises the deficit targets beginning with FY 1988 and extends them for two years, as follows:

FY 1988—$144 billion;
FY 1989—$136 billion;
FY 1990—$100 billion;
FY 1991—$64 billion;
FY 1992—$28 billion; and
FY 1993—zero.

Under the conference agreement, if sequestration is required, the entire amount of the deficit excess must be eliminated (except for FY 1988 and possibly for FY 1989). Also, the $10 billion margin-of-error amount, defined as the “margin,” is set at $10 billion for FY 1988-1992 and zero for FY 1993.

For FY 1988 only, the conference agreement provides that the aggregate required outlay reductions to be accomplished through sequestration shall be the amount of unachieved deficit reduction for the fiscal year. Unachieved deficit reduction for FY 1988 is set at $23 billion, minus the net deficit reduction achieved (because of laws enacted or regulations promulgated as final) between January 1, 1987 and the appropriate “snapshot date” (in the case of the initial sequestration report, October 10, 1987, and in the case of the final sequestration report, the latest date possible before its submission on November 15, 1987 by the CBO Director and on November 20, 1987 by the OMB Director).

For FY 1989 only, the conference agreement provides that the aggregate required outlay reductions to be accomplished through sequestration shall be the lesser of the deficit excess or the amount of unachieved deficit reduction for the fiscal year (or zero if the deficit excess is equal to or less than the margin for that year-10 billion). Unachieved deficit reduction for FY 1989 is set at $36 billion, minus the net deficit reduction achieved (because of laws enacted or regulations promulgated as final) between January 1, 1988 and the appropriate “snapshot date” (in the case of the initial sequestration report, August 15, 1988, and in the case of the final sequestration report, the latest date possible before its submission on October 10, 1988 by the CBO Director and on October 15 by the OMB Director).

The conferees recognize that the “snapshot date” may be different for the final OMB and CBO reports and therefore some legislation and regulations reflected in one report may not be reflected in the other. The OMB and CBO Directors shall ensure that the revised sequestration reports reflect legislation enacted or regulations promulgated as final as of three days prior to the issuance of such reports. In addition, the Directors shall ensure to the maximum extent practicable that the revised reports reflect legislation enacted or regulations promulgated as final during the three days immediately prior to the issuance of such reports.

The conference agreement caps the maximum amount of aggregate required outlay reductions at $23 billion for FY 1988 and $36 billion for FY 1989, but such amounts are not capped for the remaining fiscal years. The OMB and CBO Directors would determine the amount of net deficit reduction achieved for a fiscal year using the methodology and guidelines for making baseline estimates prescribed in Section 251(a)(6) of the 1985 Balanced Budget Act, as amended by this Act.

For the remaining fiscal years, FY 1990-1993, the aggregate required outlay reductions to be accomplished through sequestration would be equal to the amount of the deficit excess (or zero if the deficit excess is equal to or less than the margin for that year-$10 billion for FY 1990-1992 and zero for FY 1993).

The conference agreement changes the expiration date pertaining to the deficit targets and sequestration procedures to September 30, 1993.

The conference agreement amends Section 301(i) of the 1974 Budget Act so that a point of order would not apply to a FY 1988 or FY 1989 budget resolution if it provides for deficit reduction of $23 billion for FY 1988 or $36 billion for FY 1989, as measured against the budget baseline as defined in the 1985 Balanced Budget Act, as amended in this Act. Further, Section 311(a) of the 1974 Budget Act is amended to provide that in the Senate legislation will not be subject to a point of order for causing a violation of the maximum deficit amount if the legislation would not cause the amount of deficit reduction to be less than $23 billion for FY 1988 or $36 billion for FY 1989. Sections 302 and 311 will continue to prohibit consideration of legislation which would cause a breach of the appropriate levels of budget authority, outlays, or revenues provided in the applicable budget resolution. Determinations of the amount of deficit reduction, for purposes of these sections, would be based on estimates provided by the House and Senate Budget Committees.

Finally, the conference agreement amends 31 U.S.C. 1105(f) to provide that the President may submit a budget for FY 1989 recommending a deficit for that year in excess of the maximum deficit amount so long as the budget recommends $36 billion in reductions from a baseline estimate under the 1985 Balanced Budget Act, as amended by this Act.

U.S. House of Representatives, Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987: Conference Report to Accompany H. J. Res. 324, House Ways and Means Committee (H. Rept. 100-313) September 21, 1987.

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[BCR § 219a]