Codex

Former Section 401(c) Definition of New Spending Authority
Congressional Budget Act of 1974

New Spending Authority 

Former Section 401 of the Congressional Budget Act of 1974

The term “new spending authority” was an important term in the Congressional Budget process prior to its elimination by the Budget Enforcement Act of 1997. It has been replaced by term “direct spending” and “entitlement authority”, but its elimination has caused some confusion as to what “entitlement authority” is relative to “direct spending”.  The definition of terms are now concentrated largely in section 3 (CBA) and section 250(c) (BBEDCA), while prior to the BEA 1997 they were more diffuse in their distribution among laws.

Section 401(c) the Congressional Budget Ac of 1974 prior to the enactment of BEA 1997:

TITLE IV—ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

bills providing authority new spending

Sec. 401.617  

[…]

(c) Definitions.—

(1) For purposes of this section, the term “new spending authority” means spending authority not provided by law on the effective date of this Act, including any increase in or addition to spending authority provided by law on such date.

(2) For purposes of paragraph (1), the term “spending authority” means authority (whether temporary or permanent)—

(A) to enter into contracts under which the United States is obligated to make outlays, the budget authority645 for which is not provided in advance by appropriation Acts;

(B) to incur indebtedness (other than indebtedness incurred under chapter 31647 of title 31 of the United States Code) for the repayment of which the United States is liable, the budget authority for which is not provided in advance by appropriation Acts;

(C) to make payments (including loans and grants), the budget authority for which is not provided 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;

(D) to forgo the collection by the United States of proprietary offsetting receipts, the budget authority for which is not provided in advance by appropriation Acts to offset such forgone receipts;  and

(E) to make payments by the United States (including loans, grants, and payments from revolving funds) other than those covered by subparagraph (A), (B), (C), or (D), the budget authority for which is not provided in advance by appropriation Acts.

Such term does not include authority to insure or guarantee the repayment of indebtedness incurred by another person or government.


Counsel Notes

[Derived from the Budget Process Law Annotated (1993)]

Section 406(a) (CBA), as in effect prior to the enactment of the BEA 1997, regarding off-budget agencies, programs, and activities required that certain items be included in “spending authority” .

Section 3(5) defines appropriation Act by reference to 1 U.S.C. § 105. See supra p. 16. For the text of 1 U.S.C. § 105 (1988), see supra note 36.

Section 3(9) refered to this subparagraph to define the term “entitlement authority”. Note that section 250(c)(18) of the Balanced Budget and Emergency Deficit Control Act of 1985 defines certain direct spending appropriated accounts as entitlements for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985.

Advance Appropriations: In determining whether “budget authority … is … provided for in advance by appropriations Acts,” the Parliamentarian’s office will examine the likely real world consequences of legislation on a case-by-case basis, and will not rely exclusively on the form of language in the legislation.

 In one case, the Presiding Officer advised that even if an amendment creates benefits for qualifying individuals, it will not create entitlement authority within the meaning of section 401(c)(2)(C) if it also provides that no payments shall be made except subject to appropriations. 130 Cong. Rec. 57070-71, 57108, 57110 (1984) (parliamentary inquiry of Sen. Cohen): Senate Precedent PRL19840613-002 (June 13, 1984) (Legis, Rules database). This is so even if the language creating the benefits says “an individual shall be entitled”. Id.

The Parliamentarian’s office has advised that the following language would ensure that a program would be subject to appropriations, and therefore not an entitlement under section 401(c)(2)(C):

 In any fiscal year the administrator or this program shall limit the value or any benefits conferred by this program to an amount not in excess or the appropriation for such fiscal year and if the requirements or this program exceed the limitations set herein the benefits shall be reduced to the extent necessary to comply with the provisions of this subsection.

 Senate Precedent PRL19840613-002 (June 13, 1984) (Legis, Rules database). For an example of an application of language similar to this, see, e.g., National and Community Service Act of 1989, § 250(a), S. 1430, 101st Cong. 2d Sess., 136 Cong. Rec. S1672, S1684 (daily ed. Feb. 17, 1990) (§432A(c) of the material proposed to be inserted).

 To avoid a point of order caused by the creation of new entitlement authority, however, it is not necessarily sufficient to include language that the payments must come out of an appropriated account; the language must make the payments themselves subject to appropriations. See 130 Cong. Rec. 87107, 87109-10 (daily ed. June 13, 1984) (parliamentary inquiry and statement of Sen. Domenic ruling of the Vice President). Some thus refer to appropriated entitlements that fall within the meaning of section 401(c)(2)(C). (See, e.g., infra note ·1245 (listing “Appropriated Entitlements and Mandatories”).) Even though the Government pays such appropriated entitlements out of appropriated funds, annual appropriations do not truly control them. That the entitlement is paid from appropriated funds cannot, without more, move the entitlement from the definition of section 401(c)(2)(C), for, as the Constitution requires, “No Money shall be drawn from the Treasury but in consequence of Appropriation made by Law.” U.S. Const. art. I, § 9, cl. 7. Thus, all entitlements provide for appropriations, either implicitly or explicitly.

 Section 3(5) defines appropriation Act by reference to 1 U.S.C. § 105. See supra p. 16. The text of 1 U.S.C. § 105 (1988) (see supra note 36) deals with regular appropriations bills. Section 401(c)(2)(C) thus refers to authority that regular appropriations acts do not control.

 653. Section 3(2) defines “budget authority”. See supra pp. 11-13.

 654. For a discussion of whether something is “provided in advance by appropriation Acts”, see generally supra note 652.

 Section 3(5) defines appropriation Act by reference to 1 U.S.C. § 105. Set supra p. 16. For the text of 1 U.S.C. § 105 (1988), see supra note 36.

 655. See supra p. 251.

 656. See supra p. 251.

 657. See supra pp. 252-253.

658. See supra p. 253.

 659. Section 3(2) defines “budget authority”. See supra pp. 11-13.

 660. For a discussion of whether something is provided in advance by appropriation Acts, see generally supra note 652.

 Section 3(5) defines appropriation Act by reference to 1 U.S.C.        105. See supra p. 16. For the text of 1 U.S.C. § 105 (1988), see supra note 36.


(d) Exceptions.—

(1) Subsections (a)661 and (b)662 shall not apply to new spending authority663 if the budget authority664 for [p. 255] outlays665 which will result from such new spending authority is derived—

(A) from a trust fund666 established by the Social Security Act667 (as in effect on the date of the enactment of this Act668); or

(B) from any other trust fund,669 90 percent or more of the receipts of which consist or will consist of amounts (transferred from the general fund of the Treasury) equivalent to amounts of taxes (related to the purposes for which such outlays670 are or will be made) received in the Treasury under specified provisions of the Internal Revenue Code of 1954.671

(2) Subsections (a)672 and (b)673 shall not apply to [p. 256] new spending authority674 which is an amendment to or extension of the State and Local Fiscal Assistance Act of 1972,675 or a continuation of the program of fiscal assistance to State and local governments provided by that Act, to the extent provided in the bill or resolution providing such authority.

(3) Subsections (a)676 and (b)677 shall not apply to new spending authority 678 to the extent that—

(A) the outlays679 resulting therefrom are made by an organization which is

(i) a mixed-ownership Government corporation (as defined in section 201 of the Government Corporation Control Act), or [p. 257]

(ii) a wholly-owned Government corporation (as defined in section 101 of such Act681)  [(p. 258 includes only text from Notes #680 and 681) p. 259] which is specifically exempted by law from compliance with any or all of the provisions of that Act,682 as of the date of enactment of the Balanced Budget and Emergency Deficit Control Act of 1985;683 or

(B) the outlays684 resulting therefrom consist exclusively of the proceeds of gifts or bequests made to the United States for a specific purpose.


661. See supra pp. 247-248.

 662. See supra pp. 248-250.

 663. Section 401(c) defines new spending authority. See supra pp. 250-254.

 664. Section 3(2) defines “budget authority”. See supra pp. 11-13.

 665. Section 3(1) defines outlays. See supra p. 11.

666. That is:

–   the Federal Old-Age and Survivors Insurance Trust Fund,

–   the Federal Disability Insurance Trust Fund,

–   the Unemployment Trust Fund,

–   the Federal Hospital Insurance Trust Fund, and

–   the Federal Supplementary Medical Insurance Trust Fund.

 667. The Social Security Act is codified as amended at 42 U.S.C. §§ 301-1397e (1988 & Supp. III 1991).

 668. That date is July 12, 1974, the dale of enactment of the Congressional Budget Act of 1974. Note that the drafters of the Balanced Budget and Emergency Deficit Control Act of 1985 made clear they meant the date of enactment of the Balanced Budget and Emergency Deficit Control Act of 1985 instead of the date or enactment or the Congressional Budget Act of 1974. See section 401(d)(3)(A)(ii) infra p. 257.

669. For example, the Highway Trust Fund.

670. Section 3(1) defines outlays. See supra p. 11.

 671. The Internal Revenue Code of 1954 is codified as amended at 26 U.S.C. §§ 1-9602 (1988 & Supp. III 1991).

 672. See supra pp. 247-248.

673. See supra pp. 248-250

 674. Section 401(c) defines new spending authority. See supra pp. 250-254.

 675. The State and Local Fiscal Assistance Act of 1972, or revenue sharing. was codified as amended at 31 U.S.C. § 6701-6724 (repealed 1986). The Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L 99-272, §14001(a)(1), 100 Stat. 82, 327 (1986), repealed the State and Local Fiscal Assistance Act.

 676. See supra pp. 247-248.

 677. See supra pp. 248-250.

 678. Section 401(c) defines new spending authority. See supra pp. 250-254.

 679. Section 3(1) defines outlays. See supra p. 11.

 680. Section 201 of the Government Corporation Control Act is codified as amended at 31 U.S.C. § 9101(2) (1988 & Supp. III 1991), which states:

§ 9101. Definitions

In this chapter—

[…]

(2)        mixed-ownership Government corporation means—

(A)        Amtrak.

(B)        the Central Bank for Cooperatives.

(C)        the Federal Deposit Insurance Corporation.

(D)        the Federal Home Loan Bank.

(E)        the Federal Intermediate Credit Bank.

(P)        the Federal Land Banks.

(G)        the National Credit Union Administration Central Liquidity Facility.

(H)        the Regional Banks for Cooperatives.

(I)         the Rural Telephone Bank when the ownership, control and operation or the Bank are converted under section 410(a) or the Rural Electrification Act or 1936 (7 U.S.C. 950(a)).

(J)        the United States Railway Association.

(K)        the Financing Corporation.

(L)        the Resolution Trust Corporation.

(M) the Resolution Funding Corporation.

 31 U.S.C. §9101(2) (1988 & Supp. III 1991).

 Of these mixed-ownership Government corporations, only the Rural Telephone Bank, the Federal Intermediate Credit Banks, the Central Bank for Cooperatives, the Regional Banks for Cooperatives, and the Federal Land Banks are “specifically exempted by law from compliance with any or all of the provisions of” the Government Corporation Control Act. See 31 U.S.C. § 9108(d)(2) (1988).

 681. Section 101 of the Government Corporation Control Act is codified as amended at 31 U.S.C. § 9101(3) (1988), which states:

§ 9101. Definitions

In this chapter—

[…]

(3) “wholly-owned Government corporation means—

(A) the Commodity Credit Corporation.

(B) the Export-Import Bank of the United States.

(C) the Federal Crop Insurance Corporation.

(D) Federal Prison Industries, Incorporated.

[(E) repealed]

(F) the Government National Mortgage Association.

(G) the Overseas Private Investment Corporation.

(H) the Pennsylvania Avenue Development Corporation.

(I) the Pension Benefit Guaranty Corporation.

(J) the Rural Telephone Bank until the ownership, control, and operation of the Bank are converted under Section 410(a) of the Rural Electrification Act of 1936 (7 U.S.C. 95O(a)).

(K) the Saint Lawrence Seaway Development Corporation.

(L) the Secretary of Housing and Urban Development when carrying out duties and powers related to the Federal Housing Administration Fund.

(M) the Tennessee Valley Authority.

 31 U.S.C.§ 9101(3) (1988 & Supp. III 1991).

 Of these wholly-owned Government corporations, only the Rural Telephone Bank is specifically exempted by law from compliance with any or all of the provisions or the Government Corporation Control Act. See 31 U.S.C. § 9108(d)(2) (1988).

682. Of the Government corporations cited, only the Rural Telephone Bank, the Federal Intermediate Credit Banks, the Central Bank for Cooperatives, the Regional Banks for Cooperatives, and the Federal Land Banks are specifically exempted by law from compliance with any or all of the provisions of” the Government Corporation Control Act. See 31 U.S.C.§9108(d)(2) (1988).

 683. That is, December 12, 1985. Section 211 of the Balanced Budget and Emergency Deficit Control Act of 1985 added the words “, as of the date of enactment of the Balanced Budget and Emergency Deficit Control Act of 1985” to clarify which corporations section 401 covered.

 684. Section 3(1) defines outlays. See supra p. 11.


Counsel Notes

[1] The Budget Enforcement Act of 1997 struck out subsection (c) of the section 401. It redesignated section 401(d) as section 401(c).

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