[House Report 104-575]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                      HOUSE OF REPRESENTATIVES 
 2d Session                                                     104-575
_______________________________________________________________________


 
          CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1997

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 178

SETTING FORTH THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
      FOR THE FISCAL YEARS 1997, 1998, 1999, 2000, 2001, and 2002

                             together with

               ADDITIONAL, MINORITY, AND DISSENTING VIEWS

                                     


                                     

  May 14, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



          CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 1997



104th Congress                                                   Report
                       HOUSE OF REPRESENTATIVES 
 2d Session                                                     104-575
_______________________________________________________________________



                      CONCURRENT RESOLUTION ON THE
                        BUDGET--FISCAL YEAR 1997

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 178

SETTING FORTH THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
      FOR THE FISCAL YEARS 1997, 1998, 1999, 2000, 2001, and 2002

                             together with

               ADDITIONAL, MINORITY, AND DISSENTING VIEWS

                                     


                                     

  May 14, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed



                        COMMITTEE ON THE BUDGET

  JOHN R. KASICH, Ohio, Chairman
MARTIN OLAV SABO, Minnesota,         DAVID L. HOBSON, Ohio,
  Ranking Minority Member              Speaker's Designee
CHARLES W. STENHOLM, Texas           ROBERT S. WALKER, Pennsylvania,
LOUISE McINTOSH SLAUGHTER,             Vice Chairman
  New York                           JIM KOLBE, Arizona
WILLIAM J. COYNE, Pennsylvania       CHRISTOPHER SHAYS, Connecticut
ALAN B. MOLLOHAN, West Virginia      WALLY HERGER, California
JERRY F. COSTELLO, Illinois          JIM BUNNING, Kentucky
PATSY T. MINK, Hawaii                LAMAR S. SMITH, Texas
BILL ORTON, Utah                     WAYNE ALLARD, Colorado
EARL POMEROY, North Dakota           DAN MILLER, Florida
GLEN BROWDER, Alabama                RICK LAZIO, New York
LYNN C. WOOLSEY, California          BOB FRANKS, New Jersey
JOHN W. OLVER, Massachusetts         NICK SMITH, Michigan
LUCILLE ROYBAL-ALLARD, California    BOB INGLIS, South Carolina
CARRIE P. MEEK, Florida              MARTIN R. HOKE, Ohio
LYNN N. RIVERS, Michigan             SUSAN MOLINARI, New York
LLOYD DOGGETT, Texas                 JIM NUSSLE, Iowa
SANDER M. LEVIN, Michigan            STEVE LARGENT, Oklahoma
BENNIE G. THOMPSON, Mississippi      SUE MYRICK, North Carolina
                                     SAM BROWNBACK, Kansas
                                     JOHN SHADEGG, Arizona
                                     GEORGE P. RADANOVICH, California
                                     CHARLES F. BASS, New Hampshire
                                     MARK W. NEUMANN, Wisconsin

                           Professional Staff

  Richard E. May, Staff Director
 Eileen M. Baumgartner, Minority 
          Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Protecting the American Dream:
    Introduction to the Budget Resolution........................     3
The Clinton Crunch:
    Economic Background of the Budget Resolution.................    23
Earn More, Keep More, Do More:
    The Economic Reasons for Balancing the Budget................    27
Our Responsibility to Our Children:
    Why Current Federal Spending Trends Are Unsustainable........    31
Economic Assumptions of the Budget Resolution....................    37
Sharing the Burden:
    Attacking Corporate Subsidies................................    41
The End of Politics as Usual.....................................    43
Budget Resolution Tables.........................................    44
    Function 050: National Defense...............................    54
    Function 150: International Affairs..........................    60
    Function 250: General Science, Space, and Technology.........    64
    Function 270: Energy.........................................    67
    Function 300: Natural Resources and Environment..............    76
    Function 350: Agriculture....................................    82
    Function 370: Commerce and Housing Credit....................    84
    Function 400: Transportation.................................    90
    Function 450: Community and Regional Development.............    96
    Function 500: Education, Training, Employment, and Social 
      Services...................................................   100
    Function 550: Health.........................................   106
    Function 570: Medicare.......................................   112
    Function 600: Income Security................................   119
    Function 650: Social Security................................   131
    Function 700: Veterans' Benefits and Services................   132
    Function 750: Administration of Justice......................   137
    Function 800: General Government.............................   141
    Function 900: Net Interest...................................   145
    Function 920: Allowances.....................................   146
    Function 950: Undistributed Offsetting Receipts..............   148
    Revenues.....................................................   150
The Congressional Budget Process:
    Spending Allocations.........................................   156
    Reconciliation Directives....................................   166
Enforcing the Budget Resolution..................................   170
Statutory Controls Over the Budget...............................   171
Miscellaneous Budget Process Issues..............................   173
Oversight Findings and Related Matter............................   186
Exceptions to Federal Tax Law....................................   191
Comparison Tables................................................   197
Appendix 1: Descriptions of Additional Changes From Current 
  Policy.........................................................   200
Appendix 2: Mandate and Regulatory Reform........................   259
Appendix 3: Who's Really Working to Balance the Budget? Congress 
  Versus the Administration--a Chronology........................   275
Appendix 4: Response to the President--Rebuttals to President 
  Clinton's 82 Reasons for Vetoing the Balanced Budget Act of 
  1995...........................................................   295
Appendix 5: The Causes of Current Deficits.......................   375
Additional, Minority, and Dissenting Views.......................   386
Addendum: House Concurrent Resolution begins after page 456.
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-575
_______________________________________________________________________



        CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1997

                                _______


  May 14, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Kasich, from the Committee on the Budget, submitted the following

                              R E P O R T

                             together with

               MINORITY, DISSENTING AND ADDITIONAL VIEWS

                    [To accompany H. Con. Res. 178]

    The Committee on the Budget, to whom was referred the 
concurrent resolution (H. Con. Res. 178) establishing the 
congressional budget for the United States Government for 
fiscal years 1997 and setting forth appropriate budgetary 
levels for fiscal years 1998, 1999, 2000, 2001, and 2002, 
having considered the same, report favorably thereon without 
amendment and recommend that the concurrent resolution be 
agreed to.


                     Protecting the American Dream

                 introduction to the budget resolution

                              ----------                              

    A budget is more than numbers. Its real substance is 
ideas--ideas about saving the next generation, about empowering 
people to become self-reliant, about supporting, through the 
shared public enterprise of government, the pursuit of the 
American Dream.
    The underlying ideas in this year's Federal budget debate 
draw from two contrasting visions of America. One is the 
President's view, which--the administration's rhetoric 
notwithstanding--reveals an addiction to Washington spending, 
Washington regulation, and Washington control of Americans' 
lives. The other, detailed in this budget resolution, is the 
vision of the Republican majority in Congress--one that trusts 
the values and responsibility of families, neighborhoods, local 
school boards, local police officers, and local and State 
governments. The Republican vision recognizes that America is 
built community by community, each one different from its 
neighbor, comprising a vibrant diversity from which rises a 
Nation that truly is greater than the sum of its parts. The 
interaction among communities, and within the States, is 
dynamic and natural and ongoing; its inevitable value has been 
a cornerstone of the Nation since its founding, as expressed in 
this simple, constitutional assertion: ``The powers not 
delegated to the United States by the Constitution, nor 
prohibited by it to the States, are reserved to the States 
respectively, or to the people.'' (Article 10.)
    Yet for decades, Washington has sought to circumvent this 
principle, usurping--in the guise of ``compassion'' or 
``fairness'' or ``competitiveness''--the States' and the 
people's rightful authority for education, for law enforcement, 
for transportation, for health, and for addressing the needs of 
the poor. Wherever Americans found a concern in their lives, 
Washington found a reason to expand the central government. But 
the Washington-centered ``one-size-fits-all'' experiment has 
failed. The poor have been trapped in a centralized welfare 
system that only prolongs their dependency; the vitality of 
local schools has been leveled by the common-denominator 
politics of central-government standards; States have come to 
build roads and bridges they don't really want--because Federal 
funds are handed out for them; and senior citizens have been 
strapped to a bureaucratic health program that is going 
bankrupt because Washington seduced them into trusting only 
Washington.
    The way out cannot be found simply through more or less 
money poured into a system that is more or less the same. The 
way out requires a fundamentally new vision.

                 ACCOMPLISHMENTS OF THE 104TH CONGRESS

    Such a vision is at hand. It was defined, detailed, and 
adopted last year by the 104th Congress, and it culminated in 
the Balanced Budget Act [BBA] of 1995. Through the BBA this 
Congress reversed a 60-year trend in which increasing power and 
influence had collected in Washington, and then calcified 
there. This budget resolution for fiscal year 1997 is designed 
to build on the historic achievements of the first session of 
the 104th Congress, which include the following:

    Balancing the Federal Budget by 2002. Critics had said this 
could not be done. In truth, the Washington bureaucracy feared 
it could be--and it was. Equally important is that the efforts 
of the 104th Congress have permanently changed the political 
dialog about balancing the budget. A broad consensus now 
accepts this as a necessary condition for governing properly. 
No longer is the debate about how much to raise taxes for new 
spending and deficit ``reduction.'' Now the question is how 
much to cut taxes and shrink government while achieving a 
deficit of zero.

    Cutting Taxes for Working Families. Coupled with the 
balanced budget plan, Congress delivered a $500-per-child tax 
credit for working families and a package of incentives aimed 
at promoting saving, investment, and growth--all as promised in 
the House Republicans' Contract With America. The intent was to 
roll back the Clinton tax increase of 1993--the largest in the 
Nation's history.

    Reforming a Failed Welfare System. Congress twice passed 
reforms of the welfare system that showed true compassion by 
freeing recipients from the shackles of dependency and moving 
them toward self-reliance. In addition, responding to the pleas 
of the Nation's Governors, Congress recast the Federal-State 
Medicaid program in a way that truly puts State governments in 
the position of shaping and tailoring the program to the needs 
of their citizens.

    Strengthening and Improving Medicare for America's Seniors. 
There are just four basic points to be made about the Medicare 
program:

  - First, Medicare is going bankrupt. The Medicare hospital 
        trust fund will be out of cash and unable to pay 
        beneficiaries' hospital bills by 2001, if not sooner.

  - Second, to save it from bankruptcy, Medicare must be 
        reformed regardless of any other budgetary objectives. 
        Even if Congress were not trying to balance the budget 
        and roll back the 1993 tax increase, fundamental, 
        systemic reform of Medicare still would be necessary.

  - Third, the first session of the 104th Congress developed 
        and passed a plan to save Medicare without reducing 
        benefits to individual recipients. Likewise, the 
        Medicare reform assumed in this budget resolution would 
        increase spending on each Medicare beneficiary from 
        $5,200 in 1996 to $7,000 in 2002. Total program outlays 
        would increase from $196 billion in 1996 to $284 
        billion in 2002. This total spending increase would 
        amply cover inflation and the growing number of 
        Medicare recipients. The spending level in this 
        resolution also will accommodate maintaining the 
        beneficiary premium at 25 percent of part B program 
        costs, and will preclude any need to increase 
        beneficiary copayments or deductibles.

  - Finally, Congress' plan would expand health care choices 
        for the Nation's seniors. The plan, built on the 
        demonstrably successful model in the State of Arizona, 
        would allow beneficiaries to keep their current 
        Medicare coverage, while also offering new alternatives 
        for receiving health care--many of which will 
        substantially lower seniors' current out-of-pocket 
        health care expenditures.

    Shifting Power, Money, and Influence Out of Washington and 
Back Into the Hands of People in Their States and Communities. 
The 104th Congress has adopted policies that restore control 
and authority to State and local governments in critical areas 
such as law enforcement, health, education, and helping the 
needy.

    All of this and more was accomplished in the first session 
of the 104th Congress: the legislation was envisioned and 
written and passed by both the House and Senate; the promise of 
real change in Washington was, through specific legislative 
action, redeemed.

                       WHY IT MUST BE DONE AGAIN

    But Americans today have been denied the benefits of these 
achievements by one person alone: the President. The President 
vetoed all these reforms. Time after time, he adopted the 
rhetoric of the congressional majority, but rejected the policy 
reforms. He vetoed the Balanced Budget Act, vetoed family tax 
cuts, vetoed welfare reform (twice), vetoed Medicare reform, 
and on and on. He did so with zeal, publishing 82 reasons why 
he objected to Congress' initiatives. [His objections, and the 
responses from the House majority, are contained in Appendix 
4.] His persistence in rejecting reform made it clear that he 
wanted none. He is addicted to the large central government 
ensconced in Washington.
    So why should Congress pursue such reforms again?
    The answer is simple: It must be done, for the sake of the 
Nation's present, as well as its future.
    The administration's glowing pronouncements about economic 
performance reflect how little the President acknowledges the 
anxiety that haunts American families. Behind the numbers lie 
these facts of real life: every year, families are seeing their 
real income decline; tens of thousands of workers continue to 
receive pink slips because of corporate downsizing, and nearly 
a third of the Nation's companies anticipate reducing jobs; 
two-thirds of those who find new jobs after a layoff are forced 
to settle for pay cuts in the process; manufacturing jobs 
continue to disappear; and today, more Americans than ever are 
working two jobs just to make ends meet. [These facts are 
further detailed in a subsequent section of this report titled, 
``The Clinton Crunch.'']
    Coupled with all this has been the administration's tax 
policy. In his first year in office, the President increased 
taxes on gasoline, on individual incomes, on married couples, 
on Social Security benefits, and on the property left by 
parents to their children. The tax burden on the Nation's 
families now is higher than at any time in history. Meanwhile, 
as the government continues borrowing to finance its deficit 
spending, it soaks up capital that otherwise would be invested 
in new plants and equipment, which would in turn increase job 
growth, improve productivity, and push up wages.
    The economic performance projected for the next 2 years 
offers little solace. Gross domestic product [GDP] is expected 
to increase by a mere 2.0 percent in 1996 and 2.1 percent in 
1997--compared with 3.6 percent during the Reagan expansion and 
an average 3.25-percent growth rate for the United States since 
1870.
    All of this translates into a direct impact on how 
Americans live. As more of their time is swallowed up in trying 
to make ends meet, working Americans have less time for their 
families, their churches, and their communities--less time, in 
other words, for the moments of life that they value most. Thus 
the squeeze on their paychecks imposes a cost that cannot be 
measured in dollars.
    Unfortunately, the anxiety doesn't end there. Just beyond 
the horizon of this budget, past the year 2002, prospects for 
the future are even more disconcerting. One clear indication 
lies in the Medicare trust fund, which is expected to go 
bankrupt in 6 years or sooner. But that is only the first sign. 
According to the General Accounting Office [GAO], if current 
spending trends continue, the Federal debt in 2025 will be 
twice the size of the entire economy and the Federal deficit 
will be 20 percent of gross domestic product [GDP]. In such 
circumstances, the government will be unable to address the 
Nation's basic needs. At the same time, the government will 
continue to spend the investment capital that would otherwise 
finance economic growth.
    These hazards are further detailed in a subsequent section 
titled ``Our Responsibility to Our Children.'' As that section 
will point out, to truly secure the future, long-term, systemic 
reforms of government programs and government spending will be 
required. Balancing the budget is only the first step.
    But if Congress fails to take this step, the government's 
rapidly mounting debt will heap enormous burdens on future 
generations, who will face dramatically higher taxes and 
declining standards of living. They will witness, in short, the 
erosion of the American Dream.

                   A President Addicted to Washington

    In his State of the Union Address on January 23, 1996, the 
President said: ``Our responsibility begins with balancing the 
budget.'' Yet the President's actions have always indicated 
otherwise. His fiscal year 1997 budget submission squanders 
another opportunity to lay out a clear reform strategy that 
would address the concerns described above. The administration 
budget is an election-year makeover in which the President puts 
on the rhetoric of reform but fails to deliver the policies. It 
shows that he only talks, while we act.

                     FAILURE TO BALANCE THE BUDGET

    A little more than a year ago, the talk from the 
administration was totally different. At that time, as the new 
majority in Congress pushed for a balanced budget, the 
President and his top advisors were insisting that balancing 
the budget was not necessary. The President's spending plan at 
the time projected deficits of $200 billion a year or more for 
as far as the eye could see. In testimony to the Budget 
Committee, Budget Director Alice M. Rivlin said: ``I do not 
think that adhering to a firm path for balance by 2002 is a 
sensible thing to do.'' She also said: ``It is not always good 
policy to have a balanced budget.'' As the year unfolded, the 
President repeatedly resisted this goal, throwing up 
smokescreen budget ``plans'' that contained little or no detail 
and failed to get anywhere near balance anyway.
    But by January of this year, with the Congress having 
successfully crafted and passed a comprehensive, fully 
detailed, 7-year balanced budget plan, the administration's 
fiscal year 1997 submission casts the President as a born-again 
budget balancer. The document begins by grossly overstating his 
own deficit-reduction efforts, taking credit for policy 
decisions that were made before he entered office. The budget 
supplement says (on page 19): ``In dollar terms, the policies 
that we enacted with the last Congress have cut [the deficit] 
almost in half, from $290 billion in 1992 to $164 billion in 
1995.'' This familiar refrain from the administration is a 
distortion.
    The policies enacted during the last Congress amounted to 
the largest tax hike in history, which took effect in 1994. The 
fiscal year 1993 budget--the last of the Bush administration 
and a more honest starting point for the current 
administration's deficit comparisons--had a $255 billion 
deficit. The 1995 deficit of $164 billion is down 35 percent 
from 1993, the beginning of the current administration--not 50 
percent, as the President purports.
    Even that, however, gives the President more credit than he 
deserves. Most of the deficit reduction between 1993 and 1996 
was projected years before the first Clinton budget. For 
instance, 4 months before the President was elected, the 
Congressional Budget Office [CBO] projected that the deficit 
would decline 23 percent between 1993 and 1996.
    Furthermore, the deficit decline during the current fiscal 
year is chiefly the result of prudent spending by the House and 
Senate Appropriations Committees--spending that the President 
consistently sought to increase.
    But even if all the President's claims about the past were 
true, his budget submission for this year still would not 
balance. According to the testimony of June E. O'Neill, 
Director of the Congressional Budget Office [CBO]: ``* * * CBO 
estimates that the basic policies proposed in the President's 
budget would lower the deficit substantially but that the 
deficit would still total $81 billion in 2002'' [see table on 
page 9].



    The President's ``basic budget policies'' also increase 
deficit spending from $150 billion this year to $156 billion in 
1997 and $153 billion in 1998. The only way the President's 
plan can be described as achieving balance is through a 
mysterious set of ``contingent'' budget proposals. These total 
$124 billion over 6 years, with $84 billion of the ``savings'' 
in 2002. The ``contingent policies'' include $67 billion in 
unspecified discretionary cuts. These reductions are in 
addition to the $161 billion in discretionary cuts in the 
President's basic budgetary proposal. But the administration, 
which preens over spending increases for its ``priority 
investments,'' won't tell the public where the President would 
cut spending to balance the budget.
    All of this shows once again that the President employs the 
rhetoric of balancing the budget, but is not serious about 
delivering the necessary policies. He talks; we act.

                         DEFICITS RESULTING FROM THE PRESIDENT'S FISCAL YEAR 1997 BUDGET                        
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                          1996     1997     1998     1999     2000     2001     2002   1996-2002
----------------------------------------------------------------------------------------------------------------
Revenues:\1\                                                                                                    
    Child Tax Credit..................       $0      $10       $8       $9      $13      $13      $13       $64 
    Higher Education Deduction........        0        7        6        7        7        7        8        41 
    IRA's.............................        0        1        1        1        2        4        5        14 
    Other.............................        0        1        1        2        2        2        2         9 
    Extend Excise Taxes...............        0       -4       -6       -6       -6       -7       -7       -36 
    Other.............................        1       -6       -8      -10      -10      -10      -12       -54 
                                       -------------------------------------------------------------------------
      Subtotal........................        1        8        2        3        7        9        9        38 
                                       =========================================================================
Outlays:                                                                                                        
    Medicare..........................    (\1\)       -5       -8      -14      -20      -26      -31      -103 
    Medicaid..........................        0        2       -2       -6      -10      -16      -22       -54 
    Welfare...........................        0       -4       -6       -6       -7       -7       -8       -38 
    FCC Spectrum Auction..............        0    (\2\)       -2       -3       -4       -5      -16       -31 
    Proceeds from Asset Sales.........    (\2\)       -1    (\2\)    (\2\)    (\2\)    (\2\)       -2        -4 
    Discretionary Appropriations......        2       -4       -6      -26      -42      -46      -38      -161 
    Other Policy Changes..............       -1       -4        1       -1       -2       -5       -6       -18 
    Debt Service......................    (\2\)    (\2\)       -1       -3       -6      -11      -16       -35 
                                       -------------------------------------------------------------------------
      Subtotal........................        2      -17      -23      -59      -91     -116     -138      -444 
                                       =========================================================================
Total Changes.........................        2       -9      -21      -57      -84     -107     -129      -405 
                                       =========================================================================
DEFICITS UNDER THE PRESIDENT'S BUDGET.      150      156      153      125      108       87       81  .........
----------------------------------------------------------------------------------------------------------------
\1\ Plus and minus signs reflect a proposal's impact on the deficit. Hence a tax cut is shown as a plus because 
  it is projected to increase the deficit. A tax increase is shown as a minus because it presumably lowers the  
  deficit.                                                                                                      
\2\ Less than $500 million.                                                                                     
                                                                                                                
Source: Congressional Budget Office. Figures may not add due to rounding.                                       

                    SMALLER-THAN-ADVERTISED TAX CUTS

    Americans need tax relief. But the President's plan gives, 
and then takes away. With one hand he offers tax reductions of 
$129 billion through 2002; but with the other he snatches back 
$90 billion through tax increases. This yields a net total tax 
reduction of $38 billion [see table on the next page]--about 
one-third of the net tax relief provided for in this budget 
resolution.
    But the President shrinks his tax cuts even more to balance 
the budget--and here the ``contingent policies'' come into play 
once again. To balance the budget, he ``sunsets'' his tax cuts, 
thereby raising taxes $32 billion in 2001 and 2002. This takes 
back virtually all that's left of his net $38 billion tax cut, 
so that his actual tax reduction is only $6 billion over 6 
years. The sunset plan also means a net 1-year tax increase in 
2002 of $16 billion.
    But this will never be a problem for the current 
administration. The tax increase will fall to whomever is 
elected President in 2000, and will have to be part of that 
President's first budget submission after taking office.

                                        THE PRESIDENT'S TAX PROPOSALS \1\                                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                1996    1997    1998    1999    2000    2001    2002   1996-2002
----------------------------------------------------------------------------------------------------------------
Basic Budgetary Proposals:                                                                                      
    Child Tax Credit.........................      $0     $10      $8      $9     $13     $13     $13       $64 
    Higher Education Deduction...............       0       7       6       7       7       7       8        41 
    IRA's....................................       0       1       1       1       2       4       5        14 
    Other....................................       0       1       1       2       2       2       2         9 
    Extend Excise Taxes......................       0      -4      -6      -6      -6      -7      -7       -36 
    Other....................................       1      -6      -8     -10     -10     -10     -12       -54 
                                              ------------------------------------------------------------------
      Subtotal...............................       1       8       2       3       7       9       9        38 
``Contingent'' Tax Proposals Sunset Tax Cuts.   (\2\)       0   (\2\)   (\2\)   (\2\)      -7     -25       -32 
                                              ------------------------------------------------------------------
Net Tax Cuts.................................       1       8       2       3       7       2     -16         6 
----------------------------------------------------------------------------------------------------------------
\1\ Plus and minus signs reflect a proposal's impact on the deficit. Hence a tax cut is shown as a plus because 
  it is projected to increase the deficit. A tax increase is shown as a minus because it presumably lowers the  
  deficit.                                                                                                      
\2\ Less than $500 million.                                                                                     
                                                                                                                
Source: Congressional Budget Office. Figures may not add due to rounding.                                       



                       FAILURE TO REFORM WELFARE

    Though the President seeks to claim credit for declining 
welfare caseloads resulting from innovative welfare reforms 
already initiated in more than half of the States, the 
administration has in fact hindered this process of incremental 
reform by blocking crucial elements of welfare reform plans 
States sought to implement through Federal waivers. Only 
recently, the administration threw out portions of Ohio's 
sweeping welfare reform plan that would have blocked increased 
food stamp benefits for persons failing to comply with program 
rules designed to promote self sufficiency. The administration 
also blocked Ohio's efforts to expand welfare-subsidized 
private sector work experience.
    The President's budget retains the failed structure of a 
federally controlled entitlement to individuals. States would 
still have to go hat-in-hand to Washington bureaucrats begging 
for permission to implement innovative programs to combat 
dependency. His plan also fails to eliminate welfare as an 
immigration magnet. It states the President's support for 
allowing immigrants to receive food stamps and Supplemental 
Security Income benefits even though current immigration law 
makes becoming a public charge a deportable offense. As many as 
20 percent of all legal immigrants currently collect Federal 
benefits. The welfare reform plan passed by Congress would have 
significantly reduced alien participation in Federal welfare 
programs. The President vetoed the plan.
    The welfare time limits the President proposes are weaker 
than those contained in the congressional welfare reform 
legislation that he has vetoed twice. The congressional 
proposal called for a 5-year lifetime limit on welfare 
eligibility. The administration proposes a 60-month consecutive 
time limit, which would create a revolving door of dependency 
for welfare recipients. The President's plan also exempts 35 
percent of the adult welfare caseload from time limits, and 
could lead to exempting more than half the remaining caseload 
from the limit. The President's work requirements also are 
weaker than those contained in the legislation he vetoed. Under 
the vetoed welfare reform bill, States would have been required 
to have 50 percent of their single-parent welfare caseload 
working at least 35 hours per week by 2002. The President's 
proposal, on the other hand, requires between 12 percent and 25 
percent of the welfare caseload to participate in work or job 
training programs. Additionally, the President's food stamp 
work requirement is significantly weaker than that contained in 
the vetoed welfare reform bill, containing a huge loophole 
making it unlikely that anyone will lose benefits if it is 
enacted.
    The President's proposal acknowledges the abuses of Federal 
disability programs that the Congress has also sought to 
correct. Yet his request for additional funding to root out the 
abuse is contingent on Congress increasing overall 
discretionary spending limits by $800 million for fiscal year 
1997.
    Finally, the President's plan continues to make persons 
with no children eligible for the Earned Income Credit, even 
though couples and individuals without children were 
specifically excluded from the EIC when the program was 
created. Moreover, a person with no dependents who receives the 
maximum EIC credit is working only part time. The government 
should not be taxing people with children working full time or 
working at two jobs to subsidize childless people working only 
part time.



    The President's Medicaid proposal places financial limits 
on Medicaid payments to States, but does not give States the 
necessary flexibility to live within those limits. It limits 
the Federal payment to each State for each Medicaid 
beneficiary, but fails to trust Governors with the 
responsibility for deciding what's best for the citizens of 
their States. Despite the President's reform rhetoric, he would 
keep the Medicaid strings tied to Washington. The President 
would apply a ``per-capita'' spending cap, which limits the 
Federal payments to a State for each of the State's Medicaid 
recipients. Thus, the President's Medicaid proposal could 
create the largest unfunded mandate ever. This would result in 
a huge hidden tax increase on State taxpayers to sustain the 
status-quo, ``Washington-knows-best,'' health care entitlement.

   TRAPPING SENIORS IN A BUREAUCRATIC MEDICARE SYSTEM THAT IS GOING 
                                BANKRUPT

    Medicare is facing bankruptcy. On April 3, 1995, the Social 
Security and Medicare Trustees reported that the Federal 
Hospital Insurance Trust Fund (Medicare Part A)--which pays for 
hospital and institutional care for Medicare beneficiaries and 
which is funded by the Medicare payroll tax--will run out of 
money by 2002, under current law.
    Just 1 year later, the Medicare crisis is even more 
imminent. In October, a Treasury Department report revealed 
that the Hospital Insurance Trust Fund was operating in deficit 
in 1995, a year earlier than previously projected. According to 
the chief actuary at the Health Care Financing Administration 
[HCFA], this means that it is now likely that the trust fund 
will go bankrupt in 2001 instead of 2002.



    When the congressional majority began to tackle the 
Medicare crisis, many were surprised that the new majority 
would tackle an issue so politically sensitive. Significantly, 
the political risk was not forced by the Nation's seniors. 
Seniors were understandably concerned about changes in the 
Medicare program. But they listened, and they understood: 
maintaining the status quo of Medicare now would lead to its 
certain demise in the future; the only way to save Medicare was 
to reform it.
    The real problem came from the administration, which 
resorted to distortion and demagoguery. A clear example was the 
administration's claim that Congress planned to cut Medicare 
benefits. This was not true and the administration knew it. Nor 
is it true now. Under the Medicare reform assumed in this 
budget resolution, average benefits per recipient will increase 
from $5,200 in 1996 to $7,000 in 2002.
    It once was true that only Washington bureaucrats would 
call such an increase a spending cut; now, only officials in 
the current administration would do so. In the process, they 
are making reform more difficult and increasing the likelihood 
that seniors will have to remain in an unreformed system that 
will run out of money in 6 years or less.

                             OTHER FAILURES

    Education. In a poll conducted by the Gallup organization, 
two-thirds of the participants said they wanted the Federal 
Government to have less influence in determining the 
educational programs of their local public schools. But the 
President's budget expands the Federal education bureaucracy by 
increasing discretionary spending 4.4 percent over the 1995 
level. With this Federal funding comes increased Federal 
intervention in State and local education decisions. The budget 
retains more than 50 separate elementary and secondary 
education funding programs and 16 educational research 
programs. This is in sharp contrast with the congressional 
approach, which calls for improving education by reducing 
centralized bureaucracy and shifting authority and decision-
making back to parents and local school boards.
    The administration budget also supports programs the 
President once vowed to eliminate. For example, the Perkins 
loans capital contribution was eliminated in the fiscal year 
1995 budget because the administration believed it duplicated 
other programs. This year the program is fully funded at $158 
million. In the administration's 1996 budget, the President 
sought to phase out Aid to Disadvantaged Schools over 2 years. 
This year's budget continues funding at the fiscal year 1996 
level.
    The President's budget shows student loan volume increasing 
from 17.6 million in 1993 to 32.5 million in 1997, an increase 
of 85 percent. This is the same rate of growth in student loans 
that was proposed in the Balanced Budget Act. The key 
difference is how the loans are delivered. The administration 
wants a government-controlled ``direct lending'' program, 
making the Department of Education both a regulator and a 
competitor of the private-sector guaranteed lending program.

    Labor. Under the President's budget, funding for the 
Department of Labor would increase by almost 5 percent. The 
budget also would add 451 new bureaucrats to the government 
payroll, including 190 more at the Occupational Safety and 
Health Administration [OSHA] and 83 additional staff in the 
Secretary's Departmental Management Office.
    The President challenged Congress in his State of the Union 
Address to consolidate 70 overlapping job-training programs, 
yet this budget asks for increased funding for the current 
unworkable maze of programs. The President even proposes 
several new job-training programs, such as ``Jobs for 
Residents'' and an ``Incumbent Worker Demonstration.''

    Law Enforcement. The administration's budget continues to 
boast of the President's pledge to put 100,000 new police 
officers on the street by the year 2000. In fact, little of his 
``cops on the beat'' funding has gone to the cities that need 
it the most. Among the cities with the highest violent crime 
rates, many have received a disproportionately small amount of 
the ``cops on the beat'' funding.
    The President's community policing program requires a local 
match of 25 percent for communities to receive any of the 
Federal funds, and the 1994 crime bill allows the Attorney 
General to give preference to applicants that provide 
contributions exceeding the 25-percent match. Hence, a 
disproportionate share of the Federal money can go to wealthier 
communities, not those with more serious crime problems. What's 
more, the ``cops on the beat'' program includes so many 
conditions on receiving funds that many officials have chosen 
not to apply because the program is too expensive.

    Transportation. The administration is requesting $800 
million for Mass Transit New Starts, a $134-million increase 
over 1996. This represents a twist on the administration's 
``spend now, save later'' habit--this time it's ``spend now, 
spend later.'' The Mass Transit New Starts Program obligates 
the taxpayer to years of capital spending to assist States and 
localities in completing new mass transit systems, and to 
decades of operating assistance. This proposal does not reflect 
the thinking of an administration committed to balancing the 
budget in 2002.

          The Major Components of the House Budget Resolution

    As noted above, this budget resolution is designed to 
follow through on the achievements already adopted by the first 
session of the 104th Congress. Only one person has thus far 
denied American taxpayers the benefits of these 
accomplishments. That person is the President. This budget 
defines the difference between the congressional majority's 
vision and that of the President.

                       ACHIEVING BALANCE BY 2002

    In addition to reversing a 20-year pattern of chronic 
deficit spending, this year's balanced budget plan holds a 
promise relevant to individual Americans and their families--
the promise of safeguarding the American Dream for their 
children.
    One doesn't need economic statistics to understand the 
moral breakdown attached to chronic deficit spending. Every 
year that the government borrows more to finance current 
spending, it adds to the burden being heaped on future 
generations. A child born today inherits a tax bill of $187,746 
just to pay interest on the debt for spending the government 
already has done. That child has no voice in the process and 
will reap no benefits from the tax payments. Thus the 
government is spending money that belongs to future generations 
and is doing so without their consent. Americans know this is 
wrong--and they want the injustice stopped.
    Just as important, however, is the economic price of the 
deficits that Americans are paying right now. Deficit spending 
has added about 2 percentage points to the interest payments 
levied on American families. The serious pursuit of a balanced 
budget by the 104th Congress was by itself enough to drive down 
interest rates from about 8 percent in January 1995 to below 
5.8 percent in January 1996. The rates started back up again 
when balanced-budget talks with the administration ended.
    Today's artificially inflated interest rates add about 
$37,000 to the cost of a moderate-sized home, $2,200 to the 
cost of a college loan, and $900 to the cost of a car. For 
families struggling to make ends meet, removing these 
unnecessary costs would be a huge benefit.
    This budget resolution adjusts the Balanced Budget Act's 
glide path to reflect the congressional leadership's compromise 
offers to the administration during the November-through-
January budget negotiations--compromise efforts that the 
President still rejected. The resolution also makes adjustments 
to incorporate updated economic and budgetary projections 
furnished by the Congressional Budget Office in December 1995 
and March of this year. The bottom line, however, remains the 
same: This plan balances the Federal budget by 2002. Finally, 
the resolution takes into account the Congress' omnibus 
continuing appropriations bill, which was enacted on April 26.

         TAX CUTS FOR WORKING FAMILIES AND FOR ECONOMIC GROWTH

    Two facts provided by the Joint Economic Committee speak 
eloquently about today's tax burden:

  - The average American family pays more in Federal, State, 
        and local taxes (38 percent of their income) than they 
        do on food, clothing, and shelter combined (28 
        percent).

  - The average worker spends 2 hours and 47 minutes of every 
        work day just to cover his or her tax burden; 20 years 
        ago, that worker spent half that much time to cover 
        taxes.

    If Congress is going to shrink the Federal Government and 
balance the budget, American families should reap some of the 
benefits immediately.
    These are among the principle arguments for the family tax 
relief assumed in this budget resolution. The centerpiece is a 
$500 per child tax credit for working families--a $1,000-a-year 
tax reduction for the average family of four. As the President 
has said: ``Our first challenge is to cherish our children and 
strengthen America's families. Families are the foundation of 
American life. If we have stronger families, we will have a 
stronger America.'' But once again, he talked, we acted. The 
budget resolution calls for net, permanent tax relief of $122 
billion over 6 years to finance the child tax credit.
    The resolution also incorporates pending or completed House 
action on: a $5,000 adoption tax credit for 100,000 families to 
help defray the costs of adoption expenses; a rollback of the 
President's 4.3-cent hike in the gasoline tax; an enhanced 
health insurance deduction for the self-employed; medical 
savings accounts; long-term care incentives; and the 
liberalization of the Social Security earnings test. It is also 
assumed that the Committee on Ways and Means will close enough 
tax loopholes to finance a reduction in the capital gains tax 
rate to stimulate the creation of new, high-paying jobs. Taken 
together, this package would contain total tax relief of $176.2 
billion over 6 years.
    It is important to note that--contrary to the incessant 
claims of tax cut opponents--the primary beneficiaries of the 
tax cuts assumed in this budget resolution are middle-income 
families. More than 75 percent of the tax relief provided in 
the proposal focuses on building, strengthening, and restoring 
the American family. The biggest individual income tax cuts, as 
a percentage of taxes paid, would go to taxpayers earning 
$30,000 to $75,000 annually.

                      WELFARE AND MEDICAID REFORM

    The welfare reform plan incorporated in this budget poses a 
basic question: What is more compassionate--to shackle the poor 
in dependency, or to help them toward self-reliance?
    The current welfare system is a failure. It traps 
recipients in a cycle of dependency. It undermines the values 
of work and family that form the foundation of communities. It 
rends the social fabric of the Nation by breeding drug 
addiction, illegitimacy, crime, and child abuse. It contributes 
to the public's frustration with their government for siphoning 
an ever-increasing share of national wealth into a bureaucratic 
system that has failed, over the past 30 years, to 
significantly lower the proportion of those in living poverty.
    In 1994, total spending on benefits for low-income persons 
climbed to a record high of 5.1 percent of gross domestic 
product, or more than double the share of GDP of such programs 
in 1968. Federal dollars made up 71 percent of that total 
spending. Yet, despite this explosion of welfare spending, 
during the last three decades, AFDC enrollment has increased 
five-fold, illegitimacy has increased 400 percent, and violent 
crime has risen 560 percent.
    A primary cause of these failure is that the total package 
of welfare and income support programs pays more than work in 
many of America's communities. According to a Cato Institute 
study of benefits available to low-income persons in the 50 
States, welfare pays more than the average first-year salary 
for a teacher in 9 States. In 29 states, according to the Cato 
study, welfare pays more than the average salary for a 
secretary. In 40 States, welfare pays more than an $8 per-hour 
job. In the most generous States, welfare pays more than the 
entry level salary for a computer programmer. Clearly, if 
welfare reform is about work, real reform must reverse the 
current system's disincentives to work.
    This budget assumes a framework of welfare reform that 
attacks the two main causes of long-term welfare dependency--
lack of participation in work, and illegitimacy.
    The budget's recommendations go significantly farther than 
do the proposals contained in the President's fiscal year 1997 
budget submission toward achieving the goal of ``ending welfare 
as we know it.'' They would end the individual entitlement to 
cash welfare benefits, which the President's plan would not. 
They would impose tougher work requirements than suggested by 
the President, to better ensure that a significant share of the 
welfare caseload will eventually become self-sufficient. They 
would make meaningful reforms in the Food Stamp Program and 
limit spending over time without cutting benefit levels, unlike 
the President's proposal. They would end welfare as an 
immigration magnet. Persons immigrating to the United States 
should come here for the work opportunities the Nation's 
economy has to offer, not for the taxpayer-subsidized benefits 
a generous society has chosen to provide to its own less 
fortunate few.
    The budget resolution's Medicaid reform assumptions are 
similar to welfare reform in that they would shift authority to 
States, which are in the best position to tailor assistance to 
the populations within their borders.
    The Medicaid plan would achieve four goals: First, it would 
guarantee the basic health care needs of the Nation's most 
vulnerable populations. Second, it would bring Medicaid health 
care expenditures under control. Third, it would give States 
maximum flexibility in the design and implementation of cost-
effective systems of care. Fourth, it would protect the States 
from unanticipated program costs resulting from economic 
fluctuations in the business cycle, changing demographics, and 
natural disasters.
    By allowing the States to design their own programs, the 
unique needs of the various States, as they see them, would be 
served. This State flexibility is essential to improve Medicaid 
effectiveness, responsiveness, and efficiency. This approach 
recognizes that no one knows which Medicaid program will work 
best in all of the 50 States, the District of Columbia, and the 
five territories.
    The only way to find out is to avoid Federal preconditions 
that limit the discretion of local authorities.

       STRENGTHENING AND IMPROVING MEDICARE FOR AMERICA'S SENIORS

    The Medicare reform assumed in this budget resolution 
refines and improves on the Medicare Preservation Act as passed 
by the Congress last year. But its fundamental components are 
the same: increased benefits and expanded choices for Medicare 
recipients, and serious reforms to address Medicare's impending 
bankruptcy. The plan also maintains the current part B premium 
at 25 percent of program costs.

    Increasing Benefits. The Medicare reform recommended in 
this budget resolution would fully account for the increase in 
the Medicare population over the budget period. It would 
increase average Medicare spending on each beneficiary from 
$5,200 in 1996 to approximately $7,000 in 2002. Overall, the 
plan would spend approximately $1.479 trillion on Medicare over 
6 years, Medicare spending in 2002 would be an estimated $284 
billion--$107 billion more than the 1995 level of $177 billion.
    Under the proposed reform, Medicare beneficiaries would 
have the option of remaining in the traditional Medicare fee-
for-service plan. If they chose the traditional plan, they 
would have no increased copayments or deductibles, and their 
part B premium payment would remain at the current 25 percent 
of program costs. The budget resolution's spending guidelines 
also allow for additional, new preventive screening benefits in 
the traditional Medicare benefit package.

    Expanding Choices. The Medicare reform plan would modernize 
Medicare, bringing market forces and competition to the program 
all across the country, with the benefits accruing to seniors.
    Evidence for this model was recently documented in a report 
in the New York Times that described in detail the success of 
Medicare managed care in Tucson, AZ: 42 percent of all Medicare 
beneficiaries in Tucson have chosen HMO's as their preferred 
health care delivery option. A high penetration of private 
managed care companies offering Medicare coverage has created a 
climate of competition among providers. As a result, providers 
offer additional benefits and lower out-of-pocket costs to 
attract Medicare beneficiaries to their plans. The Times 
article cited ads for plans extolling no monthly premiums or 
deductibles, free mammograms, and low-cost prescriptions. On 
the other hand, seniors who choose traditional Medicare, spend 
up to $2,500 per year on their monthly Medicare premium, 
hospital and physician deductibles, supplementary insurance, 
and prescription drugs--and, they do not receive the benefits 
of preventive care coverage.
    The Medicare reform recommended in this budget would enable 
and encourage competitive markets across the country with more 
types of health coverage than are now available. Reforms are 
necessary because many barriers to successful implementation of 
private-based Medicare plans remain in the HCFA bureaucracy 
controlled system.
    The Medicare reform would increase the amount paid to 
private plans in low-cost areas to make private plans viable 
where they are not now. The plan would facilitate provider 
service organizations, repeal the law restricting the 
percentage of seniors covered by a plan, and open the way to 
more choices for efficient and high-quality options that will 
allow the double advantage of reducing costs for seniors and 
extending the life of the Medicare trust fund.

                           ADDITIONAL REFORMS

    This budget resolution also embraces reforms in several 
other significant areas, including the following:

    Ending the Era of Big Government. The budget calls for 
saving more than $34 billion over 6 years by eliminating or 
privatizing 130 Federal programs and activities and terminating 
the Department of Commerce and the Department of Energy. It 
also recommends terminating the Corporation for Public 
Broadcasting and AmeriCorps, and phasing out the National 
Endowment for the Arts. The budget also recommends 
approximately $14 billion in savings over 6 years by reducing 
overhead in select government agencies. The budget also urges 
that the committees of jurisdiction investigate moving the 
Departments of Agriculture and Interior out of Washington, DC, 
and closer to the constituencies most affected by the 
Departments' activities.

    Strengthening National Security. Spending for national 
defense assumed in this budget exceeds the President's request 
by $12.9 billion in budget authority and $4 billion in outlays. 
The budget provides for modernizing the Armed Forces, ensuring 
a decent quality of life for military personnel and their 
families, and developing a sound missile defense for the United 
States.

    Keeping Promises to the Nation's Veterans. The budget 
recommends $5.1 billion over 6 years more than the President 
for veterans' discretionary spending, which is principally 
medical care. It rejects the President's cuts in medical and 
prosthetic research. It calls for improvements in veterans' 
mandatory programs, including increased auto allowance for 
certain severely disabled veterans; improved compensation 
payments for surviving spouses; and a $500 scholarship for 
college seniors with at least a ``B'' average under the GI Bill 
or the Post Vietnam Era Education Assistance Program [VEAP].

    Boosting Local Law Enforcement. A total of $4.7 billion in 
1997 is assumed for the Violent Crime Reduction Trust Fund. The 
budget resolution incorporates the Local Law Enforcement Block 
Grant, which gives States and localities the power and 
resources to choose how they spend the money to combat violent 
crime according to their local needs and priorities, rather 
than letting Washington usurp those decisions. It incorporates 
the House's recently passed Immigration in the National 
Interest Act (H.R. 2202), providing full funding of $699 
million in 1997. It also incorporates the recently enacted 
Antiterrorism and Effective Death Penalty Act of 1995 (H.R. 
1710, S. 735), providing $229 million in 1997.

    Reforming Health Insurance. The resolution assumes the 
insurance reforms in House-passed H.R. 3103, the Health 
Coverage Availability and Affordability Act of 1996. By making 
health insurance more affordable and accessible, H.R. 3103 will 
have a significant impact on the health status of the 
approximately 20 percent of Americans who lack health insurance 
temporarily or throughout the year. These reforms also will 
have a positive effect on Federal entitlement spending and on 
the overall economy by helping address the problem of 
uncompensated care, which currently costs $35 billion to $40 
billion a year. In addition, the budget urges reform of the 
Food and Drug Administration, promoting swifter access to 
lifesaving medicines, and preserves a 5.8-percent increase in 
funding for the National Institutes of Health that was provided 
in 1996.

    Improving Education by Enhancing Local and Parental Roles. 
This budget restores the authority and responsibility for 
education to where it belongs--in the hands of parents, 
principals, and local school boards, not a growing Federal 
bureaucracy. The budget consolidates many elementary and 
secondary education programs into block grants, turning funding 
decisions back to the States and local schools. Failed 
programs--programs that do not help children--are terminated. 
The budget urges terminating Washington-knows-best programs 
such as Goals 2000. It recommends funding title I education for 
disadvantaged students at $7.2 billion, the same as provided 
for in the Omnibus Appropriations bill.
    It seeks Drug-Free Schools funding of $440 million--the 
same level provided in the Omnibus Appropriations bill. It 
assumes continued growth in student loans--volume would 
increase from $26.6 billion today to $37.4 billion in 2002. The 
number of students receiving loans would increase from 7 
million today to 8.5 million in 2002--and reduces student loan 
subsidies to banks and guaranty agencies. The budget also calls 
for terminating government-run ``direct'' lending.

    Prioritizing Basic Research and Science. The budget 
resolution recommends 4.3 percent more spending for civilian 
nonhealth basic research than the President's budget. It also 
prioritizes those programs with the greatest potential for 
scientific discovery to create new knowledge: national science 
foundation research and related activities; basic energy and 
life sciences; NASA space science, and life and microgravity 
sciences; National Oceanic and Atmospheric Administration 
climate and air quality research, coastal ocean science, sea 
grant research, and marine research; and National Institute of 
Standards and Technology scientific and technical research.

    Protecting Natural Resources and the Environment. This 
congressional plan calls for increased funding to improve the 
quality of the Nation's parks. It proposes reform of the 
Superfund program, boosting its funding to $2 billion a year, a 
$700-million increase. It recommends maintaining a strong safe 
drinking water and wastewater State revolving fund program 
funded at $2.85 billion annually.

    Attacking Corporate Subsidies. The budget resolution would 
terminate, among others, such unneeded special-interest 
corporate subsidies as: the Advanced Technology Program; 
outdated Federal airline subsidies; Federal funding for the 
national information infrastructure; the ``Dual-Use 
Applications'' programs of the Department of Defense; and the 
Department of Energy's subsidized energy research. It also 
recommends closing special-interest corporate tax loopholes, 
including section 936.

    Encouraging a Market-Based Farm Economy. The resolution 
incorporates the Federal Agricultural Improvement and Reform 
[FAIR] Act, passed by the current Congress and signed by the 
President on April 4. The legislation envisions a new direction 
in farm programs that will give farmers the freedom to plant in 
response to market demand, not government programs or what 
government bureaucrats think farmers ought to plant. It will 
give producers more flexibility, less paperwork, and a better 
opportunity to earn a living from the marketplace--all of which 
will make U.S. agriculture profitable and competitive in the 
21st century.

    Supporting Rural America. To improve the effectiveness and 
efficiency of Federal assistance to rural areas, the budget 
envisions a Rural Development Block Grant, which will eliminate 
overlapping and duplicative activities. The budget also calls 
for a Native American Block Grant, advancing the cause of self-
determination in America's tribal communities.

    Restoring State and Local Roles in Transportation. The 
budget urges a study of restoring transportation money and 
decisionmaking to States and localities. It also recommends 
examination of potentially vast improvements in air traffic 
control by privatizing the air traffic control system.

    Reforming Federal Housing. The budget resolution calls for 
reform of the Federal role in public housing, replacing the 
current failed one-size-fits-all regime with a new approach 
based on the innovative vision of America's neighborhoods and 
communities.

                               Conclusion

    As noted at the outset, this budget is about ideas, and 
this year's budget debate will reflect two fundamentally 
different ideas about America's communities and their shared 
future. The President borrows the language of change, but 
then--looking no farther than the next election--fails to 
advance the policies to sustain his rhetoric.
    The Republican vision--embraced in this budget resolution--
looks to the next generation. It recognizes that we must ease 
the burden of taxes on America's families; ease the burden of 
debt on the Nation's children; transform welfare from a 
dependency trap to a stepping stone toward self-reliance; and 
strengthen and improve Medicare for America's seniors.
    This budget declares, unabashedly, that such achievements 
are possible--and then goes on to show how. Redeeming these 
possibilities is our task. It calls for wise, courageous, and 
responsible stewardship of the Nation's resources. It requires 
conviction and it demands choices. It does this to address 
Americans' anxieties about the present and their doubts about 
the future. It does this so that our children and grandchildren 
may enjoy the opportunity, the challenge, and the hope of 
forging their own American Dream.


                           The Clinton Crunch

             americans' anxiety about their economic future

                              ----------                              

    As he ran for the White House in 1992, candidate Clinton 
declared that the economy at that time was the worst it had 
been in 30 years. He vowed that if elected he would 
aggressively pursue policies aimed at boosting economic 
performance.
    Now, however, it is clear that the effects of President 
Clinton's policies have worsened economic performance, yielding 
a projection of growth even more sluggish than before. The data 
provide further evidence that the ``Clinton crunch''--the 
product of maintaining the current size and scope of government 
and imposing the largest tax increase in history--must be 
reversed by the policies embraced in this budget resolution: 
shrinking the government; balancing the budget; cutting taxes; 
rewarding private-sector saving and investment; and shifting 
power, influence, and money out of Washington and back to 
people in their States and communities.
    Several points made in the introduction to this report 
deserve elaboration here. According to the Joint Economic 
Committee:

  - Every year, families are seeing their real income decline. 
        Last year, the average family with a single wage earner 
        saw $803 less in the family paycheck than in 1982

  - Tens of thousands of workers continue to receive pink slips 
        because of corporate downsizing. Between June 1994 and 
        June 1995, half the major corporations in the United 
        States eliminated jobs.

  - Less than a third of the workers who lost full-time jobs 
        found new work that paid as well. On average, they 
        settled for jobs that paid 8.2 percent less. Workers 
        who should be enjoying the most prosperous years of 
        their lives--those between the ages of 45 and 55--saw 
        their incomes decline by 14 percent.

  - High-paying manufacturing jobs continue to disappear. 
        Between March 1995 and March 1996, a total of 326,000 
        manufacturing jobs were lost.

  - In the past 2 years, the number of Americans working two 
        jobs just to make ends meet increased by 10.2 percent. 
        Today, more Americans are working two jobs than at any 
        other time in the Nation's history. Such 
        industriousness would be laudable if it were voluntary. 
        But these Americans are working harder just to keep up, 
        not to get ahead.

    Clearly the administration's fiscal policy has done nothing 
to improve this situation. Then comes the President's tax 
policy. In his first year in office, the President increased 
taxes on gasoline, on individual incomes, on married couples, 
on Social Security benefits, and on the property left by 
parents to their children. The tax burden on the Nation's 
families now is higher than at any time in history.
    Added to the prevailing anxiety is a growing sense among 
American families that they cannot get ahead--and the causes 
can be seen in the near-term economic projections that have 
resulted from the President's policies. Right now, the growth 
of the Nation's economy--real gross domestic product [GDP] is 
projected to increase by a meager 2.0 percent this year and in 
1997--is disturbingly slow by historical standards. Since 1870, 
real growth in the United States has averaged 3.25 percent 
annually, according to Dr. Milton Friedman. This long-term 
historical growth rate, which includes the impact of the Great 
Depression, is approximately 1 percentage point greater than 
what the President says his policies will produce. The 
economy's performance also trails by far the 3.6-percent 
average annual growth rate of the Reagan expansion (1983-1989). 
The growth of employment opportunities is about 300,000 lower 
than that of the Reagan expansion.
    These factors translate into the slow rise of wages paid to 
working Americans, which are growing at only about a third of 
the rate experienced in the 1950's and 1960's. This is 
occurring because the government, through its chronic deficit 
spending, is soaking up investment capital that would otherwise 
finance new plants and equipment, thereby increasing 
productivity and, in turn, wages.
    The lack of these tools is the result of low savings and 
investment rates. The figure below shows both the U.S. saving 
and domestic investment rates from 1950 to the present. During 
the 1950's, the savings rate exceeded 9 percent; during the 
1990's, the savings rate is 2.7 percent. Because investments 
come from savings, the investment rate follows a similar path: 
it was 8.2 percent during the 1950's but is down to 3.6 percent 
in the 1990's. Consequently, the growth of productivity also 
has lagged. Productivity grew by almost 3.5 percent in the 
1950's; during the 1990's it is growing at a mere 1.59 percent. 
All of this translates into the slow wage growth noted above.
    Meanwhile, the growth of real median family income has 
dropped from 2 percent a year during the Reagan expansion to 
one-tenth that level--0.2 percent a year--during the current 
administration.
    In the current economic climate, surveys continually 
capture the increasing economic and employment anxiety of 
American workers. Their concerns are justified: Despite the 
President's claim of having ``created'' 8 million jobs, the 
pace of job creation in the past 12 months is less than half of 
what is was only a year ago.
    At the same time, the Federal Government is taking more of 
families' income to fund spiraling entitlement programs. In 
1950, the average American family making the median income and 
raising two children sent $1 out of every $50 it earned to 
Washington. By 1994, the same family was sending $1 out of 
every $4 it earned--25 percent of its income--to the Federal 
Government.
    To put it simply, instead of allowing young working 
families to save more money in ways that could make them more 
productive, boost the economy, and lift wages, the government 
takes their money and spends it on entitlement programs that 
are spending an ever-increasing amount of resources.



    Meanwhile, the President has been the largest obstacle to 
shifting power, influence, and money out of Washington and back 
to people in their States and communities. Last year, the 
Republican majority in Congress passed legislation to balance 
the budget, reform welfare and Medicaid, preserve and protect 
Medicare, and cut taxes for working families and for economic 
growth. The President vetoed all of these initiatives. As 
detailed elsewhere in this report, his attempt at imitating 
those reforms--reflected in his fiscal year 1997 budget 
submission--falls far short of the response needed to control 
spending and restore economic security.
    Nor has the President pursued tax policies that would 
encourage savings, investment, and capital formation, which are 
critical to enhancing productivity growth and, in turn, higher 
standards of living and higher wages. In general, growth in 
productivity results from incorporating improved technology in 
both the physical capital (plant and equipment) and the 
processes and procedures used in production. Productivity 
growth is critically dependent on efforts to reduce current 
consumption, and thereby increase the rate of national saving.
    What all this amounts to is that the Federal Government 
must turn away from policies that encourage spending at the 
expense of saving. Incurring large deficits and permitting 
rapidly escalating spending on entitlements favor spending over 
saving. Deficit spending transfers an increasing share of the 
pool of national savings to the public sector and away from 
private-sector investments.
    Therefore, it is imperative to achieve a balanced Federal 
budget by 2002. This budget resolution calls for serious 
reforms in both entitlements and discretionary spending. These 
reforms are intended to reduce the size and scope of the 
Federal Government, end the drain on savings from continued 
deficit spending and government borrowing, and reduce the 
dependence on foreign savings. The net effect will be to 
strengthen the economy by rewarding an increased level of 
saving and investment needed to raise productivity growth, 
improve wages, and elevate living standards.


                     Earn More, Keep More, Do More

             the economic reasons for balancing the budget

                              ----------                              

    The economic benefits of a balanced budget would touch all 
Americans and all aspects of the economy. Specifically, it 
would secure a higher standard-of-living for current and future 
generations, help create news jobs and raise stagnant wages, 
and relieve the budgetary pressure from the explosion in 
entitlement spending that currently crowds out other budget 
priorities.

                      increase standards of living

    The most important economic reason for balancing the budget 
is to increase national saving. An increased rate of saving 
would accelerate capital accumulation, thereby providing an 
increased standard of living for current and future 
generations, in addition to reducing our borrowing of foreign 
capital.
    In the long run, the rate at which individuals save their 
money--withholding part of their current income for later use--
determines to a large extent a society's level of prosperity 
and well-being. Individuals can invest those savings in 
activities that promote economic growth such as accumulating 
more capital (plant and equipment), expanding the knowledge and 
skills base of its workers, and conducting research. An 
increased rate of saving enables an increased rate of 
investment, which, in turn, creates an increased rate of 
economic growth, leading to higher wages.
    Conversely, continued deficit spending by the government 
draws down savings and drains economic growth. Increased 
government borrowing also leads to increased interest rates for 
both families and businesses. In the short term, escalating 
interest rates increase the cost of purchases that families 
typically finance, such as houses and cars. As noted in the 
introduction to this report, deficit spending adds about 2 
percentage points to the interest rates on these purchases. 
Today's artificially inflated interest rates add about $37,000 
to the cost of a moderate-sized home, $2,200 to the cost of a 
college loan, and $900 to the cost of a car.
    In the long-term, increased interest rates discourage 
businesses from investing in plants and equipment, which slows 
business formation and expansion. Balancing the budget helps 
remove the upward pressure on borrowing that results from 
deficit spending. In short, balancing the budget helps get the 
government out of the economy's way, so that the economy can 
thrive.
    The serious pursuit of a balanced budget by the 104th 
Congress was by itself enough to drive down interest rates from 
about 8 percent in January 1995 to below 5.8 percent in January 
1996. The rates started back up again when balanced-budget 
talks with the administration ended. Alan Greenspan, Chairman 
of the Federal Reserve Board, has linked these interest rate 
patterns with Congress' development and passage of a balance 
budget plan and the President's subsequent rejection of the 
proposal. In his testimony to the Committee on the Budget, 
Chairman Greenspan said the following:

          What has happened, as it became increasingly credible 
        to the financial community, as we moved through last 
        year, that indeed the budget could conceivably be 
        balanced, long-term interest rates proceeded to fall, 
        and as you may recall, they fell quite appreciably. 
        When it became apparent that a quick agreement was * * 
        * increasingly in difficulty, rates have backed up.


        
                how lower deficits help create more jobs

    As the government borrows less from the pool of national 
savings, businesses are encouraged to increase their rate of 
capital purchases. Given more capital, especially advanced 
technology capital, workers become more productive. Increased 
productivity means that firms can produce the same level of 
output at lower cost. The lower cost of production is reflected 
in lower prices. Lower prices leads to higher sales and, as a 
consequence, more jobs and increased wages.

                    containing entitlement spending

    Balancing the budget by controlling entitlement spending 
would increase the share of the pool of national savings 
devoted to private-sector investments and reduce the share 
absorbed by deficit spending.
    When government borrowing is used to fund spending on 
entitlements, such as Medicaid and Medicare, the economic 
effects of deficits are compounded. In general, entitlement 
programs transfer resources from individuals with higher 
incomes and higher saving rates to those with lower income and 
lower saving rates. Therefore, higher-income individuals save 
less (their incentive to do so is reduced), and lower-income 
individuals consume more. Incurring large deficits and 
permitting rapidly escalating spending on entitlements favors 
consumption over saving.





                   Our Responsibility to Our Children

         why current federal spending trends are unsustainable

                              ----------                              

    Thus far, the Republican majority in the Congress has 
focused on reforms that must be made to balance the budget by 
fiscal year 2002. But just beyond the horizon of this budget, 
past 2002, prospects for Federal spending--and their potential 
impact on the economy--are even more disconcerting. In 15 short 
years the baby boom generation will begin to retire. That 
generation was born between 1946 and 1964 when the number of 
births in the United States rose dramatically. The baby boomers 
are preceeded and followed by generations with fewer people. In 
other words, the number of people receiving government benefits 
will grow rapidly relative to the number of working people 
paying for those benefits. At the same time, even under this 
balanced budget plan, the amount of benefits paid to each 
recipient in virtually every entitlement program also is 
increasing. For example, under the Medicare reform plan assumed 
in this budget resolution, average spending per beneficiary 
increases from $5,200 in 1996 to $7,000 in 2002. Likewise, per-
capita Medicaid spending would increase from $2,516 in fiscal 
year 1995 to $3,242 in fiscal year 2002.
    The General Accounting Office [GAO], the Congressional 
Budget Office [CBO], and various other commissions and experts 
in the Nation's long-term fiscal and demographic trends have 
issued warnings about these trends. According to the Interim 
Report of the Bipartisan Commission on Entitlement and Tax 
Reform:

          An aging population and sharp increases in health 
        care spending lead to unsustainable growth in Federal 
        entitlements. Without reform, this deepening problem 
        will jeopardize the Nation's long-term economic growth 
        and prosperity. This is not the legacy we want to leave 
        our children and grandchildren.

    According to the CBO:

        * * * current policy is simply unsustainable. Wide 
        agreement exists on this conclusion, whether it comes 
        from the Entitlement Commission's work, Alan Auerbach's 
        and Laurence Kotlikoff's generational accounting, the 
        General Accounting Office's [GAO's] deficit 
        projections, or the Congressional Budget Office's 
        [CBO's] own work. * * * Correcting those bugetary 
        imbalances would be a substantial task if it was 
        undertaken now but would only grow more daunting if 
        delayed.

    According to the GAO:

  - If left unchecked, the Federal debt, currently $5.2 
        trillion, will continue to grow. By 2025, the debt will 
        be twice as large as the entire economy, and future 
        generations will face enormous tax burdens just for 
        servicing this debt.

  - The budget deficit--the amount of additional money the 
        government borrows each year to keep running--will 
        reach 20 percent of gross domestic product [GDP] by 
        2025. In today's terms, that would translate to a 
        deficit of $1.48 trillion, roughly the size of the 
        entire Federal budget--and that annual borrowing would 
        be added each year to the already overwhelming debt.

  - Continued deficits would add to the declining national 
        savings rate, leading to a decline in the capital stock 
        and, ultimately, a decline in gross domestic product. 
        In other words, the economy would actually shrink, and 
        so would standards of living, according to the General 
        Accounting Office [GAO].

  - Federal spending would approach 44 percent of GDP by 2025--
        roughly twice the share of the economy consumed by the 
        Federal Government today.

    These problems are neither theoretical nor distant; they 
are real and they are imminent. A clear indication appears in 
last year's report from the Trustees of the Medicare Hospital 
Insurance Trust Fund. Medicare, the government-run health 
program for the elderly, will be bankrupt within the 6 years of 
this budget.
    The Trustees, who were appointed by the President, reported 
to the Congress in April 1995 that the program would run a 
deficit in 1996, and be bankrupt in 2002. They stated: ``The 
trustees believe that prompt, effective and decisive action is 
necessary'' to save Medicare from bankruptcy.
    Since then, the situation has deteriorated further. A 
Treasury Department report in October 1995 documented that the 
trust fund was in deficit in 1995, pointing to a potential 
bankruptcy date even earlier than previously assumed.

              the source of the government spending crisis

    The growth of a large, centralized government is a 
relatively recent phenomenon in U.S. history. For about 150 
years, spending by Washington showed little tendency to 
increase relative to the Nation's economy. Until the 1930's, 
for example, the Nation remained as its Founders had 
envisioned, a decentralized society in which State and local 
governments were the main entities. Their spending, which was 
mainly for education and highways, amounted to more than three 
times Federal spending.
    This situation changed drastically with the New Deal. Like 
a pendulum, power, money, influence, and decisionmaking began 
shifting toward Washington and away from families, small 
businesses, and communities.
    These trends accelerated in the 1960's and 1970's as a 
result of the Great Society programs launched under President 
Johnson (see Appendix 6, The Causes of Current Deficits) and 
the expansion of the regulatory state under President Nixon. 
Because of these two events, the Federal Government is taxing 
more, spending more, and regulating more than at any time in 
the Nation's history. This trend is especially true for the so-
called entitlement programs.
    In 1970, for example, the Federal Government spent $61.1 
billion on entitlement and other mandatory programs and another 
$14.4 billion on net interest. By 1980, the last year of the 
Carter administration, entitlement and other mandatory spending 
had increased fourfold, to $262.3 billion; spending for net 
interest had increased to $52.5 billion. By 1990, entitlement 
and other mandatory spending had increased to $567.9 billion; 
spending for net interest had increased to $184.2 billion. By 
1995, entitlement and other mandatory spending had reached 
$741.3 billion; spending for net interest had reached $232.2 
billion. According to the President's budget, the Federal 
Government will spend almost $1 trillion ($994.7 billion) on 
entitlements and other mandatory programs in fiscal year 2000 
and another $229.9 billion on net interest.

            shifting resources from generation to generation

    This transfer of income from families to government also 
has major implications for different generations. The Federal 
budget normally measures taxes and spending for 1 year at a 
time, and it shows estimates for taxes and spending for only a 
few years into the future. It does not show the effects of the 
budget on different generations. For that, other forms of 
accounting are required.
    Answering a request by the Budget Committee, CBO analyzed 
the transfer of income from young working families to retirees 
as a result of one program--Medicare. Specifically, CBO looked 
at the extent to which Medicare enrollees' hospital insurance 
[HI] payroll taxes (part A) and supplemental medical insurance 
[SMI] premiums cover the value of their benefits.
    CBO found that the share of Medicare benefits that comes 
from individuals' contributions is growing. For men who worked 
continuously at the average wage from 1966 until retirement as 
of 1985, contributions (through HI taxes and SMI premiums) are 
about 29 percent of the value of their expected Medicare 
benefits. For men retiring as of 1995, contributions are about 
38 percent of expected benefits. For men retiring as of 2005, 
contributions are expected to be about 42 percent of benefits.
    Contributions by women as a percent of expected benefits 
are smaller than they are for men. For women retiring as of 
1995, for example, contributions are about 32 percent of 
benefits. The lower percentage results because a woman's 
expected remaining lifetime at age 65 is 4 years longer than it 
is for a man, and the additional benefits women get because of 
longer life are only partly offset by the fewer benefits they 
use, compared with men, at any age after 65.
    Despite the increasing role of contributions to an 
individual's Medicare benefits, the amount of subsidy for each 
Medicare beneficiary is growing even more dramatically. The net 
transfer or subsidy value is an estimated $31,766 for men and 
$39,443 for women who retired as of 1985. For individuals who 
retired as of 1995, the net transfer is an estimated $49,751 
for men and $66,613 for women. Under current law, the subsidy 
will be $70,796 for men and $90,112 for women who retire in 
2005.

                         generational accounts

    Government deficits, taxes, transfer payments, and other 
expenditures also affect the distribution of wealth among 
different generations. As previously indicated, the Federal 
budget is not capable of measuring these transfers between 
generations. For this, other techniques are required, such as 
``generational accounting.''
    Generational accounts start with the premise that tax 
revenues have to pay for government spending. The government 
can borrow for a short time but eventually it has to pay the 
interest on this borrowing.
    Generational accounts indicate, in present value terms, 
what the members of each generation can expect to pay on 
average, now and in the future, in net taxes. Generational 
accounts look ahead many decades, and they classify taxes paid 
and benefits received--such as Medicare and welfare--according 
to the generation that pays or receives the money. For an 
existing generation, generational accounts estimate its taxes 
and benefits year by year over its entire remaining lifespan; 
and they summarize these amounts for that generation in terms 
of one number, the present value of its lifetime net tax rates.
    For future generations, generational accounts estimate the 
net tax payments based on the proposition that the government's 
bills that are not paid now will have to be paid by future 
generations (those not yet born). They calculate how much 
future generations will have to pay on average to the 
government, above the amounts they will receive in government 
benefits. The methodology then translates the figures into 
their amounts in present-day terms. In other words, 
generational accounts measure directly how large a tax bill is 
today being left to the Nation's children.
    The President's fiscal year 1995 budget contained an entire 
chapter on generational accounting. It stated:

        * * * the generational accounts can be illuminating 
        when considered in the light of their assumptions, as 
        has been the case for the 75-year projections made 
        every year by the Social Security Trustees. Moreover, 
        the most fundamental result holds for a wide range of 
        reasonable assumptions: the net tax payment by future 
        generations is relatively much larger than the net tax 
        payment by the generation just born or other existing 
        generations.

    The President's budget submission this year excludes the 
chapter on generational accounting, probably because the 
outlook has worsened. The work of Alan J. Auerbach, Jagadeesh 
Gokhale, and Laurence Kotlikoff indicates that the bill being 
left to the Nation's children is enormous. The figure below 
presents the lifetime net tax rates of generations born in this 
century as well as future generations. Under current policies, 
lifetime net tax rates--measured in present-day terms--increase 
from 24 percent for the generation born at the turn of the 
century to 34 percent for children who have just been born. In 
other words, the net tax rate already has increased by 33 
percent.
    The figure also shows that if the Congress fails to change 
the course of current government spending patterns, future 
generations face a dramatically higher lifetime net tax rate--
one that translates to 84 percent of their lifetime incomes 
when measured in today's terms.



                        the balanced budget act

    Clearly such a pattern is unsustainable and even immoral. 
The Balanced Budget Act of 1995--passed by the first session of 
the 104th Congress but vetoed by the President--took the first 
step toward correcting this problem. By slowing the growth of 
government spending, the measure would have lowered the net tax 
rate facing future generations from 84 percent to 71 percent. 
In other words, the budget that the President demagogically 
labeled ``extreme'' only slightly relieved the burden of 
ballooning taxes and stagnant real wages on future generations.
    In hindsight, this is somewhat understandable. Contrary to 
the erroneous claims by the President, the Balanced Budget Act 
did not cut programs such as Medicare and Medicaid. Medicare 
and Medicaid benefits would continue to grow year after year at 
roughly twice the rate of the economy. The plan also cannot 
change the demographic dilemma--the fact that the enormous 
cohort of baby boomers starts collecting Social Security 
benefits in just 12 years and Medicare benefits in 15 years.
    Again, balancing the budget is only the first step. Gaining 
real control over the massive shift of resources from 
generation to generation will require continued, determined 
effort, even if the budget is balanced by 2002. But failing to 
take that first step, the Nation risks turning a potential 
crisis into a reality.
    That is why this budget resolution maintains Congress' 
commitment to balancing the Federal budget.

                    the children's right to know act

    It is important that the American people understand the 
impact that current policies will have on both today's children 
and future generations. The Office of Management and Budget 
[OMB] has both the capability and the means to do generational 
accounting, but has been barred by the President from doing so. 
Congressman Lamar S. Smith has introduced legislation titled 
the Children's Right to Know Act, which mandates an annual 
generational accounting by the Office of Management and Budget 
[OMB]. The budget resolution strongly supports this 
legislation.


             Economic Assumptions of the Budget Resolution

                              ----------                              

    The budget resolution is based on economic assumptions 
developed by the Congressional Budget Office [CBO]. These 
figures, shown in Table 1, assume that the Federal budget will 
be balanced by 2002. The economic assumptions comprise a short-
term forecast for 1996 and 1997, which reflects the current 
state of the economy relative to the business cycle, and a 
longer-term projection for 1998 through 2002. Table 1 also 
provides a comparison of the Budget Committee's assumptions 
with those released by the administration (Office of Management 
and Budget) and the Blue Chip consensus of private forecasters. 
All of these forecasts are based on the new revisions to the 
national economic statistics. The Budget Committee believes 
that CBO's economic assumptions present a realistic and honest 
outlook for the economy over the next 6 years.

                                       COMPARISON OF ECONOMIC ASSUMPTIONS                                       
                                          [Calendar years, in percent]                                          
----------------------------------------------------------------------------------------------------------------
                                                       Forecast                       Projected                 
                                           Actual --------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Nominal GDP (percent year over year):...                                                                        
    OMB.................................      4.6      5.1      5.1      5.1      5.1      5.1      5.1      5.1
    CBO.................................      4.6      4.8      4.9      4.9      4.9      4.9      4.9         
    Blue Chip...........................      4.2      4.6      4.4      4.5      4.9      4.7      4.8         
Real GDP (percent year over year):......                                                                        
    OMB.................................      2.0      2.2      2.3      2.3      2.3      2.3      2.3      2.3
    CBO.................................      2.0      2.0      2.1      2.2      2.2      2.2      2.2         
    Blue Chip...........................      1.9      2.1      1.9      2.0      2.4      2.3      2.3         
Chained Price Index (percent year over                                                                          
 year):.................................                                                                        
    OMB.................................      2.5      2.8      2.7      2.7      2.7      2.7      2.7      2.7
    CBO.................................      2.6      2.8      2.7      2.7      2.7      2.7      2.7         
    Blue Chip...........................      2.3      2.4      2.4      2.5      2.5      2.4      2.5         
Inflation,CPI-U (percent year over                                                                              
 year):.................................                                                                        
    OMB.................................      2.8      2.8      3.0      2.8      2.8      2.8      2.8      2.8
    CBO.................................      2.8      3.1      3.0      2.9      2.9      2.9      3.0         
    Blue Chip...........................      2.7      2.8      2.9      2.8      2.9      2.8      2.8         
Unemployment Rate (annual rate):........                                                                        
    OMB.................................      5.6      5.7      5.7      5.7      5.7      5.7      5.7      5.7
    CBO.................................      5.8      6.0      6.0      6.0      6.0      6.0      6.0         
    Blue Chip...........................      6.0      6.1      6.3      6.3      6.1      6.1      6.0         
3-month Treasury Bills rate (annual                                                                             
 rate):.................................                                                                        
    OMB.................................      5.5      4.9      4.5      4.3      4.2      4.0      4.0      4.0
    CBO.................................      4.9      4.8      4.3      3.9      3.7      3.7      3.7         
    Blue Chip...........................      4.9      4.9      5.2      5.1      5.0      4.9      4.9         
10-year Treasury Note rates (annual                                                                             
 rate):.................................                                                                        
    OMB.................................      6.6      5.7      5.3      5.0      5.0      5.0      5.0      5.0
    CBO.................................      5.7      5.5      5.3      5.3      5.3      5.3      5.3         
    Blue Chip...........................      5.7      5.8      6.4      6.3      6.3      6.2      6.2         
----------------------------------------------------------------------------------------------------------------
Sources: OMB, ``Fiscal Year 1997 Budget, Analytical Perspectives,'' (March 18, 1996). CBO, ``The Economic and   
  Budget Outlook, Fiscal Years 1997-2006,'' (May, 1996).`` Blue Chip Economic Indicators,'' (April 10 and March 
  10, 1996).                                                                                                    

                Review of Economic Developments in 1995

    The growth rate of real GDP declined from an average of 3.5 
percent in 1994 to 2.1 percent in 1995. The overall 1995 growth 
rate is misleading, however, because growth in the first, 
second, and fourth quarters was less than 1 percent. An 
anomolous 3.6-percent third-quarter rate was needed to 
compensate for the prevalent economic anemia.
    Since the last recession, the main policy objective of the 
Federal Reserve Board [Fed] has been to ensure that its 
monetary policy supports a rate of economic growth that is 
consistent with low inflation (the so-called ``soft-landing''). 
In response to fairly brisk economic growth in 1994, the Fed 
raised interest rates several times. The Fed reasoned that 
``preemptive strikes'' were required because continued 
acceleration in growth would likely result in inflation. The 
financial markets responded to the Fed's monetary restraint by 
lowering long-term interest rates. The decline in long-term 
interest rates accelerated during 1995 with the election of a 
Republican Congress, which made balancing the budget a pillar 
of its economic agenda.
    During the year, a low-inflation environment and continued 
high corporate profits helped spark a stock market rise, as 
individuals shifted massively to investing in financial assets. 
(Housing is the major asset investment for consumers, yet in a 
low-inflation environment the returns to physical assets such 
as housing fall and returns to financial assets rise--as seen 
in the past 2 years with the boom in the stock market and 
stagnant housing prices.) Because of weak retail sales, excess 
inventories began to build in 1995. This caused companies to 
reduce production. Although this inventory correction 
contributed to the slowdown in economic growth during the year, 
it was expected to be temporary, because inventory building 
usually resumes when sales recover. But the slow economic 
growth continued into the first quarter of this year.

                The Short-term Outlook for 1996 and 1997

    CBO estimates the potential growth rate of real GDP to be 
2.1 percent in 1996 and 1997. The short-term forecast also 
shows that during 1996 both unemployment and inflation will 
rise slightly as the economy's available productive capacity is 
absorbed. The 1995 unemployment rate of 5.6 percent is expected 
to rise to 6.0 percent by 1997. The inflation rate will also 
rise slightly to about 3.0 percent a year. After falling below 
6 percent in the fourth quarter of 1995, long-term interest 
rates (10-year Treasury Note rates) rose approximately one-half 
percentage point in the first quarter of 1996.
    The short-term forecast of GDP growth assumes continued 
spending by consumers on durable goods such as autos and by 
businesses on capital goods. But the Budget Committee 
acknowledges the view expressed by some analysts that consumer 
spending may be inhibited by household indebtedness and that 
the pent-up demand for capital goods may have been satisfied.

                   The Long-term Outlook Through 2002

    CBO's long-term projections assume that the Fed will pursue 
a low-inflation environment that supports a rate of economic 
growth close to its long-term potential. Given a balanced 
budget, CBO projects for the period 1998 to 2002 that the 
economy will grow between 2.1 percent and 2.2 percent.
    The economy appears to have entered a sustained period of 
slow growth: 2 years ago the long-term potential growth rate of 
the economy was thought to be about 2.5 percent. Analysts 
lowered this estimate to between 2.3 percent and 2.4 percent 
just last year. Now it is being revised downward even further, 
to 2.1 percent.
    The latest downward revision in the economy's potential 
growth rate is explained by two factors. First, the shift to 
the new ``chain-weighted'' basis for measuring national 
economic statistics eliminated an upward bias in the real 
growth rate because some goods and services, such as computers, 
have declined in relative prices. By reducing the value of the 
computer's weight, the index more accurately reflects the 
declining relative prices of computers and, thus, yields a 
lower value of real GDP.
    Second, during the 1990's, growth in the labor force has 
slowed substantially. This slowing has prompted a downward 
revision in projections of future labor force growth. 
Accordingly, projections of slower labor force growth in the 
future implies a reduction in the potential growth rate. 
Combined, both factors have lowered the potential growth rate 
by an average of 0.4 percentage points annually.

                          the fiscal dividend

    CBO's economic projections assume that the Federal budget 
will be balanced by 2002. Economists believe that 
implementation of a credible deficit reduction plan will 
generate economic benefits in the form of lower interest rates, 
higher national savings, higher investment, and faster economic 
growth. These economic benefits will affect the Federal budget 
by reducing Federal interest payments and increasing revenues, 
thereby reducing projected deficits. This budgetary effect is 
referred to as the ``fiscal dividend.'' CBO assumes that a 
balanced budget will lower interest rates by 1.1 percentage 
points and cause a slight increase in productivity and real 
GDP. Including the debt-service savings due to these effects 
allows for a fiscal dividend of $253 billion over the period 
1996-2002.

                              formula bias

    The Bureau of Labor Statistics [BLS] has announced its 
plans to remove the ``formula bias'' from the Consumer Price 
Index [CPI]. This revision is scheduled to be incorporated in 
the index by June 1996. BLS estimates that this revision would 
correct the growth rate of the CPI to 0.1 percentage point 
below the previous projection. CBO had estimated earlier, based 
on incomplete information, a correction of 0.16 percentage 
points annually. The new information and estimate will be 
incorporated in the CBO August update.
    The correction for formula bias consists of two revisions. 
The first revision extends the ``sample rotation'' procedures 
originally introduced in January 1995. Beginning in June 1996, 
the sample rotation procedure as applied to the food-at-home 
component will be extended to all categories. In brief, the BLS 
replaces its sample of items and retail outlets on a 5-year 
rotation basis. Currently, there is an initiation period when 
new outlets and items are selected, followed by an overlap 
period when the prices of such items are used both as base 
period prices and to calculate subsequent price changes. This 
procedure assigns high weights to items with temporarily low 
prices, especially for items with short-term price 
fluctuations, such as food items. The new change is to extend 
the current procedures for food items to all nonshelter items 
by using a longer overlap period, from 1 month to at least 3 
months, to obtain more appropriate weights.
    The second revision attempts to improve the procedure used 
for substitute items. When CPI sample items are replaced, some 
30 percent are not comparable to the item they replace. The 
price of the new item is determined by reference to the 
original base period, implicitly changing the weight of the 
item. Starting in July 1996, the CPI will not recalculate the 
base period price for such noncomparable items, and will 
continue with the original weight.


                           Sharing the Burden



                     attacking corporate subsidies

                              ----------                              

    The Federal Government spends billions of dollars each year 
to subsidize corporate America. These subsidies are provided by 
virtually every major Cabinet Department in the Federal 
Government. This practice persists even as the Congress is 
closely scrutinizing spending for programs that furnish support 
for the poor and infirm it. Under these conditions, Congress 
cannot ignore spending in support of some of the largest 
corporations in America. The question that must be asked is 
this: Is the economic gain from these business subsidies worth 
the cost to the American taxpayer? In too many cases, the 
answer is no.
    These subsidies were originally created with laudable goals 
such as encouraging new technologies or developing needed 
services. In some cases, this view may have been naive or 
misdirected; but no one can deny that in many cases today, 
these goals are no longer being served or the programs are 
ineffective.
    The position of this Budget Resolution is that any kind of 
unnecessary subsidy should be closely scrutinized for ultimate 
repeal or reform. In fact, a bipartisan group of Senators have 
formed an independent commission to help drastically cut the 
subsidies for business that many call ``corporate welfare.''

             arguments for and against corporate subsidies

    Proponents of these corporate subsidies maintain that they 
serve the national interest in a variety of ways. They 
typically assert economic, national security, and social 
reasons in defense of the subsidies. The subsidies to 
corporations are variously justified because ``they protected 
vital industries;'' ``they subsidize research that private 
industry would not otherwise undertake;'' ``they encourage 
businesses to hire the socially disadvantaged;'' or ``they 
finance ventures too risky for private investors.''
    But witnesses testifying before the Committee on the Budget 
on March 7 of this year contended that such subsidies are 
unfair and, in fact, ineffective. Said Beau Boulter, chairman 
of CapitolWatch and the Coalition Against Corporate Welfare: 
``Corporate welfare is not fair. It's not smart. And, worst of 
all, it doesn't work.''
    Steve Moore, director of Fiscal Policy Studies at the Cato 
Institute, reported that the Federal Government now spends 
roughly $75 billion each year on more than 125 programs that 
provide direct taxpayer assistance to American businesses. In 
his testimony, Moore added:

          Cutting corporate welfare is good economics because 
        very few of the industrial policy programs run out of 
        Washington have a credible track record in terms of 
        creating jobs or wealth.

    Dr. Robert Shapiro, cofounder of the Progressive Policy 
Institute, told the Budget Committee that these subsidies, much 
like trade protections, actually weaken market incentives for 
companies to become more efficient and productive. Thus, 
corporate subsidies can actually be counterproductive to the 
goal of improving the economy.
    In an article in the Washington Post titled ``End Corporate 
Welfare,'' Dr. Shapiro also has noted:

          The purpose of fiscal discipline is not the aesthetic 
        appeal of a budget ledger in balance but the economic 
        benefits that come from increasing the resources 
        available for productive private and public investment. 
        If stronger economic growth is the goal of budget 
        reform, the process should begin with those programs 
        that tend to undermine that growth.

                                fairness

    Attacking corporate subsidies also appeals to those who 
argue for social justice. Reporting on the analysis completed 
by the Center on Budget and Policy Priorities based on a 
Congressional Budget Office report defining which government 
programs constitute business subsidies, Dr. Robert Greenstein 
emphasized the importance of the visibility of this issue by 
saying: ``I think our task should be large-scale, long-lasting 
deficit reduction done in an equitable and balanced manner.'' 
He added a statement by David Stockman, the former Director of 
the Office of Management and Budget: ``The task is to go after 
weak claims, not weak clients''.
    This budget resolution calls for the termination of the 
Advanced Technology Program; elimination of Federal funding for 
outdated subsidies; elimination of funding for the National 
Information Infrastrucuture; elimination of DOD's Dual Use 
Applications Programs; and elimination of further funding of 
the Department of Energy's subsidized energy research. The 
resolution also recommends the repeal of section 936, which 
provides a no-longer-needed tax incentive, principally used by 
pharmaceutical manufacturers, for companies to move facilities 
out of the United States and into Puerto Rico.


                      The End of Politics as Usual

                   function-by-function descriptions

                              ----------                              

    The discussions that follows describe the budget 
resolution's recommended priorities for fiscal years 1997 
through 2002. At the end of each function, additional 
provisions with budgetary effects are mentioned. These 
ancillary provisions are fully detailed in Appendix 1.
    The discussions that follow reflect the assumptions 
underlying the House Budget Committee's recommendations 
concerning the funding priorities for programs in each 
function. The actual policy changes for programs fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                                                                            FISCAL YEAR 1997 BUDGET RESOLUTION--TOTAL                                                                           
                                                                                    [In billions of dollars]                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Fiscal year--                                                       
                                                                   -----------------------------------------------------------------------------------------------------------------------------
                                                                        1995          1996          1997          1998          1999          2000          2001          2002        1997-2002 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority..................................................     1,543.291     1,576.985     1,629.863     1,692.472     1,733.954     1,786.658     1,826.964     1,886.472    10,556.383
Outlays...........................................................     1,519.133     1,574.677     1,618.059     1,675.492     1,713.667     1,762.281     1,793.820     1,842.378    10,405.697
Revenues..........................................................     1,355.213     1,424.189     1,470.373     1,532.708     1,599.656     1,674.768     1,754.153     1,845.563     9,877.221
Deficit (-)/surplus (+)...........................................      -163.920      -150.488      -147.686      -142.784      -114.011       -87.513       -39.667        +3.185      -528.476
Debt subject to limit.............................................     4,884.600     5,160.400     5,434.400     5,697.600     5,938.900     6,159.000     6,332.800     6,464.900    36,027.600
                                                                                                                                                                                                
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                
050  National defense:                                                                                                                                                                          
    Budget authority..............................................  ............       264.111       267.183       268.958       271.677       274.377       277.121       280.101     1,639.417
    Outlays.......................................................  ............       263.595       264.846       263.618       267.049       270.841       270.025       270.122     1,606.501
150  International affairs:                                                                                                                                                                     
    Budget authority..............................................  ............        15.011        13.732        11.551        10.576        11.089        10.890        11.009        68.847
    Outlays.......................................................  ............        15.896        14.963        13.484        12.467        11.025        10.584        10.281        72.804
250  General science, space, and technology:                                                                                                                                                    
    Budget authority..............................................  ............        16.787        16.537        16.428        16.313        16.159        15.934        15.602        96.973
    Outlays.......................................................  ............        16.570        16.697        16.494        16.224        16.111        15.943        15.673        97.142
270  Energy:                                                                                                                                                                                    
    Budget authority..............................................  ............         3.782         2.380         2.441         2.034         1.697         1.782         1.430        11.764
    Outlays.......................................................  ............         3.523         2.729         2.078         1.327         0.815         0.740         0.231         7.920
300  Natural resources and environment:                                                                                                                                                         
    Budget authority..............................................  ............        21.391        20.529        18.902        19.713        18.399        18.994        18.860       115.397
    Outlays.......................................................  ............        21.827        21.322        19.654        20.409        18.950        19.205        18.910       118.450
350  Agriculture:                                                                                                                                                                               
    Budget authority..............................................  ............        12.737        11.840        11.750        11.367        10.714         9.497         8.964        64.132
    Outlays.......................................................  ............        10.751        10.238         9.855         9.483         8.843         7.730         7.181        53.330
370  Commerce and housing credit:                                                                                                                                                               
    Budget authority..............................................  ............        11.884         8.957        14.188        14.103        12.850        14.662        11.598        76.358
    Outlays.......................................................  ............        -7.071        -1.599         7.333         4.377         6.841         8.395         7.218        32.565
400  Transportation:                                                                                                                                                                            
    Budget authority..............................................  ............        36.653        41.737        43.541        43.961        44.103        44.531        45.045       262.918
    Outlays.......................................................  ............        39.308        39.007        37.635        36.111        35.236        34.526        34.042       216.557
450  Community and regional development:                                                                                                                                                        
    Budget authority..............................................  ............        11.089         6.672         6.605         6.559         6.595         6.243         6.153        38.827
    Outlays.......................................................  ............        11.116        10.149         8.640         7.820         7.040         6.655         6.161        46.465
500  Education, training and social services:                                                                                                                                                   
    Budget authority..............................................  ............        47.790        46.965        47.416        48.046        48.696        49.410        50.092       290.625
    Outlays.......................................................  ............        50.558        49.504        48.112        47.817        48.209        48.704        49.335       291.681
550  Health:                                                                                                                                                                                    
    Budget authority..............................................  ............       110.577       129.918       137.726       144.995       152.961       161.114       167.926       894.640
    Outlays.......................................................  ............       122.977       130.276       138.064       145.168       152.890       160.789       167.476       894.663
570  Medicare:                                                                                                                                                                                  
    Budget authority..............................................  ............       181.254       193.165       207.183       217.250       229.309       241.641       255.121     1,343.669
    Outlays.......................................................  ............       179.109       191.481       205.458       214.978       227.560       239.907       252.720     1,332.104
600  Income security:                                                                                                                                                                           
    Budget authority..............................................  ............       219.334       232.612       241.254       244.842       262.510       262.260       281.100     1,524.578
    Outlays.......................................................  ............       228.879       240.107       244.185       251.716       263.060       265.271       277.213     1,514.552
650  Social security:                                                                                                                                                                           
    Budget authority..............................................  ............       354.584       372.450       390.941       410.440       431.006       453.307       476.614     2,534.758
    Outlays.......................................................  ............       351.311       368.139       386.144       405.059       425.100       446.769       469.455     2,500.666
700  Veterans benefits and services:                                                                                                                                                            
    Budget authority..............................................  ............        38.502        39.117        38.458        37.712        37.713        38.002        39.713       230.715
    Outlays.......................................................  ............        37.782        39.654        39.321        38.063        39.427        36.882        39.912       233.259
750  Administration of justice:                                                                                                                                                                 
    Budget authority..............................................  ............        20.969        22.125        22.302        23.186        23.235        20.746        20.740       132.334
    Outlays.......................................................  ............        17.694        19.930        21.162        22.241        22.944        20.704        20.700       127.681
800  General government:                                                                                                                                                                        
    Budget authority..............................................  ............        12.494        11.372        13.314        12.592        12.987        12.549        13.020        75.834
    Outlays.......................................................  ............        12.648        11.747        13.640        12.928        13.364        12.454        12.321        76.454
900  Net interest:                                                                                                                                                                              
    Budget authority..............................................  ............       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
    Outlays.......................................................  ............       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
920  Allowances:                                                                                                                                                                                
    Budget authority..............................................  ............        -0.214         2.671        -1.934        -2.025        -2.038        -2.026        -2.182        -7.534
    Outlays.......................................................  ............        -0.046        -1.032        -0.833        -0.183        -0.271        -1.770        -2.139        -6.228
950  Offsetting receipts:                                                                                                                                                                       
    Budget authority..............................................  ............       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
    Outlays.......................................................  ............       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                   FISCAL YEAR 1997 BUDGET RESOLUTION TOTAL ON-BUDGET                                                   
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Fiscal year--                                                
                                         ---------------------------------------------------------------------------------------------------------------
                                              1996          1997          1998          1999          2000          2001          2002        1997-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority........................     1,266.763     1,311.284     1,357.208     1,386.228     1,428.397     1,450.450     1,497.756     8,431.433
Outlays.................................     1,276.968     1,306.921     1,350.905     1,379.428     1,413.490     1,428.809     1,463.504     8,343.057
Revenues................................     1,059.022     1,085.363     1,130.426     1,176.236     1,229.666     1,288.998     1,358.219     7,268.908
Deficit (-)/surplus (+).................      -217.946      -221.558      -220.479      -203.192      -183.824      -139.811      -105.285    -1,074.149
Debt subject to limit...................     5,160.400     5,434.400     5,697.600     5,938.900     6,159.000     6,332.800     6,464.900    36,027.600
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority....................       264.111       267.183       268.958       271.677       274.377       277.121       280.101     1,639.417
    Outlays.............................       263.595       264.846       263.618       267.049       270.841       270.025       270.122     1,606.501
150  International affairs:                                                                                                                             
    Budget authority....................        15.011        13.732        11.551        10.576        11.089        10.890        11.009        68.847
    Outlays.............................        15.896        14.963        13.484        12.467        11.025        10.584        10.281        72.804
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority....................        16.787        16.537        16.428        16.313        16.159        15.934        15.602        96.973
    Outlays.............................        16.570        16.697        16.494        16.224        16.111        15.943        15.673        97.142
270  Energy:                                                                                                                                            
    Budget authority....................         3.782         2.380         2.441         2.034         1.697         1.782         1.430        11.764
    Outlays.............................         3.523         2.729         2.078         1.327         0.815         0.740         0.231         7.920
300  Natural Resources and Environment:                                                                                                                 
    Budget authority....................        21.391        20.529        18.902        19.713        18.399        18.994        18.860       115.397
    Outlays.............................        21.827        21.322        19.654        20.409        18.950        19.205        18.910       118.450
350  Agriculture:                                                                                                                                       
    Budget authority....................        12.737        11.840        11.750        11.367        10.714         9.497         8.964        64.132
    Outlays.............................        10.751        10.238         9.855         9.483         8.843         7.730         7.181        53.330
370  Commerce and Housing Credit:                                                                                                                       
    Budget authority....................         6.446         7.838         9.464        10.476        12.448        11.268        11.598        63.092
    Outlays.............................        -6.388        -2.319         5.752         6.043         7.320         7.283         7.218        31.297
400  Transportation:                                                                                                                                    
    Budget authority....................        36.653        41.737        43.541        43.961        44.103        44.531        45.045       262.918
    Outlays.............................        39.308        39.007        37.635        36.111        35.236        34.526        34.042       216.557
450  Community and Regional Development:                                                                                                                
    Budget authority....................        11.089         6.672         6.605         6.559         6.595         6.243         6.153        38.827
    Outlays.............................        11.116        10.149         8.640         7.820         7.040         6.655         6.161        46.465
500  Education, Training and Social                                                                                                                     
 Services:                                                                                                                                              
    Budget authority....................        47.790        46.965        47.416        48.046        48.696        49.410        50.092       290.625
    Outlays.............................        50.558        49.504        48.112        47.817        48.209        48.704        49.335       291.681
550  Health:                                                                                                                                            
    Budget authority....................       110.577       129.918       137.726       144.995       152.961       161.114       167.926       894.640
    Outlays.............................       122.977       130.276       138.064       145.168       152.890       160.789       167.476       894.663
570  Medicare:                                                                                                                                          
    Budget authority....................       181.254       193.165       207.183       217.250       229.309       241.641       255.121     1,343.669
    Outlays.............................       179.109       191.481       205.458       214.978       227.560       239.907       252.720     1,332.104
600  Income Security:                                                                                                                                   
    Budget authority....................       219.334       232.612       241.254       244.842       262.510       262.260       281.100     1,524.578
    Outlays.............................       228.879       240.107       244.185       251.716       263.060       265.271       277.213     1,541.552
650  Social Security:                                                                                                                                   
    Budget authority....................         6.868         7.812         8.476         9.219         9.979        10.775        11.607        57.868
    Outlays.............................         9.987        10.543        11.213        11.922        12.662        13.458        14.290        74.088
700  Veterans Benefits and Services:                                                                                                                    
    Budget authority....................        38.502        39.117        38.458        37.712        37.713        38.002        39.713       230.715
    Outlays.............................        37.782        39.654        39.321        38.063        39.427        36.882        39.912       233.259
750  Administration of Justice:                                                                                                                         
    Budget authority....................        20.969        22.125        22.302        23.186        23.235        20.746        20.740       132.334
    Outlays.............................        17.694        19.930        21.162        22.241        22.944        20.704        20.700       127.681
800  General Government:                                                                                                                                
    Budget authority....................        12.494        11.372        13.314        12.592        12.987        12.549        13.020        75.834
    Outlays.............................        12.648        11.747        13.640        12.928        13.364        12.454        12.321        67.454
900  Net Interest:                                                                                                                                      
    Budget authority....................       276.374       282.653       288.947       292.607       294.004       298.041       302.443     1,758.695
    Outlays.............................       276.374       282.653       288.947       292.607       294.004       298.041       302.443     1,758.695
920  Allowances:                                                                                                                                        
    Budget authority....................        -0.214         2.671        -1.934        -2.025        -2.038        -2.026        -2.182        -7.534
    Outlays.............................        -0.045        -1.032        -0.833        -0.183        -0.271        -1.770        -2.139        -6.228
950  Offsetting Receipts:                                                                                                                               
    Budget authority....................       -35.192       -45.574       -35.574       -34.762       -36.540       -38.322       -40.586      -231.358
    Outlays.............................       -35.192       -45.574       -35.574       -34.762       -36.540       -38.322       -40.586      -231.358
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  FISCAL YEAR 1997 BUDGET RESOLUTION--TOTAL OFF-BUDGET                                                  
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Fiscal years--                                                    
                                 -----------------------------------------------------------------------------------------------------------------------
                                       1996           1997           1998           1999           2000           2001           2002        1997-2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority................        310.222        318.579        335.264        347.616        358.261        376.514        388.716     2,1234.960
Outlays.........................        297.709        311.138        324.587        334.239        348.791        365.011        378.874      2,062.640
Revenues........................        365.167        385.010        402.282        423.420        445.102        465.155        487.344      2,608.313
Deficit (-)/Surplus (+).........        +67.458        +73.872        +77.695        +89.181        +96.311       +100.144       +108.470       +545.673
Debt subject to limit...........          0              0              0              0              0              0              0              0    
                                                                                                                                                        
                                 -----------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
150  International affairs:                                                                                                                             
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
270  Energy:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
300  Natural Resources and                                                                                                                              
 Environment:                                                                                                                                           
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
350  Agriculture:                                                                                                                                       
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
370  Commerce and Housing                                                                                                                               
 Credit:                                                                                                                                                
    Budget authority............          5.438          1.119          4.724          3.627          0.402          3.394          0             13.260
    Outlays.....................         -0.683          0.720          1.581         -1.666         -0.479          1.112          0              1.268
400  Transportation:                                                                                                                                    
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
450  Community and Regional                                                                                                                             
 Development:                                                                                                                                           
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
500  Education, Training, and                                                                                                                           
 Social Services:                                                                                                                                       
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
550  Health:                                                                                                                                            
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
570  Medicare:                                                                                                                                          
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
600  Income Security:                                                                                                                                   
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
650  Social Security:                                                                                                                                   
    Budget authority............        347.716        364.638        382.465        401.221        421.027        442.532        465.007      2,476.890
    Outlays.....................        341.324        357.596        374.931        393.137        412.438        433.311        455.165      2,426.578
700  Veterans Benefits and                                                                                                                              
 Services:                                                                                                                                              
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
750  Administration of Justice:                                                                                                                         
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
800  General Government:                                                                                                                                
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
900  Net Interest:                                                                                                                                      
    Budget authority............        -36.640        -40.555        -44.900        -49.690        -54.979        -60.722        -66.864       -317.710
    Outlays.....................        -36.640        -40.555        -44.900        -49.690        -54.979        -60.722        -66.864       -317.710
920  Allowances:                                                                                                                                        
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
950  Offsetting Receipts:                                                                                                                               
    Budget authority............         -6.292         -6.623         -7.025         -7.542         -8.189         -8.690         -9.427        -47.496
    Outlays.....................         -6.292         -6.623         -7.025         -7.542         -8.189         -8.690         -9.427        -47.496
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                    FISCAL YEAR 1997 BUDGET RESOLUTION--DISCRETIONARY                                                   
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year--                                                    
                                 -----------------------------------------------------------------------------------------------------------------------
                                       1996           1997           1998           1999           2000           2001           2002        1997-2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority................        495.811        494.995        492.249        488.586        496.295        488.863        499.041      2,960.029
Outlays.........................        535.974        535.139        526.421        524.319        524.462        513.713        511.352      3,135.406
                                                                                                                                                        
050  National defense:                                                                                                                                  
    Budget authority............        264.882        267.962        269.731        272.380        275.064        277.832        280.739      1,643.708
    Outlays.....................        264.516        265.668        264.462        267.808        271.537        270.744        270.768      1,610.987
150  International affairs:                                                                                                                             
    Budget authority............         18.496         17.660         15.491         14.458         13.814         13.490         13.320         88.233
    Outlays.....................         19.846         19.311         17.843         16.540         15.264         14.415         13.854         97.227
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority............         16.748         16.497         16.387         16.270         16.115         15.889         15.556         96.714
    Outlays.....................         16.532         16.658         16.455         16.184         16.069         15.899         15.628         96.893
270  Energy:                                                                                                                                            
    Budget authority............          4.835          3.778          3.557          3.596          3.329          3.261          3.199         20.720
    Outlays.....................          5.814          5.051          4.255          4.009          3.600          3.411          3.254         23.580
300  Natural Resources and                                                                                                                              
 Environment:                                                                                                                                           
    Budget authority............         20.534         19.787         19.513         19.072         18.678         18.594         18.466        114.110
    Outlays.....................         21.323         20.701         20.289         19.830         19.334         18.915         18.647        117.716
350  Agriculture:                                                                                                                                       
    Budget authority............          3.949          2.978          2.881          2.686          2.581          2.408          2.118         15.652
    Outlays.....................          3.969          3.211          2.964          2.754          2.617          2.449          2.165         16.160
370  Commerce and Housing                                                                                                                               
 Credit:                                                                                                                                                
    Budget authority............          1.787          2.441          2.509          2.907          4.188          2.307          2.303         16.655
    Outlays.....................          1.923          2.575          2.583          2.690          3.697          2.485          2.092         16.122
400  Transportation:                                                                                                                                    
    Budget authority............         13.752         12.945         12.654         12.521         11.967         11.681         11.467         73.235
    Outlays.....................         36.480         36.443         35.494         34.276         33.579         32.941         32.480        205.213
450  Community and Regional                                                                                                                             
 Development:                                                                                                                                           
    Budget authority............         10.453          6.368          6.306          6.272          6.243          5.902          5.924         37.015
    Outlays.....................         10.748         10.161          8.804          7.996          7.077          6.689          6.294         47.021
500  Education, Training and                                                                                                                            
 Social Services:                                                                                                                                       
    Budget authority............         36.220         35.372         35.135         34.979         34.842         34.773         34.711        209.812
    Outlays.....................         38.820         37.984         35.801         35.100         34.843         34.689         34.612        213.029
550  Health:                                                                                                                                            
    Budget authority............         23.254         22.230         22.159         21.957         21.845         21.726         21.526        131.443
    Outlays.....................         23.093         22.711         22.381         22.088         21.944         21.818         21.626        132.568
570  Medicare:                                                                                                                                          
    Budget authority............          3.031          3.031          3.031          3.031          3.031          3.031          3.031         18.186
    Outlays.....................          3.026          3.031          3.031          3.031          3.031          3.031          3.031         18.186
600  Income security:                                                                                                                                   
    Budget authority............         27.517         29.780         34.445         30.298         36.531         32.336         39.227         32.336
    Outlays.....................         38.740         39.867         39.788         39.621         39.349         37.678         37.516        233.819
650  Social Security:                                                                                                                                   
    Budget authority............          0.006          0.005          0.005          0.005          0.005          0.005          0.005          0.030
    Outlays.....................          3.125          2.736          2.742          2.708          2.688          2.688          2.688         16.250
700  Veterans Benefits and                                                                                                                              
 Services:                                                                                                                                              
    Budget authority............         18.425         19.079         18.129         17.154         17.054         17.154         18.704        107.274
    Outlays.....................         19.029         19.404         18.837         17.377         17.108         17.161         18.533        108.420
750  Administration of Justice:                                                                                                                         
    Budget authority............         20.575         21.862         21.857         22.738         22.807         20.342         20.360        129.966
    Outlays.....................         17.342         19.728         20.780         21.858         22.578         20.363         20.383        125.690
800  General government:                                                                                                                                
    Budget authority............         11.561         10.508         10.361         10.259         10.211         10.130         10.540         62.009
    Outlays.....................         11.694         10.918         10.713         10.598         10.387         10.078          9.892         62.586
900  Net interest:                                                                                                                                      
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
920  Allowances:                                                                                                                                        
    Budget authority............         -0.214          2.712         -1.903         -1.997         -2.010         -1.998         -2.155         -7.351
    Outlays.....................         -0.046         -1.019         -0.801         -0.149         -0.240         -1.741         -2.111         -6.061
950  Offsetting receipts:                                                                                                                               
    Budget authority............          0              0              0              0              0              0              0              0    
    Outlays.....................          0              0              0              0              0              0              0              0    
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      FISCAL YEAR 1997 BUDGET RESOLUTION--MANDATORY                                                     
                                                                [in billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Fiscal year--                                                
                                         ---------------------------------------------------------------------------------------------------------------
                                              1996          1997          1998          1999          2000          2001          2002        1997-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority........................     1,081.174     1,134.868     1,200.223     1,245.368     1,290.363     1,338.431     1,387.431     7,596.354
Outlays.................................     1,038.703     1,082.920     1,149.071     1,189.348     1,237.819     1,280.107     1,331.026     7,270.291
Revenues................................     1,424.189     1,470.373     1,532.708     1,599.656     1,674.768     1,754.153     1,845.153     9,877.221
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
050  National defense:                                                                                                                                  
    Budget authority....................        -0.771        -0.779        -0.773        -0.703        -0.687        -0.711        -0.638        -4.291
    Outlays.............................        -0.921        -0.822        -0.844        -0.759        -0.696        -0.719        -0.646        -4.486
150  International affairs:                                                                                                                             
    Budget authority....................        -3.485        -3.928        -3.940        -3.882        -2.725        -2.600        -2.311       -19.386
    Outlays.............................        -3.950        -4.348        -4.359        -4.073        -4.239        -3.831        -3.573       -24.423
250  General Science, Space, and                                                                                                                        
 Technology:                                                                                                                                            
    Budget authority....................         0.039         0.040         0.041         0.043         0.044         0.045         0.046         0.259
    Outlays.............................         0.038         0.039         0.039         0.040         0.042         0.044         0.045         0.249
270  Energy:                                                                                                                                            
    Budget authority....................        -1.053        -1.398        -1.116        -1.562        -1.632        -1.479        -1.769        -8.956
    Outlays.............................        -2.291        -2.322        -2.177        -2.682        -2.785        -2.671        -3.023       -15.660
300  Natural Resources and Environment:                                                                                                                 
    Budget authority....................         0.857         0.742        -0.611         0.641        -0.279         0.400         0.394         1.287
    Outlays.............................         0.504         0.621        -0.635         0.579        -0.384         0.290         0.263         0.734
350  Agriculture:                                                                                                                                       
    Budget authority....................         8.788         8.862         8.869         8.681         8.133         7.089         6.846        48.480
    Outlays.............................         6.782         7.027         6.891         6.729         6.226         5.281         5.016        37.170
370  Commerce and Housing Credit:                                                                                                                       
    Budget authority....................        10.097         6.516        11.679        11.196         8.662        12.355         9.295        59.703
    Outlays.............................        -8.994        -4.174         4.750         1.687         3.144         5.910         5.126        16.433
400  Transportation:                                                                                                                                    
    Budget authority....................        22.901        28.792        30.887        31.440        32.136        32.850        33.578       189.683
    Outlays.............................         2.828         2.564         2.141         1.835         1.657         1.585         1.562        11.344
450  Community and Regional Development:                                                                                                                
    Budget authority....................         0.636         0.304         0.299         0.287         0.352         0.341         0.229         1.812
    Outlays.............................         0.368        -0.012        -0.164        -0.176        -0.037        -0.034        -0.133        -0.556
500  Education, Training and Social                                                                                                                     
 Services:                                                                                                                                              
    Budget authority....................        11.570        11.593        12.281        13.067        13.854        14.637        15.381        80.813
    Outlays.............................        11.738        11.520        12.311        12.717        13.366        14.015        14.723        78.652
550  Health:                                                                                                                                            
    Budget authority....................        87.323       107.688       115.567       123.038       131.116       139.388       146.400       763.197
    Outlays.............................        99.884       107.565       115.683       123.080       130.946       138.971       145.850       762.095
570  Medicare:                                                                                                                                          
    Budget authority....................       178.223       190.134       204.152       214.219       226.278       238.610       252.090     1,325.483
    Outlays.............................       176.083       188.450       202.427       211.947       224.529       236.876       249.689     1,313.918
600  Income Security:                                                                                                                                   
    Budget authority....................       191.817       202.832       206.808       214.544       225.979       229.924       241.873     1,321.960
    Outlays.............................       190.139       200.240       204.397       212.095       223.711       227.593       239.697     1,307.733
650  Social Security:                                                                                                                                   
    Budget authority....................       354.578       372.445       390.936       410.435       431.001       453.302       476.609     2,534.728
    Outlays.............................       348.186       365.403       383.402       402.351       422.412       444.081       466.767     2,484.416
700  Veterans Benefits and Services:                                                                                                                    
    Budget authority....................        20.077        20.038        20.329        20.558        20.659        20.848        21.009       123.441
    Outlays.............................        18.753        20.250        20.484        20.686        22.319        19.721        21.379       124.839
750  Administration of Justice:                                                                                                                         
    Budget authority....................         0.394         0.263         0.445         0.448         0.428         0.404         0.380         2.368
    Outlays.............................         0.352         0.202         0.382         0.383         0.366         0.341         0.317         1.991
800  General Government:                                                                                                                                
    Budget authority....................         0.933         0.864         2.953         2.333         2.776         2.419         2.480        13.825
    Outlays.............................         0.954         0.829         2.927         2.330         2.977         2.376         2.429        13.868
900  Net Interest:                                                                                                                                      
    Budget authority....................       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
    Outlays.............................       239.734       242.098       244.047       242.917       239.025       237.319       235.579     1,440.985
920  Allowances:                                                                                                                                        
    Budget authority....................         0.000        -0.041        -0.031        -0.028        -0.028        -0.028        -0.027        -0.183
    Outlays.............................         0.000        -0.013        -0.032        -0.034        -0.031        -0.029        -0.028        -0.167
950  Offsetting Receipts:                                                                                                                               
    Budget authority....................       -41.484       -52.197       -42.599       -42.304       -42.729       -47.012       -50.013      -278.854
    Outlays.............................       -41.484       -52.197       -42.599       -42.304       -44.729       -47.012       -50.013      -278.854
--------------------------------------------------------------------------------------------------------------------------------------------------------



                             Function 050:



                            National Defense

                              ----------                              


                                         FUNCTION 050: NATIONAL DEFENSE                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $264,111   $267,183   $268,958   $271,677   $274,377   $277,121    280,101
Outlays............................    263,595    264,846    263,618    267,049    270,841    270,025    270,122
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    As established in the preamble to the Constitution, 
providing for the common defense of the Nation is an absolute 
requirement of the Federal Government. The budget resolution 
recognizes this priority. Planning for the Nation's defense 
requires a long-term perspective on the unpredictability of 
threats and the potentially revolutionary nature of modern 
technology applied to military systems. The next generation of 
Americans will enjoy the fruits of their work only if the 
United States remains secure from foreign threats.
    The current administration has enjoyed an almost 
unprecedented breathing space to fashion a defense strategy 
because President Reagan had already won the cold war. Lacking 
a clear vision of future national security needs, the 
administration in 1993 produced its Bottom-Up Review, which was 
supposed to clarify defense needs. The review failed on several 
counts: it offered an overly static analysis of national 
security threats; it failed to account for rapidly changing 
technology and operational concepts (including the rapid 
employment of commercial technology by potential foes); and it 
chronically underfunded the very force structure it 
established.
    Failing to recognize the need for a balance among 
diplomatic, economic, and military statecraft, the President 
has thrown American forces into several foreign conflicts of no 
vital national interest. In Somalia, the President turned a 
humanitarian operation into a nation-building exercise, with 
disastrous consequences. In Haiti, he has retained a 
substantial commitment of United States troops, despite the 
administration's ostentatious transfer of responsibilities on 
the island to the United Nations. In Bosnia, the administration 
at first supported the maintenance of an arms embargo as the 
best means of avoiding intervention by United States troops; 
then the Dayton Peace Accord made intervention by 25,000 United 
States troops a fait accompli. The safety of these United 
States service personnel is threatened by activities of 
Iranian-backed mercenaries, whose presence in Bosnia had been 
obscured by the administration during the period when it 
rhetorically backed the arms embargo. American servicemen and 
women in Bosnia are also in danger of becoming enmeshed in 
nation-building under the euphemism of ``implementing the 
civilian side of the Dayton Peace Accord.''
    Into this context falls the President's budget for fiscal 
year 1997, which once again fails to provide adequately for the 
national security needs of the Nation. The administration's 
budget submission reduces proposed spending for national 
defense by 4 percent from current spending levels. Only through 
the active intervention of the Congress in 1995 was the decade-
long decline in defense spending checked.
    Although the cold war is over, the United States remains a 
superpower with global security interests. Protecting and 
promoting these interests requires the commitment to pay for 
the forces necessary to execute the national strategy. Under 
the circumstances, the administration's defense budget path, 
which mandates near-term cuts and delays increases until the 
next century, lacks credibility.
    While the congressional budget resolution keeps defense 
roughly equal with inflation, the President's total national 
defense request of $254.3 billion in budget authority and 
$260.9 billion in outlays [as estimated by CBO] is $12.9 
billion in budget authority and $4.0 billion in outlays below 
the budget resolution. The President has requested four 
consecutive defense budgets that exacerbate the inconsistencies 
among resources, forces, and strategy endemic to the Bottom-Up 
Review. He has used cuts in defense spending as a major means 
of paying for increases in domestic discretionary spending. 
Cuts in Department of Defense civilian employees account for 
almost 75 percent of all reductions in the Federal work force 
over the past 3 years.
    In working to ensure that adequate resources are made 
available for the Nation's security, Congress will continue to 
address the areas of concern indicated below. Although these 
policy priorities reflect the recommendations of the Committee 
on the Budget, the actual policy changes for programs in this 
function fall under the authority of the authorizing and 
appropriating committees with jurisdiction over the programs. 
The committees of jurisdiction retain the authority to pursue 
alternative specific policies from those reflected in this 
report as long as they stay within the spending guidelines that 
flow from the budget resolution's spending limitations.

                             modernization

    The President's fiscal year 1997 request continues the 
administration's practice of promising defense modernization 
``next year.'' The administration's defense budget cuts weapons 
procurement from the current level of $44 billion to $38.9 
billion in budget authority, disregarding the recommendation of 
the Joint Chiefs of Staff that procurement be significantly 
increased.
    The President's proposed budget contains funding cuts of 25 
percent or more in Navy shipbuilding, Army and Air Force 
aircraft, and ammunition. According to the General Accounting 
Office [GAO], this year's Future Years Defense Plan [FYDP] 
reflects a $25.9-billion cut in procurement through 2001 when 
compared with last year's FYDP. This fall-off in modernization 
results from the administration's failure to reduce 
infrastructure (spending that is not directly related to 
warfighting capability) as a proportion of DOD spending.
    The Bottom-Up Review estimated infrastructure at 59 percent 
of the defense budget. At the time, it was expected that 
billions of dollars for modernization would come from reducing 
infrastructure overhead. But GAO has found no decrease in the 
proportion of the President's budget attributable to 
infrastructure over the period of the FYDP. As a consequence, 
funds that should have gone toward modernization of weapon 
systems have been devoured by overhead. The budget resolution 
assumes the committees of jurisdiction will reverse the 
downward trend in weapons procurement and pursue a vigorous 
program of modernization.

                       ballistic missile defense

    Ballistic-missile and weapon-of-mass-destruction 
technologies are proliferating into the hands of rogue nations 
and transnational groups despite the best efforts of the United 
States and other responsible nations. Protecting American 
citizens from the growing threat of a ballistic missile attack 
is a national security priority of the highest order--a 
priority that must be addressed before, not after, the threat 
becomes a reality.
    This problem has been highlighted by China's recent missile 
tests near Taiwan; neither of the United States carrier task 
forces sent to monitor the situation is capable of shooting 
down ballistic missiles, although the technology currently 
exists. Although the administration claims to support such 
defensive capabilities for U.S. allies, it fails to see the 
need to provide ballistic missile protection for Americans.
    This budget resolution assumes a robust effort to provide a 
cost-effective defense for the American people.

                            quality of life

    As noted by Representative Skelton in testimony to the 
Budget Committee, Congress and the administration must work 
together to ensure a decent and fair standard of living for 
military personnel and their families. In this context, 
military family housing must assume a high priority. Housing 
that is greatly inferior to what is available in the private 
sector lowers morale and diminishes retention of qualified 
individuals.
    Current high military deployment rates and consequent unit 
operational tempo are straining personnel. High-priority 
elements such as AWACS units, the Marines, and the 10th 
Mountain Division experience almost continuous deployment 
abroad and consequent separation from families. This situation 
incurs a contingency cost that cannot be measured in dollars. 
In the long run, the administration's excessive reliance on the 
military to solve its foreign policy dilemmas will destroy unit 
readiness and the retention of skilled personnel.

                defense reorganization and streamlining

    The best way to provide for the Nation's security needs 
while balancing the Federal budget is to generate significant 
savings internal to the Department of Defense. These savings 
can be shifted from overhead functions, or the administrative 
``tail,'' to actual defense programs, or the warfighting 
``tooth.''
    The 104th Congress has taken the initial steps to compel 
the Pentagon to change its antiquated bureaucracies and 
business practices. It has done so by legislating: reductions 
in the staff of the Office of the Secretary of Defense; a 25-
percent reduction in personnel assigned to acquisition 
organizations so as to reflect streamlined processes; and 
outsourcing of a range of non-warfighting support functions.
    As was emphasized in the discussion on modernization, it is 
critical for the Department to rigorously streamline its 
operations. Averting the gradual cannibalization of warfighting 
capability requires boldly reducing nonessential overhead.
    It is assumed that streamlining and consolidation will 
continue in fiscal year 1997, leading to fundamental reform in 
areas such as the U.S. Transportation Command, where 
duplication and bureaucracy seriously inhibit efficiency and 
drive up defense transportation costs.

                           acquisition reform

    The 104th Congress has passed legislation to change the way 
the Department of Defense procures goods and services. The 
reforms will eliminate unnecessary specifications and make the 
efficiencies of the commercial marketplace more widely 
available to defense customers. These reforms will conserve 
defense resources and, more important, reduce the cycle time 
necessary to acquire the weapons of the 21st century.
    But more needs to be done. The effectiveness of these 
reforms will depend on how aggressively the Pentagon implements 
them. The committees of jurisdiction must exert continual 
pressure upon the Department to drastically shorten the weapons 
development and procurement cycle.
    Although numerous technological reasons make it unlikely 
that programs such as the P-51 (concept to first flight in 91 
days) are repeatable in the current context, it is nevertheless 
astonishing that the research and development cycle of today's 
major weapon systems typically requires up to 20 years. The 
Pentagon must shorten the acquisition cycle so as to be able to 
acquire new field weapons in time to counter projected threats.

                      Other Defense Budget Issues

                   reductions in nondefense spending

    Significant progress was made last year in reducing 
nondefense spending in the defense budget.
    Congress was able to curtail spending on the expensive and 
increasingly politicized Technology Reinvestment Project 
[TRP]--a civilian/military technology development program, run 
out of the White House--which consumed defense dollars but 
returned little of value to the Department of Defense.
    The budget resolution recommends no further funding of TRP, 
Sematech, and the Strategic Environmental Research and 
Development Program. These are examples of programs with 
marginal defense utility. It is assumed that the committees of 
jurisdiction will continue with aggressive efforts to eliminate 
nondefense items from the defense budget. In particular, the 
resolution urges the rejection of the administration's proposed 
$250 million Dual Use Applications Program, a successor to TRP.
    A further concern is the lack of rigorous management of the 
services' manufacturing technology [Mantech] programs. Such 
management should focus on near-term cost reduction in 
manufacturing. GAO will report to the Budget Committee on 
Mantech program performance.
    Heavy environmental cleanup costs pose a significant threat 
of ``cannibalizing'' the budget and crowding out necessary 
investments. This situation is particularly true for the 
Department of Energy's cleanup of the Nuclear Weapons Complex. 
Both the Department of Defense and the Department of Energy 
must develop better information on cleanup costs, prioritize 
cleanups more rationally, and introduce more cost-effective 
methods, including new technology.
    Finally, the Department should enter into agreements with 
the private sector to provide the capital needed to upgrade 
energy producing and consuming facilities at no cost to the 
government. H.R. 2993, introduced by Representative Hobson, 
would help facilitate this initiative.

                         contingency operations

    Congress has had some success in establishing temporary 
finance mechanisms to alleviate the pressures on readiness by 
unbudgeted or contingency operations such as the deployment of 
United States forces to Bosnia. These initiatives were designed 
to halt the damaging practice of raiding operational readiness 
and training accounts to finance humanitarian and peacekeeping 
operations in Bosnia, Haiti, Somalia, Iraq, and elsewhere.
    The Pentagon already has projected the fiscal year 1996 
unbudgeted costs associated with the Bosnia deployment at $2 
billion, and this amount is expected to grow. The committees of 
jurisdiction must continue to ensure that critical military 
readiness does not suffer from contingency operations 
peripheral to U.S. national interests.

                               inflation

    The administration purports to save more than $45 billion 
in the defense budget through 2002 by a downward reestimation 
of inflation. Because the Department of Defense is allowed to 
retain $30 billion of this purported ``disinflation dividend,'' 
the administration argues that the military is able to buy more 
with the dollars it has.
    The administration's reasoning is weak on several counts. 
First, the reestimate assumes a level of inflation lower than 
any seen since the 1950's. Second, there is no comparable 
disinflation dividend in any domestic spending account, so the 
administration's action is inconsistent at best.
    Finally, inflation reestimates should not be a pretext for 
breaching the firewall between defense and nondefense spending 
assumed in the Budget Resolution Conference Report for Fiscal 
Year 1996. (A firewall ``breach'' would be the practical result 
of funds ``disappearing'' from defense as a result of an 
inflation reestimate and being reallocated to the 
administration's domestic spending preferences.)

                 Additional Changes From Current Policy

    The budget resolution also assumes savings in this function 
from sales from the National Defense Stockpile. These 
assumptions are described in detail in Appendix 1.


                             Function 150:



                         International Affairs

                              ----------                              


                                       FUNCTION 150: INTERNATIONAL AFFAIRS                                      
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $15,011   $13,732   $11,551   $10,576   $11,089   $10,890   $11,009
Outlays...................................    15,896    14,963    13,484    12,467    11,025    10,584    10,281
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Like national defense, the foreign policy of the Nation is 
reserved to the Federal Government. But achieving a sound 
foreign policy requires different means from those of the 
current administration, which believes that money is the main 
ingredient. This budget resolution promotes economic 
development in less-developed countries through a variety of 
alternative strategies that are consistent with Americans' 
values--strengthening free-market domestic economies, removing 
obstacles to private international trade, and fostering an 
economic climate that is favorable to private international 
investment. The budget also seeks an appropriate balance among 
diplomatic, economic, and military statecraft. This balanced 
approach envisions limiting military involvement abroad to 
those situations that affect vital national interests--a 
departure from the administration's practice of using American 
military forces to rectify its diplomatic failures. Like last 
year's budget, this resolution prudently reduces spending 
without touching Camp David-related assistance.
    Still, this budget recognizes the impossibility of ignoring 
the growing ineffectiveness of the Department of State and the 
Agency for International Development [AID]. Likewise, it views 
the United States Information Agency [USIA] and the Arms 
Control and Disarmament Agency [ACDA] as cold war relics. Once 
again, it assumes that much of the existing foreign policy 
apparatus is duplicative and should be consolidated within the 
Department of State. But the budget also recognizes the 
importance of humanitarian assistance. The American people have 
consistently demonstrated their compassion for those in 
distress abroad. This budget resolution maintains those values.
    The discussion below reflects the assumptions underlying 
the House Budget Committee's recommendations concerning the 
funding priorities for programs in this function. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

             continue to restructure development assistance

    Historically, development assistance has taken the form of 
grants or loans or technical advice provided directly to the 
government of the recipient country. This has strengthened the 
role of the government in the local economy and reduced 
pressure on the government to maintain an environment favorable 
to economic development. This model was chosen because, it was 
argued, developing countries lacked access to private capital. 
But this argument ignores a basic economic fact: capital 
becomes readily available when a country pursues the conditions 
that foster economic development--respect for private property 
and free enterprise; in the absence of these conditions, 
capital that is made available is likely to be wasted.
    Last year, the Congress took the first step to reform and 
refocus development assistance, which is largely administered 
by the Agency for International Development [AID]. Former 
Secretary of State James A. Baker noted that the two rationales 
for the existence of AID--to stave off communist aggression and 
to implement government-to-government transfers for large 
capital projects--no longer exists. The first became obsolete 
with the end of the cold war and the second has been 
discredited as a development model.
    This proposal continues to refocus assistance on more 
attainable goals and in countries that are more likely to 
benefit from U.S. development assistance. In addition, the 
proposal would eliminate the housing investment guarantee 
program. It assumes that the purposes of AID or any successor 
organization should be identical with the purposes of overall 
American foreign policy; for this reason, the Budget Committee 
again recommends that AID should be incorporated into the 
Department of State.
    The proposal also provides funds to both Eastern Europe and 
the former Soviet Union to assist their transition to 
democratic societies. Assistance to Eastern Europe has always 
been viewed as temporary in nature. This proposal recognizes 
this fact and phases out funding. It is important, however, to 
provide a degree of equity between the democracies of Eastern 
Europe and those of the former Soviet Union. Therefore, this 
proposal assumes that assistance to the former Soviet Union 
will be phased out. While funding is provided, the budget 
resolution assumes that the Ukraine and Armenia will receive an 
equitable distribution to promote free enterprise and 
democracy.

                     reform the department of state

    The Department of State promotes U.S. foreign policy 
interests abroad. Other, smaller agencies also conduct research 
and activities relating to foreign affairs. The Department of 
State's budget grew from $1.7 billion in the early 1980's to 
$2.6 billion in 1995. The increases in funding mainly reflect 
growth in salaries and related expenses, and rent and 
acquisition costs of residences and offices.
    Even the administration appears to believe that major 
changes in the Department are needed. In the President's long-
range budget submission, for example, salaries and expenses 
would be reduced to $270 million by fiscal year 2000; 
diplomatic and consular programs would be reduced to $1.3 
billion in the same year. For fiscal year 1996, the comparable 
figures are $365 million and $1.719 billion respectively. The 
budget resolution assumes the President's funding levels 
beginning in 1998.0
    This proposal recommends a complete restructuring of 
foreign policy. It assumes that the Department of State will 
absorb the Arms Control and Disarmament Agency [ACDA], the 
United States Information Agency, and the Agency for 
International Development. It also assumes the elimination of 
small agencies--such as the East-West Center and the North-
South Center, which duplicate functions in the Department of 
State--leading to a more coherent foreign policy. This is also 
true for the United States Institute for Peace. Testifying 
before the Budget Committee on March 22, 1996, Representative 
Danner noted that the Congress:

        * * * said quite explicitly that the institute, 
        following initial Federal funding, should establish a 
        private endowment and operate independently. * * * It 
        is time that the Institute--with its $11 million annual 
        budget--finds private dollars.

Finally, this proposal assumes the President's recommended 
reductions for the National Endowment for Democracy through 
fiscal year 2000.

                                 FUNCTION 150: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Continue to restructure development                                                                             
 assistance:                                                                                                    
    Budget authority......................     5,613      -422    -1,054    -1,519    -1,744    -1,869    -1,941
    Outlays...............................     6,417       -83      -383      -807    -1,125    -1,404    -1,627
Reform the Department of State:                                                                                 
    Budget authority......................     3,816      -111      -535      -717      -934      -934      -934
    Outlays...............................     3,937       -97      -500      -669      -864      -902      -915
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    Additional savings are assumed in this function from 
provisions including the following: ceasing support for the 
International Development Association [IDA] and other ``soft-
loan'' windows of the various multilateral banks; recognizing 
that the capital replenishments for several multilateral 
institutions will soon be completed; accepting the President's 
long-term proposals for peacekeeping operations, migrations and 
refugee assistance, and the Foreign Military Financing [FMF] 
loan program account; privatizing the United States Information 
Agency [USIA]; and reducing subsidies for international exports 
and investment, including Public Law 480.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 250:



                 General Science, Space, and Technology

                              ----------                              


                              FUNCTION 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $16,787   $16,537   $16,428   $16,313   $16,159   $15,934   $15,602
Outlays...................................    16,570    16,697    16,494    16,224    16,111    15,943    15,673
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    For the technological revolution to continue, a strong 
fundamental science base is needed. Therefore, the proposals in 
Function 250 prioritize basic research policies. For example, 
National Science Foundation research and related activities are 
provided 3 percent annual growth. Budget realities dictate that 
basic research be reemphasized. Much applied research can and 
should be market-driven and conducted by the private sector.
    Nevertheless, in certain areas, such as fundamental 
scientific research and collective risk endeavors, the 
government does play an important role. Space exploration is 
one example, and agencies such as the National Aeronautics and 
Space Administration have been able to make significant strides 
with public funds. Still, even in space, the budget resolution 
advocates policies that encourage faster private technology 
development as risk becomes better understood and more 
controllable. Finding ways to involve industries in space 
activities should be a major priority.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The committees 
of jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the budget resolution's spending 
limitations.

  emphasize basic science within the national science foundation [nsf]

    This proposal assumes that while science and technology 
must contribute to the immediate fiscal reality, the core 
Federal role of developing new knowledge for the future must be 
protected and enhanced. Under this proposal, basic research is 
prioritized. For instance, NSF civilian research grants are 
provided 3 percent annual growth through not more than five 
scientific directorates. No reductions are assumed to NSF basic 
research on the physical sciences. Education and Human 
Resources can be maintained, as can Academic Research 
Infrastructure. The budget resolution assumes that $25 million 
in environmental and safety work is included for the NSF South 
Pole station in Antarctica.

                     emphasize nasa's core missions

    This proposal assumes that space exploration is one example 
where the collective risks are still high, and recognizes the 
gains made with public funds by agencies such as the National 
Aeronautics and Space Administration. Still, even in space it 
advocates policies that encourage faster private technology 
development as risk becomes better understood and more 
controllable. Finding ways to involve industry in space 
activities is a major priority.
    Consequently, this proposal assumes savings by operating 
the space shuttle privately. Savings on the order of $1.8 
billion are also assumed in the Mission to Planet Earth [MTPE] 
Program by prioritizing the scientific data needed, 
incorporating commercial technology, and, most important, 
acquiring data directly from the private sector. The budget 
resolution notes that these program reforms will result in a $6 
billion MTPE effort between fiscal years 1997 and 2002. 
Finally, the proposal furnishes the full allocation of 
resources necessary from the $11 billion required to complete 
the construction and assembly of the international space 
station basic research laboratory. The NASA basic research 
disciplines, space science and life and microgravity sciences, 
are allocated 20 percent of the NASA budget (with increases 
each year), fulfilling the top recommendation of the Augustine 
Advisory Committee on the Future of the U.S. Space Program. 
[Note: The figures above reflect the portion of this provision 
that occurs in Function 250. A second portion appears in 
Function 400.]

           prioritize general science and research activities

    This account provides funds for high energy physics and 
nuclear physics. This proposal assumes that basic science is 
maintained with the inclusion of the Science User Facilities 
Initiative and appropriate decommissioning of outmoded, 
antiquated facilities. United States participation in the 
international Large Hadron Collider [LHC] experiment at the 
European Laboratory for Particle Physics [CERN] is supported 
and provided for in the outyears.

                                 FUNCTION 250: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Emphasize basic science within the                                                                              
 National Science Foundation (NFS)--                                                                            
 research and related activities:                                                                               
    Budget authority......................     2,251        67        95       165       238       312       389
    Outlays...............................     2,077        20        70       101       168       240       315
Reform other programs within the National                                                                       
 Science Foundation (NSF):                                                                                      
    Budget authority......................       905         4       -50       -76       -81       -81       -81
    Outlays...............................       829        -6        -6       -27       -63       -78       -81
Emphasize NASA's core missions:                                                                                 
    Budget authority......................    12,611      -349      -425      -586      -809    -1,109    -1,519
    Outlays...............................    11,378      -197      -393      -593      -782    -1,031    -1,374
Prioritize general science and research                                                                         
 activities:                                                                                                    
    Budget authority......................       981        27        19        19        19        19        19
    Outlays...............................     1,048        15        23        19        19        19        19
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    An additional policy is assumed that allows private 
producers to build and operate cogeneration facilities at 
Federal civilian installations. Although this provision 
reflects a recommendation and assumption of the Committee on 
the Budget, the actual policy change is the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the program involved. A further description of this 
recommended policy change is contained in Appendix 1.


                             Function 270:



                                 Energy

                              ----------                              


                                              FUNCTION 270: ENERGY                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................    $3,782    $2,380    $2,441    $2,034    $1,697    $1,782    $1,430
Outlays...................................     3,523     2,729     2,078     1,327       815       740       231
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    To determine what is good fundamental science, and to 
prioritize research and development, the budget resolution 
employs the following six criteria:

  - Federal R&D efforts should focus on long-term, 
        noncommercial R&D, with potential for scientific 
        discovery and the creation of new knowledge, leaving 
        economic feasibility and commercialization to the 
        marketplace.

  - Federal funding of R&D on specific processes and 
        technologies should not be carried out beyond 
        demonstration of technical feasibility. Significant 
        additional private investment should be required for 
        economic feasibility, commercial development and 
        demonstration, and production and marketing.

  - Revolutionary ideas and pioneering capabilities that make 
        possible the impossible--that which has never been done 
        before--should be pursued within controlled, 
        performance-based levels of funding.

  - The Federal Government should avoid funding research in 
        areas that are receiving--or should be reasonably 
        expected to obtain--funding from the private sector. 
        This principle applies to evolutionary advances or 
        incremental improvements.

  - Government-owned laboratories should confine their in-house 
        research to areas in which their technical expertise 
        and facilities have no peer and should contract out 
        other research to industry, private research 
        foundations, and universities.

  - All R&D programs should be relevant and tightly focused to 
        the agency's constitutional mission; those that are not 
        should be terminated.

    When specifically applied to the Department of Energy, 
these guidelines suggest significant further reductions in 
programs that, in turn, make much of the existing bureaucracy 
unnecessary and suggest its elimination. Because many of the 
Department of Energy's programs fund industrial product 
development, they cannot satisfy the ``screen'' of the above 
criteria. As a result, energy supply R&D, which was reduced by 
more than $500 million in fiscal year 1996, can be further 
reduced by $187 million in fiscal year 1997 on the way to a 
$2.0 billion funding level in fiscal year 2002. On the other 
hand, examples of research that ``pass'' the six-point test 
include the human genome project; an expanding hydrogen energy 
basic research program; and basic energy sciences research. 
Likewise, application of the criteria to fossil technologies, 
the product of mature industries, and conservation projects, 
which predominantly demonstrate cost-avoidance, suggest 
termination. The clean coal technology program is also 
recommended for termination and rescission.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The discussion 
below reflects the assumptions underlying the House Budget 
Committee's recommendations concerning the funding priorities 
for programs in this function.

      continue the process of terminating the department of energy

    The budget resolution reflects the conviction that the 
Nation's energy problems will be solved by the people and 
industries of this country in response to realistic Federal 
policies, not by government spending. In the past the Federal 
Government has postponed hard decisions on energy policy and 
created numerous programs that have added to the burden of the 
budget and have provided the illusion of progress without the 
reality.
    The Department of Energy was supposedly created to deal 
with the energy ``crisis'' that the country experienced in the 
1970's. The ``crisis'' began with natural gas shortages in the 
winter of 1971. There was a heating oil shortage the following 
winter. There were gasoline and diesel fuel shortages in early 
1974 and again in 1979. Many policymakers envisioned the 
prospect of inevitable energy shortages and ever increasing 
prices. In February 1981, the Congressional Budget Office even 
stated that ``the price of oil will almost certainly rise in 
real terms over the next decade * * *.''
    Not everyone shared this opinion. In a 1978 article titled 
``The Energy Crisis,'' Milton Friedman stated:

          There is no argument on economic grounds for having a 
        Department of Energy * * * [T]he energy industry is 
        effectively competitive, or would be if the government 
        got its cotton-picking hands out of it.

Furthermore, the article argues that we have ``this enormously 
expensive boondoggle [called] the Department of Energy * * * 
[because it is] politically profitable.''
    Indeed, the ``crisis'' was the direct product of federally 
imposed controls and regulations. Federal oil and price 
allocation controls made it illegal--literally a Federal 
offense--to move gasoline around the country when supplies grew 
tight. In other words, the Department of Energy--a government 
solution--was created to ``fix'' a government-generated 
problem. Gasoline lines ended after the controls were 
dismantled in 1981.
    Likewise, natural gas was in short supply because price 
controls encouraged consumption and discouraged production from 
1954 through the 1980's. Those shortages also disappeared as 
price controls were phased out.
    Meanwhile the Department of Energy spent more than $55 
billion in constant dollars for energy research alone. That is 
over and above the amounts the Synfuels Corporation spent on 
fuels that cost several times what conventional fuels cost. 
(The Synthetic Fuels Corporation was established to fund the 
production of commercial-scale plants for synthetic fuel 
production processes.)
    Last year's budget resolution questioned whether the Nation 
had received a full and fair return on its ``investment'' in 
the DOE. On December 15, 1994, the Wall Street Journal ran an 
article that asked a better question: ``So, What Do People At 
the Energy Department Do All Day Long?'' The response: 
``Meetings Are Many and Mail Is Answered: Real Work Is Quickly 
Disappearing.'' Since then, the Congress has learned about the 
Secretary's international escapades and her hiring of a private 
firm to monitor reporters, thereby producing a list of 
``friends'' and ``enemies.'' The House Committee on Commerce, 
in its Views and Estimates for the fiscal year 1997 budget, 
even cites the Department's ``extravagant travel, program 
waste, and lack of clear priorities.''
    Following the 1994 election, the President promised to 
``agressively realign'' the Department of Energy. He used 
phrases such as ``restructure,'' ``significantly reduce 
costs,'' and ``improve effectiveness and efficiencies.'' These 
steps are not sufficient.
    The budget resolution again recommends that the Department 
should be abolished; some of its functions should be 
eliminated, some should be privatized, and some should be 
transferred to other agencies. The resolution encourages the 
relevant authorizing committees to consider the Department of 
Energy Abolishment Act, introduced by Representative Tiahrt. 
Under this legislation, the terminations, transfers, and 
consolidations would be completed over a 3-year period 
commencing from the date of enactment under the direction of a 
temporary Energy Programs Resolution Agency.
    Even after the Department is terminated, several existing 
programs would remain a Federal responsibility. For example, 
managing the Nation's nuclear weapons complex and dismantling 
existing weapons to meet international obligations would remain 
a Federal responsibility. In addition, the Department's 
Environmental Management program, which has oversight of 
environmental restoration activities at the nuclear facilities, 
would still be a Federal responsibility.
    In the process of terminating the Department of Energy, the 
budget resolution assumes and recommends the provisions below. 
The actual policy changes for programs in this function fall 
under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The committees 
of jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the spending limits of the budget 
resolution.

    Corporatize the Department of Energy's [DOE] Laboratories. 
The General Accounting Office recently reported to the Budget 
Committee that 17 Federal departments and independent agencies 
have identified 515 Federal R&D laboratories that spent a total 
of $26.6 billion of an estimated $69.4 billion that Federal 
agencies obligated for R&D in fiscal year 1995. In 1995, the 
operating budgets:

        * * * of (1) 361 laboratories were less than $10 
        million, (2) 101 laboratories were at least $10 million 
        but less than $100 million, and (3) 53 laboratories 
        were at least $100 million. In addition, 65 Federal R&D 
        laboratories have a total of 221 satellite facilities.

    Consistent with the governance recommendations of the 1995 
DOE Task Force on Alternative Futures for the Department of 
Energy National Laboratories, chaired by Robert Galvin, the 
budget resolution assumes that the Congress:

        * * * should develop and implement a new modus operandi 
        of Federal support for the national laboratories, based 
        on a private sector style ``corporatized'' laboratory 
        system.

The existing DOE system of operation only purports to be 
contractor operated; due to DOE and congressional 
micromanagement, it is, in fact, grossly counterproductive. A 
new corporate-style system would:

        * * * invite enhanced pressure for competitive 
        performance, which would lower costs, force the 
        elimination of redundancies and less than world-class 
        capabilities, and achieve enhanced value for the public 
        investments involved.

    The budget resolution assumes that the Galvin Task Force 
recommendations for a new not-for-profit R&D corporation(s), 
formed with many of the basic principles and criteria of a 
conventional commercial operation, warrants immediate 
attention. Although the DOE weapons-oriented laboratories could 
be omitted from the corporation, many, if not all of the other 
DOE national labs, are candidates to be included in this 
corporation.

    Reduce Energy Supply Research and Development. This 
proposal reduces near-term industrial subsidies for solar and 
renewable energy (resulting in a $191 million funding level by 
eliminating solar building appliances, wind energy systems, 
production incentives, deployment, and in-house energy 
management), global warming planning and technology, 
environmental restoration and waste management, and 
bureaucratic environmental and safety compliance costs. 
Specifically terminated are: laboratory technology transfer, 
energy research analyses, DOE's education program, and the 
information management investment plan. The budget resolution 
assumes that the light water reactor design certification and 
first-of-a-kind engineering research program is funded in 
fiscal year 1997 for purposes of completion and that the fusion 
program can be sustained at a $200 million annual level. Basic 
research, however, is increased over the President's request in 
materials, chemical, and math sciences, and for hydrogen energy 
research ($20 million).

    Eliminate Unnecessary Bureaucracy in the Department of 
Energy. The Department of Energy should continue evaluating its 
general management activities to prepare itself for 
termination. This proposal again calls for reductions in the 
Department's administration. A second component of this 
proposal calls for reducing by 50 percent relative to its 
fiscal year 1995 level, funding for the Energy Information 
Administration [EIA]. The EIA provides information for use by 
the administration, the Congress, and the general public. Much 
of what the EIA does should be the responsibility of the 
private sector. A third component of this proposal would 
terminate Emergency Preparedness, as proposed last year in 
Report 104-173 by the House Committee on Appropriations.

    Phase Out the Department of Energy's Fossil Energy Research 
and Development. The Department of Energy has spent billions of 
dollars on research and development since the oil crises in 
1973 triggered this activity. Returns on this investment have 
not been cost-effective, particularly for applied R&D, which 
industry has ample incentive to undertake. Some of this 
activity is simply corporate welfare for the oil, gas, and 
utility industries. Much of it duplicates what industry is 
already doing. As the Congressional Budget Office [CBO] notes, 
some has gone to fund technologies in which the market has no 
interest--for example, hundreds of millions of dollars invested 
in coal-powered magnetohydrodynamics--without any subsequent 
interest in the product the investment produced. The House 
Committee on Appropriations' Report 104-173 accompanying the 
fiscal year 1996 Interior funding bill, states its firm 
commitment:

        * * * the fossil energy research and development 
        appropriation in total is consistent with the 
        recommendations of the authorizing committee of 
        jurisdiction, as adopted by the House.

On October 12, 1995, the House passed H.R. 2405, authorizing 
$221 million for fossil energy R&D in fiscal year 1997. This 
proposal, however, does not assume additional reductions for 
mining research and development, which was formerly funded by 
the Bureau of Mines. The administration has proposed 
transferring this program to the National Institute for 
Occupational Safety and Health in fiscal year 1997.

    Phase Out Energy Conservation Research. Energy conservation 
in the United States has been a clear success. In the 1980's, 
for example, the economy grew a third while energy use remained 
flat due to market-driven energy conservation. Government 
spending on energy conservation, on the other hand, has been 
less successful. Business has incentives to market, and 
customers to buy, conservation technologies that work well. DOE 
is left to fund less reliable and less promising technologies. 
According to the Congressional Budget Office, DOE may be:

        * * * crowding out private-sector firms or, 
        alternatively, conducting R&D that those private 
        sectors are likely to ignore--a common fate of the 
        technologies generated within DOE's national 
        laboratories.

    The Committee on Appropriations in its report 104-173 
accompanying the fiscal year 1996 Interior funding bill, states 
its firm commitment that for each year:

        * * * the research portion of the energy conservation 
        appropriation in total is consistent with the 
        recommendations of the authorizing committee of 
        jurisdiction as passed by the House.

On October 12, 1995, the House passed H.R. 2405, authorizing 
$230 million for energy conservation R&D in fiscal year 1997. 
No funding is provided for any new energy efficiency standards.
    The budget resolution continues to support funding of the 
combined State Energy Conservation Program/Institutional 
Conservation Program at 10 percent below the fiscal year 1995.

    Reduce Uranium Supply and Enrichment Activities, Uranium 
Enrichment Decontamination and Decommissioning, and Economic 
Regulation. The Uranium Supply and Enrichment Program has 
several objectives. For example, it is intended to increase 
confidence that the low-enriched uranium being purchased from 
Russia has been derived from highly enriched uranium removed 
from dismantled nuclear weapons. It is also intended to 
transfer ``enrichment-related technologies and form technology 
partnerships to bolster U.S. industrial competitiveness.'' The 
President has recommended reductions in this program. This 
proposal accepts the President's funding level, while 
recommending that the second objective be closely examined. The 
proposal also assumes the President's recommended reductions in 
the Uranium Enrichment Decontamination and Decommissioning 
Fund, which provides for R&D, remedial action, and other costs 
associated with environmental cleanup activities at sites 
leased and operated by the United States Enrichment 
Corporation. Finally, the resolution assumes the President's 
recommended reductions for economic regulation.

    Eliminate Further Funding for the Department of Energy's 
Subsidized Energy Research. The Clean Coal Technology Program 
[CCTP] has been overtaken by changes in the law and incentives 
in the marketplace. The program was created in the mid-1980's 
to help private industry develop commercial technologies to 
burn coal in environmentally sound ways. Since that time, 
enactment of the Clean Air Act Amendments of 1990 and the 
Energy Policy Act of 1992 have given utilities and large 
industrial coal users clear economic motives for selecting the 
lowest cost options for reducing emissions from among current 
practices and new technologies. Both the President and the 
Budget Committee have previously called for the termination of 
this program. The President's budget calls for a rescission 
from the program in fiscal year 1997; it also would prevent the 
Department from obligating other funds until fiscal year 1998. 
The budget resolution accepts the President's proposal for 
fiscal year 1997, but recommends that no funds be spent in 
fiscal year 1998.

    Privatize the Naval Petroleum and Oil Shale Reserves. The 
Department of Energy runs a commercial oil field (Elk Hills, 
near Bakersfield, CA) and a natural gas field (Naval Oil Shale 
Reserve No. 3 near Rifle, CO). As earlier budgets from the 
President indicated: ``[P]roducing oil and gas is a commercial, 
not a governmental activity, which is more appropriately 
performed by the private sector.''
    Furthermore, according to the Committee on Commerce, 
``[t]he Naval Petroleum Reserves are commercial oil fields that 
serve no national security interest.'' The Congress enacted 
legislation pursuant to the President's previous budget calling 
for the sale of Elk Hills. The President's fiscal year 1997 
budget proposes a gimmick to delay the sale until 2002. The 
budget resolution rejects this accounting gimmick and 
recommends that the sale occur as soon as possible. The budget 
resolution also assumes that the remaining petroleum and oil 
shale reserves should be sold or leased.

    Restructure the Strategic Petroleum Reserve. The Strategic 
Petroleum Reserve provides a crude oil stockpile to be used in 
the event a petroleum disruption occurs. Last year, the 
Balanced Budget Act [BBA] highlighted the fact that the Weeks 
Island reserve had experienced structural problems and needed 
to be decommissioned. The decommissioning of the Weeks Island 
reserve should reduce program maintenance and administration. 
The President's budget recommends reductions for this program; 
the budget resolution assumes the long-term funding levels 
proposed by the President.
    A debate concerning the long-term benefits of the Strategic 
Petroleum Reserve also should be undertaken. The Congressional 
Budget Office [CBO] completed a study in December 1994 titled 
``Rethinking Emergency Energy Policy,'' which said in part:

          Emergency policies to reduce or avoid economic losses 
        from severe disruptions of world oil supplies may no 
        longer be as effective as the Congress originally 
        envisioned. Since the Arab oil embargo of 1973, the 
        United States has based most of its emergency energy 
        policy on the Strategic Petroleum Reserve [SPR], a 
        government-owned stockpile of crude oil. * * * Many 
        analysts feel that the economic threat posed by severe 
        disruptions of oil supplies has decreased and that as a 
        result, the benefits from releasing SPR oil in a crisis 
        are smaller today than in the past. Moreover, the 
        experience of the Persian Gulf crisis in 1990 and 1991 
        demonstrated disturbing problems with current policy 
        guiding the use of the SPR in a crisis. Indeed, during 
        the Gulf crisis, both the process of deciding to use 
        the SPR and the mechanism for selling the oil may have 
        actually contributed to market uncertainty at the time.

    Sell the Alaska Power Administration [APA]. As provided for 
in the Balanced Budget Act [BBA], this budget resolution again 
calls for the sale of APA. The administration's National 
Performance Review stated that ``[t]he Federal Government 
should divest its interest in the Alaska Power 
Administration.'' There is no need for Federal involvement in 
this issue because it deals solely with assets situated in one 
State. This proposal sells the APA in accordance with the terms 
of the purchase agreements negotiated in 1989 between the 
Department of Energy and the proposed purchasers. [Note: 
Proceeds from the asset sale appear in Function 950.]
    The President's budget also recommends improved 
efficiencies concerning the operation and maintenance of the 
Western Area Power Administration, the Southeastern Power 
Administration, and the Southwestern Power Administration; the 
budget resolution assumes his recommendations.

                                 FUNCTION 270: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Corporatize the Department of Energy's                                                                          
 [DOE] laboratories: \1\                                                                                        
    Budget authority......................        NA         0         0         0         0         0         0
    Outlays...............................        NA         0         0         0         0         0         0
Reduce Energy Supply Research and                                                                               
 Development: \1\                                                                                               
    Budget authority......................     2,727      -187      -327      -427      -527      -627      -727
    Outlays...............................     3,077       -84      -213      -344      -452      -552      -652
Eliminate bureaucracy in the Department of                                                                      
 Energy: \1\                                                                                                    
    Budget authority......................       316       -53       -53       -53       -53       -53       -53
    Outlays...............................       326       -35       -50       -53       -53       -53       -53
Phase out the Department of Energy's                                                                            
 Fossil Energy Research and Development:                                                                        
 \1\                                                                                                            
    Budget authority......................       416      -195      -316      -366      -416      -416      -416
    Outlays...............................       436       -78      -204      -311      -375      -405      -416
Phase out Energy Conservation Research:                                                                         
 \1\                                                                                                            
    Budget authority......................       418      -188      -318      -368      -418      -418      -418
    Outlays...............................       454       -47      -183      -295      -364      -406      -416
Reduce uranium supply and enrichment                                                                            
 activities, uranium enrichment                                                                                 
 decontamination and decommissioning, and                                                                       
 economic regulation: \1\                                                                                       
    Budget authority......................       317       -46       -67       -91      -113       -84       -52
    Outlays...............................       340       -35       -61       -84      -107       -91       -60
Eliminate further funding for the                                                                               
 Department of Energy's subsidized energy                                                                       
 research: \1\                                                                                                  
    Budget authority......................       150      -500      -138      -138      -138      -138      -138
    Outlays...............................       270         0       -50      -101      -115      -129      -157
Privatize the Naval Petroleum and Oil                                                                           
 Shale Reserves: \1\                                                                                            
    Budget authority......................       140         0      -124      -124      -124      -124      -124
    Outlays...............................       175         0       -68      -105      -124      -124      -124
Restructure the Strategic Petroleum                                                                             
 Reserve: \1\                                                                                                   
    Budget authority......................       287       -66       -84      -102      -120      -120      -120
    Outlays...............................       229       -36       -69       -92      -110      -118      -120
Sell the Alaska Power Administration                                                                            
 [APA]: \1\                                                                                                     
    Budget authority......................       316       -42       -68       -89      -113      -113      -113
    Outlays...............................       323       -23       -44       -69       -91      -105     -110 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to continue the process of terminating the Department of Energy.                       


                                   FUNCTION 270: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                               1996  -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Sell the Alaska Power Administration                                                                            
 (offsetting receipts): \1\                                                                                     
    Budget authority......................   \2\ -10         0         7         7         7         7         7
    Outlays...............................   \2\ -10         0         7         7         7         7         7
Privatize the Naval Petroleum and Oil                                                                           
 Shale Reserves: \1\                                                                                            
    Budget authority......................  \2\ -435         0       350       336       323       310       298
    Outlays...............................  \2\ -435         0       350       336       323       310       298
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to continue the process of terminating the Department of Energy.                       
\2\ Negative number denotes cash in-flow to the Federal Government.                                             

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from various 
additional provisions, including accepting the President's 
recommendations for the electric and telecommunications 
portions of the Rural Utilities Service; extending Nuclear 
Regulatory Commission fees; and leasing excess capacity in the 
Strategic Petroleum Reserve. Although these provisions reflect 
the recommendations and assumptions of the Committee on the 
Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
specific recommended policy changes are contained in Appendix 
1.


                             Function 300:



                   Natural Resources and Environment

                              ----------                              


                                 FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $21,391   $20,529   $18,902   $19,713   $18,399   $18,994   $18,860
Outlays...................................    21,827    21,322    19,654    20,409    18,950    19,205    18,910
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The budget resolution assumes that Federal environmental 
policy must be guided by a set of seven fundamental principles:

  - First, Do No Harm. There are many government programs that 
        encourage or directly cause environmental harm. The 
        government should make sure its own house is in order. 
        It makes no sense for the Federal Government to 
        subsidize environmental destruction on the one hand 
        while establishing laws, regulations, and bureaucracy 
        to mitigate damage on the other hand.

  - Economic Growth Is a Vital Prerequisite for Environmental 
        Progress. It takes a healthy, growing economy to afford 
        the technological mandates of environmental law. 
        Furthermore, advances in technology, which benefit the 
        overall economy, will also benefit the environment. 
        Even advances in nonenvironmental technologies and 
        industries should indirectly result in more efficient 
        resource consumption and less pollution.

  - Federal Efforts Should Focus on Results, Not Regulations. 
        Federal environmental regulations should be less 
        prescriptive, more market-oriented, and based on the 
        ``polluter-pays'' principle. Federal environmental law 
        now tells people how products should be manufactured, 
        what technologies must be employed, and when and if 
        production changes should be allowed. Bureaucrats can 
        no more efficiently manage the environmental practices 
        of hundreds of thousands of commercial enterprises than 
        they can efficiently manage the economic activity of 
        those enterprises. Regulations are the most effective 
        when they set performance standards and allow 
        businesses to figure out the best way to meet those 
        standards. Allowing the trading of those emission 
        allowances would increase the efficiency of the 
        standards. Finally, regulations should target those 
        parties responsible for environmental harm; this 
        approach is fair and sets the correct incentives for 
        environmental behavior.

  - Preclude Regulation Without Representation. No lawmaking 
        should go into effect until it is affirmatively adopted 
        by the House and the Senate and signed into law by the 
        President. Most environmental law is written not by 
        elected representatives but by unelected executive 
        branch employees. Such individuals are not subject to 
        political accountability and are able to circumvent the 
        constitutional checks and balances designed to make 
        lawmaking a consensus-driven activity. Current attempts 
        to ``regulate the regulators'' are inevitably clumsy 
        and beg the question of why unelected officials are 
        making law.

  - Property Owners Should Be Compensated for Regulatory 
        Takings. Property owners whose property is taken or 
        regulated to achieve some public good should be 
        compensated. It is simply unfair to require a few 
        citizens to pay the full costs of providing goods 
        desired by the public. Just as those who cause direct 
        harm to others should be held fully liable and 
        responsible for damages, the procurement of goods that 
        benefit the entire public should be paid for with 
        public dollars. This principle reaffirms the plain 
        reading of the Fifth Amendment; it will also aid in the 
        protection of the environment. Property owners who face 
        not financial ruin but full compensation if their 
        property is identified as hosting some ecological 
        treasure are more likely to protect and conserve the 
        resource held so dear by many.

  - Recognize That Sometimes the Best Stewards of Environmental 
        Resources Are Private Stewards. America has a proud 
        conservation tradition that demonstrates that 
        communities and local groups can work together to 
        protect the environment. Some industries have shown 
        they are capable of sound environmental management.

  - One Size Does Not Fit All. The current approach to 
        environmental policy does not always permit State and 
        local governments to be responsive to local or regional 
        environmental problems. Environmental policy should be 
        flexible enough for communities to experiment with 
        sensible solutions.

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

               improve the quality of the national parks

    The National Park Service contains 368 areas and 80.3 
million acres of land in 49 States, the District of Columbia, 
Puerto Rico, the U.S. Virgin Islands, Guam, Samoa, and the 
Northern Marianas. Visitation to the parks has increased over 
the past few years, and it is important to preserve these 
unique cultural and natural resources. For this reason, the 
budget resolution recommends an increase in funding for the 
operation of the National Park System. In addition, the budget 
resolution recommends that a portion of the funding and 
personnel in the Washington and regional offices should be 
relocated to actual park operations. This was recently 
accomplished to provide additional funds for the Chesapeake and 
Ohio [C&O] Canal National Historical Park.
    The budget resolution also reiterates support for the 
proposal developed by the House Committee on Resources, and 
included in last year's Balanced Budget Act, to increase fees 
and permit resource managers to retain a large portion of those 
fees. This proposal was included in the President's fiscal year 
1997 budget submission. Furthermore, according to the so-called 
``Green Scissors'' report:

        * * * [T]his idea is not necessarily opposed by those 
        who might have to pay. A poll conducted by the National 
        Parks and Conservation Association indicated that 80 
        percent of those polled would support higher entrance 
        fees in national parks if the money is used to maintain 
        the parks.

    The budget resolution agrees that underpricing recreational 
visits contributes to the degradation of natural areas.
    This proposal assumes a 10-percent reduction in the 
National Recreation and Preservation Program, as recommended by 
the Committee on Resources. In addition, it assumes that 
international forestry, and the Advisory Council for Historic 
Preservation will be terminated as proposed by the Committee on 
the Budget and the Committee on Appropriations last year. Under 
international forestry, technical assistance is provided 
outside the United States. It is assumed all these funds should 
be reallocated to parks within the United States.

                      reform the superfund program

    The Superfund Program has been widely criticized for 
bureaucratic inefficiency and a tendency to litigate. In 1994, 
the House Committee on Commerce, then controlled by Democrats, 
stated: ``[T]he program's weaknesses are recognized by 
virtually all Superfund stakeholders.'' This year, the House 
Committee on Commerce has been extremely critical of the 
programs effectiveness, noting that the current program is 
``incapable of achieving its fundamental goal--cleaning up 
hazardous waste sites'' and that ``more than half of every 
Federal dollar spent on Superfund goes to something other than 
cleaning up [these] sites.'' Despite the President's stated 
concerns about the environment, however, he has been silent 
about how the program can be improved.
    Therefore, this proposal assumes that the Congress must 
take the lead in fixing this flawed program. The budget 
resolution assumes the extension of two expiring taxes: the 
corporate environmental income tax [CEIT] and the excise tax on 
petroleum products and chemical feedstocks. The Budget 
Committee also recommends that the authorizing committees will 
correct the program in a manner that will reform the high 
cleanup and legal costs, correct the unfairness of the 
liability scheme, reduce overlapping authority and 
responsibility between various levels of government, and alter 
the economic incentives to use undeveloped--or ``greenfield''--
sites to avoid potential Superfund liability.
    The budget resolution assumes that the reformed Superfund 
Program will be funded at $2 billion annually, an increase of 
$698 million over current levels.

 authorize a safe drinking water revolving fund and maintain a strong 
                        clean water srf program

    According to the House Committees on Commerce and 
Transportation and Infrastructure, the reauthorization of the 
Safe Drinking Water Act is one of their highest priorities. The 
Commerce Committee has informed the Budget Committee that 
public water systems will require:

        * * * [D]irect financial assistance in order to meet an 
        increasingly complex array of national drinking water 
        standards. Testimony and other evidence reviewed by the 
        committee indicates a clear need for a State Revolving 
        Loan Fund [SRF] in order to meet the public health 
        objectives of the [Safe Drinking Water Act].

    The budget resolution assumes that the final legislation 
will be similar to S. 1316, the Safe Drinking Water Act 
Amendments of 1995, or H.R. 2747, the Water Supply 
Infrastructure Assistance Act of 1996. The Budget Committee 
recognizes, however, that the committees of jurisdiction retain 
the authority to pursue alternative specific policies from 
those reflected in this proposal. Finally, the budget 
resolution advocates funding the Clean Water SRF Program to 
fulfill wastewater construction commitments.

  implement the conservation programs within the federal agricultural 
                   improvement and reform [fair] act

    As will be discussed further in Function 350, the Congress 
recently passed, and the President signed, historic legislation 
to overhaul the Nation's outmoded and cumbersome agricultural 
programs. That legislation included several provisions that 
will also greatly improve the quality of the environment.

    Restore the Florida Everglades. The Florida Everglades is a 
unique national treasure. Its long-term viability is vital to 
the quality of life in south Florida. The legislation provides 
funding for land acquisition in the Florida Everglades for the 
purpose of environmental restoration. In addition, funds are 
provided for the sale or swap of other federally held land in 
Florida.

    Expand the Conservation Reserve Program [CRP]. The CRP 
offers producers annual rental payments to remove highly 
erodible cropland and other environmentally sensitive land from 
production. The Department of Agriculture's enrollment 
authority expired on December 31, 1995. The legislation gives 
the Secretary of Agriculture the authority to enter into new 
contracts and extend expiring contracts. The authorized maximum 
acreage in the program is maintained at 36.4 million acres.

    Implement the Environmental Quality Incentive Program 
[EQIP]. This new initiative will assist agricultural producers 
to deal with environmental and conservation concerns. 
Assistance can be used for animal waste management facilities, 
terraces, waterways, filterstrips, or other structural and 
management practices to protect water and soil resources.

                restore salmon runs in the elwha river0

    The budget resolution recognizes the importance of 
restoring salmon runs in some rivers in the Pacific Northwest. 
The Elwha River in Washington State may represent a unique 
opportunity for salmon restoration in a fiscally responsible 
and effective manner. The resolution urges the committees of 
jurisdiction and other concerned parties to identify ways to 
restore salmon runs to the Elwha River in the most cost-
effective way, taking into consideration the concerns of local 
residents and the possibility of sharing costs with those who 
would benefit from restoration. Restoration should allow the 
Department of the Interior and other fishery managers to 
measure the success of fishery restoration and protect the 
community water supplies.

                                 FUNCTION 300: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve the quality of the national parks:                                                                      
 \1\                                                                                                            
    Budget authority......................     1,083        11        22        32        54        54        65
    Outlays...............................     1,076         8        19        29        48        52        62
Reform the Superfund Program:                                                                                   
    Budget authority......................     1,302       698       698       698       698       698       698
    Outlays...............................     1,399       180       421       558       628       662       662
Authorize a Safe Drinking Water Revolving                                                                       
 Fund [SRF] and maintain a strong Clean                                                                         
 Water SRF Program:                                                                                             
    Budget authority......................     2,813        39        39        39        39        39        39
    Outlays...............................     2,744         2        12        26        34        38        39
----------------------------------------------------------------------------------------------------------------
\1\ Additional funds are provided through the termination of lower priority accounts.                           


                                   FUNCTION 300: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve the quality of the national parks:                                                                      
    Budget authority......................   \1\ -69       -13        -6       -11        -7       -12        -7
    Outlays...............................   \1\ -71       -12        -9       -13       -11       -14        -9
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including: eliminating unneeded bureaucracy 
in the Department of the Interior, encouraging land swaps 
instead of new puchases, prioritizing conservation operations 
within the Department of Agriculture, targeting construction 
funding in the Departments of Agriculture and Interior, 
restructuring the Department of the Interior's minerals-related 
agencies, reforming the various land management agencies, 
reforming the Bureau of Reclamation [BOR], refocusing the 
National Oceanic and Atmospheric Administration [NOAA] on its 
core mission as part of terminating the Department of Commerce, 
reforming the Corps of Engineers, funding EPA science based on 
risk-based regulations, reducing the Department of Interior's 
overhead, and opening a small portion of the coastal plain of 
ANWR for exploration.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 350:



                              Agriculture

                              ----------                              


                                            FUNCTION 350: AGRICULTURE                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $12,737   $11,840   $11,750   $11,367   $10,714    $9,497    $8,964
Outlays...................................    10,751    10,238     9,855     9,483     8,843     7,730     7,181
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities0

    For more than 60 years, Washington has tried to centrally 
plan U.S. agriculture with an enormous system of commodity 
supply and price controls, acreage allotments, production 
quotas, restrictions on imports, and export subsidies. These 
outdated and cumbersome policies are preventing U.S. farmers 
from taking advantage of opportunities in the world market.
    By contrast, the new direction in farm programs envisioned 
in this budget resolution will give farmers the freedom to 
plant in response to market demand, not government programs or 
what government bureaucrats think farmers ought to be planting. 
Producers have asked for more flexibility, less paperwork, and 
a better opportunity to earn a living from the marketplace.
    The new approach, embraced in this budget resolution, 
accomplishes these goals, and does so in a manner that will 
make U.S. agriculture profitable and competitive in the 21st 
century.

       the federal agricultural improvement and reform [fair] act

    The President signed the FAIR Act into law on April 4, 
1996. The centerpiece of this historic legislation is the new 
market transition contracts. These contracts replace deficiency 
payments with fixed, albeit declining, payments that do not 
vary with market conditions. Total payments are guaranteed for 
fiscal years 1996 through 2002. The FAIR Act also eliminates 
the complex production controls, such as acreage reduction 
programs, and increases planting flexibility. Specifically, any 
commodity may be grown on contract acreage except fruits and 
vegetables.

                 Additional Changes From Current Policy

    The budget resolution assumes savings in this function from 
various additional provisions including: reforming the foreign 
agricultural service, reducing unneeded bureaucracy within the 
Department of Agriculture, refocusing Federal support for 
agricultural research and extensions, reforming the Farmers 
Home Administration, downsizing the Farm Service Agency; 
terminating State mediation grants and outreach for socially 
disadvantaged farmers; and reducing the Department of 
Agriculture's overhead.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these recommended policy 
changes are contained in Appendix 1.


                             Function 370:



                      Commerce and Housing Credit

                              ----------                              


                                    FUNCTION 370: COMMERCE AND HOUSING CREDIT                                   
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $11,884    $8,957   $14,188   $14,103   $12,850   $14,662   $11,598
Outlays...................................    -7,071    -1,599     7,333     4,377     6,841     8,395     7,218
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Continuing leadership in the development of new 
technologies is vital to the strength of a nation. 
``Competitiveness'' became the political mantra of the late 
1980's and early 1990's, and heated debates over how the United 
States could best remain competitive have raged through the 
Halls of Congress and in public policy forums across the 
country. In certain areas, such as new technology standards and 
measurement development and fundamental technical competence, 
the government does play an important role. In this regard, the 
budget resolution assumes 3 percent growth in the National 
Institute of Standards and Technology's core program funding 
(Scientific and Technical Research and Services) and research 
facility modernization.
    But the President and previous Congresses have focused on 
the small picture through micromanagement. Washington's 
tendency to micromanage undoubtedly has caused much of the 
massive regulation and bureaucratic structure that hinder the 
Nation's ability to move forward.
    Although the Federal Government has a role in basic 
research, it should not be engaged in applied research. 
Furthermore, considerable evidence exists that the Federal 
Government is not capable of choosing projects with the 
greatest potential for technological and commercial success. 
Therefore, the budget resolution recommends terminating the 
Department of Commerce's Industrial Technology Services, 
including the so-called Advanced Technology Program, and 
phasing out the manufacturing extension partnership. Instead, 
the government should focus on providing an economic 
environment that favors growth, spurs the investment of private 
capital, and encourages risk-taking.
    Rather than pursuing industrial policy, the United States 
can best enhance its competitiveness by eliminating deficit 
spending and the national debt; by modernizing outmoded 
antitrust laws to recognize global competition; by providing a 
permanent R&D tax credit; by reforming the civil justice 
system, including product and professional liability standards; 
and by reviewing new government regulations using risk 
assessment reform and cost-benefit analysis.
    The actual policy changes for programs in this function 
fall under the authority of the authorizing and appropriating 
committees with jurisdiction over the programs. The discussion 
below reflects the assumptions underlying House Budget 
Committee's recommendations concerning the funding priorities 
for programs in this function.

                  terminate the department of commerce

    The Department of Commerce is an unwieldy conglomeration of 
marginally related programs, nearly all of which duplicate 
those performed elsewhere in the Federal Government. According 
to the General Accounting Office, Commerce ``shares its 
missions with at least 71 Federal departments, agencies, and 
offices.'' Its bureaucracy is bloated, its infrastructure is in 
disrepair, and more than 60 percent of its resources are 
dedicated to activities completely unrelated to its 
``mission.'' Former Commerce Department officials recently 
testified that the few unique functions contained in Commerce 
suffer under the multiple tiers of political appointees and 
bureaucracy. This proposal, which was developed by the chairmen 
of the committees of jurisdiction and coordinated by the House 
leadership, terminates Commerce programs that are either 
unnecessary or redundant; consolidates functions that belong 
elsewhere in the government; and makes independent those 
programs that should function in a more businesslike manner. 
Specific components of the termination would include the 
following:

    Terminate Administrative Functions. The Office of the 
Secretary, General Counsel, Inspector General, and other 
administrative functions are terminated.

    Terminate the United States Travel and Tourism 
Administration. The Travel and Tourism Administration was 
recently terminated in the Omnibus Appropriations Bill (H.R. 
3019). The Travel and Tourism Administration promotes the 
United States abroad as a tourism destination. It does this 
through field offices in Amsterdam, London, Frankfurt, Milan, 
Paris, Sydney, Tokyo, and Toronto. The efforts of the Travel 
and Tourism Administration are dwarfed by marketing efforts of 
the U.S. hotel, travel, and tourism industries.

    Terminate Industrial Technology Services, Including the 
Advanced Technology Program. This provision would include 
terminating the Offices of Technology Policy, Technology 
Commercialization and Technology Evaluation and Assessment, the 
Advanced Technology and Manufacturing Extension Partnerships. 
The scientific and technical research functions of the National 
Institute of Standards and Technology [NIST] would be 
transferred to an independent National Scientific, Oceanic and 
Atmospheric Administration. Although the Federal Government has 
a role in basic research, it should not be engaged in applied 
research, product development or commercialization conducted 
through the Technology Administration. See ``Prioritize the 
National Institute of Standards and Technology's Core 
Programs'' below.

    Privatize the National Technical Information Service 
[NTIS]. NTIS collects scientific, technical, engineering, and 
other business-related information from Federal and 
international sources and disseminates it to the American 
business and industrial research community. NTIS is a self-
supporting agency with operating costs paid out of revenues 
earned from the sale of information products and services. To 
enhance its businesslike operation and improve the services and 
products it provides, NTIS should be privatized.

    Terminate the National Telecommunications and Information 
Administration. This would include terminating the Information 
Infrastructure Grants, Public Telecommunications Facilities 
Grants, and the Endowment for Children's Educational Television 
(Function 500). Management of the electromagnetic spectrum is 
transferred to the reconstituted United States Trade 
Representative (see below), and scientific and technical 
research of the electromagnetic spectrum is transferred to the 
standards office in the National Scientific, Oceanographic and 
Atmospheric Administration (see below).

    Corporatize the Patent and Trademark Office. The office 
would be converted into a government-owned corporation.

    Terminate the Economics and Statistics Administration. 
Under this provision, the Bureau of the Census and the Bureau 
of Economic Analysis are transferred to the Department of Labor 
to be merged with the Bureau of Labor Statistics. This is a 
transitional step in preparation for the creation of a Federal 
statistical agency.

    Reconstitute the National Oceanic and Atmospheric 
Administration [NOAA]. NOAA is reconstituted into a 
freestanding agency, named the National Science, Oceanic and 
Atmospheric Administration [NSOAA], consisting of most of the 
programs currently within NOAA as well as the scientific and 
technical research functions of NIST and the research of the 
electromagnetic spectrum of the NTIA. The NOAA corps and fleet 
(Function 300) are terminated. [Please note: Additional 
provisions affecting NOAA appear in Function 300.]

    Transfer Functions of the International Trade 
Administration. The functions of the International Trade 
Administration are transferred to the Office of the United 
States Trade Representative [USTR]. The USTR will be removed 
from the Executive Office of the President, and the USTR will 
be restructured to include a Deputy for Negotiations and a 
Deputy for Administration.

    Restructure the Economic Development Administration [EDA]. 
The EDA is restructured and transferred to the Small Business 
Administration (see Function 450).

    Transfer Functions of the Bureau of Export Administration. 
Licensing and enforcement functions of the Bureau of Export 
Administration will be transferred to the USTR.

prioritize the national institute of standards and technology's [nist] 
                             core programs

    The fundamental scientific understanding and basic research 
of the technical aspects and standards for new processes and 
technologies is NIST's constitutional mission. The budget 
resolution recommends $281 million for these Scientific and 
Technical Research and Services in fiscal year 1997 and a 3-
percent annual increase thereafter. The resolution rejects the 
President's approach, which reduces NIST basic research by $40 
million compared with last year's request while continuing to 
push for $450 million in NIST corporate welfare grants.

restructure mortgages to prevent fha costs associated with the project-
                         based subsidy program

    Currently, millions of low-income Americans live in 
federally subsidized privately owned apartments. As long as 
they live in the subsidized units, their contributions to the 
rents are no more than 30 percent of their income; the Federal 
Government pays the rest. A majority of projects charge the 
tenants and the Federal Government more than the surrounding 
market rents. In some cases the rent is twice what an 
unassisted unit across the street might charge. According to 
the Department of Housing and Urban Development, of the 20,000 
HUD-assisted properties, 9,000 also have FHA-provided mortgage 
insurance. Hence if the owners of the projects default on their 
mortgages, the lender will look to the Federal Government for 
payment.
    Many of these FHA-insured projects have mortgages far 
higher than the real market value of the property, which 
contributes to the high subsidized rents. In most cases this 
was done by Federal design. Marginal or blighted neighborhoods 
often cannot attract investment in the form of high-quality new 
construction because the rents paid would be too low to sustain 
the costs associated with putting up the building. The Federal 
Government therefore subsidized the mortgages, sometimes 
through buying down the interest rates, and then insured the 
mortgages against default, allowing the developers to obtain 
mortgages from the lenders. In addition, to sustain the new 
building, project-based assistance was attached to many of the 
units of these projects. The owner of the building could then 
charge rents high enough to sustain the mortgage payments 
because the lower-income tenant's payments are subsidized by 
the Federal Government. Inefficient operation of the projects, 
HUD's poor management abilities, and the poor oversight of 
tenant income contribute to the high costs of these projects.
    Though some are in decent physical condition, many 
properties have declined and become dilapidated. Many need 
substantial rehabilitation before they would be able to be 
viable on the open market. A large number of tenants might 
choose to leave these projects were the assistance made 
portable. If present policies continue, HUD estimates $80 
billion in hard costs associated with these projects over the 
next 25 years. In a December 1994 report, CBO said:

          In 1989, an estimated 55 percent of FHA-insured 
        multifamily properties had insufficient funds in their 
        reserve accounts to cover the backlog of repair and 
        replacement needs they had accumulated. The amount of 
        that unfunded backlog--the total backlog minus the 
        funds available in replacement reserve accounts--
        averaged more than $1,400 per unit across the entire 
        insured inventory.

    Over the next 10 years, most of the contracts for these 
units come up for renewal. This presents the Federal Government 
with a choice. It can maintain the present system. But this 
will be costly: the Congressional Budget Office projects the 
cost of renewing project-based assistance, under present 
policies, would grow from $627 million in budget authority to 
$7.9 billion per year by 2006. Even this cost does not reflect 
the costs associated with the continuing degradation of the 
buildings and the consequent effect on the lower-income 
tenants, who are disproportionately elderly and disabled. HUD 
has listed the following repercussions of maintaining present 
policies:

          Deterioration of old assisted stock; continued 
        decline of neighborhoods and an increase in crime and 
        social costs; minimal rehabilitation of existing stock; 
        increasing overpayments to assisted owners.

    In testimony to the House Budget Committee, the General 
Accounting Office said of this situation:

          The people in leadership in HUD recognize this is an 
        intolerable situation and absolutely something must be 
        done. We commend HUD for at least recognizing that 
        something must be done and the existing situation 
        cannot continue.

    The budget resolution agrees with this assessment. The 
resolution recommends implementing a comprehensive 
restructuring plan to replace the present system of private 
project-based assistance with a system largely based on 
vouchers.
    This can be achieved by accepting the principles of an 
administration proposal to bring the mortgage levels of these 
projects down to the real market value of the property. The 
rents can then be reduced to market rates without triggering a 
mortgage default and thus avoid a cost to the FHA. This would 
be accomplished through selling the mortgage on the open 
market, with no FHA insurance and only transitional project-
based assistance.
    The sales would entail near-term losses to the Federal 
Government because it would have to cover the difference 
between the mortgage value at the present level and the value 
at the market rate. At the end of the process, however, the 
housing assistance would be transformed into a voucher-based 
program and the Federal Government's liability would be 
extinguished.

                                 FUNCTION 370: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Terminate, transfer, or privatize various                                                                       
 agencies and functions in the Department                                                                       
 of Commerce: \1\                                                                                               
    Budget authority......................     3,679       -67      -103      -110      -110      -110      -110
    Outlays...............................     3,799       -36       -85      -104      -110      -110      -110
Terminate Industrial Technology Services,                                                                       
 including Advanced Technology Program:                                                                         
 \1\                                                                                                            
    Budget authority......................       300      -291      -300      -300      -300      -300      -300
    Outlays...............................       255       -20       -88      -212      -297      -299      -299
Prioritize the National Institute of                                                                            
 Standards and Technology's [NIST] Core                                                                         
 Programs: \1\                                                                                                  
    Budget authority......................       251        30        38        47        56        65        74
    Outlays...............................       247        23        36        45        54        63        72
Construction of research facilities [NIST]                                                                      
 \1\                                                                                                            
    Budget authority......................   \2\ -15       105        60        60        60        60        60
    Outlays...............................        49        13        22        32        59        61       65 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               
\2\ Negative number denotes cash in-flow to the Federal Government.                                             


                                   FUNCTION 370: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Privatize the National Technical                                                                                
 Information Service [NTIS]: \1\                                                                                
    Budget authority......................         0         0       -13         0         0         0         0
    Outlays...............................         0         0       -13         0         0         0         0
Corporatize the Patent and Trademark                                                                            
 Office: \1\                                                                                                    
    Budget authority......................         0         0         0      -119      -119      -119      -119
    Outlays...............................         0         0         0      -119      -119      -119      -119
Restructure mortgages to prevent FHA costs                                                                      
 associated with project based subsidy                                                                          
 program:                                                                                                       
    Budget authority......................        NA       383         0         0         0         0         0
    Outlays...............................        NA       383         0         0         0         0        0 
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from the 
following provisions: shifting to the Postal Service the cost 
of transition payments for workman's compensation benefits paid 
to pre-1971 postal employees; terminating fleet modernization 
at the National Oceanic and Atmospheric Administration; making 
the SBA's 7(a) loan guarantee program self-financing; 
encouraging private financing of small business development 
centers; reducing the flood insurance subsidy on pre-firm 
structures; reducing duplication in small and minority business 
programs and consolidating functions in the Small Business 
Administration; reforming the Federal Housing Administration's 
multifamily mortgage insurance program to make it self-
financing; enhancing the FHA property disposition program; 
providing for FHA assignment reform and eliminating the Federal 
Trade Commission. Partial savings also result from the Rural 
Development Block Grant described in Function 450. Although 
these provisions reflect the recommendations and assumptions of 
the Committee on the Budget, the actual policy changes are the 
discretion of the appropriations and authorizing committees 
with jurisdiction over the programs involved. Further 
descriptions of these specific recommended policy changes are 
contained in Appendix 1.


                             Function 400:



                             Transportation

                              ----------                              


                                          FUNCTION 400: TRANSPORTATION                                          
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $36,653   $41,737   $43,541   $43,961   $44,103   $44,531   $45,045
Outlays...................................    39,308    39,007    37,635    36,111    35,236    34,526    34,042
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Over the past 40 years, the Nation has witnessed a great 
expansion of the Federal Government's involvement in 
transportation. The current Federal role in highways, 
originally intended to be of limited duration to meet immediate 
post-war needs, has outlived its mandate and has become a 
barrier to sensible decisionmaking. The Nation's mass transit 
systems, which provide local transportation, are dependent on 
the U.S. Treasury to finance construction and subsidize the 
travel of almost every transit commuter in America. In 
aviation, the Federal role of ensuring the safety of the skies 
has expanded to include programs that assist in building 
runways, taxiways, and terminals. Federal involvement in 
intercity rail travel has delivered a near-bankrupt 
corporation, running on a dilapidated infrastructure and 
desperate for Federal aid every day to survive. There is even a 
Federal program for ``enhancements,'' such as bicycle paths. In 
every instance, Federal aid has brought strings and regulations 
that have increased costs. This has necessitated more Federal 
aid, and has led to greater dependence on the Federal 
Government--and needs now far exceed Federal resources in every 
mode of transportation.
    This expansion of Federal involvement in transportation has 
occurred over decades, and it cannot and should not be reversed 
overnight. As a result, the proposals that follow are not 
policy directives to the committee of jurisdiction, nor do they 
affect the spending assumptions in this resolution. But the 
policy directions outlined below merit further investigation, 
hearings, and deliberation for the long-term health of the 
Nation's transportation network.
    The budget resolution's priority for Function 400 is to 
introduce ideas that would harness the ingenuity of Governors, 
State legislatures and local governments, the 
entrepreneurialism of private industry, and the strength of the 
financial markets to enhance the Nation's transportation 
network. This is not to suggest that there is no Federal role 
in transportation. It merely recognizes that Federal 
involvement in many instances has been counterproductive and 
has precluded other, non-Federal ways of financing 
infrastructure improvements.
    Programs in this function fall under the authority of the 
authorizing and appropriating committees with jurisdiction over 
the programs. No savings targets have been assigned to the 
following provisions, and this resolution does not preclude 
spending from the trust funds at levels which the trust fund 
can support. The committees of jurisdiction retain the 
authority to pursue alternative specific policies from those 
reflected in this report as long as they remain within the 
spending limitations of the budget resolution.

   study of restoring state authority, flexibility, and control over 
                           america's highways

    The Problem. The Nation's highway financing mechanism is a 
relic of the 1950's. It was created at a time when lawmakers 
were, in part, concerned that the Nation's highways would be 
inadequate to allow populations to exit urban centers in the 
event of a nuclear attack. Construction of the interstate 
system was originally authorized to last 13 years and cost $25 
billion. It has lasted 40 years at a cost of about $130 
billion. The Federal-Aid Highways Program was also expanded 
during that time to include more than $170 billion in other 
programs and projects.
    During the creation of the Federal-Aid Highways Program in 
the 1950's, highways were still considered the province of the 
States and localities. A 1956 report on the Federal Aid to 
Highways Program by the Commission on Intergovernmental 
Relations stated:

          States and their political subdivisions have primary 
        interests in, and their residents derive substantial 
        benefits from, all highways, even those of an 
        interstate character. Fulfillment of the national 
        interest in highways does not necessarily require that 
        the National Government participate, directly or 
        through financial aids, in their provision or 
        operation.

    The report explained that a defined Federal involvement for 
a limited term was:

        [T]he most effective way to remedy the immediate 
        highway problems of the Nation as well as discharge the 
        national responsibility over the long run. The 
        Commission gave earnest consideration to complete 
        Federal financing of this limited system beyond any 
        emergency program that may be undertaken, but rejected 
        this approach * * *.

    Although it was designed to be a federally assisted State 
program, Federal-Aid Highways has evolved into a highly 
prescriptive, regulated, earmarked Washington-directed program. 
To a great extent, States and localities decide which roads are 
constructed. But, with some exceptions, the Federal Government 
prescribes how much of the Federal-Aid Highways Program can be 
spent on interstate construction, maintenance, congestion 
mitigation and air quality programs, bridge replacement, rural 
access projects, urban access and mobility projects, scenic 
byways programs, and myriad other programs.
    The highway program is financed through excise taxes, 
principally the gasoline tax. The Federal Government collects 
the gas tax, diverts funds for earmarked projects, skims off 
more to pay for the Federal highway bureaucracy, runs the 
remainder through a complex web of programs, and then returns 
the money to the States. This process is so inefficient that 
some economists estimate that the purchasing power of each 
dollar sent to Washington is degraded by at least 25 cents.
    Over time, this structure has enabled the construction of 
the Interstate Highway System. But that system is complete. Now 
States are faced with billions of dollars' worth of unmet 
highway and bridge needs, and a Federal system that hamstrings 
their efforts to rehabilitate America's infrastructure.

    Proposed Solution for Further Study. One possible solution 
to addressing future infrastructure needs would be reducing the 
Federal gasoline tax and highway trust fund outlays by an 
equivalent amount beginning in 1999. States could then raise 
their taxes a commensurate amount. The budget resolution urges 
exploration of this approach.
    Currently, the Federal-Aid Highways Program, funded through 
the highway trust fund, spends approximately $20 billion each 
year. This proposal would reduce the program eventually to 
collecting and expending approximately $6 billion a year.
    Because Federal spending and gas tax revenues would decline 
at commensurate amounts, this proposal would have no impact on 
the deficit and would not be ``scored'' as a net savings. But 
that is beside the point; the issue is one not of simply 
cutting spending, but of implementing the best possible means 
of improving the infrastructure of localities, States, and the 
Nation.
    The Federal Government should retain a role in ensuring a 
maintenance of effort to protect the quality and continuity of 
the Interstate Highway System. It should also retain a role in 
coordination among States, safety regulations, and standard 
setting.
    From the perspective of the taxpayer, the transition to 
State control would be seamless. Each State already has its own 
gas tax and could enact legislation raising gas taxes by an 
amount equivalent to the reduction in the Federal tax, 
effective when the Federal Government lowers its gas tax. From 
the perspective of the highway users, the change would be 
dramatic. Ending Federal micromanagement and earmarking would 
allow Governors and State departments of transportation to do 
more with less.
    The key to improving the Nation's infrastructure is 
reempowering the States, not further consolidating power in 
Washington. Restoring the States' control over their highways 
could be an important first step, and warrants further 
investigation.

 study of privatizing the operations of the air traffic control system

    Recently, the House passed legislation that would remove 
the Federal Aviation Administration [FAA] from the Department 
of Transportation and reform current procurement, personnel, 
and management practices. If enacted, this legislation would 
enhance the Federal Aviation Administration's ability to 
modernize the Air Traffic Control System.
    An alternative approach, however, would be to transfer the 
operations of the air traffic control system to a private 
corporation. A plan to do this is outlined below. The budget 
resolution has assumed no savings from this proposal, but 
recommends further study of this approach.

    The Problem. The Air Traffic Control [ATC] System in the 
United States is obsolete, and Washington has bungled its 
modernization for more than a decade. For example, controllers 
still use pre-1960's equipment to guide 19,000 planes a year. 
According to the FAA, vacuum tubes made obsolete by the 
transistor in 1947 are still used at hundreds of ATC sites. The 
system's truck-sized UNIVAC computers have one-tenth the power 
of today's personal computers costing less than $2,000, and 
some ATC computers could not run the $49 flight simulator 
computer games that are installed on millions of personal 
computers in homes across America.
    The Nation's Air Traffic Control System is safe. But this 
is the result of the Herculean labors of air traffic 
controllers, and the safety technology incorporated in aircraft 
design and maintenance--not because the Federal Government owns 
and manages the ATC System.
    In addition to the failure to modernize, the Federal 
Aviation Administration has been widely criticized for general 
mismanagement. In a recent letter to the FAA's Administrator, 
the inspector general of the Department of Transportation 
wrote:

          During the last 12 to 18 months, the Office of the 
        Inspector General has advised you of at least four 
        instances of significant abuses by the Federal Aviation 
        Administration * * *. While each of these abuses are 
        vastly different, there is a common thread. That thread 
        is the mindset within FAA that managers are not held 
        accountable for decisions that reflect poor judgment.

    The antiquated technology and Federal mismanagement are at 
least partly responsible for the chronic airport congestion and 
delays that cost travelers, industry, and the government nearly 
$6 billion annually. In the next few years, as many as 40 
airports will experience serious congestion affecting 80 
percent of air travelers. Clearly, the current system will not 
meet the Nation's air travel needs of the next century.
    The current condition of the Federal Aviation 
Administration in many ways illustrates what happens when a 
government bureaucracy tries to be a service provider, 
particularly in a high-volume, high-tech field such as air 
traffic control. The report to the President and Congress by 
the National Commission to Ensure a Strong, Competitive Airline 
Industry summarized the issue as follows:

          In the history of American business, there has never 
        been a major commercial industry whose minute-by-minute 
        operating efficiency was capped by the daily operating 
        efficiency of the Federal Government--except for the 
        airlines. The Commission believes there is a 
        fundamental inconsistency between the processes of 
        government and the operation of a 24-hour-a-day, high-
        technology, capital-intensive air traffic control 
        system.

    Proposed Solution for Further Study. Problems of this 
magnitude call for bold change. One alternative would be to 
transfer the operations of the Air Traffic Control System to a 
privately run corporation, while retaining a Federal role in 
setting safety standards, certification, and regulations.
    Privatizing ATC operations would remove the bureaucratic 
impediments to modernizing the system, and would enable the 
corporation to raise billions of dollars through the private 
capital markets for modernization. Further, it would end the 
current conflict of interest resulting from the same 
organization running air traffic control and monitoring its 
safety. A privately managed air traffic control corporation 
could also provide incentives for current, experienced air 
traffic controllers by implementing a flexible and fair pay 
scale. Finally, a corporation could function as a commercial 
enterprise, responsive to its users and using best business 
practices.
    In the past, variations of either privatization or 
government-owned air traffic control corporations, have been 
endorsed by the National Commission to Ensure a Strong, 
Competitive Airline Industry; the Reason Foundation; the 
Clinton administration; Representatives Solomon, Barton, and 
Goss; the Air Transport Association (1985); and the 
Transportation Review Board (1991). On April 1, 1996, Canada's 
Transport Minister signed legislation authorizing the sale of 
Canada's Air Traffic Control System to a newly created 
corporation, Nav Canada.
    As indicated above, the budget resolution assumes no 
savings from privatizing the Air Traffic Control System. 
Nevertheless, privatizing air traffic control can save the 
traveling public, the airlines, and the taxpayers billions of 
dollars while ensuring a dynamic system capable of advancing at 
a pace as rapid as the changing needs of air travel itself.

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from various 
provisions including the following: eliminating highway 
demonstration projects; making Amtrak more businesslike and 
phasing out operating and capital subsidies; completing the 
Northeast Corridor Improvement Program in 1999; reducing funds 
for the Office of the Secretary of Transportation; extending 
vessel tonnage fees; focusing NASA's aeronautics on new 
concepts; terminating wooden bridge research and demonstration 
programs; eliminating Federal corporate subsidies for 
development of ``intelligent transportation systems;'' 
deregulating ocean shipping and eliminating the Federal 
Maritime Commission; eliminating maritime corporate subsidy 
programs and the Maritime Administration; eliminating funding 
for experimental rail programs with doubtful market potential; 
eliminating outdated airline subsidies; eliminating funding for 
the Civil Aeromedical Institute and the FAA Management Training 
Institute; redefining the Federal role in transit; eliminating 
certain unnecessary transportation programs and returning 
responsibility to the States; and eliminating select functions 
and overhead for Department of Transportation Research and 
Special Programs Administration. Although these provisions 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
specific recommended policy changes are contained in Appendix 
1.


                             Function 450:



                   Community and Regional Development

                              ----------                              


                                FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $11,089    $6,672    $6,605    $6,559    $6,595    $6,243    $6,153
Outlays...................................    11,116    10,149     8,640     7,820     7,040     6,655     6,161
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    Federal programs designed to spur economic and community 
development have been among the worst examples of duplicative 
Federal bureaucracy. Hundreds of different programs have 
attempted to provide greater economic opportunity to lower-
income families in distressed communities, but there is very 
little evidence of success from any of these programs. Still, 
the programs have proliferated, each with its own bureaucracy 
and constituency. Far more good will be achieved by 
consolidating those programs that show potential for success, 
targeting funds to where they are most needed, and eliminating 
the rest.
    The discussion below reflects the assumptions underlying 
House Budget Committee's recommendations concerning the funding 
priorities for programs in this function. The actual policy 
changes for programs in this function fall under the authority 
of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

 consolidate economic and development programs into flexible state and 
                locally based economic development funds

    Although the Federal Government will continue to play a 
role in providing assistance to urban areas' community 
development, the present system too often diverts resources to 
work projects having little or no benefit for lower-income 
Americans. Community development funding must be concentrated 
where it is most needed. This proposal would combine the 
Community Development Block Grant Program, the HOME Program, 
and the Community Development Financial Institutions Program 
into one flexible fund allocated to and administered by State 
housing and development agencies and local governments. These 
development funds would be concentrated on very low-income 
areas for the revitalization of declining communities, using 
homeownership and preservation of affordable housing as 
principal strategies. This mission would be implemented by 
creating partnerships with neighborhood development 
corporations. The corporations would comprise local volunteer 
boards of directors, including resident leaders; private 
business community representatives; and local public officials. 
The State-based funds would extend grants, direct loans, and 
loan guarantees to the neighborhood development organizations 
so they in turn might provide low-cost loans to those unable to 
obtain credit from conventional banks or financial 
institutions. By monitoring for quality control, and providing 
a secondary market for loans, development funds will provide 
for liquidity and continued ability to loan to these 
neighborhood development corporations. Development funds may 
issue securities backed by these loans, to be purchased by 
private investors such as banks seeking to obtain credit for 
Community Reinvestment Act purposes. Many local governments now 
use the section 108 loan guarantee program in this fashion by 
capitalizing it with other funds, such as Economic Development 
Initiative funding. This proposal would expand the application 
by proposing a network of States, local governments, and 
locally based private organizations. Through this mechanism, 
the goals of both comprehensive neighborhood development and 
cohesion with newly created State-based welfare programs can be 
obtained.
    By moving away from a direct grant program to a flexible 
program emphasizing loans and loan guarantees, significant 
savings may be achieved after State-based funds are capitalized 
in the first 2 years. [Please note: A portion of this proposal 
also appears in Function 600.]

                 create a rural development block grant

    In 1995, the administration proposed, and the House budget 
resolution endorsed, the creation of a rural development block 
grant. But the administration delayed submitting its proposal 
to the Committee on Appropriations until May, well after the 
committee heard testimony from the administration and outside 
witnesses on the fiscal year 1996 proposed budget. The 
President's fiscal year 1997 budget again contains a proposal 
to create a rural development block grant, and this budget 
resolution reiterates its support for such an approach. 
Testifying before the House Committee on Government Reform and 
Oversight concerning this proposal, the General Accounting 
Office [GAO] noted:

          Appropriate program consolidation pursuing a broad 
        strategy for economic development in rural areas 
        provides one alternative to the current system of 
        multiple, narrowly focused programs. Program 
        consolidation would provide the opportunity to 
        eliminate overlapping or duplicative activities, 
        thereby facilitating improvements in the effectiveness 
        and efficiency of overall Federal assistance to rural 
        areas.

    The block grant includes rural water and wastewater grants, 
loans, and loan guarantees; loans and loan guarantees for 
essential community facilities; loans for new construction of 
rural rental housing and the corresponding rental assistance; 
and grants, loans, and loan guarantees for the creation and 
expansion of rural businesses. The President has recommended 
reductions for the rural water and waste disposal loans program 
account, the rental assistance program, the community facility 
loans program account, and the rural housing insurance fund 
program account. The budget resolution assumes these 
recommendations.
    The private sector is significantly more effective at 
producing economic development than the government. Therefore, 
this proposal calls for a 50-percent reduction in business and 
development accounts before the creation of the block grant. 
[Note: The rental assistance portion of this proposal appears 
in Function 600; the Rural Housing Insurance Program occurs in 
Function 370.]

                create a new native american block grant

    On July 11, 1994, Investor's Business Daily carried an 
article titled: ``Gov't's Destructive Benevolence.'' The 
article stated that:

        * * * economists who study Indian development say that 
        the most important cause of Indian poverty is a century 
        of attempting to centrally plan reservations' economic 
        development from Washington without regard to local 
        conditions or tribal history and customs * * *.

This view was echoed last year by the Committee on Resources, 
which noted:

          The enormity of the social, political, and economic 
        problems which confront today's collective native 
        Americans is matched only by the number of confusing 
        and antiquated Federal statutes which guide the [Bureau 
        of Indian Affairs] in performing its duties.

    The Resources Committee endorsed efforts to:

        * * * shift Federal funds directly to the Tribes 
        through the Self-Goverance Program (Public Law 103-413) 
        and the Indian Self-Determination and Education 
        Assistance Act (Public Law 93-638).

The Resources Committee also noted the continued 
``dissatisfaction on the part of many native Americans with the 
health care services provided by the Indian Health Service 
[IHS].''
    This proposal would accelerate the trend toward self-
determination for native Americans. The budget resolution 
assumes that the reinvented Bureau of Indian Affairs [BIA] 
would provide block grants, rather than engaging in the direct 
provision of services or the direct supervision of tribal 
activities.
    The proposal would reduce the central office operations and 
area office operations of the BIA by 50 percent relative to 
fiscal year 1995. It would incorporate construction funding in 
the block grant. To address the recurrent health care problems 
endemic to native Americans, the budget resolution assumes an 
extension of the Self-Governance Program to include the Indian 
Health Service [IHS] in fiscal year 2000. Finally, this 
proposal assumes that the other major programs for native 
Americans will be incorporated into the block grant when those 
programs have achieved self-determination (meaning, under the 
Self-Determination Act of 1975, that they may directly receive 
funds.) [Note: Portions of this proposal are also contained in 
Functions 500 and 550.]

                                 FUNCTION 450: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Consolidate economic and development                                                                            
 programs into flexible State and locally                                                                       
 based economic development funds:                                                                              
    Budget authority......................     4,600    -1,326    -1,326    -1,326    -1,326    -1,326    -1,326
    Outlays...............................     4,835       -80      -533      -962    -1,286    -1,326    -1,326
Create a rural development block grant:                                                                         
    Budget authority......................       663      -116      -115      -114      -113      -113      -113
    Outlays...............................       690       -34       -69       -95      -106      -115      -114
Create a new Native American block grant:                                                                       
    Budget authority......................       852       -54       -54       -54       -54       -54       -54
    Outlays...............................       889       -38       -54       -54       -54       -54       -54
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings from a 
phased-in downsizing of the Appalachian Regional Commission; 
focusing the Tennessee Valley Authority on its power-related 
activities; downsizing the Economic Development Administration; 
eliminating low-priority programs; reducing by 50 percent the 
flood insurance subsidy on pre-firm structures; accepting the 
administration's proposed funding for the Federal Emergency 
Management and Planning Assistance Program; and restoring 
equity in unemployment benefits. Although these provisions 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
recommended policy changes are contained in Appendix 1.


                             Function 500:



          Education, Training, Employment, and Social Services

                              ----------                              


                       FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $47,790   $46,965   $47,416   $48,046   $48,696   $49,410   $50,092
Outlays...................................    50,558    49,504    48,112    47,817    48,209    48,704    49,335
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities0

    Education is a top priority for the Nation. It is the means 
by which individuals develop the skills, knowledge, and sense 
of responsibility to pursue their own personal destinies and 
participate in their communities. It is the key that unlocks 
the door to higher-skilled, better-paying jobs for those 
seeking to break out of poverty. It is the source of highly 
trained workers, who are crucial to keeping the Nation 
competitive in an increasingly technical global economy. 
Improving education in America demands restoring the authority 
and responsibility to where it belongs--in the hands of 
parents, principals, and local school boards, not a growing 
Federal bureaucracy. As noted by Louis Grumet, executive 
director of the New York State School Boards Association:

          The Department of Education is far removed from the 
        classroom and has become more of a burden to local 
        school boards than a supportive partner. Using policy 
        letters and program audits, the Department has abused 
        its authority by threatening to withhold Federal 
        dollars from States and school boards unless they 
        comply with edicts devoid of regulatory, legislative, 
        or judicial authority. The Department has become a tool 
        for interest groups to place mandates on school boards 
        outside the legislative process that are unrelated to 
        the needs of children. We urge the dismantling of the 
        U.S. Education Department and the return of educational 
        governance to local school boards.

    Although some in the current administration have opposed 
limiting the Federal Government's role in education, Alice M. 
Rivlin, the administration's outgoing Budget Director, has 
strongly endorsed this course in her book ``Reviving the 
American Dream:''

          Improving education will take bottom-up reform. 
        Presidential speeches and photo opportunities, national 
        testing and assessment, federally funded experimental 
        schools, even new grants spent in accordance with 
        Federal guidelines, can make only marginal 
        contributions to fixing the schools. Education in 
        America will not improve significantly until States and 
        communities decide they want better schools. Making 
        education more effective will take parents who care, 
        committed teachers, community support, and accountable 
        school officials. An ``education President'' can help 
        focus media attention on schooling, but he risks 
        diluting State and local responsibility by implying 
        that Washington can actually produce change.

    Shifting authority back to States and localities does not 
threaten the quality or accessibility of education; indeed, it 
provides for better and more responsive education. Nor does 
this change of roles engender large additional education costs 
for State and local governments; it can be achieved by 
eliminating the overblown Federal bureaucracy and reducing 
regulatory burdens on local schools.
    There is no question that the Federal education bureaucracy 
is too large and too burdensome. The House Committee on 
Economic and Educational Opportunities has identified 760 
Federal education programs in 39 separate agencies, 
departments, commissions, and boards, with obligated funds 
totaling $120 billion. Only 6 percent of these programs' 
primary function is to teach or support mathematics, reading, 
or science. Federal Government mandates for social policy, 
political correctness, and ``new age'' educational theories 
have replaced them, with little academic benefits for students.
    The State of Ohio Legislative Office of Education 
Oversight, in its October 1990 assessment, titled ``Public 
School Reporting Requirements,'' found that Federal program 
reporting requirements are disproportionate to the amount of 
funding they provide. In a survey of required forms, the Ohio 
office discovered that Federal requirements generate over 50 
percent of the paperwork, but only 5 percent of funding for 
elementary and secondary schools.

    Another perspective was offered by columnist David S. 
Broder in the Washington Post on June 7, 1995:

          [Education Secretary] Riley has a Deputy Secretary, 
        an Undersecretary, 11 Assistant Secretaries and 14 
        Deputy Assistant Secretaries. Beyond that, there are 21 
        boards, commissions and councils, each with its own 
        hierarchy. Each of the Department's 10 regional offices 
        boasts separate representatives for the Secretary and 
        Deputy Secretary plus an array of Directors. That's a 
        lot of chiefs for very few Indians.

    The record of academic achievement also casts doubt on the 
effectiveness of Federal funding and intervention. Between 1965 
and 1994 spending for elementary and secondary education has 
grown from $1.942 billion to $34.318 billion. Over the same 
period combined verbal and mathetical Scholastic Aptitude Test 
[SAT] scores have fallen from 958 to 902.
    In the spirit of the Back to Basics Bill--introduced by a 
group of majority freshmen in June 1995--this budget resolution 
consolidates many elementary and secondary education programs 
into block grants, turning funding decisions back to the States 
and local schools. Failed programs--programs that do not help 
children--are terminated.
    To reiterate: The goal of this budget is to reduce Federal 
bureaucracy and regulations so parents and schools can get back 
to the business of educating children. The ``Washington knows 
best'' policies of the Great Society have failed. To improve 
education for this and future generations, we need to get back 
to basics by returning the responsibility of educating our 
children to parents and local communities.
    At the same time, the budget resolution continues to 
strongly support higher education funding. Under the Republican 
budget, funding for student loans will continue to increase 
rapidly over the next 7 years--from $26.6 billion today to 
$37.4 billion in 2002. The numbers of students receiving loans 
will grow from 7 million in 1996 to 8.5 million in 2002. CBO 
projects that these are the exact same levels that will occur 
under President Clinton's student loan policies.
    The discussion below reflects the assumptions underlying 
House Budget Committee's recommendations concerning the funding 
priorities for programs in this function. The actual policy 
changes for programs in this function fall under the authority 
of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the spending guidelines that flow from the budget resolution's 
spending limitations.

    reduce subsidies to banks and guaranty agencies, and eliminate 
                         government-run lending

    The budget saves approximately $3 billion by eliminating 
subsidies to bankers, guaranteed agencies, and secondary 
markets in the guaranteed student loan program. This is the 
same reform as incorporated in the Balanced Budget Act of 1995. 
None of these costs can be passed along to students because 
interest rates and origination fees for student loans are 
capped by law. Savings are also achieved from eliminating the 
direct loan program. Again, this change will come at no 
sacrifice to students or their parents because every student 
who would have gotten a direct loan from the government will 
have access to a guaranteed student loan from their local bank.
    Eliminating direct lending will protect taxpayers from 
excess defaults that are likely to result from Department of 
Education mismanagement. Already there are warning signs of 
serious problems in the direct lending program. Schools with 
high default rates, particularly proprietary schools, have 
flocked to the direct lending program. Almost 300 schools in 
the direct lending program had default rates of 25 percent or 
higher in at least 1 year. Another indication of serious 
management problems at the Department of Education has been the 
major delays in processing financial aid applications for 
900,000 college students. Although the Department of Education 
has blamed the problems on the partial government shutdown and 
bad weather in the District of Columbia, the reality is that 
these forms are processed by outside contractors who were 
unaffected by these events (many of the contract employees are 
outside the Washington, DC, area). It is Department of 
Education mismanagement that has left thousands of students in 
limbo and forced hundreds of colleges to push back their May 1 
admissions deadlines. Eliminating the government-run direct 
loan program will protect taxpayers from an enormous potential 
liability and assure the long vitality of the student loan 
program.

      create a block grant for elementary and secondary education

    All elementary and secondary education programs except 
Title I, Indian Education, Special Education, and Impact Aid 
would be included in this grant, but total spending for the 
block grant would not be reduced from the current levels of 
spending for these programs. The approach will achieve two 
general goals articulated by the administration: ``flexibility, 
allowing States and localities to implement * * * systems that 
respond to local needs, instead of Federal setasides and other 
requirements;'' and ``consolidation, ending program 
proliferation by merging separate formula and discretionary 
programs into a more coherent, integrated program.''

                      block grant library funding

    H.R.1617, the Consolidated and Reformed Education, 
Employment, and Rehabilitation Systems [Careers] Act and the 
President's 1997 budget consolidate library programs into a 
single block grant. Merging the State grant with a number of 
smaller programs, including the Indian and Native Hawaiian 
library program and Library Center Programs, will reduce 
bureaucracy and free up resources for libraries. The 
administration's own budget proposes savings of 23 percent from 
the 1995 level.

        privatize the corporation for public broadcasting [cpb]

    The original goal of the Public Broadcasting Act of 1967 
was to supply cultural and educational programming not 
available on the three national networks. Today, a number of 
channels--Arts and Entertainment, Bravo, the Learning Channel, 
the Discovery Channel--offer programming similar to that of the 
Public Broadcasting System [PBS] without any taxpayer 
assistance. Moreover, the annual Federal appropriation 
represents only 14 percent of the Corporation's annual budget. 
CPB could make up cuts in Federal funding by reducing waste and 
increasing corporate sponsorship and viewer support, as well as 
by being more aggressive in its licensing arrangements with 
popular PBS programs such as ``Barney'' and ``Sesame Street.'' 
Congressman Fields' bill to privatize PBS increases 
opportunities for corporate underwriting and limits the number 
of duplicative public television stations. It should also be 
noted that the threat of Federal subsidy reductions 
significantly increased PBS' fundraising last year.
    This proposal would provide $260 million for fiscal year 
1997 and $240 million for fiscal year 1998, the levels proposed 
in the House-passed appropriations bill. Federal funding would 
continue to be reduced by $60 million a year until Federal 
support is eliminated in 2002.

             enact careers job training consolidation bill

    In his State of the Union Address, the President challenged 
Congress to consolidate 70 overlapping, antiquated job training 
programs into a program offering vouchers. The Careers Act, 
which passed the House of Representatives on September 19, 
1995, by a vote of 345 to 79, consolidates job training and 
education programs into three block grants to the States. The 
bill also requires States to offer vouchers within 3 years. The 
budget resolution assumes this consolidation strategy.

                                 FUNCTION 500: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Block grant library funding:                                                                                    
    Budget authority......................       129       -26       -26       -26       -26       -26       -26
    Outlays...............................       140       -10       -19       -26       -26       -26       -26
Privatize the Corporation for Public                                                                            
 Broadcasting:                                                                                                  
    Budget authority......................       275         0       -20       -80      -140      -200      -260
    Outlays...............................       275         0       -20       -80      -140      -200      -260
Enact careers job training consolidation                                                                        
 bill:                                                                                                          
    Budget authority......................     7,241    -1,137    -1,178    -1,189    -1,200    -1,209    -1,212
    Outlays...............................     7,695       -68      -922    -1,113    -1,168    -1,208    -1,212
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 500: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reduce subsidies to banks and guaranty                                                                          
 agencies and eliminate Government run                                                                          
 lending:                                                                                                       
    Budget authority......................     1,774      -894      -424      -788      -786      -826      -866
    Outlays...............................     2,062      -840      -336      -634      -769      -822      -852
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The discussions below explain in specific terms how other 
government programs and spending levels in this function would 
change as a result of the policy priorities described above. 
Although these descriptions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.
    Most of the additional savings are assumed to come from the 
following: phasing out the National Endowment for the Arts and 
Humanities, along with several other smaller programs; 
restoring equity in unemployment assistance; eliminating funds 
for politicized activities under the name of ``community 
service;'' restoring State and local authority over education 
standards; supporting the President's program terminations; 
freeing local school districts to promote English proficiency; 
discontinuing unneeded capital subsidies, as proposed in the 
President's 1995 budget; eliminating duplicative postsecondary 
grant programs, as recommended in the President's fiscal year 
1997 budget; eliminating burdensome categorical grant programs, 
as called for in the Careers bill and the President's budget; 
accepting the President's fiscal year 1996 proposal concerning 
aid to institutions; phasing out duplicative Robert C. Byrd 
scholarships; increasing funding for Historically Black 
Colleges by eliminating Howard University's special earmarked 
program; eliminating nonperforming Job Corps Centers; and 
eliminating the obsolete Office of the American Workplace. The 
effect of three welfare reform-related provisions--replacing 
the AFDC JOBS program; establishing two child protection block 
grants; and reducing funding for the Title XX Social Services 
Block Grant--occur in Function 500 as well.


                             Function 550:



                                 Health

                              ----------                              


                                              FUNCTION 550: HEALTH                                              
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $110,577   $129,918   $137,726   $144,995   $152,961   $161,114   $167,926
Outlays............................    122,977    130,276    138,064    145,168    152,890    160,789    167,476
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The proposals in this function carry out one of the 
fundamental goals of the budget resolution--shifting power, 
influence, and money out of Washington and back to people in 
their States and communities. That goal is expressed 
particularly regarding health insurance reform, the 
transformation of the Federal-State Medicaid program, and 
reform of Food and Drug Administration [FDA] procedures. It is 
exceptionally important in these areas because of the vital 
nature of reform for the Nation's health care.
    The discussion below reflects the assumptions underlying 
the House Budget Committee's recommendations concerning the 
funding priorities for programs in this function. But the 
actual policy changes for programs in this function fall under 
the authority of the authorizing and appropriating committees 
with jurisdiction over the programs. The committees of 
jurisdiction retain the authority to pursue alternative 
specific policies from those reflected in this report as long 
as they stay within the spending guidelines that flow from the 
budget resolution's spending limitations.

                        health insurance reform

    The budget resolution incorporates the insurance reforms 
and spending and revenue estimates of the House-passed Health 
Coverage Availability and Affordability Act of 1996 (H.R. 
3103). The measure expands access to health insurance and helps 
make it more affordable. It also contains portability 
provisions to assure that losing a job or changing jobs will 
not cost a family their health insurance coverage.
    Although health insurance reform has been a mounting 
concern over the past several years, previous Congresses, as 
well as the current administration, have failed to bring about 
needed reform, primarily because of their insistence on a 
centralized, government-controlled bureaucratic system of one-
size-fits-all health coverage. The 104th Congress acknowledged 
the Nation's rejection in 1993 of government control of their 
health care, and in response developed this current set of 
targeted reforms that meet the real needs and address the real 
fears of Americans who face the prospect of losing their health 
insurance coverage.
    By making health insurance more affordable and accessible, 
H.R. 3103 will have a significant impact on the health status 
of the approximately 20 percent of Americans who lack health 
insurance temporarily or throughout the year. These reforms 
will also have a positive effect on Federal entitlement 
spending and on the overall economy; it is estimated that 
uncompensated health care in the United States is currently 
costing between $35 billion and $40 billion per year.
    Insurance portability provisions in the bill allow 
individuals who lose or change jobs to maintain health 
insurance coverage. These provisions will relieve job-lock 
pressures, allowing many individuals to explore other 
employment possibilities and realize their full earning 
potential.
    The bill also helps expand health care coverage to small 
companies. According to the Employee Benefit Research 
Institute, 49 percent of all uninsured workers in 1994 were 
either self-employed or working in companies with fewer than 25 
employees. Small employer insurance pooling and a higher health 
insurance tax deduction for the self-employed will help small 
companies and the self-employed to afford and maintain health 
insurance.
    The bill adjusts the tax code to make medical savings 
accounts a viable option for purchasing health care. It will 
allow individuals to control their health care dollars and to 
benefit financially by making prudent health care purchases. 
Additional provisions include medical malpractice reform to 
help lower health costs nationally; tax incentives for the 
purchase of long-term care insurance; stiffer penalties for 
fraud and abuse; and administrative simplification of 
electronic health data transfers.

                     reform of the medicaid program

    Medicaid, the Federal-State health care financing system 
for the poor, is strapped by Federal regulations and explosive 
cost increases. The reforms assumed in this budget resolution 
would transform Medicaid into a system that can be tailored to 
meet the diverse needs of diverse populations--and at the same 
time slow the unsustainably high growth rate in the system's 
costs.
    Medicaid spending has been growing at an average annual 
rate of 19.1 percent between 1990 and 1994. During 1991, 
Federal Medicaid outlays grew by 27.8 percent. They grew 
another 29.1 percent in 1992. For fiscal year 1996, CBO 
estimates that Federal payments will be $95.7 billion and State 
payments will be an additional $72.2 billion (for a total of 
$168.0 billion). The fiscal year 1996 Federal payments include 
``disproportionate share hospital'' payments of $10.7 billion. 
These supplemental payments are made to hospitals that provide 
a disproportionate share of medical care to low-income 
populations, such as Medicaid and indigent patients.
    CBO projects Federal Medicaid payments rising by 7.5 
percent in fiscal year 1996, rising to an increase of 9.9 
percent in fiscal year 2002. These rates of spending growth are 
unsustainable. But they cannot be controlled by tinkering with 
the current system. Correcting the problem requires 
fundamental, systemic reform.
    First, State flexibility is essential to improved Medicaid 
effectiveness, responsiveness, and efficiency. The approach 
assumed in the budget resolution recognizes that State and 
local officials, providers, and recipients know best how to 
structure their Medicaid programs to meet the needs of their 
own populations. By limiting Federal preconditions that 
restrict the discretion of State and local authorities, the 
reform strategy also allows for much-needed innovations to 
improve the responsiveness of the Medicaid program.

    Reform Goals. Medicaid reform, if enacted, would achieve 
four goals: First, it would guarantee the basic health care 
needs of the Nation's most vulnerable populations. Second, it 
would restrain Medicaid health care expenditures to a 
sustainable rate of growth. Third, it would give States maximum 
flexibility in the design and implementation of cost-effective 
systems of care. Fourth, it would protect the States from 
unanticipated program costs resulting from economic 
fluctuations in the business cycle, changing demographics, and 
natural disasters.

    Reform Proposal. A comprehensive Medicaid reform plan was 
anticipated in the fiscal year 1996 budget resolution, and the 
needed legislative and policy changes were incorporated in the 
subsequent Balanced Budget Act of 1995. But the President 
vetoed that legislation. Since then, the Nation's Governors 
have developed their own Medicaid reform proposal, which is 
similar in important respects to the Balanced Budget Act. The 
Governors unanimously adopted the plan on February 6, 1996.
    The budget resolution again calls for Medicaid reform, 
built on the framework of the Balanced Budget Act and the 
Governors' February 6 agreement. Such a reform will give States 
and local communities the power they need to run health care 
programs for the poor in an efficient and effective manner, and 
also will gain needed control over Medicaid spending growth.
    The reform assumed in the budget resolution calls for a 
base allocation of Federal funds. Distribution among the states 
would be determined by such factors as the number of people in 
poverty; caseloads and eligibility categories (disabled, 
elderly, etc.); cost of providing care; and inflation. This 
base allocation of Federal funds is then blended with the 
concept of an insurance umbrella. Within the constraints of the 
required Federal budget savings, the insurance umbrella would 
assure adequate Medicaid funding even during recessions. States 
would continue to add their own funds to the Federal 
contribution to provide health care for low-income residents.
    The reform will make insurance coverage available to many 
who are currently uninsured. It also will dismantle the current 
Washington-run system: States will have the flexibility to 
create innovative health care programs for their low-income 
citizens. Some of the savings achieved through increased 
efficiency can be used to expand coverage to those with incomes 
up to 275 percent of the Federal poverty level.

    Contrast With the President's Approach. The approach 
recommended by the Nation's Governors and the budget resolution 
contrasts sharply with the President's ``per capita cap'' 
proposal. The President proposes to limit Federal funding that 
States could receive for each Medicaid recipient. Under the 
President's plan, any per capita expenses that exceeded this 
limit would have to be met solely by State and local taxpayers. 
This creates an unfunded mandate. States would be required by 
Federal law to provide medical assistance services but would 
receive no Federal funding to defray the cost of meeting this 
mandate.
    The President would retain most current Federal Medicaid 
regulations, which would continue to hamstring efforts to make 
Medicaid more efficient and responsive to local needs.

    Illustrative Option. Under the Budget Committee's Medicaid 
reform plan, Federal Medicaid outlays in fiscal year 2002 would 
be $140.2 billion, compared with fiscal year 1995 outlays of 
$89.1 billion, as estimated by CBO. States would continue to 
match the Federal dollars. Federal payments to the States would 
rise each year, but the growth would be restrained.
    Over the 6-year period fiscal year 1997 through 2002, a 
total of $731.3 billion would be spent by the Federal 
Government on Medicaid. The President's fiscal year 1997 budget 
proposed Medicaid spending of $749.7 billion over the next 6 
years.
    Federal Medicaid outlays per recipient would rise from an 
average of $2,475 in fiscal year 1995 to about $3,250 in fiscal 
year 2002. In addition, a $3.5-billion fund would be 
established to pay for the cost of providing health care 
services for undocumented aliens, and a $1.5 billion fund would 
be established to pay for the cost of providing health care 
services for native Americans.
    Again, the Medicaid reform envisioned in this budget 
resolution is designed to meet four goals: to guarantee the 
basic health care needs of the Nation's most vulnerable 
populations; to restrain Medicaid health care expenditures to a 
sustainable rate of growth; to give States maximum flexibility 
in the design and implementation of cost-effective systems of 
care; and to protect States from unanticipated program costs 
resulting from economic fluctuations in the business cycle, 
changing demographics, and natural disasters. Enactment of such 
reforms would assure that health care assistance for the needy 
would continue, and would be far more compassionate and 
responsive to their particular needs.

     structurally reform the food and drug administration's review 
                               procedures

    Make Lifesaving Drugs and Devices Available to Americans 
Through Reform of the Food and Drug Administration Review 
Process. The Food and Drug Administration's [FDA's] stated goal 
is to protect the public health through the prevention of 
injury or illness due to unsafe or ineffective products. The 
FDA has come under criticism, however, because of delays in 
drug and device approval and heavy-handed regulatory 
enforcement. An October 1995 General Accounting Office report 
stated that FDA review time for medical devices has increased 
in recent years. Although GAO reported a reduction in approval 
time for new drug applications in recent years, it is still a 
lengthy and costly process. Work force is not the issue; the 
FDA has almost 3,000 evaluators, compared with 400 in the 
United Kingdom. The United Kingdom has the same safety record 
as the United States, with a comparable review process.
    Chairman Bliley of the Committee on Commerce Committee has 
brought together the work of several Members of Congress and 
introduced three FDA reform bills (H.R. 3199, H.R. 3200, and 
H.R. 3201) covering drugs, food, and medical devices.
    The FDA reform assumed in this budget resolution would 
maintain existing or equivalent government standards and 
oversight, as well as the FDA stamp of approval. The 
significant feature is the movement to nongovernmental FDA 
certified organizations for the review and approval of drugs, 
biologics, medical devices, food additives, and nutritional 
health claims, as well as the use of FDA certified 
organizations to conduct good manufacturing practice 
inspections. The FDA would be the certifier of certifiers, and 
maintain standards for the reviewing process. It would continue 
to be the primary reviewer during the transition period, until 
a sufficient number of accredited organizations are certified. 
Budgetary savings would be realized by reducing FDA's 
evaluation and investigation budgets.

    Improve Provisions Allowing Domestic Companies to Export 
Certain Food and Drugs. This provision, contained in 
legislation sponsored by Representative Upton and included in 
the Balanced Budget Act, allows pharmaceuticals and medical 
devices not approved in the United States to be exported to any 
country in the world if the product complies with the laws of 
that country and has valid marketing authorization in one of 
the following countries: Australia, Canada, Israel, Japan, New 
Zealand, Switzerland, South Africa, or the European Union. Any 
person who exports a drug or device may request the Secretary 
of Health and Human Services to certify in writing that the 
exportation is legal. A fee of up to $175 is authorized for 
each written export certification.

    Expand the Benefits of Already Approved Drugs By Permitting 
Dissemination of Off-Label Drug Use Information. The FDA 
prohibits the dissemination of information on the use of drugs 
for treatments other than the FDA-approved usage. Many drugs 
are found to be effective on other illnesses, but the FDA 
requires a new application and full clinical trials for the new 
use. This is highly expensive, and delays treatment for 
patients that would benefit from treatment. Most cancer 
treatments are off-label uses of previously approved drugs. 
This proposal would allow the dissemination of information for 
off-label use of an approved drug. The drug has already met the 
safety standard in the previous clinical trial, and appropriate 
information should be allowed to be disseminated. This will 
reduce approval costs for both the government and the private 
sector.

      maintain increases in national institutes of health funding

    The budget resolution maintains the National Institutes of 
Health [NIH] as a funding priority. Increased funding of 5.8 
percent in the 1996 appropriation is maintained in the fiscal 
year 1997 budget. The report of the Committee on Appropriations 
for H.R. 2127, the Labor, Health and Human Services, and 
Education, and Related Agencies appropriations bill of 1996, 
stated:

        * * * the committee views NIH as one of its very 
        highest priorities and has made difficult resource 
        allocations throughout the bill to preserve what it 
        believes is the minimum necessary funding level for 
        NIH.

The resolution funding for NIH represents a 15.5 percent 
increase since the fiscal year 1993 budget. [Note: Because this 
proposal causes no change in fiscal impact, it is not reflected 
in the table below.]

                                 FUNCTION 550: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Structurally reform the Food and Drug                                                                           
 Administration's review procedures:                                                                            
    Budget authority......................       820         0       -66      -139      -564      -139      -139
    Outlays...............................       821         0       -49      -414      -135      -139      -139
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 550: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                          Spending change                       
                                           1996   --------------------------------------------------------------
                                           est.      1997      1998      1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Reform of the Medicaid Program:                                                                                 
    Budget authority...................    82,999    -2,000    -4,640    -8,380    -12,580    -18,040    -26,360
    Outlays............................    95,739    -2,000    -4,640    -8,380    -12,580    -18,040    -26,360
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                           1996                                                                 
                                           est.      1997      1998      1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Recommended Medicaid levels:                                                                                    
    Budget authority...................    95,739   102,850   110,890   118,090    125,690    133,600    140,220
    Outlays............................    95,739   102,850   110,890   118,090    125,690    133,600    140,220
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings in areas 
including: Accepting the administration's funding for the 
Health Resources and Services Administration; incorporating 
Indian health care services and facilities into the new Native 
American Block Grant; consolidating data collection and 
analysis functions at the Department of Health and Human 
Services; eliminating unnecessary funding in the Office of the 
Secretary and accepting the administration's funding level for 
departmental management; and consolidating duplicative 
bureaucracy by transferring the Mine Safety and Health 
Administration to the Occupational Safety and Health 
Administration and reducing the combined agency.
    The resolution also expressly rejects the administration's 
25-percent cut in the Centers for Disease Control and 
Prevention.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 570:



                                Medicare

                              ----------                              


                                             FUNCTION 570: MEDICARE                                             
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $181,254   $193,165   $207,183   $217,250   $229,309   $241,641   $255,121
Outlays............................    179,109    191,481    205,458    214,978    227,560    239,907    252,270
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

                     the current status of medicare

    There are just four basic points to be made about the 
Medicare program:

  - First, Medicare is going bankrupt. The Medicare hospital 
        trust fund will be out of cash and unable to pay 
        beneficiaries' hospital bills by 2001, if not sooner.

  - Second, to save it from bankruptcy, Medicare must be 
        reformed regardless of any other budgetary objectives. 
        Even if Congress were not trying to balance the budget 
        and roll back the 1993 tax increase, fundamental, 
        systemic reform of Medicare still would be necessary.

  - Third, the 104th Congress developed and passed a plan to 
        save Medicare without reducing benefits to individual 
        recipients. Although the President vetoed the original 
        plan, Congress is determined to continue in its efforts 
        to save Medicare. This budget resolution would increase 
        spending on each Medicare beneficiary from $5,200 in 
        1996 to $7,000 in 2002. Total program outlays would 
        increase from $196 billion in 1996 to $284 billion in 
        2002. This total spending increase amply covers 
        inflation and the growing number of Medicare 
        recipients. The spending level in this resolution will 
        accommodate maintaining the beneficiary premium at 25 
        percent of Part B program costs, and will preclude the 
        necessity to increase beneficiary copayments or 
        deductibles, all of which have been agreed to by the 
        leadership of the committees of jurisdiction of the 
        Medicare program.

  - Finally, Congress' plan expands health care choices for the 
        Nation's seniors. The plan, built on the demonstrably 
        successful model in the State of Arizona, allows 
        beneficiaries to keep their current Medicare coverage, 
        with no increased coinsurance or deductibles, while 
        also offering new alternatives for receiving health 
        care--many of which will substantially lower seniors' 
        current out-of-pocket health care expenditures.

    The Medicare crisis was cited in last year's House budget 
resolution in the following passage:

          Medicare is facing bankruptcy. On April 3, 1995, the 
        Social Security and Medicare Trustees reported that the 
        Federal Hospital Insurance Trust Fund (Medicare Part 
        A)--which pays for hospital and institutional care for 
        Medicare beneficiaries and which is funded by the 
        Medicare payroll tax--will run out of money in 7 years, 
        or by 2002, under current law.

    Just 1 year later, the Medicare crisis is even more urgent. 
In October, a Treasury Department report revealed that the 
Hospital Insurance Trust Fund already was running an operating 
deficit in fiscal year 1995, a year earlier than previously 
projected. The March 1996 Treasury report recorded that for the 
first half of fiscal year 1996, the trust fund ran a $4.2 
billion deficit. According to Roland ``Guy'' King, former chief 
actuary of the Health Care Financing Administration [HCFA], 
this means the trust fund now will likely go bankrupt in 2000 
instead of the previously estimated 2002.
    In testimony before the Committee on Ways and Means on 
April 30, 1996, the Congressional Budget Office warned that the 
Medicare program's financial inadequacy must be addressed 
immediately:

        * * * fixing Medicare's financing problems will not be 
        easy * * *. To ensure solvency of the HI trust fund 
        just through 2006 would require an increase in the HI 
        payroll tax of 0.7 percentage points--about 25 
        percent--starting in January. Alternatively, the rate 
        of growth of HI outlays would have to be slowed by more 
        than 3 percentage points --from 8 percent to about 4.5 
        percent a year. Larger changes would be required to 
        bring the growth of SMI [supplemental medical 
        insurance] spending in line with the growth of the 
        economy. Postponing action would make the necessary 
        policy actions even more severe.

    But the Medicare crisis is not simply financial. It 
concerns the need to restore the trust of those who rely on the 
guarantee of Medicare. It is about preserving a program that is 
in danger of failing not only its future beneficiaries but also 
those who depend on Medicare for meeting their health care 
needs now. It is also about taking power and control from a 
centralized bureaucracy and returning seniors' health care 
choices to those best suited to judge their needs--the seniors 
themselves.
    Through the first half of 1995, the administration sought 
to hide the problem, then resorted to politicizing Congress' 
efforts to address it. For example, even though the 
congressional Medicare reform bill--the Medicare Preservation 
Act--would have allowed the program to grow by over $100 
billion through 2002, the administration proclaimed daily that 
Congress wanted to ``cut'' Medicare. Such commentary was 
especially cynical considering that less than 2 years ago, the 
President, in his Health Security Act, proposed reducing 
Medicare spending growth by a greater amount than was later 
recommended in the Medicare Preservation Act.
    After vetoing Congress' original Medicare reform, the 
President demonstrated an unwillingness to help develop a 
mutually agreeable plan to save Medicare, even after the 
congressional leadership offered $102 billion more spending 
than the original MPA. Instead of true reform that would ensure 
a financially sound future for the Medicare Program, the 
President proposed to shift $60 billion of part A spending for 
home health benefits to the part B trust fund. If implemented, 
this proposal would require billions more in taxpayer-financed 
payments to sustain the Medicare Part B program.
    In addition to saving the program from bankruptcy, the 
Medicare Preservation Act would have prepared Medicare for the 
retirement of the baby boom generation and modernized it to 
provide more health coverage options for beneficiaries. Some of 
these options, including expanded HMO's, provider service 
organizations, and medical savings accounts would have 
significantly reduced beneficiaries' out-of-pocket health care 
expenses. While beneficiaries could stay with the Medicare fee-
for-service system so many of them are now accustomed to, this 
bill would have allowed them, if they desired, to experiment 
and tailor their health care coverage to meet their individual 
financial, medical, and lifestyle needs.
    The 1997 budget resolution provides funding levels designed 
to address fundamental reform of the Medicare Program. Such 
reform would strengthen the Medicare Part A Trust Fund and 
provide expanded choices for health care delivery to the 
Nation's seniors. The spending anticipated in this resolution 
will accommodate maintaining the beneficiary premium at 25 
percent of part B program costs which has been agreed to by the 
leadership of the committees of jurisdiction of the Medicare 
Program.
    The resolution also calls on the President, as soon as 
possible, to release the latest findings of the Medicare 
Trustees so that Congress and the administration may have an 
up-to-date assessment of what reforms are necessary.

                 arizona's successful model for choice

    The Medicare plan assumed in this resolution would bring 
market forces and competition to the Medicare program across 
the country, with the benefits accruing to seniors. Evidence 
for this model was recently documented in a report in the New 
York Times that described in detail the success of Medicare 
managed care in Tucson, AZ: 42 percent of all Medicare 
beneficiaries in Tucson have chosen HMO's as their preferred 
health care delivery option.
    A high penetration of private managed care companies 
offering Medicare coverage has created a climate of competition 
among providers. As a result, providers offer additional 
benefits and lower out-of-pocket costs to attract Medicare 
beneficiaries to their plans. The Times article cited 
advertisements for plans extolling no monthly premiums or 
deductibles, free mammograms, and low-cost prescriptions. On 
the other hand, seniors who choose traditional Medicare spend 
up to $2,500 per year on their monthly Medicare premium, 
hospital and physician deductibles, supplementary insurance, 
and prescription drugs--and they do not receive the benefits of 
preventive care coverage. This phenomenon echoes the experience 
of private-sector companies such as Xerox, Kodak, and IBM, 
which learned--as detailed in testimony to the Committee on the 
Budget--that more choices of health coverage and innovations in 
care increase quality and lower costs.
    Only 1.2 percent of beneficiaries who sign up for managed 
care plans in Arizona return each month to the traditional 
Medicare plan. In a State poll for the Arizona Hospital and 
Health Care Organization last November, the Gallup Organization 
found that the elderly in HMO programs in Arizona were more 
satisfied than health care consumers in all other kinds of 
programs, including fee-for-service Medicare, employer-financed 
HMO's and employer-financed insurance programs permitting 
workers unrestricted choices of doctors.
    Arizona's Medicare managed care system is highly developed 
because the State was given a regulatory waiver to offer 
managed care plans to its Medicaid population. This enabled the 
health plans to develop the networks and infrastructure 
necessary for efficient health care delivery for all interested 
Arizona residents. Today, competition for beneficiaries is 
improving benefits and quality of care.
    The Medicare reforms embraced in this budget resolution 
would spread the success of the Arizona experience across the 
country to the benefit of all Medicare enrollees. Reforms are 
necessary because Medicare's current payment system and 
regulations as well as the program's very limited options for 
health care delivery create serious barriers to successful 
implementation of private-based Medicare plans. Congress' 
reforms would enable and encourage broad competitive markets 
with more types of health coverage than are now available, and 
would increase the amount paid to private plans in low-cost 
areas to make private plans viable where they are not now.
    The Medicare proposal would also include reforms to 
facilitate provider service organizations, repeal of the law 
restricting the percentage of seniors covered by a plan, and 
other measures that would open the way for more choices of 
efficient and high quality health care options.
    The specific Medicare reforms to be developed fall under 
the authority of the authorizing committees with jurisdiction 
over the program. The committees of jurisdiction retain the 
authority to pursue alternative specific policies from those 
reflected in this report as long as they stay within the 
spending guidelines that flow from the budget resolution's 
spending guidelines. The nature of the Medicare reform 
anticipated in this budget resolution would follow the 
illustrative framework described below.

                Recommendation: The Medicare Reform Plan

    The fact that the Hospital Insurance Trust Fund is going 
broke and Medicare Part B is growing at 13 percent (four times 
the rate of inflation) clearly indicates that the program must 
be reformed if it is to continue providing benefits for current 
seniors and be available to future retirees.
    The Medicare reform recommended in this budget resolution 
would fully account for the increase in the Medicare population 
over the budget period. It would increase average Medicare 
spending on each beneficiary from $5,200 in 1996 to 
approximately $7,000 in 2002. Overall, the plan would spend 
approximately $1.479 trillion on Medicare over 6 years, 
Medicare spending in 2002 would be an estimated $284 billion--
$107 billion more than the 1995 level of $177 billion.
    The Medicare reforms would expand choice of health care 
coverage for seniors, preserve the option to choose one's 
doctor, and allow beneficiaries to realize savings from prudent 
health care spending with medical savings accounts. These 
changes would help bring to Medicare the innovations and cost 
control already experienced in the private sector.

                             beneficiaries

    Under the proposed reform, Medicare beneficiaries would 
have the option of remaining in the traditional Medicare fee-
for-service plan. If they choose the traditional plan, they 
would have no increased copayments or deductibles, and their 
part B premium payment would remain at the current 25 percent 
of program costs. Alternatively, beneficiaries nationwide would 
be able to choose from a variety of new private plans according 
to their needs. For example, for beneficiaries who want 
preventive benefits--which traditional Medicare does not 
currently offer--he or she would have the option to choose a 
private plan that includes such benefits. Some plans also would 
allow beneficiaries to determine, at the point a service is 
needed, whether to receive the service from their regular plan 
or to receive it from outside the plan. The budget resolution's 
spending guidelines also allow for additional, new preventive 
screening benefits in the traditional Medicare benefit package.

                            fraud and abuse

    Estimates of the annual cost of fraud and abuse in the 
Medicare program are as high as $18 billion. This problem was 
addressed in the Medicare Preservation Act in an amendment 
offered by Representative Shays of the Budget Committee and 
Representative Schiff of the Judiciary Committee. The amendment 
established criminal statutes under which the Department of 
Justice could prosecute perpetrators of health care fraud, 
instead of continuing to rely on antiquated wire fraud and mail 
fraud statutes to counter increasingly sophisticated health 
care fraud schemes.
    A similar provision has been subsequently incorporated into 
the Health Coverage Availability and Affordability Act of 1996 
(H.R. 3103), passed by the House on March 28 and assumed in 
this budget resolution. The bill establishes mandatory 
appropriations for Medicare payment safeguards and for the 
antifraud activities of the inspector general of the Department 
of Health and Human Services and the Federal Bureau of 
Investigation. According to CBO, data indicate that an 
additional dollar devoted to the IG's enforcement activities 
would return $7 in recoveries. Data from the FBI's Health Care 
Fraud Unit indicate a 9-to-1 ratio of recoveries to cost.
    H.R. 3103 increases current civil monetary penalties for 
fraudulent claims for reimbursement under Medicare and Medicaid 
and applies these penalties to all Federal health programs. 
Penalties apply to individuals for bill-coding violations, 
prescribing services that are not medically necessary, 
kickbacks, falsifying home health services, failure by HMO's to 
fulfill their contracts. In addition, the Secretary of HHS is 
required to exclude providers from participation for 3 years 
following felony convictions for fraud, obstructing an 
investigation, and violations of controlled substance statutes. 
As in the Medicare Preservation Act, this bill would make 
certain offenses involving health care fraud Federal crimes.
    The budget resolution also recommends the adoption of H.R. 
3225, sponsored by Representative Shays, which contains an 
additional antiwaste and abuse initiative. This initiative 
would expedite implementation of new payment adjustments for 
durable medical equipment [DME], ensuring that the Medicare 
program captures savings available from the competitive DME 
marketplace. Currently, although Medicare is the largest single 
purchaser of DME with over $2 billion in annual expenditures, 
the program pays rates far above private payor rates for DME. 
The inspector general of the Department of Health and Human 
Services has called the current DME adjustment system--which 
modifies prices Medicare pays for DME--``absurd.''

                               providers

    In General. The budget recommends a variety of provider 
payment reforms and calls for incentives for providers to 
deliver services more efficiently and with the utmost attention 
to quality of care. Under the assumed framework for reform, 
hospital payments would increase each year by the rate of 
inflation minus a factor for productivity increases. The plan 
also allows for special provisions for rural and urban 
hospitals. These options could include, among others, the 
Medicare Dependent Small Rural Hospital Program, a rural 
emergency access hospital program and continued add-on payments 
for Disproportionate Share Hospitals. Payments to physicians 
for Medicare services would be made consistent across provider 
service-types. Primary care physicians in an area with a 
shortage of providers would receive an additional payment 
increase to help ensure that Medicare beneficiaries have 
accessible health care services.

    Provider-Sponsored Organizations. A major initiative to 
strengthen the Medicare program would allow Medicare payment to 
provider-sponsored organizations. The plan would enable 
hospitals, doctors, and other provider affiliations to offer 
plans, thereby competing with HMO's and other health plans for 
Medicare beneficiaries. This competition would expand market 
forces among providers and plans and enhance the opportunity 
for the Arizona Medicare experience to be replicated.

                        medical savings accounts

    Medical savings accounts would enable seniors to have 
control over their health care spending and allow them to 
realize the benefit of prudent health spending. The traditional 
Medicare plan has deductibles that must be paid out-of-pocket 
or by beneficiary-purchased MediGap plans. Under the Medicare 
reform envisioned in this budget, a beneficiary who chose a 
medical savings account would receive high-deductible 
catastrophic health insurance coverage, and Medicare would make 
contributions to a savings account that the beneficiary could 
use to pay noncatastrophic medical expenses.

                        medical liability reform

    The budget resolution also incorporates the revenue 
estimates of the medical liability reform measures contained in 
H.R. 3103. This long-needed reform will bring balance to 
medical liability cases, and lower health costs over the long 
run.

                               Conclusion

    Without enactment of the kinds of reforms outlined above, 
there is serious danger that the Medicare Program will not be 
able to serve many of the people who now depend on it. Its 
availability to future retirees also would be in serious doubt. 
As noted earlier, Medicare must be reformed regardless of any 
efforts to balance the budget or roll back the 1993 tax 
increase. Without such reform, the program will go bankrupt.
    But the Medicare reforms called for in this budget aim at 
more than extending the life of the program. They seek to 
strengthen and improve Medicare--to make it better serve 
beneficiaries through more updated and effective health care 
delivery methods, and through a more sound benefits and payment 
structure. These benefits can occur only if serious, credible 
Medicare reforms such as these are enacted.

                                   FUNCTION 570: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                         Spending change                        
                                         1996   ----------------------------------------------------------------
                                         est.      1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Strengthen and improve Medicare for                                                                             
 America's seniors:                                                                                             
    Budget authority.................   178,223    -6,800    -11,278    -20,989    -29,114    -39,320    -50,600
    Outlays..........................   176,083    -6,800    -11,278    -20,989    -29,114    -39,320    -50,600
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                         1996                                                                   
                                         est.      1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Recommended Medicare levels: \1\                                                                                
    Budget authority.................   198,191   210,746    227,579    240,249    255,081    270,096    286,655
    Outlays..........................   196,051   209,062    225,854    237,977    253,332    268,362    284,254
----------------------------------------------------------------------------------------------------------------
\1\ Includes total Medicare spending funded from trust fund revenues and premiums.                              



                             Function 600:



                            Income Security

                              ----------                              


                                          FUNCTION 600: INCOME SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $219,334   $232,612   $241,254   $244,842   $262,510   $262,260   $281,100
Outlays............................    228,879    240,107    244,185    251,716    263,060    265,271    277,213
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The budget assumes a comprehensive welfare reform plan 
designed to shift decisionmaking authority from Washington to 
States and local communities while increasing the ability of 
welfare recipients to break out of the cycle of poverty. Major 
proposals also are offered in this function as well as in 
Functions 920, 950, and Revenues, to strengthen the integrity 
of Federal retirement programs. Proposals in this function also 
seek to reassess the Federal role in assisted and public 
housing. The actual policy changes for programs in this 
function fall under the authority of the authorizing and 
appropriating committees with jurisdiction over the programs. 
The committees of jurisdiction retain the authority to pursue 
alternative specific policies from those reflected in this 
report as long as they stay within the budget resolution's 
spending limitations. The discussion below reflects the 
assumptions underlying House Budget Committee's recommendations 
concerning the funding priorities for programs in this 
function.

                             welfare reform

    The hazards of an expansive welfare state were succinctly 
expressed by President Franklin D. Roosevelt in his 1935 State 
of the Union Address:

          Continued dependence upon relief induces a spiritual 
        and moral disintegration fundamentally destructive to 
        the national fiber. To dole out relief in this way is 
        to administer a narcotic, a subtle destroyer of the 
        human spirit.

    President Roosevelt's view was prophetic. The current 
welfare system is a failure. It traps recipients in a cycle of 
dependency. It undermines the values of work and family that 
form the foundation of communities. It rends the social fabric 
of the Nation by breeding drug addiction, illegitimacy, crime, 
and child abuse. It contributes to the public's frustration 
with their government for siphoning an ever-increasing share of 
national wealth into a bureaucratic system that has failed over 
the past 30 years to significantly lower the proportion of 
those living in poverty.
    In 1994, total spending on benefits for low-income persons 
climbed to a record high of 5.1 percent of gross domestic 
product, or more than double the share of gross domestic 
product [GDP] of such programs in 1968. Federal dollars made up 
71 percent of that total spending. Yet, despite this explosion 
of welfare spending, AFDC enrollment during the past three 
decades has increased five-fold, illegitimacy has increased 400 
percent, and violent crime has risen 560 percent.
    A primary cause of this failure is that the total package 
of welfare and income support programs pays more than work in 
many of America's communities. According to a Cato Institute 
study of benefits available to low-income persons in the 50 
States, welfare pays more than the average first-year salary 
for a teacher in 9 States. The Cato study also reported: in 29 
States welfare pays more than the average salary for a 
secretary; in 40 States, welfare pays more than an $8.00 per-
hour job; and in the most generous States, welfare pays more 
than the entry level salary for a computer programmer. Clearly, 
if welfare reform is about work, real reform must reverse the 
current system's disincentives to work.
    This budget assumes the goals and overall framework of H.R. 
4, the Personal Responsibility and Work Opportunity Act of 
1995, passed by Congress but twice vetoed by the President. 
These proposals attack the two main causes of long-term welfare 
dependency--child bearing out of wedlock and lack of 
participation in work.
    The policies assumed in the budget resolution would go 
significantly farther than do the proposals contained in the 
President's fiscal year 1997 budget submission toward achieving 
the goal of ``ending welfare as we know it.'' To better ensure 
that a significant share of welfare families would eventually 
become self-sufficient, they would implement tougher work 
requirements than those suggested by the President. They would 
end the individual entitlement to cash welfare benefits, which 
the President's plan would not. They would make meaningful 
reforms in the Food Stamp Program and restrain the growth of 
spending over time without cutting individual benefit levels, 
unlike the President's proposal. They would end welfare as an 
immigration magnet: Persons immigrating to the United States 
should come for the work opportunities the Nation's economy has 
to offer, not for the taxpayer-subsidized benefits a generous 
society has chosen to provide to its own less-fortunate few.
    The descriptions below provide an illustrative framework 
for the kind of welfare reform envisioned in this budget 
resolution. Most of the items fall within Function 600; the 
Child Protection Block Grants are reflected in Function 500, as 
is the AFDC JOBS Program and the Social Services Block Grant.

    Block Grants for Temporary Assistance for Needy Families. 
This component of the reform would consolidate four Federal 
cash welfare assistance programs into a single block grant to 
the States and set a fixed funding level through fiscal year 
2000. States would be empowered to design their own basic cash 
assistance programs to encourage work and self-sufficiency. The 
plan would discourage illegitimacy by requiring beneficiaries 
to establish paternity, by allowing States to deny benefits to 
unwed teenage mothers and to deny additional benefits to 
mothers who have additional children while receiving welfare 
benefits. By 2002, States would be required to have 50 percent 
of their welfare caseloads working at least 35 hours per week. 
The plan would establish a 5-year lifetime limit on welfare 
eligibility per individual. The block grant also would replace 
the AFDC JOBS program [further discussed in Function 500].

    Supplemental Security Income [SSI] Reforms. This part of 
the plan would make several reforms to SSI, including 
increasing penalties for persons who fraudulently obtain SSI 
benefits, and denying benefits to fugitive felons and parole 
violators. Eligibility criteria for disability benefits for 
children would be tightened to ensure that children who qualify 
for benefits meet the legally defined criteria of disability. 
Current lax program rules allow children to qualify for 
disability benefits based on individual functional assessments 
[IFA's] which permit benefits of up to $450 per month to 
children who display ``age inappropriate behavior'' or other 
disciplinary problems that do not represent genuine 
disabilities. Numerous examples have come to light of parents 
coaching children to misbehave in order to qualify for 
benefits.

    Child Support. This component would improve the collection 
and dissemination of information on court-ordered child support 
to increase compliance with support orders. It also would 
include provisions to improve performance of paternity 
establishment among mothers giving birth out of wedlock.

    Restricting Welfare and Public Benefits for Aliens. This 
reform would make aliens categorically ineligible to receive 
Supplemental Security Income [SSI] and Food Stamp benefits 
until they obtain United States citizenship. Exceptions would 
be made for persons who served in the U.S. military or their 
dependents and persons who have worked in the United States and 
paid Social Security taxes for at least 40 quarters. Alien 
sponsorship agreements would be made legally enforceable and 
the ``deeming'' period--during which the sponsor's income is 
considered available to the alien when applying for means-
tested public benefits--would be extended to the aliens 
obtaining citizenship. Under current immigration laws, becoming 
a public charge is a deportable offense, although this is 
rarely enforced. By strengthening the enforceability of alien 
sponsorship agreements, this reform would require an alien's 
family or charitable agency sponsor to provide for the economic 
well-being of aliens they brought into the United States.

    Reductions in Federal Government Positions. This component 
would reduce the number of Federal positions in administrative 
agencies that currently oversee the Aid to Families with 
Dependent Children [AFDC] Program.

    Reform of Public Housing. This reform would ensure that 
persons receiving Federal housing assistance would not see 
those benefits increased if they were sanctioned for failure to 
comply with requirements of other welfare programs, such as the 
work requirements for cash welfare benefits.

    Establish Two Child Protection Block Grants. The plan would 
create a child protection program consisting of three major 
elements: open-ended entitlements to foster care maintenance 
and adoption assistance payments; a Child Protection block 
grant consolidating programs authorized under the Social 
Security Act; and a Child and Family Services block grant 
consisting of programs authorized under the Child Abuse 
Prevention and Treatment Act and other laws authorizing both 
services and funding for research and training in the area of 
child protection. Creating the block grants would permit 
consolidation of 20 separate child protection programs, 
providing States with greater flexibility to respond to 
incidences of child neglect and abuse. [Please note: The fiscal 
impact of this portion of the welfare proposal occurs in 
Function 500.]

    Child Care Block Grant. This component would consolidate 
eight current Federal child care assistance programs into a 
single administrative structure with two funding streams. With 
these funds, States would finance child care benefits for 
persons who were required to get off or remain independent of 
welfare. The reform would eliminate current requirements that 
siphon more than 25 percent of Federal child care funding for 
centralized government planning and program administration. It 
would enhance parental freedom to choose the child care 
providers they preferred.

    Child Nutrition Programs. This reform would lighten the 
Federal regulatory burden on local school lunch and breakfast 
programs and makes illegal aliens ineligible to receive free or 
reduced price meals in federally funded child nutrition 
programs. Meal reimbursement rates would be reduced for child 
care providers participating in the Family Day Care Home 
Program who live in middle- or upper-income neighborhoods. This 
step would be taken to introduce a means test in a program that 
currently provides free meals to children receiving day care in 
a home setting regardless of that child's family's income. 
Thus, the reform would better target child nutrition spending 
to low-income children.

    Food Stamp Reforms. This component would create a 
simplified Food Stamp Program under which States would link the 
administration of their food stamp benefits with their cash 
welfare programs for the 40 percent of food stamp recipients 
who also received cash welfare benefits. Additionally, persons 
between the ages of 18 and 50 would be required to work at 
least 20 hours per week after receiving food stamp benefits for 
4 months. Reforms would be made to limit the number of indexing 
provisions in the program, which expand benefits over time. 
Future benefit increases would be linked only to increases in 
the cost of food. A State could qualify to receive its food 
stamp funding as a block grant if it established a system for 
electronic benefits transfer and if it met certain program 
integrity standards. Penalties for food stamp fraud and 
trafficking would be increased.
    Miscellaneous Provisions. These provisions would include a 
10-percent reduction in funding for the Title XX Social 
Services Block Grant [reflected in Function 500], requiring the 
Secretary of HHS to develop a strategy for reducing unwed 
teenage pregnancies, and reserving $75 million in funding in 
the Maternal and Child Health block grant for educational 
programs encouraging teenagers to abstain from sexual activity.

        ensuring the soundness of the federal retirement system

    Representative John L. Mica, chairman of the Government 
Reform and Oversight Subcommittee on Civil Service, presented a 
clear warning about the Federal retirement system in testimony 
to the House Committee on the Budget on March 22, 1996:

          The Civil Service Retirement Disability Fund [CSRDF] 
        suffers from a history of fiscal practices that relied 
        on the deferral of actual costs of annuities to future 
        generations of taxpayers. We are that future 
        generation, and we can no longer defer these costs.

    The current Federal civilian retirement system is a 
composite of various components implemented between the 1920's 
and the 1980's. It reflects an evolution of ideas about the 
purpose of a pension system in the context of an overall 
employee compensation package. In the 1930's and 1940's, 
pensions served a dual purpose of providing a secure retirement 
future for Federal employees and discouraging turnover in the 
work force at a time when wages may not have been fully 
competitive with private sector compensation. The needs of 
today are changing as work force trends indicate a growing 
desire for greater pension portability.
    Equally significant, the characteristics of the system led 
to the buildup of a $540 billion unfunded liability. Although 
some of the characteristics of the system have been changed, 
the method of financing current and future benefits still poses 
substantial risk to system participants of future benefit 
reductions. In 1997, the Treasury will pay out $41.3 billion in 
pension benefits to retirees and survivors. The retirement 
system will take in approximately $10 billion in cash receipts 
from employee payroll deductions and from cash contributions 
from the U.S. Postal Service. The general fund of the Treasury 
will make up the $30 billion difference needed to finance 
benefit payouts.
    According to the Annual Report of the Office of Personnel 
Management [OPM], by the year 2002, that $30 billion difference 
will become $41.6 billion. That amount will continue to climb 
rapidly in coming decades, to $73.5 billion in 2010 and to more 
than $164 billion by the year 2030. The President's budget 
submission for fiscal year 1997 notes that taxpayers paid $408 
billion to fund Federal civilian pension benefits during the 
last 35 years; 35 years from now, that $408-billion subsidy 
will cover only 3 years of benefits promised to retirees. 
Clearly, the burden of providing current benefit levels with 
such a system of financing is unsustainable over time. Congress 
cannot assume that future taxpayers will simply acquiesce to 
the ever-increasing tax burden needed to make good on these 
benefit promises.
    The Federal civilian retirement system is primarily 
composed of two major retirement plans, the Civil Service 
Retirement System [CSRS] and the Federal Employees Retirement 
System [FERS]. CSRS was established in the 1920's as a pay-as-
you-go system, with a defined benefit paid to current retirees 
financed through retirement contributions of current employees, 
plus a government contribution representing the employer's 
share. System participants do not participate in Social 
Security. Due to the system's original design, employing 
agencies have never paid the full normal cost necessary to 
ensure sufficient reserves to pay promised benefits. Until 
1969, an amount less than necessary to finance future benefits 
was deposited in the CSRDF, causing the buildup of an unfunded 
liability which grew to $540 billion by 1984. The CSRS system 
was closed to new entrants on January 1, 1984.
    The successor system to CSRS is known as the Federal 
Employees Retirement System. FERS participants also participate 
in Social Security. They have the option of making tax-deferred 
contributions to the Thrift Savings Plan, which invests their 
contributions in marketable government and private sector bonds 
and securities. The Federal Government matches employee 
contributions to TSP of up to 5 percent. FERS participants also 
qualify for a defined benefit whose structure is similar to the 
CSRS benefit, but which provides a significantly lower salary 
replacement rate and employee contribution because of the 
availability of Social Security and the Thrift Savings Plan. 
Employing agencies bear the full brunt of the amount of the 
full normal cost of the system not paid by the employees 
themselves in their employee contributions.
    Although the development of FERS was a significant 
improvement over CSRS, the plan still contains the basic 
shortcoming of depending on a pay-as-you-go defined benefit for 
an important portion of its future promised benefits. Thus, 
rather than investing the employer and employee contributions 
in real, marketable securities that will grow in value over 
time to enable the payment of future benefits, the system 
continues to rely on ``investment'' of the contributions in 
nonmarketable government securities. These nonmarketable 
securities are simply IOU's promising future payments to plan 
participants from the taxes levied on future generations of 
American workers.
    To count on the generosity of future generations is clearly 
a risky proposition for today's Federal workers. Moreover, it 
also may offer a lower future rate of return than might be 
available through the buildup of appreciating assets in the 
marketplace. The recent history of the Thrift Savings Plan has 
shown that the longer-term performance of retirement 
contributions invested in marketable private sector and 
government securities can earn an average annual return of 
between 10 percent and 13 percent.
    The budget resolution makes assumptions in Federal 
retirement programs designed to lower the costs of the system 
to taxpayers in an effort to protect future benefits for 
retirees and for current Federal workers. Many of these 
proposals were agreed upon during budget negotiations between 
the congressional leadership and the President in December 
1995.
    Chief among these initial reforms is an increase in the 
contributions current employees make into the retirement 
system. The current distribution of the burden of financing 
Federal retirement benefits relies on taxpayers to provide 72 
percent of total funding. The increase in the employee share is 
the first since 1969, although during the first five decades of 
the Federal retirement system the employee contribution was 
increased on the average of once every 6 years. The increase 
appears in the Revenues section of the budget resolution.
    To enable employees now in CSRS who would like to take 
advantage of the full benefits of the Thrift Savings Plan by 
converting to the FERS system, the budget resolution also 
assumes an open season permitting such transfers. This will 
reduce overall long-term pension costs for agencies employing 
persons who choose this option, because the full normal cost of 
CSRS accruing benefits is 25.4 percent of payroll, while the 
full normal costs of accruing FERS benefits is only 12.4 
percent of payroll. This provision appears in Functions 920, 
950, and Revenues.
    While the budget resolution assumes no comprehensive 
overhaul of FERS, it is noted that the Government Reform and 
Oversight Subcommittee on Civil Service is exploring potential 
options for creation of a new retirement system for prospective 
Federal employees. Clearly, such an approach is the only long-
term solution to the financing problems inherent in pay-as-you-
go defined benefit retirement plans. The committee encourages 
the Subcommittee on Civil Service to develop proposals for 
creating a retirement system in which employer and employee 
contributions are invested in real marketable private sector 
and government securities. It is hoped that plans can be 
developed to increase pension portability and better shield 
future retirees from benefit changes resulting from the 
political process.
    Those portions of the retirement reforms that appear in 
Function 600 are described below:

    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. The 1993 budget reconciliation act placed a 3-month 
delay on COLA's for civilian retirees through fiscal year 1996. 
This proposal extends that delay through 2002. Federal retirees 
will still receive a COLA every 12 months, as they have since 
1994. This proposal was included in the Balanced Budget Act and 
in the President's 1997 budget submission.

    Conform Military Retirement COLA Receipt Date to Current 
Law. This proposal extends the COLA equity provisions of H.R. 
1530, the National Defense Authorization Act, through fiscal 
year 2002. These provisions ensure that military and civilian 
retirees will be treated alike by providing for a 3-month COLA 
delay for military retirees beginning in fiscal year 1998.

    Congressional Pension Reform. Currently, Members of 
Congress and their staff receive more generous Federal pension 
benefits than most other Federal employees. When Congress 
created the Congressional Pension System in 1946, it 
established a 2.5-percent benefit accrual rate for Members and 
congressional employees. That means that after 20 years of 
service, Member and staff pensions would equal 50 percent of 
the base salary, and after 30 years service, benefits would be 
75 percent of base pay. The benefit formula for most other 
Federal employees equals 36 percent of base salary after 20 
years and 56 percent of base pay after 30 years.
    This proposal conforms Member and staff accrual rates for 
those covered by the Civil Service Retirement System to the 
accrual rate of most other Federal employees, currently 2 
percent. The Civil Service Retirement System includes all 
employees who began service prior to January 1, 1984. The 
proposal also eliminates a similar favorable accrual rate for 
Members and congressional staff under FERS. Currently, Members 
and staff have an accrual rate of 1.7 percent, while all other 
Federal employees have an accrual rate of 1 percent if they 
retire before age 62 and 1.1 percent if they retire after 62. 
The proposal conforms Members of Congress and staff accrual 
rates and pension contribution amounts to those applied to most 
other Federal employees. The proposal was included in the BBA 
and in the President's budget submission.

  reassess and reform the federal role in assisted and public housing

    The current era reflects abundant examples of the failure 
of centralized government. Even so, the Department of Housing 
and Urban Development is singular in its spectacular failure to 
address the problems associated with housing the Nation's least 
fortunate families. Further, it is a living testament to the 
way the most sincere advocates of government solutions can 
actually devastate those they seek to help. The unintended 
consequences of many Federal housing policies have been 
blighted neighborhoods, crime-infested projects, and 
hopelessness among the inhabitants of the Nation's inner 
cities. This has been wrought by a Federal bureaucratic 
superstructure that imposes solutions without regard to the 
unique elements of a community. Every neighborhood is diverse 
and complex, a fact that dooms any attempt to dictate answers 
from a distant capital. But this does not have to be the case. 
The budget resolution recognizes that these neighborhoods are 
teeming with possibilities. By removing government impediments, 
Congress can enable local citizens to take back their 
neighborhoods and break the stranglehold of crime, drugs, and 
despair.
    The Federal Government's role in housing policy began in 
1934 with the creation of the Federal Housing Administration, 
followed in 1937 by the creation of the Public Housing 
Administration. The Department of Housing and Urban Development 
was created in the 1960's, presumably to coordinate efforts and 
increase the prominence of ``urban issues.'' Since its 
inception, HUD has suffered a host of well-documented problems, 
from management ineffectiveness and unclear mission to scandal 
and outright failure. The National Academy of Public 
Administration's 1994 comprehensive study of the Department 
found flaws in its very structure that created a ``prescription 
for problems.'' HUD's mission is scattered and unclear and its 
focus is on programs and policies, not problems and solutions. 
The unintended consequence of many of HUD's programs is 
intensely concentrated poverty in certain neighborhoods, which 
creates stretches of urban landscape devoid of economic 
opportunity. A recent Urban Institute report noted:

          National housing programs have tended to concentrate 
        rather than disperse the poor, which reduces their 
        social and economic opportunities and increases racial 
        and economic segregation.

    HUD has even earned the enmity of many residents of the 
inner city. In fact, recently Secretary of Housing and Urban 
Development Henry G. Cisneros toured a major American city in a 
white unmarked car. He asked one of the HUD representatives 
traveling with him why he did not put a HUD seal on the car so 
that people could see HUD's presence when they traveled to 
community meetings. The representative said:

          First, we don't go to community meetings. And second, 
        if residents knew it was a HUD vehicle, we would 
        probably be inviting them to vandalize it.

    As spending has vastly increased over the past three 
decades, and as programs have proliferated, a tangle of special 
interests has grown up around the housing bureaucracy. These 
groups are beholden not to the communities and families they 
ostensibly serve, but to the Federal authorities, both in 
Congress and at HUD, controlling access to taxpayer money. They 
have consistently smothered efforts at major reforms.
    This failure to reform Federal housing policy has led to an 
untenable budgetary situation. A massive increase in budget 
authority will be required to maintain the present structure of 
assisted housing, both tenant- and project-based. Past 
Congresses appropriated large amounts of budget authority for 
long-term assisted housing contracts. As these contracts came 
due in the early 1990's, instead of making the hard choice of 
either maintaining the budget authority spending required to 
sustain assisted households or to reform the program, Congress 
appropriated less budget authority while outlays from previous 
years continued to flow. This created a mismatch between budget 
authority and outlays. While it appropriated less than $20 
billion in budget authority in 1995, HUD spent more than $30 
billion in outlays. In the next 5 years, because of expiring 
contracts, budget authority must rise if this level of outlays 
is to be sustained.
    This is the primary cause of the exploding budget authority 
needs for the Department. With overall discretionary spending 
under tight constraints, other essential programs would have to 
be reduced to sustain this growth. At present, the Department 
consumes about 10 percent of all domestic discretionary 
spending, up from only 4 percent in 1980. If present trends 
continue, this is expected to rise to as much as 20 percent of 
domestic discretionary spending, in excess of $45 billion per 
year. Every dollar in increase would have to be taken from 
education, the environment, scientific research, and other 
essential programs. This is an unacceptable result, especially 
in light of the gross mismanagement of HUD's budget documented 
by numerous sources, including the General Accounting Office, 
the National Association of Public Administration, and the HUD 
Office of the Inspector General. A Price-Waterhouse study 
recently reported HUD's problems include: inadequate assurance 
about the propriety of $14 billion in section 8 rental 
assistance and $900 million in subsidy payments under the 
elderly and disabled rental program; and an inability to 
accurately account for $8.4 billion under its section 202 loan 
program. The report also noted that as recently as fiscal year 
1994, HUD was still using 1980 census data to allocate 
Community Development Block Grants to cities. Clearly the 
Federal Government can no longer bear the present burden of 
increasing housing costs alone. The budget resolution 
recommends the consideration of methods to more effectively use 
Federal resources to leverage private investment and to 
increase the role and funds committed to this effort by both 
State and local governments.
    Departing from the Great Society model is crucial for the 
viability of Federal assistance to neighborhoods and cities. 
Federal assistance must be marked by a clear mission, a limited 
scope, and a focused, attainable set of goals. Effective 
solutions can only come from the communities in which families 
live: The power to transform blighted neighborhoods lies among 
the storefronts, churches, houses, playgrounds, and schoolyards 
of local communities. Solutions must be found by bringing 
together leaders from small businesses, local government, civic 
organizations, and church groups to devise plans for their own 
neighborhoods. The Federal Government can support such efforts 
by providing resource grants, promoting tenant ownership, and 
increasing the use of mechanisms such as vouchers, which 
emancipate families from often wretched housing conditions.
    Concurrent with the restoration of power to communities 
must be a reduction in the stifling administrative bureaucracy. 
Almost $1 billion a year is spent simply on sustaining a vast 
clutter of bureaucrats and program administrators. These 
resources could be better used to issue vouchers or to aid 
communities through grants and loan guarantees. A total of 
13,000 staff positions administer hundreds of programs that are 
applied to many thousands of cities. They dispense billions of 
dollars to different special interest groups and issue 
thousands of pages of regulations. This consititutes an 
oppressive array of bureaucracy that has succeeded only in 
perpetuating the cycle of poverty and despair in central urban 
centers around the Nation.
    In conjunction with welfare reform, public housing projects 
must become way stations to opportunity, not warehouses for the 
poor. Currently, a jumble of grants is given to public housing 
authorities for operation, modernization, rehabilitation, 
development, security and drug elimination, and even youth 
sports. These programs should be combined into one or two 
flexible grants to provide for the operation of public housing 
in the near term. Ways of better using this funding should be 
explored in conjunction with State, local, and private 
resources to maintain and renovate the existing housing stock. 
The budget resolution recognizes this housing stock must not be 
lost, but the Federal Government should no longer support the 
construction of new public housing units. Instead, dilapidated 
public housing buildings should be demolished as a first step 
in the reinvigoration of urban neighborhoods. Vacant and 
degraded public housing units contribute to the decline of 
neighborhoods by providing havens to drug dealers, gang 
members, and others engaging in criminal activity.
    The budget resolution therefore recommends the passage of 
the United States Housing Act (H.R. 2406), sponsored by 
Representative Lazio, as a significant first step toward the 
restructuring that is required. The resolution also recommends 
that, to follow through on this initiative, the Committee on 
Banking and Financial Services bring to the floor legislation 
providing for major comprehensive housing reforms to remove the 
present structure of centralized bureaucratic control. Among 
the specific elements that might be included in a comprehensive 
restructuring of Federal housing policy are the following:

    Consolidate Native American Housing and Development 
Programs Into a Single Community Grant. Indian housing funding, 
now scattered among more than 10 different programs, should be 
consolidated into one dedicated program, directed to tribal 
governments or Indian Housing Authorities. These local 
authorities should be given the flexibility to pursue community 
development and housing strategies that reflect their own needs 
and priorities. Though general problems of unemployment, 
economic stagnation, and blighted communities are similar to 
some urban areas within the United States, the nature of Indian 
reservations differs not only from urban centers, but very 
often from each other. Currently a variety of different 
programs may provide resources to Indian tribal governments or 
Indian Housing Authorities, each with its own requirements 
dictated by a Washington-based bureaucracy. By using a formula, 
to be determined at an administrative level to best reflect the 
rapidly shifting needs and economic status of Indian tribes, a 
single fund can efficiently disperse resources to where they 
are needed. This proposal reflects legislation prepared by the 
House Banking Committee and is generally supported by the 
administration.

    Reject Administration's Reductions in Elderly and Disabled 
Funding. The administration recommends cutting funding levels 
for housing the elderly and the disabled by nearly 50 percent 
by the year 2000. The administration's proposals would slash 
housing desperately needed by the elderly and the disabled by 
$2.5 billion over 6 years and come at the same time the 
administration is recommending additional funds in community 
development programs for ``bonus pools'' to be handed out by 
the Secretary and subject to the worst possible political 
abuse. The administration itself has recently issued a report 
identifying a crisis in the housing needs of lower-income 
Americans. Even though fiscal discipline is a necessity, 
essential programs can be protected while implementing reforms 
that will streamline wasteful programs and eliminate 
duplicative ones.

                                 FUNCTION 600: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reassess and reform the Federal role in                                                                         
 assisted and public housing:                                                                                   
    Budget authority......................        NA     1,371     6,446     2,471     8,910     4,715    11,606
    Outlays...............................        NA      -802       290     3,111     4,920     4,473     4,962
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 600: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                           Spending change                      
                                            1996   -------------------------------------------------------------
                                            est.      1997      1998      1999      2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Welfare reform:                                                                                                 
    Budget authority....................    76,036      -516    -5,861    -8,073    -9,503    -10,212    -11,940
    Outlays.............................    76,098      -603    -5,821    -8,072    -9,503    -10,268    -11,984
Maintain current payment date of                                                                                
 civilian retiree cost of living                                                                                
 adjustments through 2002 as recommended                                                                        
 by the President:                                                                                              
    Budget authority....................    40,233      -289      -334      -338      -342       -359       -374
    Outlays.............................    40,154      -289      -334      -338      -342       -359       -374
Conform military retiree COLA receipt                                                                           
 dates with current law:                                                                                        
    Budget authority....................    28,787         0      -209      -209      -209       -216       -223
    Outlays.............................    28,707         0      -209      -209      -209       -216       -223
Congressional pension reform:                                                                                   
    Budget authority....................       111         0        -1        -1        -2         -2         -3
    Outlays.............................       111         0        -1        -1        -2         -2         -3
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes additional savings from 
provisions such as the following: reforming the Earned Income 
Credit [EIC]; treating persons who voluntarily leave military 
service the same as civilians with regard to unemployment 
insurance; reducing unneeded surplus funding for the Department 
of Labor's alien labor certification program; reforming the 
section 8 assisted housing programs; reducing administrative 
expenses associated with the Department of Housing and Urban 
Development; restoring equity in unemployment insurance; 
empowering public housing authorities to reform their housing 
developments; and consolidating lead-based paint abatement 
responsibilities by transferring lead programs from the 
Department of Housing and Urban Development to the 
Environmental Protection Agency.
    Although these provisions reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                             Function 650:



                            Social Security

                              ----------                              


                                          FUNCTION 650: SOCIAL SECURITY                                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $354,584   $372,450   $390,941   $410,440   $431,006   $453,307   $476,614
Outlays............................    351,311    368,139    386,144    405,059    425,100    446,769    469,455
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

                             promises kept

    Congressional Republicans have repeatedly pledged to 
protect Social Security from any benefit cuts or tax increases. 
The promise has been kept. None of the House Republican budgets 
developed during the current administration has touched this 
highly valued program. This budget again keeps the Republican 
pledge not to affect Social Security benefits.

                           the earnings test

    Senior citizens should be able to engage in productive work 
in order to supplement their Social Security benefits. That is 
why this belief was felt so strongly that it was incorporated 
into the House Republicans' Contract With America.
    Currently, those who earn higher income levels pay more 
than a dollar in taxes for each additional dollar they earn--so 
their net income decreases if they work for pay. The 1995 
annual earnings limit for senior citizens (age 65-69) was 
$11,280. In short, the current earnings limit punishes those 
who rely on wage income, those who are engaging in productive 
work.
    The Senior Citizens Right to Work Act--which was 
incorporated into H.R. 3136, the Contract With America 
Advancement Act of 1996--allows senior citizens to work for 
wages up to $30,000 without a tax penalty. This proposal 
preserves the long-term financial integrity of the Social 
Security trust funds. It would gradually raise the earnings 
limit for those between full retirement age (65 and 70) to 
$30,000 by the year 2002.
    The increase would be phased in over 7 years as follows: 
1996 would be $12,500, 1997 would be $13,500, 1998 would be 
$14,500, 1999 would be $15,500, 2000 would be $17,000, 2001 
would be $25,000, and in 2002 it would reach the goal of 
$30,000.


                             Function 700:



                    Veterans' Benefits and Services

                              ----------                              


                                  FUNCTION 700: VETERANS' BENEFITS AND SERVICES                                 
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $38,502   $39,117   $38,458   $37,712   $37,713   $38,002   $39,713
Outlays...................................    37,782    39,654    39,321    38,063    39,427    36,882    39,912
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    ``President Clinton's budget would be devastating for the VA.''

                                               Jesse Brown,
                     Secretary of Veterans Affairs, March 29, 1996.

    The budget resolution calls for $5.1 billion more in 
discretionary spending over 6 years for veterans' affairs than 
does the President's budget. The resolution also rejects the 
President's proposed cuts in medical and prosthetic research 
and the National cemetery system, and provides for a number of 
expanded benefits, including an increased auto allowance for 
certain severely disabled veterans, improved compensation 
payments for surviving spouses, and a $500 scholarship for 
college seniors with at least a ``B'' average under the GI Bill 
or the Post-Vietnam Era Education Assistance Program [VEAP].
    These measures are intended to correct the President's 
failure to provide adequately for the needs of the Nation's 
veterans. The administration's budget submission proposes huge, 
devastating reductions in VA spending for hospitals and medical 
care, medical and prosthetic research, the National Cemetery 
System, the inspector general, and other accounts. Only through 
the active intervention of the Republican-led Congress can 
these cuts be checked.
    The contrast between the President's devastating cuts in 
discretionary spending and the adequate funding approach 
recommended in this budget is dramatic. [Please see the table 
below.]
    Two aspects are especially important. First, because 
discretionary spending is dealt with on an annual basis, what 
is the level of funding for fiscal year 1997? Second, for 
planning purposes, what is the level for fiscal years 1998 
through 2002? Compared with the President's budget, the budget 
resolution recommends much higher levels each year.

                                     PROPOSED VA TOTAL DISCRETIONARY OUTLAYS                                    
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Administration............................     $19.0     $19.3     $18.2     $16.3     $14.8  \1\ $16.          
                                                                                                     3  \1\ $18.
                                                                                                               4
House Republican Budget...................      19.0      19.4      18.8      17.4      17.1      17.2      18.5
----------------------------------------------------------------------------------------------------------------
\1\ Figures reflect President's budget path to an $81-billion deficit in 2002. Additional cuts would be         
  necessary to reach balance by 2002.                                                                           

                              medical care

    Although the number of veterans is projected to begin 
declining by the year 2000, the veteran population is getting 
older. The aging of the veteran population is important because 
on average, the older the veteran, the greater will be the need 
for hospital services and medical care. On balance, according 
to the Department of Veterans Affairs, the demand for medical 
care will rise because the aging factor will be more important 
than the declining population in determining the need for 
hospital and medical care services.
    The budget resolution recommends that the VA begin to 
implement policies recommended by the GAO, IG, and CBO to 
improve efficiency in the VA health care system. In additional 
to the implicit funds gained through these efficiency gains, 
discussed in more detail under eligibility reform below, the 
budget resolution recommends an increase in explicit funding 
for VA medical care for fiscal year 1997 to a level of $17.3 
billion. The President's proposed level for fiscal year 1997 
was $17.2 billion. This difference of $100 million could make 
the difference between closing hospitals and outpatient clinics 
or keeping them open.

                               PROPOSED VA OUTLAYS FOR HOSPITALS AND MEDICAL CARE                               
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Administration............................     $16.9     $17.2     $16.2     $14.4     $13.0  \1\ $14.          
                                                                                                     4  \1\ $16.
                                                                                                               5
House Republican Budget...................      16.9      17.3      16.8      15.4      15.2      15.3      16.7
----------------------------------------------------------------------------------------------------------------
\1\ Figures reflect President's budget path to an $81 billion-deficit in 2002. Additional cuts would be         
  necessary to reach balance by 2002.                                                                           

    The truly devastating funding cuts under the President's 
budget would occur in fiscal years 1998, 1999, and 2000. At the 
funding levels shown in the table below, outlays for VA 
hospitals and medical care would fall by about $8.4 billion 
from CBO projections but by about $3.3 billion in this budget 
resolution.

  reject the administration's proposed cuts in medical and prosthetic 
                                research

    The Nation's service men and women who have lost arms or 
legs in battle have been able to rely on restorative prosthetic 
devices and procedures developed through VA-funded research.
    In contrast with the President's budget which would cut VA 
medical and prosthetic research, the budget resolution proposes 
to fully fund this activity. For example, the President's 
budget would reduce spending from $233 million in fiscal year 
1996 to $202 million in fiscal year 2000. The budget resolution 
proposes increased funding to $255 million in fiscal year 1997, 
$257 million in fiscal year 1998, and $258 million each year 
thereafter.

  reject the administration's proposed cuts in the national cemetery 
                                 system

    The National Cemetery System is an expression of 
appreciation and respect for veterans who gave of themselves to 
protect the ideals of liberty. The President's budget would 
begin reducing funding for the Cemetery System in fiscal year 
1998 and continue cutting through 2001, reducing it by $15 
million in fiscal year 2000 alone.
    In contrast, because of the growing need for interments 
over the budget period, the budget resolution would fully fund 
the National Cemetery System, with an outlay increase of $3 
million in fiscal year 1997 and then funding the system at the 
CBO projected outlay levels of $73 million over the remainder 
of the budget years. For example, the resolution calls for 
spending of $73 million in the year 2000, instead of the $58 
million proposed by the President.

                  inspector general and other accounts

    The inspector general is a key element in efforts to 
eliminate waste, fraud, and abuse in the VA. The budget 
resolution proposes fully funding this activity at the fiscal 
year 1996 level of $32 million. In contrast, the President's 
budget proposes reductions each year, including fiscal year 
1997.
    Under the President's budget, outlays would fall to $31 
million in fiscal year 1997 and continue falling to $23 million 
in fiscal year 2000, a 28-percent cut. The budget resolution 
recommends fully funding the other VA accounts at CBO-projected 
levels without reduction. This is again in sharp contrast with 
the President's budget, which recommends deep cuts to numerous 
other appropriated accounts.

                           eligibility reform

    The budget resolution continues to support budget neutral 
eligibility simplification and reform. Such reform would allow 
the VA to treat veterans eligible for hospital or medical 
services in the most efficient manner possible, frequently 
substituting more appropriate outpatient care for inpatient 
hospital care. Eligibility reform is strongly supported by the 
veterans' service organizations.
    The VA administers a vast health care system for veterans 
who meet certain eligibility criteria. Care is provided largely 
in facilities owned and operated by the VA. For fiscal year 
1995, the VA-operated facilities included 173 hospitals, 131 
nursing homes, 375 outpatient clinics, and 39 domiciliaries. 
Eligibility rules for veterans' health care services are 
complex. In general, eligibility is based on characteristics of 
the veteran (such as having a health condition related to 
service in the Armed Forces, or level of income) and the kind 
of health care service being provided (inpatient, outpatient, 
et cetera). The VA is required to provide free hospital care to 
veterans with service-connected disabilities (and to certain 
other veterans, including those with incomes below about 
$21,000). The VA may provide hospital care to all other 
veterans but only on a space available basis and if they pay 
required deductibles and copayments. In fiscal year 1993, about 
2.8 million veterans used the VA health care system, 
representing just over 10 percent of the total veteran 
population.
    In fiscal year 1996 the veterans hospitals and medical care 
received a $400 million increase over the fiscal year 1995 
level. As part of the fiscal year 1996 operating plan, the 
Secretary is required by the appropriation to submit a plan to 
implement improvements identified by the inspector general, the 
General Accounting Office, the Congressional Budget Office, and 
the veterans' service organizations. These administrative 
savings are estimated by the Appropriations Committee as 
yielding hundreds of millions of dollars in savings. These 
potential savings, when captured by VA, will allow the VA to 
use its medical care funding more efficiently. Much of the 
emphasis must be on shifting the emphasis from VA hospitals to 
VA outpatient health care. To quote the Veterans Affairs Under 
Secretary for Health: ``We're not in the hospital business; we 
are in the health care business.''

               additional veterans benefits improvements

    Several new initiatives are recommended for veterans:

    Raise Disabled Veterans' Auto Allowance. This proposal 
would raise the one-time auto allowance for severely disabled 
veterans from $5,500 to $10,000.

    Improving Compensation for Surviving Spouses. This proposal 
would allow a surviving spouse to retain compensation or 
pension payment prorated to the day of death, instead of 
cutting off at the end of the previous month, as required by 
current law.

    Extend Back Benefit Payment Limits. This proposal would 
extend, from 1 year to 2 years, the current law limits on 
payment of back benefits to surviving spouses of those who die 
while their claim is being adjudicated.

    Provide Scholarship for College Seniors. This proposal 
calls for providing a $500 scholarship for college seniors with 
at least a ``B'' average under the GI Bill or the Post-Vietnam 
Era Education Assistance Program [VEAP].

    Convert Education Benefits. This proposal recommends 
converting those participating in VEAP education benefits 
program, which has a 2-to-1 government match for benefits, to 
the Montgomery GI Bill, which has a 9-to-1 match for benefits.

    Establish Permanent Teacher Certification. This proposal 
would make permanent the Alternative Teacher Certification 
Program, which encourages veterans to become teachers.

    Fund the Pro Bono Program. This proposal calls for funding 
the Pro Bono Program at the Court of Veterans Appeals.

                                   FUNCTION 700: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Raise disabled veterans' auto allowance:                                                                        
 \1\                                                                                                            
    Budget authority......................     1,360         6         6         6         6         6         6
    Outlays...............................     1,290         6         6         6         6         6         6
Improve compensation for Surviving                                                                              
 Spouses: \2\                                                                                                   
    Budget authority......................    14,979        11        11        12        12        12        13
    Outlays...............................    13,794        10        11        12        13        11        13
Extend back benefit payment limits: \2\                                                                         
    Budget authority......................    14,979         3         3         3         3         3         3
    Outlays...............................    13,794         2         3         3         3         3         3
Provide scholarship for college seniors:                                                                        
 \1\                                                                                                            
    Budget authority......................     1,360         8        11        11        11        11        10
    Outlays...............................     1,290         8        11        11        11        11        10
Convert education benefits: \1\                                                                                 
    Budget authority......................     1,360         5         5         5         5         5         5
    Outlays...............................     1,290         5         5         5         5         5         5
Establish permanent teacher certification:                                                                      
 \1\                                                                                                            
    Budget authority......................     1,360         1         1         1         1         1         1
    Outlays...............................     1,290         1         1         1         1         1         1
Fund the pro bono program:                                                                                      
    Budget authority......................        NA         1         1         1         1         1         1
    Outlays...............................        NA         1         1         1         1         1         1
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the readjustment benefits account.                                                    
\2\ This proposal impacts the compensation account.                                                             

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including the following: Rounding down the 
fiscal year 1997 compensation COLA to the nearest whole dollar 
amount; applying the new dependency and indemnity compensation 
COLA rate to all eligible recipients; lifting prohibitions on 
VA's use of offsets to tax refunds and Federal employee wages 
and salaries to pay VA mortgage payments; using real estate 
mortgage investment conduits; reforming VA's medical liability 
for injuries resulting from VA treatment, and restricting 
vocational rehabilitation benefits to veterans with service-
connected disabilities related to their employment handicap. 
Additional savings are assumed from permanently extending 
expiring law to authorize collection of prescription drug 
copayments and per diems, recovery of costs from health 
insurers of veterans for nonservice-related conditions, 
verification of veteran's income for medical cost recovery and 
pension eligibility determination, VA's pension limits for 
persons in Medicaid nursing homes, and the current 0.75 home 
loan fee increase and the use of the least expensive way to 
dispose of foreclosed VA property. Although these proposals 
reflect the recommendations and assumptions of the Committee on 
the Budget, the actual policy changes are the discretion of the 
appropriations and authorizing committees with jurisdiction 
over the programs involved. Further descriptions of these 
recommended policy changes are contained in Appendix 1.


                             Function 750:



                       Administration of Justice

                              ----------                              


                                     FUNCTION 750: ADMINISTRATION OF JUSTICE                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $20,969   $22,125   $22,302   $23,186   $23,235   $20,746   $20,740
Outlays...................................    17,694    19,930    21,162    22,241    22,944    20,704    20,700
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The threat of crime, especially violent crime, remains one 
of the most insidious conditions in modern American society; 
and one of the most important functions of government is to 
assure personal security. Federal law enforcement efforts 
should focus on areas of Federal jurisdiction. State and local 
enforcement is best handled by local agencies. The best 
assistance Washington can provide comes from activities outside 
budgetary choices--activities such as appointing judges whose 
compassion and sense of justice is focused on the victims of 
crime.
    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                   violent crime reduction trust fund

    The budget resolution provides $4.7 billion for the Violent 
Crime Reduction trust fund to support Federal law enforcement 
and State and local efforts to reduce and prevent crime. The 
congressional approach to reducing crime--the Local Law 
Enforcement Block Grant--gives States and localities the power 
and resources to choose how they spend the money to combat 
violent crime according to their local needs and priorities, 
rather than letting Washington usurp those decisions.
    The 10-percent match required under the Republican block 
grant enables more communities to hire police. The block grant 
is designed to attack high crime problem areas. It distributes 
funds to local governments based on population and their 
numbers of violent crimes compared with the number of violent 
crimes reported by other localities in their States.
    The congressional approach vastly improves on the 
administration's typically Washington-centered strategy. The 
administration's response has been more Federal spending and 
control under the guise of putting 100,000 new police officers 
on the street by the year 2000. In fact, little of the 
President's ``cops on the beat'' funding has gone to the cities 
that need it the most. Among the cities with the highest 
violent crime rates, many have received a disproportionately 
small amount of the ``cops on the beat'' funding.
    The President's community policing (``cops on the beat'') 
program requires a local match of 25 percent for communities to 
receive any of the Federal funds, and the 1994 crime bill 
allows the Attorney General to give preference to applicants 
that provide contributions exceeding the 25-percent match. 
Hence, a disproportionate share of the Federal money can go to 
wealthier communities, not those with more serious crime 
problems.
    The ``cops on the beat'' program includes so many 
conditions on receiving funds that many officials have chosen 
not to apply because the program is too expensive. Further, if 
the ``cops on the beat'' program is to result in 100,000 new 
officers, it will require $28 billion of additional local 
spending.
    Furthermore, under the administration's ``cops on the 
beat,'' funding for police is gradually phased out over the 3-
year funding period so that the States eventually assume the 
full costs of the officers. Therefore, the communities that 
hired the police officers under the President's program will, 
in the end, have to either pay their full cost or let them go.

                  full funding for immigration reform

    The budget resolution assumes the reforms contained in the 
House's recently passed Immigration in the National Interest 
Act. This legislation maintains America's generous welcome mat 
for productive, hard-working immigrants. At the same time, it 
ensures that American taxpayers are not burdened with the bill 
for illegal aliens or immigrants who come to the United States 
to retire on welfare.
    After years of congressional neglect of the issue, the 
legislation toughens the response to illegal immigration. It 
doubles the number of border patrol agents, provides border 
patrol with 21st century technology to combat those who break 
our laws, and implements border patrol initiatives that have 
proved most effective. Because illegal immigrants enter through 
airports, not just at the border, the legislation improves the 
ability of the INS to screen new arrivals. The legislation 
cracks down on smugglers of illegal aliens, increases penalties 
for those who illegally enter the United States, and creates 
State-Federal partnerships to end the problem of illegal 
immigration.
    In addition to discouraging illegal immigration, the 
legislation ensures that legal immigrants who enter the United 
States will be productive, self-reliant Americans. Consistent 
with the Nation's longstanding immigration laws and policy, 
immigrants who are likely to become public charges are denied 
admission. Sponsorship requirements are strengthened so that 
the sponsors of new immigrants--not U.S. taxpayers--will be 
responsible for their support, if they are unable to care for 
themselves.

                 full funding for the antiterrorism act

    The Antiterrorism and Effective Death Penalty Act of 1995 
provides the Federal Government significant new resources to 
fight domestic and international terrorism. The budget 
resolution fully funds law enforcement efforts to fight the 
battle against these atrocities. The funding will provide 
resources to give Federal law enforcement new tools to prevent, 
prosecute, and punish terrorists.
    The law enforcement agencies will be better prepared to 
stop terrorists before they strike and to bring them to 
justice. Prosecutors will have new tools and expanded penalties 
against those who terrorize Americans. The criminals sentenced 
to death row for terrorist acts will no longer be able to use 
legal loopholes to delay their sentences.
    The Antiterrorism Act allows the Federal Government to deny 
visas to foreigners who belong to groups designated as 
terrorist, and stops terrorists from raising money in the 
United States to finance their crimes. Furthermore, the act 
provides new laws to better control chemical and biological 
weapons.

                         the federal judiciary

    The budget resolution recognizes the judiciary's essential 
role in providing justice to all citizens. It also acknowledges 
the increasing workload and additional responsibilities thrust 
on the judicial system. The judiciary cannot control the number 
of cases filed, yet it must assure that the pursuit of swift 
justice does not overwhelm due process. The resolution 
therefore recommends that the Committee on Appropriations 
assures adequate funding to meet anticipated caseloads.

                    reform the u.s. marshals service

    This proposal eliminates the political appointment process 
for U.S. marshals and promotes the professionally trained 
deputy marshals to the U.S. marshal positions. The total number 
of employees in the Marshals Service is reduced by 70. This 
concept to reform the Marshals Service has been discussed since 
the Truman administration, and was proposed in the Vice 
President's National Performance Review.

                                 FUNCTION 750: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Violent crime reduction trust fund:                                                                             
    Budget authority......................     3,117     1,566     1,583     2,483     2,483         0         0
    Outlays...............................     1,333       514     1,314     1,174     2,173         0         0
Full funding for immigration reform:                                                                            
    Budget authority......................        NA       699       774       856       960       978       996
    Outlays...............................        NA       532       637       940       994       956       976
Full funding for the Antiterrorism Act:                                                                         
    Budget authority......................        NA       229       271       198       204       204       204
    Outlays...............................        NA       107       184       238       239       240       240
Reform the U.S. Marshals Service:                                                                               
    Budget authority......................       423        -5        -5        -5        -5        -5        -5
    Outlays...............................       421        -5        -5        -5        -5        -5        -5
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes additional savings from 
phasing out the Federal funding of the Legal Services 
Corporation; eliminating the position and Office of the 
Associate Attorney General; restoring local and State authority 
in community relations; terminating ineffective funding for the 
State Justice Institute; terminating the U.S. Parole 
Commission; and accepting several spending reductions proposed 
by the President. These proposals reflect the assumptions and 
recommendations of the Committee on the Budget, but the actual 
policy changes are the discretion of the committees of 
jurisdiction. The recommendations are detailed in Appendix 1.


                             Function 800:



                           General Government

                              ----------                              


                                        FUNCTION 800: GENERAL GOVERNMENT                                        
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority..........................   $12,494   $11,372   $13,314   $12,592   $12,987   $12,549   $13,020
Outlays...................................    12,648    11,747    13,640    12,928    13,364    12,454    12,321
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The President's concern for ``reinventing government'' 
always had an appealing sound, but the administration's 
approach has been a disappointment. The disappointment stems 
mainly from the weakness of the President's strategy. His goal 
was to tinker around the edges, to make the existing bloated 
bureaucracy marginally more ``efficient.'' What is needed is 
fundamental reform of programs and operations. The proposals in 
this budget resolution--including those that fall here, in 
Function 800--seek fundamental, systemic reform.
    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

     reform operations of the general services administration [gsa]

    The GSA was established in 1946 to provide goods and 
services across the government in the most effective and cost-
efficient manner. Now 50 years later, however, the monopoly 
status of GSA is causing government agencies to in fact pay 
excessive costs for various goods and services that easily can 
be provided by the private sector at a much lower cost. Given 
the scale of the government's purchases through GSA, there is 
great opportunity for significant savings systemwide through 
competition. GSA's current budget is approximately $200 
million, but the agency controls more than $45 billion in 
annual purchases by government agencies. As the Vice 
President's National Performance Review has argued:

          It is not enough that GSA try to become a better 
        monopoly; true change will not occur until agencies are 
        free to choose where and how they spend their money.

    The budget resolution recommends the following proposals as 
part of an overall reform of the government services of the 
General Services Administration. The resolution assumes no 
savings from these proposals at this time, however, pending 
legislative action by the committees of jurisdiction.

    Improve Travel Management Governmentwide Using Private 
Sector Methods and Incentives to Reduce Both Administrative and 
Direct Costs. The Federal Government spends about $10 billion 
per year in travel costs on airfare, hotels, relocation of 
Federal employees, and various other travel expenses. This does 
not include administrative costs. There are a number of 
commonsense steps agencies can take to save millions of dollars 
per year. These steps involve creating incentives for Federal 
employees to find the best deal possible on any travel service 
and simplifying administrative procedures, which account for 
approximately 30 percent of total travel costs.

    Increase the Participation of Private Bidders in Real 
Property Disposal. This proposal involves allowing private 
bidders to exceed a proposed offering price in a sale conducted 
using restricted negotiating procedures. In recognition of the 
local government's special role in the base closure process, 
the local government would be allowed to meet the final 
purchase price offered by a bidder. This would protect the 
taxpayers' interests, and maintain the special role of the 
local government. A second element of this proposal would 
establish the responsibility of an agency that donated or gave 
away property to provide Congress with an appraisal conducted 
under established appraisal standards. Agencies should seek an 
appropriation to cover any shortfall resulting from a giveaway 
of Federal real estate.

    Reform Federal Motor Vehicle Fleet Management. The Federal 
fleet costs more than $1 billion a year for the acquisition, 
operation, maintenance, and disposal of its vehicles. Through 
its Interagency Fleet Management System [IFMS] established in 
1954, the GSA leases approximately one-third of the fleet to 
Federal agencies. The GAO has reviewed the impact of a 1985 law 
requiring that all agencies with more than 300 vehicles develop 
true cost accounting for their fleet operations and, to make 
the most cost-effective contract decisions, explicitly compare 
costs between GSA's IFMS and private-sector firms. Only the 
Internal Revenue Service has fully obeyed this law. To 
encourage long-delayed reform and the adoption of greater cost 
efficiencies throughout the government's fleet systems, the 
budget resolution recommends that the inventory and operations 
of the IFMS be transferred to a temporary government 
corporation and be sold within 3 years to a private 
organization. Private-sector firms allege that the IFMS is not 
truly cost competitive because it does not do full-cost 
accounting; a self-study by GSA, reviewed by Arthur Andersen 
but not yet made public, asserts otherwise. In either case, a 
nongovernmental IFMS would have the competitive incentives to 
make a more aggressive contribution to cost reforms.

    Reform the Public Building Service [PBS] for Leased 
Properties. Recent studies conducted by commercial brokers have 
indicated that PBS overpays for real estate at leased property. 
The studies concluded that potential, if not significant 
savings can be achieved by using private-sector tools and 
resources on PBS operations. Several private firms have 
contacted GSA, offering to provide professional private-sector 
experience to find savings in federally leased space on a 
contingent-fee basis. The resolution recommends that GSA 
continue its pilot project to explore this approach.

    Maximize Proceeds From the Sale of Federal Government 
Personal Property Surplus. Federal agencies give away to non-
Federal entities substantial amounts of personal property (such 
as computers, helicopters, and office equipment) per year. 
According to GSA figures, Federal agencies donated $865 million 
of former personal property in fiscal year 1995, and $3.41 
billion over the past 5 years. Some of this equipment has not 
been screened by other Federal agencies for possible reuse 
(which means that one agency must seek additional 
appropriations to purchase equipment being given away by 
another agency). A consistent policy should be established 
whereby Federal agencies screen all equipment prior to disposal 
as surplus. Further, agencies which seek to give away surplus 
personal property should seek an appropriation in the amount of 
the property. There may be reasons to transfer equipment to 
non-Federal entities, but agencies' extensive giveaways are 
undermining oversight by Congress, a duty assigned to Congress 
under Article IV of the Constitution.

               end the government's monopoly on printing

    This proposal requires that, 9 months after enactment, all 
government work be offered for competitive bidding. 
Approximately 20 percent is currently not sent out to private 
contractors. GPO's labor costs are 50 percent greater than 
comparable private printers' costs; GPO's paper waste averages 
40 percent more than the most lax industry standard. Although 
significant employee reductions will become possible through 
this procedure (reductions that should be identified by the 
appropriate committees of jurisdiction), this proposal assumes 
only those savings that would result from contracting out to 
the private sector. It is expected that employing the 
competitive market for government printing would save about 30 
percent of printing costs annually.

 reform the office of personnel management [opm] and transfer certain 
                   responsibilities to other agencies

    Under this proposal, OPM's Retirement and Insurance Service 
would move to the Social Security Administration; the Human 
Resources Systems Service would move to the Office of 
Management.

                                 FUNCTION 800: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
End the Government's monopoly on printing:                                                                      
    Budget authority......................        NA       -95      -190      -190      -190      -190      -190
    Outlays...............................        NA       -90      -185      -190      -190      -190      -190
Reform the Office of Personnel Management                                                                       
 and transfer certain responsibilities to                                                                       
 other agencies:                                                                                                
    Budget authority......................        88        -3        -8        -8        -8        -8        -8
    Outlays...............................        85        -3        -7        -8        -8        -8        -8
----------------------------------------------------------------------------------------------------------------


                                 FUNCTION 800: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
End the Government's monopoly on printing:                                                                      
    Budget authority......................        NA       -95      -190      -190      -190      -190      -190
    Outlays...............................        NA       -90      -185      -190      -190      -190      -190
Reform the Office of Personnel Management                                                                       
 and transfer certain responsibilities to                                                                       
 other agencies:                                                                                                
    Budget authority......................        88        -3        -8        -8        -8        -8        -8
    Outlays...............................        85        -3        -7        -8        -8        -8        -8
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes savings from various 
other provisions, including eliminating the Council of Economic 
Advisors; eliminating the Joint Committee on Printing and the 
Library; reducing funding for the Executive Office of the 
President and the General Accounting Office; accepting the 
President's proposals to reduce funding in 11 accounts; and 
repealing Title V of the McKinney Act.
    These proposals further reflect the assumptions and 
recommendations of the Committee on the Budget, but the actual 
policy changes are the discretion of the authorizing and 
appropriating committees of jurisdiction. The provisions are 
detailed in Appendix 1.


                             Function 900:



                              Net Interest

                              ----------                              


                                           FUNCTION 900: NET INTEREST                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................   $239,734   $242,098   $244,047   $242,917   $239,025   $237,319   $235,579
Outlays............................    239,734    242,098    244,047    242,917    239,025    237,319    235,579
----------------------------------------------------------------------------------------------------------------

    Net interest is the price the government pays for the 
spending it did yesterday. It buys no goods or services for 
current or future generations. Money spent to pay interest is 
money that is not available to pay for national defense, 
infrastructure improvements, education, law enforcement, or 
other vital programs.
    Balancing the budget and paying down the national debt are 
important steps in reducing the cost of net interest payments. 
Reducing the deficit directly reduces the growth in net 
interest costs by reducing the amount of money that is 
borrowed. Balancing the deficit also reduces the growth of 
interest costs because a balanced budget leads to lower 
interest rates. The cost of interest on our accumulated 
national debt is now larger than the annual budget deficit. In 
1995, net interest costs were $232 billion. Between 1996 and 
2002 the Congressional Budget Office projects the Federal 
Government will spend $1.7 trillion on interest payments.
    Balancing the budget will enable the government to reduce 
interest payments by $47 billion over the next 6 years from 
what would otherwise be required. This will reduce the amount 
that the government needs to borrow, thus reducing the amount 
of interest we have to pay on the money we have borrowed to pay 
the interest on the money previously borrowed.


                             Function 920:



                               Allowances

                              ----------                              


                                            FUNCTION 920: ALLOWANCES                                            
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                        1996                                                                    
                                        est.       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Budget Authority...................      -$214     $2,671    -$1,934    -$2,025    -$2,038    -$2,026    -$2,182
Outlays............................        -46     -1,032       -833       -183       -271     -1,770     -2,139
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

                       repeal the davis-bacon act

    The Davis-Bacon Act requires that an inflated ``prevailing 
wage'' be paid on all federally funded or federally assisted 
construction projects. This government regulation represents a 
hidden tax on construction jobs, inflates the costs of Federal 
construction, and destroys opportunities for employment for 
minorities, small firms, and less-skilled workers. The act also 
imposes an unfunded mandate on State and local governments.

                    repeal the service contracts act

    The McNamara-O'Hara Service Contract Act of 1965 is a tax 
on jobs similar to Davis-Bacon except that it applies to 
service, rather than construction, contracts. The act requires 
covered contractors and their successors to provide inflated 
wages and benefits at least equal to the locality's prevailing 
standards or those in a collective bargaining agreement of the 
previous contractor.

                                 FUNCTION 920: DISCRETIONARY SPENDING PRIORITIES                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal the Davis-Bacon Act:                                                                                     
    Budget authority......................        NA      -726      -726      -725      -724      -725      -726
    Outlays...............................        NA      -166      -425      -566      -634      -675      -701
Repeal the Service Contracts Act:                                                                               
    Budget authority......................        NA      -687      -687      -687      -687      -687      -687
    Outlays...............................        NA      -652      -687      -687      -687      -687      -687
----------------------------------------------------------------------------------------------------------------


                                   FUNCTION 920: MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal the Davis-Bacon Act:                                                                                     
    Budget authority......................        NA       -41       -31       -28       -28       -28       -27
    Outlays...............................        NA       -13       -32       -34       -31       -29       -28
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution assumes further savings in this 
function from allowing an open season for CSRS participants to 
convert to FERS; reducing the number of political appointees; 
and requiring Federal agencies to use a credit card for all 
printing purchases of less than $1,000. Although these 
provisions reflect the recommendations and assumptions of the 
Committee on the Budget, the actual policy changes are the 
discretion of the appropriations and authorizing committees 
with jurisdiction over the programs involved. Further 
descriptions of these specific recommended policy changes are 
contained in Appendix 1.


                             Function 950:



                   Undistributed Offsetting Receipts

                              ----------                              


                                 FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS                                
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                              1996  est.     1997        1998        1999        2000        2001        2002   
----------------------------------------------------------------------------------------------------------------
Budget Authority............    -$41,484    -$52,197    -$42,599    -$42,304    -$44,729    -$47,012    -$50,013
Outlays.....................     -41,484     -52,197     -42,599     -42,304     -44,729     -47,012     -50,013
----------------------------------------------------------------------------------------------------------------

                           Policy Priorities

    The discussions below reflect the assumptions and 
recommendations of the Committee on the Budget. The actual 
policy changes for programs in this function fall under the 
authority of the authorizing and appropriating committees with 
jurisdiction over the programs. The committees of jurisdiction 
retain the authority to pursue alternative specific policies 
from those reflected in this report as long as they stay within 
the budget resolution's spending limitations.

               improve federal debt collection procedures

    Improve Federal Debt Collection Procedures. This budget 
resolution assumes amendment of the debt collection legislation 
contained in H.R. 3019, the Balanced Budget Downpayment Act, 
II. The proposal would explicitly repeal a percentage 
limitation on collection of outstanding debt from Federal 
benefit payments in excess of $9,000 annually.
    The legislation permits the use of expedited collection 
procedures, including granting the IRS continuing levy 
authority to collect outstanding tax debt. The legislation 
enhances the ability of Federal agencies to collect debts owed 
by employees, contractors, or beneficiaries of Federal 
programs. It also allows agencies to contract with private debt 
collection services to recover outstanding debts.
    The legislation also includes a provision to increase the 
use of electronic funds transfer in Federal benefit programs.

                                   FUNCTION 950. MANDATORY SPENDING PRIORITIES                                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Improve Federal debt collection                                                                                 
 procedures:                                                                                                    
    Budget authority:.....................         0      -210        -5        -5        -5        -5        -5
    Outlays...............................         0      -210        -5        -5        -5        -5        -5
----------------------------------------------------------------------------------------------------------------

                 Additional Changes From Current Policy

    The budget resolution also assumes savings in this function 
from the following: allowing an open season for CSRS employees 
to convert to FERS; increasing the agency contributions to the 
Civil Service Retirement and Disability Trust Fund for active 
CSRS employees; enhancing Federal debt collection procedures; 
broadening and extending spectrum auctions; selling the Alaska 
Power Administration; privatizing the Naval Petroleum and Oil 
Shale Reserves; selling Governors Island, NY; and selling air 
rights adjacent to Union Station.
    Although these proposals reflect the recommendations and 
assumptions of the Committee on the Budget, the actual policy 
changes are the discretion of the appropriations and 
authorizing committees with jurisdiction over the programs 
involved. Further descriptions of these specific recommended 
policy changes are contained in Appendix 1.


                                Revenues

                              ----------                              


                                                    REVENUES                                                    
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
   1996  est.          1997            1998            1999            2000            2001            2002     
----------------------------------------------------------------------------------------------------------------
$1,424,189.....     $1,470,373       $1,532,708      $1,599,656      $1,674,768      $1,754,153      $1,845,563 
----------------------------------------------------------------------------------------------------------------

                     Earn More, Keep More, Do More

    In the Contract With America, Republicans promised to 
transfer power, money, and influence out of Washington and back 
to the people in their States and communities--to reverse the 
pendulum toward individual empowerment and personal 
responsibility. The tax provisions assumed in this budget 
resolution represent a key contribution to that effort. The 
21st century is not about big government and higher taxes; it's 
about the power of individuals and families. Federal tax 
burdens cannot be eliminated altogether so long as legitimate 
Federal Government functions exist. But the bias should always 
be in favor of taking less from people, especially families and 
small businesses--the real engine of economic growth and job 
creation. The goal of this budget is to allow Americans to earn 
more and keep more so they can do more.
    The House Budget Committee's revenue assumptions provide a 
permanent $500 per child tax credit for working families. The 
budget resolution calls for net tax relief of $122 billion over 
6 years. But additional tax relief--for capital gains rate 
reductions, other incentives to spur economic growth and job 
creation, and small business tax relief--can be financed 
through closing inappropriate corporate loopholes and extending 
other expired tax provisions.

                 rolling back the clinton tax increase

    In 1993, without the support of a single Republican in 
Congress, the President proposed and signed into law the 
largest tax increase in the Nation's history. It was a defining 
moment of his Presidency--clearly showing his basic philsophy 
of higher taxes and more Washington spending.
    Just as the Republican members of the Budget Committee 
argued 3 years ago, this budget resolution rejects the 
President's view. Our position is that the tax burden on 
Americans must be reduced for four reasons: taxes are too high; 
individuals, families, and businesses spend their money more 
wisely than the Federal Government does; tax reductions 
strengthen Congress' resolve to eliminate waste and restrain 
out-of-control entitlement spending; and cutting taxes will 
spur investment and job creation, thereby boosting revenue and 
aiding in deficit reduction.
    The total tax burden on families has grown considerably in 
the past half century, as demonstrated by the following 
statistics:

  - According to the Tax Foundation, Tax Freedom Day, an annual 
        snapshot of the portion of the American budget that 
        taxes claim, has progressed from March 8 in 1940 (an 
        effective tax rate nationwide of 18.3 percent) to May 6 
        in 1995 (an effective tax rate of 34.4 percent for the 
        United States).

  - Families now pay more in taxes (39 cents out of every 
        dollar of the typical two-income family's budget) than 
        they do for food, housing, and medical care combined 
        (34 cents out of every dollar).

  - The typical one-income family paid 36.2 percent of its 
        income in taxes in 1995, compared to 27.6 percent in 
        1955. Similarly, the typical two-income family now pays 
        almost 39 percent of its income in taxes, compared to 
        27.7 percent in 1955.

    As government is downsized, the American family must be a 
direct beneficiary because the best providers of health, 
education, and welfare are families, not bureaucrats. If any 
institution deserves support as the Nation approaches the 21st 
century, it is the American family. That's why the centerpiece 
of our tax relief is a $500 per child tax credit for working 
families.
    Critics contend that cutting taxes is contrary to balancing 
the budget. They argue that as expected revenue levels 
diminish, eliminating the deficit becomes that much more 
difficult. Such reasoning is typical of the narrow, Washington-
centered perspective on the nature of taxation.
    First, opponents of tax relief are not proposing faster 
deficit reduction. They simply want to spend the money rather 
than returning it to the people who earned it. The bottom line 
is that tax relief will force reductions in Federal spending 
that would not occur otherwise.
    Second, the nature of specific tax provisions creates 
incentives and disincentives that affect behavior and economic 
growth and, in turn, revenue available for deficit reduction. 
The effectiveness of tax reduction should be evaluated over the 
long-term, not based on results obtained for a short period of 
time. Over time, reducing taxes improves the efficiency of the 
economic system. This means that taxpayers have a greater 
incentive to work, save, and invest, enhancing growth in the 
multiple and diverse facets of the private-sector economy.

                    tax relief for american families

    Contrary to the incessant claims of tax-cut opponents, the 
primary beneficiaries of the tax cuts assumed in this budget 
resolution would be middle-income families. More than 75 
percent of the tax relief assumed in the proposal focuses on 
building, strengthening, and restoring the American family. The 
biggest individual income tax cuts, as a percentage of taxes 
paid, would go to taxpayers earning $30,000 to $75,000 
annually. Those earning more would receive a smaller reduction 
as a percentage of taxes paid.
    The recent rise in gasoline prices (15 percent since late 
February) highlights the need to provide tax relief to American 
families. President Clinton, in his tax plan of 1993, imposed a 
permanent 4.3 cent increase in the Federal motor fuels excise 
tax. This increase raised the total Federal excise tax on 
gasoline for automobiles and trucks to 18.3 cents. The 
President's tax increase serves to exacerbate the recent 
increase in gasoline prices. The resolution assumes repeal of 
the 4.3 cent excise tax increase through December 31, 1996. An 
analysis by the Joint Committee on Taxation shows that, because 
it is a regressive tax, the largest beneficiaries of the repeal 
would be low-income families.
    So that overtaxed middle-income families do not have to 
wait for their share of the balanced budget bonus, the 
resolution assumes a $500 per child tax credit starting on 
January 1, 1996.

                      tax relief for job creation

    An often forgotten fact of economic life is this: In good 
times, the rich get richer; in bad times, the rich get richer. 
The only time all Americans can get ahead is when the economy 
is growing, expanding opportunities. A capital gains tax 
reduction can be financed within the framework of this budget 
resolution by eliminating various inappropriate corporate tax 
loopholes and extending expiring tax provisisons.
    The capital gains tax reduction would encourage risk taking 
and help get the economy moving again. It would benefit 9 
million taxpayers, 6 million of whom will have incomes less 
than $100,000 a year.
    A capital gains tax cut increases the return on saving and 
investment, thereby promoting saving and investment. This is 
the source of capital formation, which leads to business 
expansion and, hence, faster job creation. A study by the 
American Council for Capital Formation predicts that cutting 
the capital gains rate would create hundreds of thousands of 
new jobs annually. The capital gains proposal would provide 
everyone with a lower rate on capital gains. Currently, only 
individuals in the highest income tax rate brackets get a 
percentage reduction in their overall tax liability when they 
declare capital gains.
    The resolution also assumes that additional measures to 
enhance economic growth will be adopted including reform of the 
Alternative Minimum Tax and an increase in the expensing 
deduction to help small businesses grow and hire more workers.

                    reducing corporate tax subsidies

    Corporations receive favorable tax treatment in the form of 
exclusions, credits, deductions, preferential tax rates, or 
deferrals of tax liability under the current tax structure. 
This resolution assumes a reduction in provisions in the tax 
code that can be clearly identified as inappropriately 
benefiting one industry or a limited number of corporations. 
These include the phase-in repeal of section 936 and the 
elimination of interest deductions for corporate-owned life 
insurance policy loans.

          other key provisions affecting receipts or revenues

    The budget resolution also assumes a host of additional 
provisions to strengthen American families. One of the most 
significant is H.R. 3286, which creates a $5,000 tax credit for 
adoption expenses. Qualified adoption expenses include adoption 
fees, court costs, and attorneys' fees. The bill would also 
provide a maximum $5,000 exclusion from the gross income of an 
employee for specified certain adoption expenses to be paid by 
the employer. One hundred thousand families that seek to adopt 
children will benefit from this legislation.
    In addition, the assumptions in this budget resolution 
reflect revenue effects from the following: allowing an open 
season for CSRS employees to convert to FERS; improving Federal 
debt collection procedures; increasing Federal employee 
contributions to their retirement trust funds; reforming the 
Earned Income Credit; selling the Alaska Power Administration; 
technical adjustment for railroad unemployment reforms; and 
replacing dollar bills with dollar coins. The budgetary effects 
of these proposals are reflected in Appendix 1.
    The budget resolution also rejects the President's proposed 
tax increase on undyed kerosene used for home heating fuel. 
Dyed kerosene is largely unavailable for home heating fuel. 
Even if it were available, however, the Consumer Products 
Safety Commission and the New England Fire Marshals have 
expressed concern that the change in tax treatment of kerosene 
could cause health problems for low-income families who would 
use a dyed kerosene in unvented heaters.

                           baseline revenues

    The committee's baseline revenues are based on CBO's March 
baseline. The revenue baseline has been adjusted to include the 
provisions affecting revenues contained in H.R. 3103 and H.R. 
2337.
    H.R. 3103 contains provisions to implement medical savings 
accounts [MSA's], create a deduction for long-term care 
insurance, and increase the deduction for health cost for self-
employed Americans. MSA's, by allowing tax-free treatment of 
money set aside to pay medical bills, would encourage cost-
cutting competition in health care while providing patients 
with new options. An estimated 1 million taxpayers will take 
advantage of this new program.
    H.R. 2337 contains a set of provisions, entitled the 
``Taxpayer Bill of Rights,'' that would provide greater rights 
and reforms to aid the taxpayer against the IRS. Most 
provisions create greater responsibility for the IRS in its 
actions against taxpayers such as by increasing the burden of 
proof by the IRS. Also, a few provisions increase the authority 
of the IRS to act in the best interest of the taxpayer and the 
government.
    It also should be noted that this bugdet incorporates the 
enactment of H.R. 3136, which would relax the current 
limitations on the receipt of Social Security benefits for 
those age 65 to 69 with earnings above $11,280. Above this 
threshold, Social Security benefits are reduced $1 in benefits 
for each $3 of earnings. The reduction in benefits that occurs 
for earnings above the threshold was equivalent to an increase 
in the beneficiaries' marginal tax rate of 34 percent. The 
beneficiaries' overall marginal tax rate was as high as 70 
percent. Under this bill, the earnings limitation for these 
retirees would be increased in stages during the 1996-2002 
period to $30,000 in 2002. The exempt amount would be increased 
automatically thereafter by the rate of increase in average 
wages.

                                               REVENUE PRIORITIES                                               
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                       Revenue change \1\                       
                                     1996 est. -----------------------------------------------------------------
                                                   1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Tax relief.........................     -2,500    -15,863    -19,971    -23,685    -23,389    -23,079    -16,456
Adoption Promotion and Stability                                                                                
 Act of 1996.......................         52        176        -34        -43        -53        -48        -40
Proposed motor fuel tax repeal.....     -1,655     -1,285         26          9          3          1          0
    Outlays........................  .........  .........  .........  .........  .........  .........  .........
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes revenue losses.                                                                     

                           REVENUE COMPARISONS

              Table 1.--Comparison of Total Budget Revenues


[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................  $1,054.3
    1992 actual...............................................   1,090.5
    1993 actual...............................................   1,153.5
    1994 actual...............................................   1,257.7
    1995 actual...............................................   1,355.2
Fiscal year 1996:
    Administration's request (February 1996)..................   1,426.8
    Committee level...........................................   1,424.2
Fiscal year 1997:
    Administration's request (February 1997)..................   1,495.2
    Committee level...........................................   1,470.4
Fiscal year 1998:
    Administration's request (February 1998)..................   1,577.9
    Committee level...........................................   1,532.7
Fiscal year 1999:
    Administration's request (February 1999)..................   1,652.5
    Committee level...........................................   1,599.7
Fiscal year 2000:
    Administration's request (February 2000)..................   1,733.8
    Committee level...........................................   1,674.8
Fiscal year 2001:
    Administration's request (February 2001)..................   1,819.8
    Committee level...........................................   1,754.2
Fiscal year 2002:
    Administration's request (February 2002)..................   1,912.2
    Committee level...........................................   1,845.6

               Table 2.--Comparison of On-Budget Revenues


[In billions of dollars]

Fiscal year:                                                      Amount
    1991 actual...............................................    $760.4
    1992 actual...............................................     788.0
    1993 actual...............................................     841.6
    1994 actual...............................................     922.7
    1995 actual...............................................   1,004.1
Fiscal year 1996:
    Administration's request (February 1996)..................   1,059.3
    Committee level...........................................   1,059.0
Fiscal year 1997:
    Administration's request (February 1997)..................   1,107.2
    Committee level...........................................   1,085.4
Fiscal year 1998:
    Administration's request (February 1998)..................   1,171.6
    Committee level...........................................   1,130.4
Fiscal year 1999:
    Administration's request (February 1999)..................   1,224.8
    Committee level...........................................   1,176.1
Fiscal year 2000:
    Administration's request (February 2000)..................   1,283.9
    Committee level...........................................   1,229.7
Fiscal year 2001:
    Administration's request (February 2001)..................   1,348.6
    Committee level...........................................   1,289.0
Fiscal year 2002:
    Administration's request (February 2002)..................   1,417.6
    Committee level...........................................   1,358.2

                             TABLE 3.--REVENUES BY SOURCE UNDER PAST AND CURRENT LAW                            
                    [Includes on- and off-budget revenues, fiscal years, billions of dollars]                   
----------------------------------------------------------------------------------------------------------------
                                                                        Historical                     Projected
                                                    ------------------------------------------------------------
                                                       1950      1960      1970      1980      1990       1997  
----------------------------------------------------------------------------------------------------------------
Individual income tax..............................     $15.8     $40.7     $90.4    $244.1    $466.9     $660.2
Corporate income tax...............................      10.4      21.5      32.8      64.6      93.5      174.4
Social insurance tax and contributions.............       4.3      14.7      44.4     157.8       380      531.0
Excises............................................       7.6      11.7      15.7      24.3      35.3       50.9
Estate and gift taxes..............................       0.7       1.6       3.6       6.4      11.5       17.2
Custom duties......................................       0.4       1.1       2.4       7.2      16.7       20.2
Miscellanous reciepts..............................       0.2       1.2       3.4      12.7      27.3       31.4
                                                    ------------------------------------------------------------
      Total \1\....................................      39.4      92.5     192.8     517.1   1,031.3    1,485.4
                                                    ============================================================
On-budget revenues.................................      37.3      81.9     159.3     403.9     749.7    1,100.4
Off-budget revenues \2\............................       2.1      10.6      33.5     113.2     281.7      385.0
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                Source: CBO March 1996 baseline revenues.                  


                     TABLE 4.--REVENUES SOURCE AS PERCENT OF GDP UNDER PAST AND CURRENT LAW                     
                              [Includes on- and off-budget revenues, fiscal years]                              
----------------------------------------------------------------------------------------------------------------
                                                                        Historical                     Projected
                                                    ------------------------------------------------------------
                                                       1950      1960      1970      1980      1990       1997  
----------------------------------------------------------------------------------------------------------------
Individual income tax..............................       5.9         8       9.2       9.2       8.6        8.4
Corporate income tax...............................       3.9       4.2       3.3       2.4       1.7        2.2
Social insurance tax and contributions.............       1.6       2.9       4.5         6         7        6.8
Excises............................................       2.8       2.3       1.6       0.9       0.6        0.6
Estate and gift taxes..............................       0.3       0.3       0.4       0.2       0.2        0.2
Custom duties......................................       0.1       0.2       0.3       0.5       0.5        0.3
Miscellanous reciepts..............................       0.1       0.2       0.3       0.5       0.5        0.4
                                                    ------------------------------------------------------------
      Total \1\....................................      14.9      18.3      19.6      19.6      18.9       18.9
                                                    ============================================================
On-budget revenues.................................      14.1      16.2      16.2      15.3      13.7       14.0
Off-budget revenues \2\............................       0.8       2.1       3.4       4.3       5.2        4.9
----------------------------------------------------------------------------------------------------------------
\1\ Details may not add to totals due to rounding.                                                              
\2\ Social Security [OASDI] revenues.                Source: CBO March 1996 baseline revenues.                  



                    The Congressional Budget Process

                              ----------                              

    The spending and revenue levels in the budget resolution 
are executed through two parallel, but separate, mechanisms: 
allocations to the appropriations and authorization committees, 
and reconciliation directives to the authorizing committees. 
The budget resolution includes instructions directing the 
authorizing committees to report legislation complying with the 
entitlement, revenue, and deficit reduction targets. This 
report allocates to the Appropriations Committee and 
authorization committees their respective shares of spending 
authority.

                          Spending Allocations

    As required under Sections 302(a) and 602(a) of the 
Congressional Budget Act of 1974, the spending levels 
established in the budget resolution are allocated to the 
Appropriations Committee and each of the authorization 
committees with spending authority.
    The allocations serve as a committee-level ceiling on 
subsequent spending legislation. Under Section 310001(f) of the 
Violent Crime Reduction Act of 1994 (Public Law 103-322), a 
separate allocation is provided to the Appropriations Committee 
to fund programs authorized out of the Violent Crime Reduction 
Trust Fund.

    Current Law Versus Discretionary Action. Section 302(f) of 
the Budget Act requires that the allocation be broken down into 
two categories: amounts provided under current law and amounts 
subject to discretionary action. Amounts provided under current 
law encompass programs that affect direct spending--entitlement 
and other programs that have permanent new budget authority or 
offsetting receipts. Amounts subject to discretionary action 
concern programs whose spending levels are set in annual 
appropriations bills.

                        appropriations committee

    The Appropriations Committee is allocated a lump sum of new 
budget authority and corresponding outlays. The portion of this 
sum that is of concern to the Appropriations Committee is 
listed under assumed law and represents the total amount of 
budget authority that may be appropriated for the forthcoming 
budget year.

    Term. Since most discretionary appropriations are provided 
1 year at a time in annual appropriations bills, the 
allocations cover only the budget year commencing on October 1 
of 1996.

    602(b) Allocations. Upon receiving its 602(a)/302(a) 
allocation, the Appropriations Committee is required to divide 
the 602(a) allocation among its 13 subcommittees. The amount 
that each subcommittee receives constitutes its 602(b) 
allocation. The subcommittees must stay within their respective 
602(b)'s when they mark up individual appropriations bills.

    Continuing Disability Reviews. Public Law 104-121 
established a process to provide additional funding for 
continuing disability reviews for specified disability 
programs. Under Public Law 104-121, the chairman of the Budget 
Committee will increase the 602(a) allocations and aggregate 
spending levels whenever an appropriations bill or conference 
report is filed providing additional funding for continuing 
disability reviews [CDR's], which will be reduced if the bill 
is not enacted. The Director of the Office of Management and 
Budget will make a similar adjustment in the discretionary 
spending limits upon enactment of such legislation.
    The reason for the special adjustment is that the cost of 
the CDR's is discretionary while the savings are mandatory. 
Consequently, the Appropriations Committee has little incentive 
to divert funding from other discretionary programs to CDR's 
because the savings are not credited against their allocation 
and the statutory appropriations cap.
    The House-passed CDR provisions circumvented the 
Appropriations Committee with a mandatory appropriation. The 
Budget Committee opposed this approach because of the precedent 
it would have set for funding administrative activities on an 
entitlement basis. The special adjustment was substituted for 
the mandatory appropriation in an effort to assure adequate 
funding for CDR's, while preserving the discretionary status of 
the CDR reviews.
    The Budget Committee does not view special adjustments in 
the allocations and discretionary spending limits as a panacea 
for every program in need of additional funding and will be 
reluctant to agree to similar adjustments in the future. It 
will consult with the Appropriations Committee to fashion an 
appropriate policy regarding similar issues that may arise in 
the future.

                        authorization committees

    The authorizing committees are allocated a lump sum of new 
budget authority and, in some cases, new entitlement authority 
along with the corresponding outlays. Most of this spending is 
authorized under current law. The budget authority allocated to 
these committees is categorized as subject to discretionary 
action when the resolution assumes a new or expanded 
entitlement program.

    Term. Since the spending authority for the authorization 
committees is multiyear and frequently permanent, the 
allocations are for the forthcoming budget year commencing on 
October 1 and the 5-year total for fiscal years 1997 through 
fiscal year 2001.
    The Budget Committee does not enforce the requirement that 
the authorization committees file 602(b) allocations.

    Types of Spending Authority. The authorizing committees may 
receive two types of direct spending in their allocations: new 
budget authority and new entitlement authority. New budget 
authority is defined as authority provided by law to enter into 
financial obligations that will result in immediate or future 
outlays involving Federal Government funds.
    New entitlement authority, which is a form of new budget 
authority, is defined as the authority to make payments, the 
budget authority for which is not provided 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.8
    The allocations for fiscal year 1997 and 1997 through 2001 
are as follows:

  ALLOCATION OF SPENDING RESPONSIBILITY TO HOUSE COMMITTEES PURSUANT TO 
     SEC. 602(a) OF THE CONGRESSIONAL BUDGET ACT--FISCAL YEAR: 1997     
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                      Budget                 Entitlement
                                    authority     Outlays     authority 
------------------------------------------------------------------------
     APPROPRIATIONS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    050  National defense........          196          196            0
    150  International affairs...          170          170            0
    300  Natural resources and                                          
     environment.................        1,997        2,008            0
    350  Agriculture.............        3,124        1,732            0
    370  Commerce and housing                                           
     credit......................           32         -318            0
    400  Transportation..........          605          602            0
    500  Education, training,                                           
     employment, and social                                             
     services....................       10,741       10,796            0
    550  Health..................      109,098      109,029            0
    570  Medicare................       58,309       58,309            0
    600  Income security.........       85,391       85,305            0
    650  Social Security.........           21           21            0
    700  Veterans benefits and                                          
     services....................       19,508       19,552            0
    750  Administration of                                              
     Justice.....................          414          411            0
    800  General government......        8,666        8,666            0
    900  Net interest............           10           10            0
                                  --------------------------------------
      Subtotal...................      298,282      296,489            0
                                  ======================================
Discretionary appropriations                                            
 action (assumed legislation):                                          
    050  National defense........      267,962      265,668            0
    150  International affairs...       17,660       19,311            0
    250  General, science, space,                                       
     and technology..............       16,497       16,658            0
    270  Energy..................        3,778        5,051            0
    300  Natural resources and                                          
     environment.................       19,787       20,701            0
    350  Agriculture.............        2,978        3,211            0
    370  Commerce and housing                                           
     credit......................        2,441        2,575            0
    400  Transportation..........       12,945       36,443            0
    450  Community and regional                                         
     development.................        6,368       10,161            0
    500  Education, training,                                           
     employment, and social                                             
     services....................       35,372       37,984            0
    550  Health..................       22,230       22,711            0
    570  Medicare................        3,031        3,031            0
    600  Income security.........       29,780       39,867            0
    650  Social security.........            5        2,736            0
    700  Veterans benefits and                                          
     services....................       19,079       19,404            0
    750  Administration of                                              
     justice.....................       21,862       19,728            0
    800  General government......       10,508       10,918            0
    920  Allowances..............        2,712       -1,019            0
                                  --------------------------------------
      Subtotal...................      494,995      535,139            0
                                  ======================================
Discretionary action by other                                           
 committees (assumed entitlement                                        
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................          -32          -32            0
    500  Education, training,                                           
     employment, and social                                             
     services....................         -105          -33            0
    550  Health..................       -2,001       -2,001            0
    600  Income security.........       -2,316       -2,289            0
    700  Veterans benefits and                                          
     services....................          218          219            0
                                  --------------------------------------
      Subtotal...................       -4,236       -4,136            0
                                  --------------------------------------
      Committee total............      789,041      827,492            0
                                  ======================================
      AGRICULTURE COMMITTEE                                             
                                                                        
Current level (enacted law):                                            
    150  International affairs...         -476         -476            0
    270  Energy..................            0         -972            0
    300  Natural resources and                                          
     environment.................          683          648            0
    350  Agriculture.............        7,383        5,440        7,177
    400  Transportation..........           30           30            0
    450  Community and regional                                         
     development.................          253          204            0
    600  Income security.........           67           17        1,173
    800  General government......          270          270            0
    900  Net interest............            0            0           10
                                  --------------------------------------
      Subtotal...................        8,210        5,161        8,360
                                  --------------------------------------
      Committee total............        8,210        5,161        8,360
                                  ======================================
   NATIONAL SECURITY COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    050  National defense........       11,513       11,470            0
    300  Natural resouraces and                                         
     environment.................            3            3            0
    400  Transportation..........            0          -19            0
    500  Education, training,                                           
     employment, and social                                             
     services....................            4            3            0
    600  Income security.........       29,940       29,855            0
    700  Veterans benefits and                                          
     services....................          180          180          180
                                  --------------------------------------
      Subtotal...................       41,640       41,492          180
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    050  National Defense........          -79          -79            0
    950  Undistributed offsetting                                       
     receipts....................       -1,500       -1,500            0
                                  --------------------------------------
      Subtotal...................       -1,579       -1,579            0
                                  --------------------------------------
      Committee total............       40,061       39,913          180
                                  ======================================
  BANKING AND FINANCIAL SERVICES                                        
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    150  International affairs...         -588       -2,438            0
    370  Commerce and housing                                           
     credit......................          405       -6,084            0
    450  Community and regional                                         
     development.................            6          -58            0
    600  Income security.........           50          -15            0
    900  Net interest............        3,256        3,256            0
                                  --------------------------------------
      Subtotal...................        3,129       -5,339            0
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    370  Commerce and housing                                           
     credit......................          175       -3,125            0
    450  Community and regional                                         
     development.................            0          -72            0
    600  Income security.........          -18         -107            0
                                  --------------------------------------
      Subtotal...................          157       -3,304            0
                                  --------------------------------------
      Committee total............        3,286       -8,643            0
                                  ======================================
     ECONOMIC AND EDUCATIONAL                                           
     OPPORTUNITIES COMMITTEE                                            
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................        3,104        2,487        4,050
    600  Income security.........          174          162        9,930
                                  --------------------------------------
      Subtotal...................        3,278        2,649       13,980
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    500  Education, training,                                           
     employment, and social                                             
     services....................         -894         -840            0
    600  Income security.........           -4           -4         -152
                                  --------------------------------------
      Subtotal...................         -898         -844         -152
                                  --------------------------------------
      Committee totals...........       -2,380       -1,805      -13,828
                                  ======================================
        COMMERCE COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    370  Commerce and Housing                                           
     Credit......................        4,700        4,700        4,700
    500  Education, training,                                           
     employment, and social                                             
     services....................            1            1            0
    500  Health..................          675          675      105,397
    800  General government......            9            9            0
                                  --------------------------------------
      Subtotal...................        5,385        5,385      110,097
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    550  Health..................            0            0       -2,000
                                  --------------------------------------
      Subtotal...................            0            0       -2,000
                                  --------------------------------------
      Committee total............        5,385        5,385      108,097
                                  ======================================
INTERNATIONAL RELATIONS COMMITTEE                                       
Current level (enacted law):                                            
    150  International affairs...       10,900       12,330            0
    400  Transportation..........            7            7            0
    600  Income security.........          523          523          511
    800  General government......            6            6            0
                                  --------------------------------------
      Subtotal...................       11,436       12,866          511
                                  --------------------------------------
      Committee total............       11,436       12,866          511
                                  ======================================
 GOVERNMENT REFORM AND OVERSIGHT                                        
            COMMITTEE                                                   
                                                                        
Current level (enacted law):                                            
    550  Health..................            0          -54        3,914
    600  Income security.........       41,907       40,887       40,887
    750  Administration of                                              
     justice  ...................           40           40           40
    800  General government......       13,042       13,040            0
    900  Net interest............           28           28            0
    950  Undistributed offsetting                                       
     receipts....................          -20          -20            0
                                  --------------------------------------
      Subtotal...................       54,997       53,921       44,841
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    600  Income security.........         -289         -289         -289
    800  General government......           -3           -3            0
    950  Undistributed offsetting                                       
     receipts....................         -816         -816            0
                                  --------------------------------------
      Subtotal...................       -1,108       -1,108         -289
                                  --------------------------------------
      Committee total............       53,889       52,813       44,552
                                  ======================================
       OVERSIGHT COMMITTEE                                              
Current level (enacted law):                                            
    500  Education, training,                                           
     employment, and social                                             
     services....................           28           22            0
    800  General government......           67            3           95
                                  --------------------------------------
      Subtotal...................           95           25           95
                                  --------------------------------------
      Committee total............           95           25           95
                                  ======================================
       RESOURCES COMMITTEE                                              
                                                                        
Current level (enacted law):                                            
    270  Energy..................            8          114            0
    300  Natural resources and                                          
     environment.................          908          807            0
    370  Commerce and housing                                           
     credit......................           75           51            0
    450  Community and regional                                         
     development.................          388          358            0
    550  Health..................            4            4            0
    800  General government......          742          766          179
    950  Undistributed offsetting                                       
     receipts....................       -1,355       -1,355            0
                                  --------------------------------------
      Subtotal...................          770          745          179
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    300  Natural resources and                                          
     environment.................          -92          -91          -12
    800  General government......           10           18            0
                                  --------------------------------------
      Subtotal...................          -82          -73          -12
                                  --------------------------------------
      Committee total............          688          672          167
                                  ======================================
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................          195          195            0
    600  Income security.........           59           21            9
    750  Administration of                                              
     justice.....................        1,556        1,538          238
    800  General government......          619          619            0
                                  --------------------------------------
      Subtotal...................        2,429        2,373          247
                                  --------------------------------------
      Committee total............        2,429        2,373          247
                                  ======================================
TRANSPORTATION AND INFRASTRUCTURE                                       
            COMMITTEE                                                   
Current level (enacted law):                                            
    270  Energy..................          280          222            0
    300  Natural resources and                                          
     environment.................          245          248            0
    400  Transportation..........       27,102        2,142          602
    450  Community and regional                                         
     development.................            5           75            0
    600  Income security.........       14,984       14,962            0
    800  General government......           -1           -1            0
                                  --------------------------------------
      Subtotal...................       42,615       17,648          602
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    400  Transportation..........        2,277           -3           -3
                                  --------------------------------------
      Subtotal...................        2,277           -3           -3
                                  --------------------------------------
      Committee total............       44,892       17,645          599
                                  ======================================
        SCIENCE COMMITTEE                                               
Current level (enacted law):                                            
    250  General science, space,                                        
     and technology..............           40           39            0
    500  Education, training,                                           
     employment and social                                              
     services....................            1            1            0
                                  --------------------------------------
      Subtotal...................           41           40            0
                                  ======================================
      Committee total............           41           40            0
                                  ======================================
     SMALL BUSINESS COMMITTEE                                           
                                                                        
Current level (enacted law):                                            
    370  Commerce and housing                                           
     credit......................            3         -125            0
    450  Community and regional                                         
     development.................            0         -171            0
                                  --------------------------------------
      Subtotal...................            3         -296            0
      Committee total............            3         -296            0
                                  ======================================
   VETERANS' AFFAIRS COMMITTEE                                          
                                                                        
Current level (enacted law):                                            
    700  Veterans benefits and                                          
     services....................        1,437        1,604       20,869
                                  --------------------------------------
      Subtotal...................        1,437        1,604       20,869
Discretionary action (assumed                                           
 legislation):                                                          
    700  Veterans benefits and                                          
     services....................            0            0          224
                                  --------------------------------------
      Subtotal...................            0            0          224
                                  --------------------------------------
      Committee total............        1,437        1,604       21,093
  HOUSE WAYS AND MEANS COMMITTEE                                        
                                                                        
Current level (enacted law):                                            
    500   Education, training,                                          
     employment, and social                                             
     services....................            0            0        8,044
    570   Medicare...............      217,200      215,516      215,516
    600   Income security........       46,232       45,194       37,091
    650   Social Security........        7,786        7,786            0
    750   Administration of                                             
     Justice.....................          420          380            0
    800   General government.....          473          472            0
    900   Net interest...........      352,514      352,514      352,514
                                  --------------------------------------
      Subtotal...................      624,625      621,862      613,165
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    500   Education, training,                                          
     employment, and social                                             
     services....................       -1,221         -851          -33
    570   Medicare...............       -6,470       -6,470            0
    600   Income security........         -445         -559       -2,257
                                  --------------------------------------
      Subtotal...................       -8,136       -7,880       -2,290
                                  --------------------------------------
      Committee total............      616,489      613,982      610,875
                                  ======================================
            UNASSIGNED                                                  
                                                                        
Current level (enacted law):                                            
    050  National defense........      -12,392      -12,455            0
    150  International affairs...      -13,966      -13,897            0
    250  General science, space,                                        
     and technology..............          -37            3            0
    270  Energy..................       -1,666       -1,715            0
    300  Natural resources and                                          
     environment.................       -3,031       -3,024            0
    350  Agriculture.............       -1,685         -183            0
    370  Commerce and housing                                           
     credit......................         -194         -137            0
    400  Transportation..........       -1,266         -202            0
    450  Community and regional                                         
     development.................         -320         -397            0
    500  Education, training,                                           
     employment, and social                                             
     services....................          -31          -70            0
    550  Health..................         -106          -64            0
    570  Medicare................      -78,870      -78,886            0
    600  Income security.........      -13,435      -13,430            0
    650  Social security.........          -12          -43            0
    700  Veterans benefits and                                          
     services....................       -1,322       -1,259            0
    750  Administration of                                              
     justice.....................       -2,192       -2,197            0
    800  General government......      -23,008      -23,083            0
    900  Net interest............      -73,108      -73,108      -60,765
    920  Allowances..............           29           32            0
    950  Undistributed offsetting                                       
     receipts....................      -41,909      -41,909            0
                                  --------------------------------------
      Subtotal...................     -267,412     -265,949      -60,765
                                  ======================================
Discretionary action (assumed                                           
 legislation):                                                          
    920  Allowances..............          -41          -13            0
                                  --------------------------------------
      Subtotal...................          -41          -13            0
                                  --------------------------------------
      Committee total............     -267,453     -265,962      -60,765
                                  ======================================
      Total--current level.......      830,960      790,676      752,361
                                  ======================================
      Total--discretionary action      480,240      516,124       -4,522
                                  ======================================
    Grand total..................    1,311,200    1,306,800      747,839
------------------------------------------------------------------------


       ALLOCATION OF SPENDING RESPONSIBILITY TO HOUSE COMMITTEES PURSUANT TO SECTIONS 302(a)/602(a) OF THE      
                                            CONGRESSIONAL BUDGET ACT                                            
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                       1997         1998         1999         2000         2001       1997-2001 
----------------------------------------------------------------------------------------------------------------
Appropriation Committee:                                                                                        
    Current level:                                                                                              
        Budget authority.........      298,282      297,973      320,594      348,874      370,294     1,636,017
        Outlays..................      296,489      291,204      312,952      342,279      361,183     1,604,107
    Discretionary action, general                                                                               
     purpose:                                                                                                   
        Defense:                                                                                                
        Budget authority.........      267,962      269,731      272,380      275,064      277,832     1,362,969
        Outlays..................      265,668      264,462      267,808      271,537      270,744     1,340,219
        Nondefense:                                                                                             
            Budget authority.....      222,350      217,818      210,606      215,631      211,031     1,077,436
            Outlays..............      266,398      257,831      251,600      247,632      242,969     1,266,430
    Subtotal:                                                                                                   
        Budget authority.........      490,312      487,549      482,986      490,695      488,863     2,440,405
        Outlays..................      532,066      522,293      519,408      519,169      513,713     2,606,649
        Violent Crime Reduction                                                                                 
         Trust Fund:                                                                                            
        Budget authority.........        4,683        4,700        5,600        5,600            0        20,583
        Outlays..................        3,073        4,128        4,911        5,293            0        17,405
    Total discretionary action:                                                                                 
        Budget authority.........      494,995      492,249      488,586      496,295      488,863     2,460,988
        Outlays..................      535,139      526,421      524,319      524,462      513,713     2,624,054
    Discretionary action by other                                                                               
     committees:                                                                                                
        Budget authority.........       -4,236       23,984       21,857       18,964       14,863        75,432
        Outlays..................       -4,136       22,706       21,468       18,816       14,802        73,656
    Committee total:                                                                                            
        Budget authority.........      789,041      814,206      831,037      864,133      874,020     4,172,437
        Outlays..................      827,492      840,331      858,739      885,557      889,698     4,301,817
Agriculture Committee:                                                                                          
    Current level (enacted law):                                                                                
        Budget authority.........        8,210        8,359        8,104        7,460        6,402        38,535
        Outlays..................        5,161        5,395        5,109        4,556        3,519        23,740
    New entitlement authority....            0        1,192        1,236        1,267        1,301         4,996
National Security Committee:                                                                                    
    Current level (enacted law):                                                                                
        Budget authority.........       41,640       43,186       44,769       46,343       48,017       223,955
        Outlays..................       41,492       43,001       44,595       46,221       47,899       223,208
    Discretionary action:                                                                                       
        Budget authority.........       -1,579           62           48           34          -72        -1,507
        Outlays..................       -1,579           62           48           34          -72        -1,507
    Committee total:                                                                                            
        Budget authority.........       40,061       43,248       44,817       46,377       47,945       222,448
        Outlays..................       39,913       43,063       44,643       46,255       47,827       221,701
    New entitlement authority....            0         -209         -209         -209         -216          -843
Banking and Financial Services                                                                                  
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........        3,129        4,401        4,147        4,682        4,486        20,845
        Outlays..................       -5,339       -1,679       -2,425       -2,804       -2,179       -14,426
    Discretionary action:                                                                                       
        Budget authority.........          157         -286         -347         -515         -521        -1,512
        Outlays..................       -3,304          -31         -305         -351         -343        -4,334
    Committee total:                                                                                            
        Budget authority.........        3,286        4,115        3,800        4,167        3,965        19,333
        Outlays..................       -8,643       -1,710       -2,730       -3,155       -2,522       -18,760
Economic Opportunity Committee:                                                                                 
    Current level (enacted law):                                                                                
        Budget authority.........        3,278        2,968        3,631        3,889        4,221        17,987
        Outlays..................        2,649        2,649        3,008        3,351        3,648        15,305
    Discretionary action:                                                                                       
        Budget authority.........         -898         -444         -803         -791         -832        -3,768
        Outlays..................         -844         -356         -649         -774         -817        -3,440
    Committee total:                                                                                            
        Budget authority.........        2,380        2,524        2,828        3,098        3,389        14,219
        Outlays..................        1,805        2,293        2,359        2,577        2,831        11,865
    New entitlement authority....         -152        1,270        2,016        2,211        2,279         7,624
Commerce Committee:                                                                                             
    Current level (enacted law):                                                                                
        Budget authority.........        5,385        5,893        6,684        7,380        8,080        33,422
        Outlays..................        5,385        5,895        6,701        7,398        8,098        33,477
    Discretionary action:                                                                                       
        Budget authority.........            0       -1,401       -2,909       -4,713       -5,517       -14,540
        Outlays..................            0       -1,401       -2,909       -4,713       -5,517       -14,540
    Committee total:                                                                                            
        Budget authority.........        5,385        4,492        3,775        2,667        2,563        18,882
        Outlays..................        5,385        4,494        3,792        2,685        2,581        18,937
    New entitlement authority....       -2,000       -4,640       -8,380      -12,580      -18,040       -45,640
International Relations                                                                                         
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       11,436       10,321        9,393        9,953        9,877        50,980
        Outlays..................       12,866       11,880       11,033       10,638       10,390        56,807
Government Reform and Oversight                                                                                 
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       54,997       57,320       59,793       62,342       65,094       299,546
        Outlays..................       53,921       56,383       58,742       61,132       63,670       293,848
    Discretionary action:                                                                                       
        Budget authority.........       -1,108         -919         -912         -906         -920        -4,765
        Outlays..................       -1,108         -919         -912         -906         -920        -4,765
    Committee total:                                                                                            
        Budget authority.........       53,889       56,401       58,881       61,436       64,174       294,781
        Outlays..................       52,813       55,464       57,830       60,226       62,750       289,083
    New entitlement authority....         -289         -335         -339         -344         -361        -1,668
Oversight Committee:                                                                                            
    Current level (enacted law):                                                                                
        Budget authority.........           95           97           98           99           97           486
        Outlays..................           25           25           54          264           34           402
Public Lands and Resources                                                                                      
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........          770        2,021        2,066        2,169        2,393         9,419
        Outlays..................          745        1,931        2,014        2,113        2,322         9,125
    Discretionary action:                                                                                       
        Budget authority.........          -82         -774          -26         -422          -65        -1,369
        Outlays..................          -73         -774          -27         -430          -78        -1,382
    Committee total:                                                                                            
        Budget authority.........          688        1,247        2,040        1,747        2,328         8,050
        Outlays..................          672        1,157        1,987        1,683        2,244         7,743
    New entitlement authority....          -12           -9          -13          -11          -14           -59
Judiciary Committee:                                                                                            
    Current level (enacted law):                                                                                
        Budget authority.........        2,429        3,922        4,014        4,066        4,131        18,562
        Outlays..................        2,373        3,861        3,951        4,002        4,066        18,253
    Discretionary action:                                                                                       
        Budget authority.........            0            0         -119         -119         -119          -357
        Outlays..................            0            0         -119         -119         -119          -357
    Committee total:                                                                                            
        Budget authority.........        2,429        3,922        3,895        3,947        4,012        18,205
        Outlays..................        2,373        3,861        3,832        3,883        3,947        17,896
Transportation and Infrastructure                                                                               
 Committee:                                                                                                     
    Current level (enacted law):                                                                                
        Budget authority.........       42,615       15,837       15,875       16,046       16,277       106,650
        Outlays..................       17,648       17,406       16,862       16,610       16,612        85,138
    Discretionary action:                                                                                       
        Budget authority.........        2,277       30,134       30,186       31,348       32,029       125,974
        Outlays..................           -3          115         -289          350          413          -506
    Committee total:                                                                                            
        Budget authority.........       44,892       45,971       46,061       47,394       48,306       232,624
        Outlays..................       17,645       17,521       16,573       16,960       17,025        85,644
        New entitlement authority           -3           -4           -4           -4           -4           -19
Science Committee:                                                                                              
    Current level (enacted law):                                                                                
        Budget authority.........           41           42           44           45           46           218
        Outlays..................           40           40           41           43           45           209
    Discretionary action:                                                                                       
        Budget authority.........            0          -13            0            0            0           -13
        Outlays..................            0          -13            0            0            0           -13
    Committee total:                                                                                            
        Budget authority.........           41           29           44           45           46           205
        Outlays..................           40           27           41           43           45           196
Small Business Committee:                                                                                       
    Current level [enacted law]:                                                                                
        Budget authority.........            3            2            2            2            0             9
        Outlays..................         -296         -402         -232         -181         -153        -1,264
Veterans' Affairs Committee:                                                                                    
    Current level [enacted law]:                                                                                
        Budget authority.........        1,437        1,365        1,280        1,205        1,141         6,428
        Outlays..................        1,604        1,573        1,466        1,458        1,462         7,563
    Discretionary action:                                                                                       
        Budget authority.........            0            0         -265         -276         -288          -829
        Outlays..................            0            0         -265         -276         -288          -829
    Committee total:                                                                                            
        Budget authority.........        1,437        1,365        1,015          929          853         5,599
        Outlays..................        1,604        1,573        1,201        1,182        1,174         6,734
    New entitlement authority....          224          615          542          827        1,267         3,475
Ways and Means Committee:                                                                                       
    Current level [enacted law]:                                                                                
        Budget authority.........      624,625      653,353      680,343      705,358      735,148     3,398,827
        Outlays..................      621,862      650,656      677,189      702,840      732,743     3,385,290
    Discretionary action:                                                                                       
        Budget authority.........       -8,136      -16,704      -28,409      -37,776      -48,277      -139,302
        Outlays..................       -7,880      -16,608      -28,379      -37,736      -48,346      -138,949
    Committee total:                                                                                            
        Budget authority.........      616,489      636,649      651,934      667,582      686,871     3,259,525
        Outlays..................      613,982      634,048      648,810      665,104      684,397     3,244,341
    New entitlement authority....       -2,290       -2,486       -2,200       -2,250       -2,298       -11,524
Unassigned to Committee:                                                                                        
    Current level [enacted law]:                                                                                
        Budget authority.........     -267,412     -275,617     -281,296     -292,508     -304,520    -1,421,353
        Outlays..................     -265,949     -267,614     -273,586     -284,701     -296,879    -1,388,729
    Discretionary action:                                                                                       
        Budget authority.........          -41          -31          -28          -28          -28          -156
        Outlays..................          -13          -32          -34          -31          -29          -139
    Committee total:                                                                                            
        Budget authority.........     -267,453     -275,648     -281,324     -292,536     -304,548    -1,421,509
        Outlays..................     -265,962     -267,646     -273,620     -284,732     -296,908    -1,388,868
    Total current level:                                                                                        
        Budget authority.........      830,960      831,443      879,541      927,405      971,184     4,440,533
        Outlays..................      790,676      822,204      867,474      915,219      956,480     4,352,053
    Total discretionary action:                                                                                 
        Budget authority.........      480,240      525,857      506,859      501,095      479,116     2,493,167
        Outlays..................      516,124      528,796      511,726      498,181      472,320     2,527,147
    Grand totals:                                                                                               
        Budget authority.........    1,311,200    1,357,300    1,386,400    1,428,500    1,450,300     6,933,700
        Outlays..................    1,306,800    1,351,000    1,379,200    1,413,400    1,428,800     6,879,200
    Total new entitlement                                                                                       
     authority...................       -4,522       -4,606       -7,351      -11,093      -16,086       -43,658
----------------------------------------------------------------------------------------------------------------

                       Reconciliation Directives

    As provided in Section 310(a) of the Budget Act of 1974, 
the budget resolution includes reconciliation instructions to 
the 13 authorizing committees to report changes in law 
necessary to achieve the direct spending, revenue, and deficit 
reduction targets in the budget resolution. Each of these 
committees is directed to achieve aggregate direct spending, 
aggregate revenue or deficit reduction levels. These directives 
trigger the authorizing legislation necessary to comply with 
the direct spending and revenue assumptions in the budget 
resolution.

    Separate Bills and Separate Deadlines. The budget 
resolution establishes a structure for reporting three separate 
authorization bills as follows:

  - By May 24, 1996, the Committees on Agriculture, Commerce, 
        Economic and Educational Opportunities, and Ways and 
        Means are required to submit welfare reform legislation 
        and the Committee on Commerce is required to submit 
        Medicaid reform legislation.

  - By June 14, 1996, the Committees on Commerce and Ways and 
        Means are required to submit Medicare preservation 
        legislation.

  - By July 12, 1996, the Committees on Banking and Financial 
        Services, Commerce, Economic and Educational 
        Opportunities, Government Reform and Oversight, 
        International Relations, Judiciary, National Security, 
        Resources, Science, Transportation and Infrastructure, 
        and Veterans Affairs are required to submit 
        miscellaneous direct spending and the Committee on Ways 
        & Means is required to submit both miscellaneous direct 
        spending reform and tax relief measures.

    Optional Omnibus Reconciliation Bill. To provide additional 
flexibility in the reconciliation process, the budget 
resolution also provides a contingent instruction in which the 
committees may be instructed to submit their recommendations to 
the Budget Committee for inclusion in a single, omnibus 
reconciliation bill. The date for submitting the 
recommendations would be determined by the chairman of the 
Committee on the Budget in a letter to the Speaker, which must 
be printed in the Congressional Record.
    The authority to provide a procedure for an omnibus bill in 
the resolution is set forth in section 301(b)(4) which provides 
that the budget resolution may ``set forth such other matters, 
and require such other procedures, relating to the budget, as 
may be appropriate to carry out the purposes of this act.''
    The authorizing committees would still be required to meet 
all reconciliation levels as if the bills were moved 
separately. The resulting bill would be privileged in the House 
as a reconciliation instruction under Section 310 of the 
Congressional Budget Act. Committees that previously submitted 
recommendations could revise their submissions as long as they 
met their targets in the latter bill.

    Directives. The budget resolution contains three kinds of 
directives. The 13 authorizing committees are instructed not to 
exceed a specified direct spending level. The Committee on Ways 
and Means is also reconciled to not fall below a revenue floor. 
Two committees are also directed to achieve deficit reduction 
levels which can be met through any combination of revenues and 
direct spending.
    These instructions are described below:

  - All 13 committees that received reconciliation instructions 
        are required to make changes in law to achieve direct 
        spending targets. Direct spending is defined in the 
        Balanced Budget and Emergency Deficit Control Act as 
        the combination of budget authority provided by law 
        other than appropriations acts, entitlement authority, 
        and the Food Stamp Program.

  - In the case of reconciliation instructions for direct 
        spending targets, the reconciliation instructions 
        direct the authorizing committees to report changes in 
        law such that the specified spending limits are not 
        exceeded. This contrasts with prior budget resolutions, 
        which have directed the authorizing committees to make 
        reductions from an inflated projection of future 
        spending. To determine the magnitude of required 
        changes, committees should compare the amounts these 
        programs would spend under current law with the amounts 
        set forth for their committees in the reconciliation 
        instructions.

  - The Committee on Ways and Means is directed to report 
        changes in law such that the aggregate level of revenue 
        is not less than the specified level.

  - The Committees on Banking and Financial Services and 
        Government Reform and Oversight are also directed to 
        achieve a specified level of deficit reduction. Deficit 
        reduction targets may be met through any combination of 
        changes in laws that affect direct spending or 
        revenues. Savings necessary to comply with these 
        instructions are in addition to the savings they must 
        achieve under their respective direct spending targets.

    There are no reconciliation instructions for authorization 
changes that are subject to annual appropriations. Last year 
several committees reconciled authorization changes only to see 
the provision dropped in conference under threat of the Byrd 
rule (which prohibits consideration in the Senate of extraneous 
measures in a reconciliation bill).

    Policy Assumptions. Amounts reconciled to each committee 
represent the total amount available to spend on all programs 
within its jurisdiction. Where two or more committees have 
jurisdiction over a program, funding for that program is 
reconciled to each committee. Medicare is an exception because 
parts A and B are allocated to both the Ways and Means and 
Commerce Committees, though Commerce has no jurisdiction over 
part A.

    Term. The reconciliation targets are for fiscal year 1997 
and the 6-year total for fiscal years 1997 through 2002 and 
fiscal year 2002. Committees have discretion in the levels they 
would achieve in fiscal years 1998, 1999, 2000, and 2001 as 
long as they comply with their targets for the first year, 
sixth year, and 6-year total.

    Flexibility. The authorizing committees are free to 
substitute their own policies as long as they meet their 
reconciliation target. If the authorization committees fail to 
report legislation achieving their reconciliation directives, 
then the Congressional Budget Act authorizes the Committee on 
Rules, in concert with the Budget Committee, with the authority 
to make in order a substitute that would achieve the necessary 
savings.
    Under Section 310(c) of the Budget Act, the Committee on 
Ways and Means has additional flexibility in choosing between 
changes in laws affecting taxes and entitlements. As 
interpreted by the Budget Committee, section 310(c) provides 
that the Ways and Means Committee may increase its tax 
reduction by 20 percent if it increases its spending restraints 
by the same amount. Conversely, it may decrease its spending 
reduction if it decreases the tax cuts by the same amount. In 
either case, the committee may not increase the deficit beyond 
the levels implicit in its direct spending and revenue 
instructions.
    The reconciliation instructions are summarized below:

                                        RECONCILIATION BY HOUSE COMMITTEE                                       
                                           WELFARE AND MEDICAID REFORM                                          
                                        Recommendations Due May 24, 1996                                        
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Agriculture Committee: Direct spending..................        35,117        35,604        35,597       216,199
Commerce Committee: Direct spending.....................       296,817       324,314       476,428     2,392,181
Economic and Educational Opportunities Committee: Direct                                                        
 spending...............................................        14,772        15,812        19,677       105,343
Ways and Means Committee: Direct spending...............       349,740       382,631       563,077     2,810,370
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Commerce Committee Direct spending......................       296,817       317,514       425,828     2,234,080
Ways and Means Committee: Direct spending...............       349,740       375,831       512,477     2,652,269
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                        Committee                           1996 base       1997          2002        1997-2002 
----------------------------------------------------------------------------------------------------------------
Banking and Financial Services:                                                                                 
    Direct spending.....................................       -14,780       -12,249        -6,116       -42,310
    Deficit reduction \1\...............................             0             0          -115          -305
Commerce: Direct spending...............................       296,817       316,013       419,609     2,213,093
Economic and Educational Opportunities: Direct spending.        14,772        14,968        18,818       101,044
Government Reform and Oversight:                                                                                
    Direct spending.....................................        62,540        65,130        82,548       442,000
    Deficit reduction \1\...............................             0          -255          -575        -2,886
International Relations: Direct spending................        13,799        13,025        10,311        67,953
Judiciary: Direct spending..............................         2,851         2,784         4,586        24,982
National Security: Direct spending......................        39,680        39,787        49,551       270,749
Resources: Direct spending..............................         1,746         2,132         2,057        11,739
Science: Direct spending................................            39            40            46           242
Transportation and Infrastructure: Direct spending......        18,649        18,254        17,890       106,903
Veterans Affairs: Direct spending.......................        19,841        21,375        22,217       130,468
Ways and Means:                                                                                                 
    Direct spending.....................................       349,740       373,764       509,912     2,638,286
    Revenues............................................     1,028,322     1,050,476     1,319,852     7,047,865
----------------------------------------------------------------------------------------------------------------
\1\ Deficit reduction targets are in addition to and not reflected in the Committee's total direct spending     
  level.                                                                                                        



                    Enforcing the Budget Resolution

                              ----------                              

    The budget resolution for fiscal year 1997 will be enforced 
through points of order that may be raised under the 
Congressional Budget Act of 1974. The Congressional Budget Act 
limits spending and tax legislation to the aggregate and 
committee levels set forth in the budget resolution. To enforce 
the budget resolution, Members must raise the appropriate point 
of order during consideration of the bill or measure.

                            Points of Order

    The major Budget Act requirements are as follows:

    Section 302(f). Prohibits consideration of legislation that 
exceeds a committee's allocation of new budget authority or new 
entitlement authority. Section 302(f) applies to the budget 
year and the 5-year total for the authorizing committee. For 
appropriations bills, however, it applies only to the budget 
year. An exception is provided for legislation that is offset 
by savings above and beyond those required by the budget 
resolution.

    Section 303(a). Prohibits consideration of spending and tax 
legislation before the House has passed a budget resolution. 
Section 303(a) does not apply after May 15.

    Section 311(a)(1). Prohibits consideration of legislation 
that exceeds the ceiling on budget authority and outlays or 
reduces revenue below the revenue floor. Section 311(a)(1) 
applies to the budget year and 5-year total for bills 
increasing revenue, but only to the budget year for 
appropriations bills. Section 311 does not apply if legislation 
does not exceed the committee's 602(a) allocation.

    Section 401(a). Prohibits consideration of legislation that 
creates borrowing authority or contract authority that is not 
subject to appropriations.

    Section 401(b)(1). Prohibits consideration of legislation 
creating new entitlement authority in the year preceding the 
budget year.

                              Enforcement

    The budget is a planning document. To achieve its goal of 
balancing the budget, the Congress must ensure that subsequent 
legislation complies with the spending and revenue levels in 
the budget resolution.
    Sections 303(g), 308(b)(2), and 311(c) of the Budget Act 
require the Budget Committee to advise the presiding officer on 
the application of points of order against specific legislation 
pending before the House. House Budget Committee rules also 
authorize the chairman to poll the committee on recommendations 
to the Rules Committee to enforce the Budget Act by not waving 
points of order against specific legislation.
    As a matter of general policy, the committee opposes 
waivers of the Budget Act that permit the Congress to consider 
legislation that is inconsistent with the budget resolution. 
The chairman will continue to assume an aggressive role in 
enforcing the spending and revenue levels established in the 
budget resolution.

                   Statutory Controls Over the Budget

    Since 1985 a series of statutory budget controls has been 
superimposed on the congressional budget process through 
amendments to the Balanced Budget and Emergency Deficit Control 
Act. The latest generation of these controls, which were 
adopted as part of the Omnibus Budget Reconciliation Act of 
1990 [OBRA '90], consists of limits or caps on discretionary 
appropriations and a Pay-As-You-Go [PAYGO] requirement for tax 
and entitlement legislation. Both the caps and PAYGO 
requirements are enforced through sequestration. As amended by 
the Omnibus Budget Reconciliation Act of 1993 [OBRA '93], these 
controls will expire at the end of fiscal year 1998.
    The Budget Committee exercised for the first time its 
original jurisdiction over budget process last year when it 
reported two bills to extend PAYGO requirements and the 
discretionary caps. On March 16, the committee ordered reported 
H.R. 1219, a bill extending the caps and PAYGO requirements 
though fiscal year 2000. H.R. 1219 was folded into H.R. 1215 as 
part of the offsets for the tax measures in the Contract With 
America, which passed the House on April 5, 1995. The Senate 
did not act on H.R. 1215, although elements of the bill were 
included in freestanding bills.
    On October 12, 1995, the committee ordered reported H.R. 
2459, legislation further extending PAYGO requirements and the 
discretionary caps. This bill was folded into the Seven-Year 
Balanced Budget Act, H.R. 2491, which passed the House on 
October 17. The budget enforcement provisions were dropped from 
the conference report, H. Rept. 104-350, at the insistence of 
the Senate.
    The Budget Committee continues to believe that an extension 
of the caps and PAYGO requirements is necessary to enforce any 
negotiated agreement on a balanced budget.

                     discretionary spending limits

    OBRA 1990 established in Section 251 of the Balanced Budget 
and Emergency Deficit Control Act separate limits on 
appropriations for defense, international affairs, and 
domestic-discretionary appropriations through fiscal year 1993 
and a single limit on all appropriations for fiscal years 1994 
and 1995.
    OBRA 1993 extended the single limit through fiscal year 
1998. Any breach of the appropriations cap triggers an across-
the-board cut in all discretionary programs. A fairly small 
number of programs are exempt from sequestration and several 
others are protected by special rules that limit the amount of 
any sequester.
    Under existing law, the caps are automatically adjusted for 
changes in inflation not anticipated in previous projections; 
emergencies; estimating differences; and changes in concepts 
and definitions.
    As part of the Omnibus Crime Control and Prevention Act of 
1994, a separate cap was established for programs funded out of 
the Violent Crime Control Act (and discretionary spending 
limits were reduced by an equivalent amount). Any breach of 
this cap will also trigger an across-the-board sequester for 
programs authorized out of the trust fund. This cap will expire 
at the end of fiscal year 1998, although the trust fund is 
authorized through fiscal year 2000.
    H.R. 1219, as passed by the House, reduced and then 
extended both the discretionary spending limits and the Violent 
Crime Control and Prevention Trust Fund limits through fiscal 
year 2000. H.R. 2491, as passed by the House, further reduced 
and extended the discretionary spending limits through fiscal 
year 2002 and the Violent Crime Control and Prevention Trust 
Fund limits through fiscal year 2000. Both bills also 
eliminated automatic adjustments in the caps for changes in 
inflation.
    Last year, H. Con. Res. 67, the Concurrent Resolution on 
the Budget for Fiscal Year 1996, reestablished a separate limit 
on defense spending which is enforceable by a point of order 
only in the Senate. Absent a change in law, the defense limit 
is not enforced through sequestration.
    With the sharp reduction in the allocations in last year's 
budget resolution, the importance of the statutory caps has 
diminished. Because the allocations are significantly lower 
than the caps, the 602(a) allocations effectively drive the 
discretionary spending levels. In fiscal year 1996, the 
discretionary spending limits are $15 billion lower than the 
statutory levels.
    The Budget Committee continues to support extending the 
discretionary caps through fiscal year 2002 with the 
modifications reflected in both the bills it reported last 
year.

                       pay-as-you-go requirements

    OBRA 1990 established in Section 252 of the Balanced Budget 
and Emergency Deficit Control Act [GRH] a PAYGO requirement for 
tax and entitlement legislation. Under PAYGO, tax and 
entitlement legislation may not increase the net deficit in any 
fiscal year. Any net increase in the deficit attributable to 
tax or entitlement legislation triggers an automatic sequester 
in all nonexempt entitlement programs.
    Only 3 percent of all entitlement spending is subject to 
sequestration. Among the larger programs that are by statute 
exempt from sequestration are Social Security, Medicaid, 
military and civil service retirement, the refundable portion 
of the Earned Income Credit and most welfare programs. Special 
rules also limit the amount that can be sequestered from 
Medicare.
    Last year the House twice passed legislation extending 
PAYGO requirements. PAYGO would have been extended through 
fiscal year 2000 as part of H.R. 1219, and permanently extended 
as part of H.R. 2491.
    While the Budget Committee supports the permanent extension 
of PAYGO, it supports modifications that would provide 
flexibility in allocating resources between mandatory and 
discretionary components of the Federal budget. Under current 
law, discretionary spending cannot be used to pay for 
entitlement initiatives or tax cuts, nor can taxes be increased 
to pay for discretionary spending initiatives. Consequently, 
these budgetary controls prevent Congress and the President 
from making the very tradeoffs the budgetary process was 
intended to facilitate.
    The administration and Congress have both proposed ways to 
increase flexibility in budgeting while preserving the 
budgetary discipline inherent in separate controls on mandatory 
and discretionary programs. Both H.R. 1219 and H.R. 2491, as 
passed by the House, would have allowed cuts in discretionary 
spending to offset tax cuts. In its fiscal year 1996 budget 
submission, the administration suggested an interpretation of 
PAYGO requirements that would permanently score statutory 
changes in the discretionary spending limits as an offset under 
PAYGO requirements.

    OMB Circumvention of PAYGO Requirements. The Budget 
Committee is concerned about recent action taken by the Office 
of Management and Budget to circumvent a potential PAYGO 
sequester. OMB scored the recently enacted Federal Agriculture 
Improvement and Reform Act (Public Law 104-127) as reducing the 
deficit by $1.9 billion in fiscal year 1996 and $3.7 billion in 
fiscal year 1997 even though CBO estimated that the bill would 
increase the deficit for those same years by $3.2 billion and 
$1.5 billion.
    In its estimate of Public Law 104-127, OMB contends that it 
is relying on a recent Federal court decision to justify the 
differences between its cost estimate and that of CBO. But the 
court decision cited by OMB (Morris v. Glickman) is an 
unreported Federal district court order, without an 
accompanying written opinion, denying an injunction sought by 
one of the parties. This constitutes a questionable basis upon 
which to make a decision with a $5 billion impact in fiscal 
year 1997 alone.
    The immediate effect of OMB's estimate was to eliminate a 
potential sequester that otherwise would have been triggered if 
$4.7 billion in offsets were not enacted by the end of the 
session. The long-term effect may be more serious: policymakers 
may no longer be deterred from deficit spending on the 
assumption that the administration will circumvent spending 
controls.

                  Miscellaneous Budget Process Issues

                           taxpayer check-off

    Perhaps the most innovative budget process reform would be 
to give the American people who actually pay the bill for the 
Federal Government a direct voice in deficit reduction. 
Taxpayers would be given the opportunity to designate up to 10 
percent of their tax payments to paying down the national debt. 
This plan was introduced in the 104th Congress by 
Representative Walker and passed the House last year as part of 
the Seven-Year Balanced Budget Reconciliation Act.
    Amounts designated by taxpayers for debt reduction would be 
placed in a national public debt reduction fund established by 
the Department of Treasury. On May 1 of each year the Treasury 
Department would be required to provide Congress with an 
estimate of the amount designated by taxpayers. Congress and 
the President would have until the end of session to find 
sufficient spending cuts in entitlements or discretionary 
programs.
    Any shortfall in the amount of spending cuts necessary to 
offset amounts earmarked for deficit reduction would trigger an 
across-the-board sequester. The only exemptions would be for 
Social Security, deposit insurance, and net interest. Any 
reductions pursuant to a sequester would be permanent and could 
not be replaced with tax increases.
    Members of Congress would still retain their designated 
constitutional authority and responsibility to determine what 
Federal activities to fund and the amount to be spent on each 
program. But if Congress failed to cut overall spending by the 
amount called for by the taxpayers, across-the-board cuts would 
be made in all government programs. Social Security retirement 
benefits, interest on the public debt, deposit insurance, and 
other contractual obligations of the government would be exempt 
from the sequester.
    The checkoff will initially mandate, until the Federal 
budget is balanced, spending reductions and debt retirement 
only to the extent the total amount designated by the taxpayers 
exceeds the savings that Congress otherwise enacts. For 
example, if Congress passed reconciliation and appropriation 
bills that implemented savings of $50 billion in fiscal year 
1999, and the checkoff next year (for tax year 1996) totaled 
$60 billion, the $50 billion in reconciliation and 
discretionary savings would count toward the checkoff 
requirement, leaving an additional $10 billion to be cut.
    The impact of the ``public debt taxpayer buydown'' on the 
deficit and debt could be enormous depending on the year-by-
year decisions of individual taxpayers. The Congressional 
Budget Office has calculated that if taxpayers consistently 
checked off the maximum 10 percent, the deficit would decline 
from current projections for the next several years and be 
virtually eliminated by 2001. After that, the public debt would 
be rapidly reduced as well.

                       sale of government assets

    Section 5 provides that asset sales will be counted for all 
purposes under the Congressional Budget Act.
    Section 5 specifies that the proceeds from asset sales will 
be counted for purposes of determining compliance with the 
reconciliation instructions and enforcing points of order under 
the Congressional Budget Act. Both the proceeds and costs 
arising from asset sales will be reflected in committee 
allocations, in reconciliation instructions, and in estimates 
used to determine whether legislation complies with the budget 
resolution.
    Prior to the 104th Congress, budget resolutions routinely 
prohibited using asset sales to meet reconciliation targets and 
comply with other Budget Act requirements. This restriction was 
lifted last year by H.Con.Res. 67, but must be extended each 
year in the House unless it is codified by statute.
    The Budget Enforcement Act of 1990 similarly precluded 
using asset sales to meet discretionary spending limits and 
Pay-As-You-Go requirements. These restrictions will remain in 
effect unless the Balanced Budget and Emergency Deficit Control 
Act is amended.
    While the Budget Committee wants to encourage asset sales, 
it does not want to encourage committees to substitute one-time 
asset sales for policies that achieve permanent savings in 
meeting their reconciliation targets. It will work with OMB to 
fashion a rule in which only those assets that contribute to 
long-term deficit reduction will be counted under the Budget 
Act and the Emergency Balanced Budget and Deficit Control Act.

                 credit reform and direct student loans

    Section 6 conforms the treatment of direct administrative 
costs for direct student loans with that of guaranteed student 
loans. The Budget Committee will employ this scoring convention 
to correct a disparity that has arisen under the Federal Credit 
Reform Act of 1990 for the scoring of student loans.
    Currently, direct administrative costs for direct student 
loans are measured on a cash basis, with the budget reflecting 
only that year's costs of administering the loan. For 
guaranteed student loans, the direct administrative costs are 
measured on a net present value basis.
    Scoring direct administrative costs on a net present value 
basis captures the estimated long-run costs of managing a loan 
at the time a loan is made. Because many of the costs of 
administering a loan occur when the loan is in repayment, 
direct lending initially appears to be much less expensive than 
lending under the guaranteed student loan program. Both the 
Congressional Research Service and the Congressional Budget 
Office have acknowledged the bias created by this treatment of 
administrative expenses.

                     sense of congress on baselines

    Section 7 provides sense-of-Congress language relating to 
baselines. Baselines are defined as projections of future 
spending based on current law. These budgetary conventions have 
been the source of much criticism in Congress because they 
constitute the base against which the costs of public policies 
are calculated by the CBO and OMB.
    The basic problem with baselines is that they are 
inherently biased against policies that would restrain 
spending. Legislation that reduces growth in entitlements is 
scored as ``cutting'' the program--even if total spending level 
for the program would continue to rise--because automatic 
growth is incorporated into the baseline.
    Under such scoring practices, policymakers have grown 
reticent about supporting structural changes in programs that, 
no matter how reasonable, could be viewed as spending ``cuts.'' 
Opponents of Medicare and other entitlements reforms are quick 
to terrify the elderly by warning of dire entitlement cuts when 
the policies in question are essential to program solvency and 
ensuring the long-term sustainability of benefits.
    The House has recently made considerable headway in 
combating the baseline mentality. In the 104th Congress, the 
Rules of the House were amended to require CBO to display total 
funding levels in addition to changes from the baseline and to 
include comparisons of proposed funding levels to the 
corresponding levels of the prior year.
    The rules of the House Budget Committee were also amended 
to reflect, as a matter of general policy, that the starting 
point for deliberations on the budget should be the prior year 
and to require that the report accompanying the budget 
resolution compare aggregates and function totals to the 
corresponding levels from the prior year. The Budget Committee 
has further broken with the baseline concept by reconciling 
aggregate funding levels instead of changes from a baseline.

                    sense of congress on emergencies

    Section 8 provides sense-of-Congress language that Congress 
should consider alternative approaches on the budgetary 
treatment of funding for emergencies.
    Under current law, funding emergencies are exempt from both 
the discretionary spending limits and the PAYGO requirements. 
``Emergencies'' is not a defined term with respect to the 
discretionary spending limits and PAYGO requirements. To take 
advantage of the emergency exemption, Congress and the 
President need only agree to designate funding as an emergency. 
The designations are usually enacted as part of the legislation 
providing the spending authority.
    Since 1990, Congress and the President have enacted 29 
separate bills which designated a total of $91.9 billion as 
emergencies. Of this amount, $45.9 billion was for Desert 
Storm, which was ultimately offset by contributions from allied 
countries. Only $4 billion of the total was for direct spending 
programs.
    The budgetary treatment of emergencies has led to a number 
of abuses, including piggybacking onto dire emergency relief 
bills appropriations for items that would not pass on their own 
merits, and designating as emergencies funding requests that 
are not genuine emergencies for the sole purpose of 
circumventing the discretionary spending limits and PAYGO 
requirements.
    Among the alternative approaches to emergencies are 
codifying the definition of an emergency, establishing 
contingency funds, and requiring offsetting spending cuts to 
accommodate emergency funding requirements.

                    sense of congress on loan sales

    Section 9 consists of sense-of-Congress language directing 
committees to report legislation selling portfolios of loans to 
achieve budgetary savings when such action is appropriate. 
During both the 103d and 104th Congresses, committees of the 
House and Senate recommended that agencies should investigate 
the possibility of privatizing loan servicing or selling 
appropriate loan portfolios. The Department of Housing and 
Urban Development has already initiated the sale of some loan 
portfolios. The Office of Management and Budget is conducting a 
study, required by the Treasury Postal Service Appropriations 
Act, comparing government loan servicing with private loan 
servicing. Evidence gathered to date indicates that savings 
from privatizing loan servicing or selling appropriate 
portfolios can generate significant budgetary savings.

                  sense of congress on medicaid reform

    Section 10 provides sense-of-Congress language that 
Congress should provide various protections in Medicaid reform. 
Medicaid coverage would be guaranteed for pregnant women with 
incomes below 133 percent of the poverty line; children under 
age 6 in families with income below 133 percent of poverty; 
children age 6 through 12 in families with incomes below 100 
percent of the poverty line; the elderly who meet Supplemental 
Security Income [SSI] income and resource standards; and 
persons with disabilities as defined by the State in their 
State plan. To qualify for Federal matching funds under both 
the base allotment and the umbrella insurance policy, States 
must match at the rates applicable for their State. Use of 
illusory financing schemes by States to raise State matching 
funds is disallowed.
    Federal minimum standards for nursing homes, including 
those established under the Omnibus Budget Reconciliation Act 
of 1987, will be retained in the reformed Medicaid. The 
Medicare Catastrophic Coverage Act of 1988 established new 
rules for the treatment of income and resources of married 
couples when one of the spouses requires nursing home care and 
the other remains in the community. These Federal protections, 
which prevent wives or husbands from being required to 
impoverish themselves to obtain and keep Medicaid benefits for 
their spouses requiring nursing home care, are retained in the 
reformed Medicaid. Last, Medicaid coverage remains guaranteed 
for Medicare cost sharing (premiums and cost-sharing payments) 
for low-income Medicare beneficiaries.

     sense of congress on domestic violence and federal assistance

    Section 11 provides sense-of-Congress legislation opposing 
the enactment of welfare reform legislation that would increase 
violence against women and children. It further provides that 
Congress should require that State-implemented welfare, 
education, and jobs programs address the impact of domestic 
violence on welfare recipients.

         sense of congress on impact of legislation on children

    Section 12 provides sense-of-Congress language that 
Congress should not adopt legislation that has an adverse 
effect on children. It further provides that if any legislation 
is enacted that harms this population, then remedial action 
should be taken through subsequent legislation.

                  sense of congress on debt repayment

    Section 13 provides sense-of-Congress language that a 
procedure for paying off the national debt should be developed 
once the budget is balanced.

  sense of congress on commitment to a balanced budget by fiscal year 
                                  2002

    Section 14 reaffirms the commitment of the Congress to 
balance the Federal budget by fiscal year 2002 using the 
economic assumptions of the Congressional Budget Office.
    On November 20, 1995, the President signed legislation 
(Public Law 104-56) committing Congress and the President to 
``enact legislation in the first session of the 104th Congress 
to achieve a balanced budget not later than fiscal year 2002 as 
estimated by the Congressional Budget Office.''
    Reaching a balanced budget in 2002 as estimated by the 
nonpartisan Congressional Budget Office has been the underlying 
goal of the congressional leadership since the very beginning 
of the 104th Congress. The statutory commitment mentioned above 
was the first time that the President agreed with that goal, 
after several prior changes of position.
    As a candidate, the President pledged that, if elected, he 
would balance the budget in 5 years. As President, he made no 
attempt to balance the budget until last summer. Upon assuming 
office in 1992, the President's first major legislative 
initiative was a $16.3 billion supplemental appropriations 
bill. The President's first budget submission would have 
resulted in deficits of $229 billion by fiscal year 1998. The 
President's health care initiative, which was presented as a 
means of reducing the deficit, was projected by CBO to increase 
the deficit by $70 billion over 6 years.
    The President continued to argue through early 1995 that it 
was not necessary to balance the budget. Finally, last summer, 
the President started making a string of promises regarding the 
budget. Initially, he said he could balance the budget in 10 
years using his own numbers. Then it was 9 years. Then it was 7 
years (by 2002), but again using the partisan estimates of his 
own Office of Management and Budget.
    Even after the November 20 agreement, the President tried 
to back away from it and did not provide any details until 
January on how he would achieve a balanced budget by 2002 as 
scored by CBO. Congress provided detailed plans for a balanced 
budget by 2002 as scored by CBO as early as May 1995, and 
actual legislation meeting that goal as early as October 1995. 
The President vetoed that legislation.
    Because the November 20 agreement sets forth the first 
session of the 104th Congress (1995) as the timeframe for 
enacting legislation to meet the goal of a balanced budget by 
2002 as estimated by CBO, the Budget Committee believes that it 
is important to reiterate Congress' commitment to achieving 
that plain and unambiguous goal this year.

                            Committee Votes

    Clause 2(l)(2)(B) of House rule XI requires each committee 
report accompanying any measure or matter of a public character 
to include the total number of votes cast for and against on 
each rollcall vote on a motion to report and any amendment 
offered to the measure or matter, together with the names of 
those voting for and against.
    On May 9, 1996, the committee met in open session, a quorum 
being present. The committee ordered reported the House 
Concurrent Resolution on the Budget for Fiscal Year 1997, with 
the recommendation that the resolution be agreed to and that 
the resolution do pass.
    The following votes were taken by the committee:
    1. Mr. Sabo offered an amendment to instruct the Committee 
on Economic and Educational Opportunities to report legislation 
to the House of Representatives increasing the minimum wage by 
at least $0.90 per hour over a 2-year period. The amendment was 
defeated by a rollcall vote of 15 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  ....  X   
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  ....  ....
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  ....  ....
Mr. Hoke.....................  .....  .....  Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    2. Messrs. Olver and Pomeroy offered an amendment to add a 
sense of the Congress regarding changes in Medicaid. The 
amendment was defeated by a rollcall vote of 18 ayes and 23 
noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    3. Ms. Woolsey offered an amendment to reduce spending in 
Function 050 (National Defense) and increase spending in 
Functions 500 (Education, Training, Employment, and Social 
Services), 550 (Health), and 600 (Income Security). The 
amendment was defeated by a rollcall vote of 15 ayes and 24 
noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  ....  X   
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  ....      
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  .....  Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  ....  X   
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    4. Mr. Orton offered an amendment to require CBO to certify 
that reconciliation legislation would balance the total budget 
by the year 2002. The amendment was withdrawn.
    5. Mr. Orton offered an amendment to require the chairman 
of the Committee on the Budget to certify, based upon CBO 
estimates, that reconciliation legislation would balance the 
total budget by the year 2002. The amendment was defeated by a 
rollcall vote of 18 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  .....  Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    6. Messrs. Olver and Stenholm offered an amendment to 
increase spending in Function 270 for solar and renewable 
energy programs, energy conservation research and development, 
and fossil energy research and development. The amendment was 
defeated by a rollcall vote of 18 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  .....  Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    7. Mrs. Mink offered an amendment to add sense-of-the-
Congress language regarding the impact of legislation on 
children. The amendment was agreed to by voice vote.
    8. Mrs. Meek offered an amendment to remove any reform of 
the Earned Income Tax Credit and to offset any deficit increase 
resulting from the elimination of the EITC reform by reducing 
tax relief. The amendment was defeated by a rollcall vote of 18 
ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    9. Ms. Roybal-Allard offered an amendment to add sense-of-
the-Congress language regarding domestic violence and Federal 
assistance. The amendment was agreed to by voice vote.
    10. Mr. Mollohan offered an amendment to increase spending 
in Function 750 (Administration of Justice) for the Community 
Policing Program. The amendment was defeated by a rollcall vote 
of 18 ayes and 23 noes.


------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------


    11. Mr. Doggett offered an amendment regarding tax 
treatment of wealthy Americans who renounce their U.S. 
citizenship to avoid taxes. The amendment was defeated by a 
rollcall vote of 18 ayes and 22 noes.


------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  .....  Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    12. Mr. Olver offered an amendment regarding level funding 
of transit programs. The amendment was defeated by a rollcall 
vote of 18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    13. Ms. Rivers offered an amendment to add report language 
regarding the Coastal Zone Management Act. The amendment was 
accepted by unanimous consent.
    14. Mr. Stenholm offered an amendment to increase spending 
in Function 550 (Health) to continue funding for the Office of 
Rural Health Policy and Rural Outreach Grants. The amendment 
was defeated by a rollcall vote of 18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    15. Mr. Doggett offered an amendment to increase the level 
of revenue to reflect the elimination of corporate tax 
expenditures. The amendment was defeated by a rollcall vote of 
18 ayes and 23 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  .....  X                                 
------------------------------------------------------------------------

    16. Mr. Sabo offered an amendment to adjust the resolution 
to reflect the House vote on H.R. 842, which would move 
transportation trust funds off-budget. The amendment was 
defeated by a rollcall vote of 19 ayes and 22 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  .....  X      Mr. Sabo.......  X         
Mr. Hobson...................  .....  X      Mr. Stenholm...  X         
Mr. Walker...................  .....  X      Ms. Slaughter..  X         
Mr. Kolbe....................  .....  X      Mr. Coyne......  X         
Mr. Shays....................  .....  X      Mr. Mollohan...  X         
Mr. Herger...................  .....  X      Mr. Costello...  X         
Mr. Bunning..................  .....  X      Mrs. Mink......  X         
Mr. Smith (TX)...............  .....  X      Mr. Orton......  X         
Mr. Allard...................  .....  X      Mr. Pomeroy....  X         
Mr. Miller...................  .....  X      Mr. Browder....  X         
Mr. Lazio....................  .....  X      Ms. Woolsey....  X         
Mr. Franks...................  .....  X      Mr. Olver......  X         
Mr. Smith (MI)...............  .....  X      Ms. Roybal-      X         
                                              Allard.                   
Mr. Inglis...................  .....  X      Mrs. Meek......  X         
Mr. Hoke.....................  .....  X      Ms. Rivers.....  X         
Ms. Molinari.................  .....  .....  Mr. Doggett....  X         
Mr. Nussle...................  .....  X      Mr. Levin......  X         
Mr. Largent..................  .....  X      Mr. Thompson...  X         
Mrs. Myrick..................  .....  X                                 
Mr. Brownback................  .....  X                                 
Mr. Shadegg..................  .....  X                                 
Mr. Radanovich...............  .....  X                                 
Mr. Bass.....................  .....  X                                 
Mr. Neumann..................  X                                        
------------------------------------------------------------------------

    17. Mr. Shays offered an amendment to add a sense of the 
Congress regarding changes in Medicaid. The amendment was 
agreed to by voice vote.
    18. Mr. Hobson moved that the committee adopt the 
aggregates, function totals, and other appropriate matters (the 
Chairman's Mark). The Chairman's Mark was adopted by voice 
vote.
    19. Mr. Hobson moved that the committee adopt the 
Concurrent Resolution on the Budget for Fiscal Year 1997. The 
Concurrent Resolution was adopted by a rollcall vote of 23 ayes 
and 18 noes.

------------------------------------------------------------------------
            Member              Aye     No        Member       Aye   No 
------------------------------------------------------------------------
Mr. Kasich (Chairman)........  X      .....  Mr. Sabo.......  ....  X   
Mr. Hobson...................  X      .....  Mr. Stenholm...  ....  X   
Mr. Walker...................  X      .....  Ms. Slaughter..  ....  X   
Mr. Kolbe....................  X      .....  Mr. Coyne......  ....  X   
Mr. Shays....................  X      .....  Mr. Mollohan...  ....  X   
Mr. Herger...................  X      .....  Mr. Costello...  ....  X   
Mr. Bunning..................  X      .....  Mrs. Mink......  ....  X   
Mr. Smith (TX)...............  X      .....  Mr. Orton......  ....  X   
Mr. Allard...................  X      .....  Mr. Pomeroy....  ....  X   
Mr. Miller...................  X      .....  Mr. Browder....  ....  X   
Mr. Lazio....................  X      .....  Ms. Woolsey....  ....  X   
Mr. Franks...................  X      .....  Mr. Olver......  ....  X   
Mr. Smith (MI)...............  X      .....  Ms. Roybal-      ....  X   
                                              Allard.                   
Mr. Inglis...................  X      .....  Mrs. Meek......  ....  X   
Mr. Hoke.....................  X      .....  Ms. Rivers.....  ....  X   
Ms. Molinari.................  .....  .....  Mr. Doggett....  ....  X   
Mr. Nussle...................  X      .....  Mr. Levin......  ....  X   
Mr. Largent..................  X      .....  Mr. Thompson...  ....  X   
Mrs. Myrick..................  X      .....                             
Mr. Brownback................  X      .....                             
Mr. Shadegg..................  X      .....                             
Mr. Radanovich...............  X      .....                             
Mr. Bass.....................  X      .....                             
Mr. Neumann..................  X      .....                             
------------------------------------------------------------------------

    20. Mr. Hobson moved that the committee report the 
resolution to the House with the recommendation that the 
resolution be agreed to and that the resolution do pass. The 
motion was agreed to by a voice vote.


                 Oversight Findings and Related Matter

                              ----------                              


                  Budget Committee Oversight Findings

    Clause 2(1)(3)(A) of rule XI requires each committee report 
to include oversight findings and recommendations required 
pursuant to clause 2(b)(1) of rule X. The oversight findings of 
the Budget Committee are as follows:
    The Budget Committee has held several hearings since the 
Fiscal Year 1996 Budget Resolution was reported by the 
committee in May 1995. These hearings have touched upon a wide 
variety of topics relating to the Federal budget, and the 
testimony has been invaluable in assisting the committee in 
preparing the Fiscal Year 1997 Budget Resolution.
    Perhaps the most important hearings held by the Budget 
Committee have been the committee's field hearings. At the 
field hearings held on February 3, 1996, in Concord, NH, and on 
April 26, 1996, at Villanova University, citizens asked 
questions and offered suggestions on balancing the budget. The 
overwhelming sentiment expressed at the field hearings was the 
importance of balancing the Federal budget in a timely manner 
so as to not unfairly burden our children and generations to 
come.
    Most of the participants argued that the budget should not 
be balanced by increasing taxes. Indeed, speaker after speaker 
testified about the heavy burden of taxation on the average 
taxpayer and the need for a tax cut to help working families. 
Citizens were also concerned about the impending bankruptcy of 
the Medicare program, and appreciated the fact that the Budget 
Committee has a plan to address the long-term solvency of the 
program while continuing to increase benefits.
    Members of Congress have also had an opportunity to make 
their views on the Federal budget known. On March 22, 1996, the 
Budget Committee held a Members' Day hearing, at which 29 
Republican, Democrat, and Independent Members of Congress gave 
testimony and offered proposals for the fiscal year 1997 
budget. In addition, several Members who were unable to be 
present at the hearing offered written testimony for the 
record.
    Testimony offered at Members' Day touched on such subjects 
as: a plan by Representative Goss to reduce discretionary 
spending by $300 billion over 5 years; a proposal by 
Representative Johnson of Texas to privatize public 
broadcasting; the Democratic Coalition (``Blue Dog'') budget, 
presented by Representatives Hoyer, Tanner, and Peterson of 
Minnesota; a plan by Representative Gekas to increase funding 
for the National Institutes of Health; budget process reforms 
offered by Representatives Gutknecht and Barton; and 
legislation introduced by Representative Evans that reduces 
corporate subsidies.
    One of the most important goals of the 104th Congress has 
been the desire to shift power and influence from Washington 
back to the people in the States and localities. To that end, 
the Budget Committee held a hearing on March 5, 1996, on 
federalism, and heard testimony from witnesses on the benefits 
of a more limited role for the Federal Government.
    Some of the issues discussed in connection with federalism 
included: the threat of tyranny when too much power is 
concentrated in a strong central government; the oppressive 
burden of unfunded Federal mandates, both in terms of financial 
cost and their incongruity to local conditions; the need for 
Federal legislators to remember that the Constitution provides 
for a Federal Government with limited, enumerated powers; and 
the need for local legislators to have the flexibility to deal 
with local issues.
    The Budget Committee is also concerned about the 
consequences for future generations of chronic deficits and the 
failure to control growth in entitlement spending. Accordingly, 
hearings were held on March 13, 1996, on the effects the 
unsustainability of current government spending and the need 
for policymakers to consider generational accounting principles 
to reflect the costs of current policies on future generations.
    Testimony centered on the deleterious future effects of 
current policies including: the issue of sharply higher Federal 
spending on entitlements when the baby boomers begin to retire 
in 15 years; the possibility of future generations facing a net 
tax burden of 84 percent to pay for benefits for future 
retirees; the effects of a rise in the national debt on the 
performance of the economy and the stagnation of personal 
incomes; the possibility of entitlement spending and interest 
consuming more than three-quarters of all Federal spending in 
the future; and the need to base fiscal policies on 
generational accounting principles.
    The Budget Committee is convinced that everyone should 
contribute their fair share to achieving a balanced budget. 
Consequently, a hearing was held on March 7, 1996, on the issue 
of identifying and eliminating unnecessary corporate subsidies. 
Robert Shapiro with the Progressive Policy Institute identified 
specific cuts and reforms that would produce $265 billion in 
savings over 5 years and about $400 billion in savings over 7 
years from unproductive Federal corporate subsidies. Stephen 
Moore of the Cato Institute argued that stronger efforts should 
be made to cut unneeded corporate subsidies. Robert Greenstein 
of the Center on Budget and Policy Priorities advocated 
attacking corporate subsidies in both spending and in tax 
policies. Former Representative Beau Boulter of CapitolWatch 
noted that corporate subsidies represent an unwarranted 
intrusion of the government into private sector economic 
activity.
    The hearing on March 28, 1996, regarding the implications 
of taking the transportation trust funds off-budget was an 
important demonstration of bipartisan cooperation by the 
members of the Budget Committee. Committee members of both 
parties were overwhelmingly opposed to taking the trust funds 
off-budget, as were most of the witnesses testifying before the 
committee.
    Members of the Appropriations Committee who testified 
(Representatives Livingston, Wolf, and Coleman) emphasized the 
loss of control over the budget process that would result from 
removing the trust funds from the unified budget. Dr. Allen 
Schick, the foremost expert on budget process reforms, stated 
that exempting off-budget trust funds from spending constraints 
would pressure Congress to raise taxes and make deeper cuts in 
discretionary spending. David Luberoff of Harvard University 
noted that:

          Sound budgeting principles require a unified budget, 
        particularly in an era when deficit reduction clearly 
        is the primary challenge facing the Congress and the 
        executive branch. As Congress and the executive branch 
        make the difficult decisions required to balance the 
        budget, all sources of spending and revenue should be 
        on the table.

    Other hearings held by the Budget Committee included: The 
Administration's Budget Proposals on August 3, 1995; 
Longstanding Government Performance Issues on September 13, 
1995; Effects of Potential Government Shutdown on September 19, 
1995; President Clinton's Fiscal Year 1997 Budget on March 21, 
1996; Prospects for Economic Growth on March 27, 1996; and the 
Economic and Budget Outlook on April 17, 1996.

 Oversight Findings and Recommendations of the Committee on Government 
                          Reform and Oversight

    Clause 2(1)(3)(D) of rule XI requires each committee report 
to contain a summary of oversight findings and recommendations 
made by the Government Reform and Oversight Committee pursuant 
to clause 4(c)(2) of rule X, whenever such findings have been 
timely submitted. The Committee on Budget has received no such 
findings or recommendations from the Committee on Government 
Reform and Oversight.

           Federal Assistance to State and Local Governments

    Section 301(e)(7) of the Congressional Budget and 
Impoundment Control Act of 1974 requires that the report 
accompanying the concurrent resolution on the budget include a 
statement of any significant changes in the proposed levels of 
Federal assistance to State and local governments.
    The following proposed changes may affect the levels of 
Federal assistance to State and local governments:

                             transportation

  - Eliminate Federal funding for outdated airline subsidies.

  - Phase out Federal mass transit operating subsidies by 2002.

  - Make the following changes in mass transit capital 
        expenditures: no new starts in fixed guideway mass 
        transit capital grants; phase in a reduction in the 
        matching rate for remaining capital expenditures to 50 
        percent.

  - Eliminate the following programs and return responsibility 
        to the States: the International Highway Transportation 
        Outreach Program; the Congestion Pricing Program; the 
        Applied Research Program; the National Highway and 
        Transit Institutes; and the On-The-Job Training 
        Program.

                   community and regional development

  - Combine the Community Development Block Grant Program, the 
        HOME Program, and the Community Development Financial 
        Institutions Program into one flexible fund allocated 
        to and administered by State housing and development 
        agencies and local governments.

  - Create a new Rural Development block grant.

  - Create a new Native American block grant.

          education, training, employment, and social services

  - Create a block grant for elementary and secondary education 
        without reducing total funding from the levels of the 
        programs collectively.

  - Consolidate library programs into a single block grant.

                                 health

  - Eliminate unauthorized Rural Outreach grants that duplicate 
        other federally supported services.

  - Eliminate funding intended to establish State offices of 
        rural health.

  - Eliminate duplicative grants to State bureaucracies for 
        administering state trauma care systems.

  - Eliminate special funding for Native Hawaiian Health Care 
        made obsolete by employer and State insurance reforms.

  - Eliminate funding for the Pacific Basin Initiative that 
        duplicates other Federal funding sources.

  - Incorporate Indian health care facilities into the new 
        Native American block grant.

  - Consolidate and target funding for the Substance Abuse and 
        Mental Health Service Administration.

  - Reduce Federal funding for Community Support 
        Demonstrations.

  - Transform Medicaid to provide greater flexibility and 
        authority to the States.

                            income security

  - Consolidate four Federal cash welfare assistance programs 
        into a single block grant for temporary assistance for 
        needy families.

  - Restrict welfare and public benefits for aliens.

  - Consolidate eight current Federal child care assistance 
        programs into a single block grant.

  - Consolidate native American housing and development 
        programs into a single block grant.

                       administration of justice

  - Fund a Local Law Enforcement block grant.

          establishment of statutory limit on the public debt

    Clause 2 of House rule XLIX requires the report of the 
Committee on the Budget of the House accompanying any current 
resolution on the budget to include a clear statement of the 
effect of adoption of the current resolution upon the statutory 
limit on the debt. House Rule XLIX provides for the automatic 
engrossment of a bill raising the statutory limit upon the 
adoption of a conference report on the concurrent resolution on 
the budget.
    The adoption of this budget resolution will have no effect 
on the statutory limit on the debt if, as expected, the rule 
providing for the consideration of the Concurrent Resolution on 
the Budget for Fiscal Year 1997 waives the applicability of 
House Rule XLIX. House Resolution 149 waived the applicability 
of House XLIX during the consideration of the conference report 
accompanying H.Con.Res. 67, the Concurrent Resolution on the 
Budget for Fiscal Year 1996. The statutory limit on the debt 
was last raised by Public Law 104-121 on March 29, 1996, and a 
further increase will not be necessary until at least October 
1997.


                         Exceptions to Tax Law

                              ----------                              

    The Congressional Budget Act of 1974 requires a listing of 
items called ``tax expenditures'' in the President's budget 
submission and in reports accompanying congressional budget 
resolutions. These items are defined in the act as:

        * * * revenue losses attributable to provisions of the 
        Federal tax law which allow a special exclusion, 
        exemption, or deduction from gross income or which 
        provides a special credit, a preferential rate of tax, 
        or a deferral of tax liability.

Under this definition, the concept of a expenditures refers to 
revenue losses attributable exclusively to provisions in the 
corporation and individual income taxes.
    This terminology should be changed because its line of 
reasoning is faulty. It assumes, first, that the government can 
``lose'' money that did not belong to the government in the 
first place. The funds in fact belong to taxpayers; the 
government cannot lose what it never had. Second, in the 
transaction involved, no money really changes hands. Taxpayers 
simply keep more of their own funds.
    Nearly all these tax provisions are intended either to 
encourage certain economic activities or to reduce income tax 
liabilities for taxpayers in special circumstances. The use of 
a tax provision, rather than a direct expenditure, often is 
more efficient. The use of a tax provision also keeps the 
behavior voluntary. Estimates of individual tax benefits are 
prepared by the Treasury Department and the Joint Committee on 
Taxation. The estimates normally presented here are those of 
the Joint Committee on Taxation and in this case are based on 
that committee's most recent report of September 1995. The 
Joint Committee on Taxation has estimated the revenue 
``losses'' rather than outlay equivalent amounts of tax 
expenditures.
    Table 1 shows the revenues involved in targeted tax 
benefits for fiscal years 1996 through 2000. The economic 
assumptions upon which these calculations are based were the 
most recent Congressional Budget Office assumptions available 
to the Joint Committee in August 1995. Because of the 
interaction among the provisions, the revenue effect from two 
or more repeals would not necessarily equal the exact sum of 
the revenue losses for each item. Furthermore, because tax 
legislation seldom applies retroactively to taxpayer decisions 
made earlier, the added revenues available for the initial 
years from legislation to eliminate such a tax provision may be 
substantially less than shown in the following table.

                                     TABLE 1.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 1996-2000                                     
                                                                  [Billions of dollars]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Corporations                             Individuals                        
                           Function                           --------------------------------------------------------------------------------   Total  
                                                                1996    1997    1998    1999    2000    1996    1997    1998    1999    2000   1996-2000
--------------------------------------------------------------------------------------------------------------------------------------------------------
National defense                                                                                                                                        
    Exclusion of benefits and allowances to Armed Forces                                                                                                
     personnel...............................................  ......  ......  ......  ......  ......     2.0     2.0     2.1     2.1     2.2       10.4
    Exclusion of military disability benefits................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
International affairs                                                                                                                                   
    Exclusion of income earned abroad by U.S. citizens.......  ......  ......  ......  ......  ......     1.6     1.7     1.8     1.9     1.9        8.9
    Exclusion of certain allowances for Federal employees                                                                                               
     abroad..................................................  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusion of income of foreign sales corporations (FSCs).     1.5     1.5     1.5     1.6     1.6  ......  ......  ......  ......  ......        7.7
    Deferral of income of controlled foreign corporations....     1.1     1.1     1.2     1.2     1.2  ......  ......  ......  ......  ......        5.8
    Inventory property sales source rule exception...........     3.6     3.7     3.7     3.8     3.8  ......  ......  ......  ......  ......       18.6
    Interest allocation rules exception for certain                                                                                                     
     nonfinancial institutions...............................     0.2     0.2     0.2     0.2     0.2  ......  ......  ......  ......  ......        1.0
General science, space, and technology                                                                                                                  
    Expensing of research and development expenditures.......     2.5     2.7     2.9     3.1     3.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)       14.5
Energy                                                                                                                                                  
    Expensing of exploration and development costs:                                                                                                     
        Oil and gas..........................................     0.1     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
        Other fuels..........................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Excess of percentage over cost depletion:                                                                                                           
        Oil and gas..........................................     0.3     0.4     0.4     0.4     0.4     0.1     0.1     0.1     0.1     0.1        2.4
        Other fuels..........................................   (\1\)     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Credit for enhanced oil recovery costs...................   (\1\)     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
    Credit for non-conventional fuels production.............     0.9     0.8     0.8     0.8     0.7     0.1     0.1     0.1     0.1     0.1        4.5
    Credits for alcohol fuels \2\............................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......        0.1
    Exclusion of interest on State and local government                                                                                                 
     industrial development bonds for energy production                                                                                                 
     facilities..............................................     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2     0.2     0.2        1.1
    Expensing of tertiary injectants.........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of energy conservation subsidies provided by                                                                                              
     public utilities........................................     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Credit for investments in solar and geothermal energy                                                                                               
     facilities..............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Credits for electricity production from wind and biomass.   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Deductions and credits for clean-fuel vehicles and                                                                                                  
     refueling property......................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
Natural resources and environment                                                                                                                       
    Expensing of exploration and development costs, nonfuel                                                                                             
     minerals................................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Excess of percentage over cost depletion, nonfuel                                                                                                   
     minerals................................................     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.0
    Investment credit and 7-year amortization for                                                                                                       
     reforestation expenditures..............................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Expensing of multiperiod timber-growing costs............     0.4     0.5     0.5     0.5     0.5   (\1\)   (\1\)     0.1     0.1     0.1        2.8
    Exclusion of interest on State and local government                                                                                                 
     sewage, water, and hazardous waste facilities bonds.....     0.2     0.2     0.2     0.2     0.2     0.5     0.5     0.5     0.5     0.5        3.8
    Investment credit for rehabilitation of historic                                                                                                    
     structures..............................................     0.1     0.1     0.1     0.1     0.1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.5
    Special rules for mining reclamation reserves............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.3
Agriculture                                                                                                                                             
    Expensing of soil and water conservation expenditures....   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Expensing of fertilizer and soil conditioner costs.......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Expensing of the costs of raising dairy and breeding                                                                                                
     cattle..................................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1     0.1     0.2        0.8
    Exclusion of cost-sharing payments.......................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Exclusion of cancellation of indebtedness income of                                                                                                 
     farmers.................................................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.3
    Cash accounting for agriculture..........................     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2     0.2     0.2        1.1
Commerce and housing                                                                                                                                    
    Financial institutions:                                                                                                                             
        Bad-debt  reserves  of  financial institutions.......     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
        Exemption of credit union income.....................     08.     0.8     0.9     0.9     0.9  ......  ......  ......  ......  ......        4.3
    Insurance companies:                                                                                                                                
        Exclusion of investment income on life insurance and                                                                                            
         annuity contracts...................................     0.5     0.8     1.0     1.4     1.6     8.7    13.1    18.1    23.7    28.3       97.3
        Exclusion of investment income from structured                                                                                                  
         settlement amounts..................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Small life insurance company taxable income                                                                                                     
         adjustment..........................................     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.3
        Special treatment of life insurance company reserves.     2.2     2.5     2.8     3.1     3.4  ......  ......  ......  ......  ......       14.0
        Deduction of unpaid property loss reserves for                                                                                                  
         property and casualty insurance companies...........     1.8     1.9     2.1     2.3     2.5  ......  ......  ......  ......  ......       10.6
        Special alternative tax on small property and                                                                                                   
         casualty insurance companies........................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Tax exemption for certain insurance companies........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  ......  ......  ......  ......  ......      (\1\)
        Special deduction for Blue Cross and Blue Shield                                                                                                
         companies...........................................     0.3     0.4     0.4     0.3     0.2  ......  ......  ......  ......  ......        1.7
    Housing:                                                                                                                                            
        Deductibility of mortgage interest on owner-occupied                                                                                            
         residences..........................................  ......  ......  ......  ......  ......    59.2    62.7    66.4    70.3    74.5      333.1
        Deductibility of property tax on owner-occupied homes  ......  ......  ......  ......  ......    14.4    15.1    15.9    16.6    17.4       79.5
        Deferral of capital gains on sales of principal                                                                                                 
         residences..........................................  ......  ......  ......  ......  ......    15.3    15.9    16.4    17.0    17.6       82.2
        Exclusion of capital gains on sales of principal                                                                                                
         residences for persons age 55 and over ($125,000                                                                                               
         exclusion)..........................................  ......  ......  ......  ......  ......     5.1     5.3     5.5     5.7     5.9       27.5
        Exclusion of interest on State and local government                                                                                             
         bonds for owner-occupied housing....................     0.6     0.6     0.6     0.6     0.7     1.5     1.5     1.5     1.5     1.5       10.8
        Exclusion of interest on State and local government                                                                                             
         bonds for rental housing............................     0.4     0.3     0.3     0.3     0.3     0.8     0.8     0.7     0.7     0.7        5.3
        Depreciation of rental housing in excess of                                                                                                     
         alternative depreciation system.....................     1.2     1.2     1.1     1.0     1.0     0.8     0.8     0.8     0.7     0.7        9.3
        Low-income housing tax credit........................     0.9     1.0     1.1     1.2     1.4     1.7     1.9     2.2     2.4     2.5       16.3
    Other business and commerce:                                                                                                                        
        Maximum 28% tax rate on long-term capital gains......  ......  ......  ......  ......  ......     9.1    10.2    11.4    12.7    14.3       57.6
        Depreciation of buildings other than rental housing                                                                                             
         in excess of alternative depreciation system........     3.7     3.2     2.6     1.9     1.5     1.5     1.4     1.1     0.9     0.7       18.5
        Depreciation of equipment in excess of alternative                                                                                              
         depreciation system.................................    22.5    22.2    21.6    21.4    21.1     5.6     5.8     5.8     5.8     5.8      137.6
        Expensing of up to $17,500 of depreciable business                                                                                              
         property............................................     0.8     0.5     0.3     0.2     0.2     0.5     0.3     0.2     0.1     0.1        3.2
        Exclusion of capital gains at death..................  ......  ......  ......  ......  ......    14.0    15.4    17.1    18.3    19.5       84.3
        Deferral of capital gains on gifts...................  ......  ......  ......  ......  ......     1.5     1.5     1.6     1.7     1.7        8.0
        Amortization of business startup costs...............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Reduced rates on first $10,000,000 of corporate                                                                                                 
         taxable income......................................     4.1     4.3     4.4     4.6     4.7  ......  ......  ......  ......  ......       22.1
        Permanent exemption from imputed interest rules......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.2     0.2     0.2     0.2     0.2        1.1
        Expensing of magazine circulation expenditures.......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
        Special rules for magazine, paperback book, and                                                                                                 
         record returns......................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Deferral of gain on non-dealer installment sales.....     0.4     0.4     0.5     0.5     0.5     0.3     0.3     0.4     0.4     0.4        4.1
        Completed contract rules.............................     0.2     0.2     0.2     0.2     0.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        1.1
        Cash accounting, other than agriculture..............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     0.1     0.1     0.1        0.5
        Exclusion of interest on State and local government                                                                                             
         small-issue industrial development bonds............     0.3     0.2     0.2     0.2     0.2     0.6     0.5     0.4     0.4     0.4        3.3
        Deferral of gain on like-kind exchanges..............     0.5     0.5     0.5     0.6     0.6     0.3     0.3     0.3     0.4     0.4        4.5
        Exception from net operating loss limitations for                                                                                               
         corporations in bankruptcy proceedings..............     0.4     0.5     0.5     0.5     0.5  ......  ......  ......  ......  ......        2.4
Transportation                                                                                                                                          
    Deferral of tax on capital construction funds of shipping                                                                                           
     companies...............................................     0.1     0.1     0.1     0.1     0.1  ......  ......  ......  ......  ......        0.5
    Exclusion of employer-paid transportation benefits.......  ......  ......  ......  ......  ......     2.1     2.2     2.3     2.4     2.5       11.5
    Exclusion of interest on State and local government bonds                                                                                           
     for high-speed rail.....................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Community and regional development                                                                                                                      
    Investment credit for rehabilitation of structure, other                                                                                            
     than historic structures................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.4
    Exclusion of interest on State and local government bonds                                                                                           
     for private airports, docks, and mass-commuting                                                                                                    
     facilities..............................................     0.3     0.3     0.3     0.3     0.4     0.7     0.7     0.7     0.8     0.9        5.4
    Regional economic development tax incentives: empowerment                                                                                           
     zones, enterprise communities, and Indian investment                                                                                               
     incentives..............................................     0.2     0.2     0.3     0.3     0.4     0.2     0.2     0.3     0.3     0.4        2.8
Education, training, employment, and social services                                                                                                    
    Education and training:                                                                                                                             
        Exclusion of scholarship and fellowship income.......  ......  ......  ......  ......  ......     0.8     0.9     0.9     1.0     1.1        4.6
        Parental personal exemption for students age 19 to 23  ......  ......  ......  ......  ......     0.8     0.8     0.8     0.8     0.8        4.1
        Exclusion of interest on State and local government                                                                                             
         student loan bonds..................................     0.1     0.1     0.1     0.1     0.1     0.3     0.2     0.2     0.2     0.1        1.4
        Exclusion of interest on State and local government                                                                                             
         bonds for private nonprofit educational facilities..     0.3     0.3     0.3     0.3     0.3     0.6     0.6     0.7     0.7     0.7        4.8
        Deductibility of charitable contributions for                                                                                                   
         educational institutions............................     0.5     0.5     0.5     0.5     0.5     2.0     2.1     2.1     2.2     2.3       13.5
        Exclusion of interest on educational savings bonds...  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Employment:                                                                                                                                         
        Exclusion of employee meals and lodging (other than                                                                                             
         military)...........................................  ......  ......  ......  ......  ......     0.6     0.6     0.6     0.7     0.7        3.2
        Special tax provisions for employee stock ownership                                                                                             
         plans (ESOPs).......................................     0.9     1.0     1.1     1.2     1.2   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        5.4
        Exclusion of benefits provided under cafeteria plans                                                                                            
         \3\.................................................  ......  ......  ......  ......  ......     4.4     5.0     5.7     6.5     7.2       28.8
        Exclusion of rental allowances for ministers' homes..  ......  ......  ......  ......  ......     0.3     0.3     0.3     0.3     0.3        1.5
        Exclusion of miscellaneous fringe benefits...........  ......  ......  ......  ......  ......     5.2     5.5     5.8     6.2     6.5       29.1
        Exclusion of employee awards.........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.6
        Exclusion of income earned by voluntary employees'                                                                                              
         beneficiary associations............................  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.6        2.7
        Targeted jobs tax credit.............................     0.1   (\1\)   (\1\)  ......  ......   (\1\)  ......  ......  ......  ......        0.1
    Social services:                                                                                                                                    
        Deductibility of charitable contributions, other than                                                                                           
         for education and health............................     0.5     0.5     0.5     0.5     0.5    14.0    14.7    15.3    16.0    16.7       79.3
        Credit for child and dependent care expenses.........  ......  ......  ......  ......  ......     2.7     2.8     2.8     2.9     3.0       14.2
        Exclusion of employer-provided child care \4\........  ......  ......  ......  ......  ......     0.7     0.8     0.9     1.0     1.2        4.6
        Exclusion of certain foster care payments............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Expensing of costs for removing architectural                                                                                                   
         barriers............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
        Credit for disabled access expenditures..............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
Health                                                                                                                                                  
    Exclusion of employer contributions for medical insurance                                                                                           
     premiums and medical care \5\...........................  ......  ......  ......  ......  ......    48.4    52.0    55.7    59.8    64.0      279.8
    Exclusion of medical care and CHAMPUS medical insurance                                                                                             
     for military dependents, retirees, and retiree                                                                                                     
     dependents..............................................  ......  ......  ......  ......  ......     0.5     0.6     0.6     0.6     0.6        2.9
    Deductibility of medical insurance premiums by the self-                                                                                            
     employed................................................  ......  ......  ......  ......  ......     05.     0.6     0.6     0.7     0.7        3.1
    Deductibility of medical expenses........................  ......  ......  ......  ......  ......     3.5     3.8     4.1     4.4     4.8       20.7
    Exclusion of interest on State and local government bonds                                                                                           
     for private nonprofit hospital facilities...............     0.6     0.6     0.6     0.6     0.7     1.3     1.3     1.4     1.5     1.6       10.2
    Deductibility of charitable contributions to health                                                                                                 
     organizations...........................................     0.4     0.4     0.4     0.4     0.4     1.4     1.5     1.6     1.6     1.7        9.8
Medicare                                                                                                                                                
    Exclusion of untaxed medicare benefits:                                                                                                             
        Hospital insurance...................................  ......  ......  ......  ......  ......     9.0    10.0    11.0    12.1    13.3       55.3
        Supplementary medical insurance......................  ......  ......  ......  ......  ......     4.2     4.9     5.7     6.5     7.5       28.7
Income security                                                                                                                                         
    Exclusion of workers' compensation benefits..............  ......  ......  ......  ......  ......     3.9     4.0     4.1     4.2     4.3       20.5
    Exclusion of special benefits for disabled coal miners...  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of cash public assistance benefits.............  ......  ......  ......  ......  ......     0.5     0.5     0.6     0.6     0.7        3.0
    Net exclusion of pension contributions and earnings:                                                                                                
        Employer plans.......................................  ......  ......  ......  ......  ......    69.6    70.5    73.5    76.7    80.0      370.3
        Individual retirement plans..........................  ......  ......  ......  ......  ......     8.8     9.3     9.8    10.3    10.9       49.1
        Keogh plans..........................................  ......  ......  ......  ......  ......     3.5     3.7     3.9     4.2     4.4       19.7
    Exclusion of other employee benefits:                                                                                                               
        Premiums on group term life insurance................  ......  ......  ......  ......  ......     2.0     2.0     2.1     2.1     2.2       10.5
        Premiums on accident and disability insurance........  ......  ......  ......  ......  ......     0.2     0.2     0.2     0.2     0.2        1.0
    Exclusion of employer-provided death benefits............  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.2
    Additional standard deduction for the blind and the                                                                                                 
     elderly.................................................  ......  ......  ......  ......  ......     1.7     1.9     2.0     2.1     2.3       10.0
    Tax credit for the elderly and disabled..................  ......  ......  ......  ......  ......   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)        0.1
    Deductibility of casualty and theft losses...............  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.4
    Earned income tax credit (EITC) \6\......................  ......  ......  ......  ......  ......     3.6     4.0     4.1     4.3     4.6       20.6
Social Security and railroad retirement                                                                                                                 
    Exclusion of untaxed Social Security and railroad                                                                                                   
     retirement benefits.....................................  ......  ......  ......  ......  ......    23.1    24.2    25.2    26.4    27.5      126.4
Veterans' benefits and services                                                                                                                         
    Exclusion of veterans' disability compensation...........  ......  ......  ......  ......  ......     1.7     1.8     1.8     1.9     1.9        9.1
    Exclusion of veterans' pensions..........................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.5
    Exclusion of GI bill benefits............................  ......  ......  ......  ......  ......     0.1     0.1     0.1     0.1     0.1        0.6
    Exclusion of interest on State and local government bonds                                                                                           
     for veterans' housing...................................     [1]     [1]     [1]     [1]     [1]     0.1     0.1     0.1     0.1     0.1        0.5
General purpose fiscal assistance                                                                                                                       
    Exclusion of interest on public purpose State and local                                                                                             
     government debt.........................................     4.4     4.4     4.6     4.9     5.4    10.3    10.3    10.8    11.5    12.5       79.1
    Deduction of nonbusiness State and local government                                                                                                 
     income and personal property taxes......................  ......  ......  ......  ......  ......    27.5    29.0    30.5    32.1    33.8      152.8
    Tax credit for section 936 income........................     3.4     3.5     3.8     4.1     4.4  ......  ......  ......  ......  ......       19.3
Interest                                                                                                                                                
    Deferral of interest on savings bonds....................  ......  ......  ......  ......  ......     1.5     1.5     1.6     1.6     1.7        7.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $50 million.                                                                                                                              
\2\ In addition, the 5.4-cents-per-gallon exemption from excise tax for alcohol fuels results in a reduction in excise tax receipts, net of income tax  
  effects of $0.6 billion per year in fiscal years 1996 and 1997, and $0.5 billion per year in fiscal years 1998 through 2000.                          
\3\ Estimate includes amounts of employer-provided health insurance purchased through cafeteria plans and employer-provided child care purchased through
  dependent flexible spending accounts. These amounts are also included in other line items in this table.                                              
\4\ Estimate includes employer-provided child care purchased through dependent care flexible spending accounts.                                         
\5\ Estimate includes employer-provided health insurance purchased through cafeteria plans.                                                             
\6\ The figures in the table show the effect of the EITC on receipts. The increase in outlays is: $19.9 billion in 1996, $21.9 billion in 1997, $22.9   
  billion in 1998, $23.9 billion in 1999, and $24.9 billion in 2000.                                                                                    
                                                                                                                                                        
Note.--Details may not add to totals due to rounding.                                                                                                   
                                                                                                                                                        
Source: Joint Committee on Taxation.                                                                                                                    


                                                         COMPARISON TO PRESIDENT'S BUDGET--TOTAL                                                        
                                                                  [Dollars in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Fiscal year--                                           
                                                                -----------------------------------------------------------------------------  1997-2002
                                                                    1996       1997       1998       1999       2000       2001       2002              
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget authority...............................................     -6.361    -13.690    -17.386    -26.652    -25.170    -43.687    -27.495    -154.080
Outlays........................................................      0.869    -14.046    -24.756    -28.519    -32.542    -35.069    -31.813    -166.745
Revenues.......................................................     -3.537     -7.059    -15.009    -19.444    -15.017    -20.359    -31.681    -108.569
Deficit (-)/Surplus (+)........................................     -4.406      6.987      9.747      9.075     17.525     14.710      0.132      58.176
Debt subject to limit..........................................      4.400     -7.100    -16.100    -26.000    -45.600    -62.500    -78.000    -235.300
050 National Defense:                                                                                                                                   
    Budget authority...........................................      0.395     12.843     10.420      7.876      4.089     -2.231     -7.663      25.334
    Outlays....................................................      0.271      4.069      7.299      9.255      7.583      3.446     -8.097      23.555
150 International Affairs:                                                                                                                              
    Budget authority...........................................     -0.216     -1.614     -2.997     -3.311     -3.181     -4.733     -6.106     -21.942
    Outlays....................................................     -0.148     -0.717     -1.396     -2.076     -2.570     -3.519     -4.642     -14.920
250 General Science, Space, and Technology:                                                                                                             
    Budget authority...........................................      0.071     -1.381      0.341      0.980      1.587      0.138     -1.566       0.099
    Outlays....................................................      0.033     -0.158     -0.138      0.254      1.007      0.482     -0.917       0.530
270 Energy:                                                                                                                                             
    Budget authority...........................................     -0.109     -0.855     -1.282     -1.000     -1.031     -1.551     -2.197      -7.916
    Outlays....................................................     -0.039     -0.402     -0.668     -0.997     -1.050     -1.322     -1.894      -6.333
300 Natural Resources and Environment:                                                                                                                  
    Budget authority...........................................      0.325     -1.420     -2.714     -1.711     -2.532     -2.767     -4.104     -15.248
    Outlays....................................................      0.214     -0.880     -2.627     -1.664     -2.549     -2.555     -3.677     -13.952
350 Agriculture:                                                                                                                                        
    Budget authority...........................................      0.010     -1.121     -0.861     -0.717     -0.485     -1.087     -1.861      -6.132
    Outlays....................................................     -0.001     -0.885     -0.885     -0.760     -0.563     -0.965     -1.687      -5.745
370 Commerce and Housing Credit:                                                                                                                        
    Budget authority...........................................      0.213     -0.792     -0.812     -0.681     -0.501     -0.841     -1.231      -4.858
    Outlays....................................................      0.317     -0.388     -0.711     -0.801     -0.730     -0.955     -1.306      -4.891
400 Transportation:                                                                                                                                     
    Budget authority...........................................     -0.450     -0.481      7.361     10.748     13.223     10.343      7.108      48.302
    Outlays....................................................      0.009     -0.565     -1.006     -0.759      0.621      0.873     -1.244      -2.080
450 Community and Regional Development:                                                                                                                 
    Budget authority...........................................     -1.003     -2.536     -2.154     -1.699     -1.243     -2.409     -3.242     -13.283
    Outlays....................................................     -0.035     -0.453     -1.675     -2.068     -2.274     -2.020     -2.165     -10.655
500 Education, Training & Social Services:                                                                                                              
    Budget authority...........................................     -2.938     -6.299     -7.070     -8.267     -9.344    -11.313    -13.307     -55.600
    Outlays....................................................     -0.044     -1.758     -5.566     -7.224     -8.455    -10.202    -12.111     -45.316
550 Health:                                                                                                                                             
    Budget authority...........................................     -0.003     -6.968     -6.626     -6.186     -5.885     -3.814     -8.180     -37.659
    Outlays....................................................      0.310     -5.996     -6.714     -6.539     -6.259     -3.153     -7.141     -35.802
570 Medicare:                                                                                                                                           
    Budget authority...........................................     -0.091      0.045     -2.101     -5.317     -7.243    -11.032    -17.170     -42.818
    Outlays....................................................     -0.257      0.059     -2.101     -5.317     -7.243    -11.025    -17.161     -42.788
600 Income Security:                                                                                                                                    
    Budget authority...........................................     -1.601      1.057     -2.874    -10.617     -7.617    -15.660    -12.700     -48.411
    Outlays....................................................      0.490      1.098     -2.899     -4.745     -6.511    -10.472    -12.918     -36.447
650 Social Security:                                                                                                                                    
    Budget authority...........................................     -0.250     -0.001     -0.001     -0.001     -0.001     -0.001     -0.001      -0.006
    Outlays....................................................      0.288     -0.340     -0.363     -0.349     -0.369     -0.446     -0.532      -2.399
700 Veterans Benefits and Services:                                                                                                                     
    Budget authority...........................................     -0.278      0.104      0.595      1.123      2.501      0.729      0.303       5.082
    Outlays....................................................     -0.182      0.097      0.581      1.073      2.347      0.881      0.161       5.140
750 Administration of Justice:                                                                                                                          
    Budget authority...........................................      0.090     -1.385     -2.225     -2.267     -2.305     -4.037     -3.406     -15.624
    Outlays....................................................      0.002     -1.307     -3.194     -2.585     -2.536     -5.008     -4.281     -18.911
800 General Government:                                                                                                                                 
    Budget authority...........................................      0.021     -4.119     -1.844     -2.559     -2.263     -3.270     -3.291     -17.346
    Outlays....................................................      0.020     -3.050     -1.242     -2.013     -1.819     -2.801     -3.636     -14.571
900 Net Interest:                                                                                                                                       
    Budget authority...........................................      0.234      0.308     -0.405     -1.333     -2.580     -3.722     -4.816     -12.548
    Outlays....................................................      0.234      0.308     -0.405     -1.333     -2.580     -3.722     -4.816     -12.548
920 Allowances:                                                                                                                                         
    Budget authority...........................................     -0.214      3.161     -1.914     -2.015     -2.018     10.908     34.601      42.723
    Outlays....................................................     -0.046     -0.542     -0.813     -0.173     -0.251     14.751     34.644      47.616
950 Offsetting Receipts:                                                                                                                                
    Budget authority...........................................     -0.567     -2.236     -0.223      0.302      1.659      2.663     21.607      23.772
    Outlays....................................................     -0.567     -2.236     -0.223      0.302      1.659      2.663     21.607      23.772
--------------------------------------------------------------------------------------------------------------------------------------------------------


                        COMPARISON OF THE FY 1997 BUDGET WITH THE FY 1996 SPENDING LEVELS                       
                                              [Dollars in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                            Fiscal year--                                       
                               ----------------------------------------------------------------------  1997-2002
                                  1996      1997      1998      1999      2000      2001      2002              
----------------------------------------------------------------------------------------------------------------
Spending......................   1,574.7      43.4     100.8     139.0     187.6     219.1     267.7     2,532.3
Percent.......................        NA       2.8       6.4       8.8      11.9      13.9      17.0        60.8
    National Defense:                                                                                           
        Spending..............     263.6       1.3       0.0       3.5       7.2       6.4       6.5        24.9
        Percent...............        NA       0.5      0.0.       1.3       2.7       2.4       2.5         9.5
150 Internation Affairs:                                                                                        
    Spending..................      15.9      -0.9      -2.4      -3.4      -4.9      -5.3      -5.6       -22.6
    Percent...................        NA      -5.9     -15.2     -21.6     -30.6     -33.4     -35.3      -142.0
250 General Science, Space,                                                                                     
 and Technology:                                                                                                
    Spending..................      16.6       0.1      -0.1      -0.3      -0.5      -0.6      -0.9        -2.3
    Percent...................        NA       0.8      -0.5      -2.1      -2.8      -3.8      -5.4       -13.7
270 Energy:                                                                                                     
    Spending..................       3.5      -0.8      -1.4      -2.2      -2.7      -2.8      -3.3        13.2
    Percent...................        NA     -22.5     -41.0     -62.3     -76.9     -79.0     -93.4      -375.2
300 Natural Resources and                                                                                       
 Environment:                                                                                                   
    Spending..................      21.8      -0.5      -2.2      -1.4      -2.9      -2.6      -2.9       -12.5
    Percent...................        NA      -2.3     -10.0      -6.5     -13.2     -12.0     -13.4       -57.3
350 Agriculture:                                                                                                
    Spending..................      10.8      -0.5      -0.9      -1.3      -1.9      -3.0      -3.6       -11.2
    Percent...................        NA      -4.8      -8.3     -11.8     -17.7     -28.1     -33.2      -104.0
370 Commerce and Housing                                                                                        
 Credit:                                                                                                        
    Spending..................      -7.1       5.5      14.4      11.4      13.9      15.5      14.3        75.0
    Percent...................        NA     -77.4    -203.7    -161.9    -196.7     218.7     202.1     -1060.5
400 Transportation:                                                                                             
    Spending..................      39.3      -0.3      -1.7      -3.2      -4.1      -4.8      -5.3       -19.3
    Percent...................        NA      -0.8      -4.3      -8.1     -10.4     -12.2     -13.4       -49.1
450 Community and Regional                                                                                      
 Development:                                                                                                   
    Spending..................      11.1      -1.0      -2.5      -3.3      -4.1      -4.5      -5.0       -20.2
    Percent...................        NA      -8.7     -22.3     -29.7     -36.7     -40.1     -44.6      -182.0
500 Education, Training &                                                                                       
 Social Services:                                                                                               
    Spending..................      50.6      -1.1      -2.4      -2.7      -2.3      -1.9      -1.2       -11.7
    Percent...................        NA      -2.1      -4.8      -5.4      -4.6      -3.7      -2.4       -23.1
550 Health:                                                                                                     
    Spending..................     123.0       7.3      15.1      22.2      29.9      37.8      44.5       156.8
    Percent...................        NA       5.9      12.3      18.0      24.3      30.7      36.2       127.5
570 Medicare:                                                                                                   
    Spending..................     179.1      12.4      26.3      35.9      48.5      60.8      73.6       257.5
    Percent...................        NA       6.9      14.7      20.0      27.1      33.9      41.1       143.7
600 Income Security:                                                                                            
    Spending..................     228.9      11.2      15.3      22.8      34.2      36.4      48.3       168.3
    Percent...................        NA       4.9       6.7      10.0      14.9      15.9      21.1        73.5
650 Social Security:                                                                                            
    Spending..................     351.3      16.8      34.8      53.7      73.8      95.5     118.1       392.8
    Percent...................        NA       4.8       9.9      15.3      21.0      27.2      33.6       111.8
700 Veterans Benefits and                                                                                       
 Services:                                                                                                      
    Spending..................      37.8       1.9       1.5       0.3       1.6      -0.9       2.1         6.6
    Percent...................        NA       5.0       4.1       0.7       4.4      -2.4       5.6        17.4
750 Administration of Justice:                                                                                  
    Spending..................      17.7       2.2       3.5       4.5       5.3       3.0       3.0        21.5
    Percent...................        NA      12.6      19.6      25.7      29.7      17.0      17.0       121.6
800 General Government:                                                                                         
    Spending..................      12.6      -0.9       1.0       0.3       0.7      -0,2      -0.3         0.6
    Percent...................        NA      -7.1       7.8       2.2       5.7      -1.5      -2.6         4.5
900 Net Interest:                                                                                               
    Spending..................     239.7       2.4       4.3       3.2      -0.7      -2.4      -4.2         2.6
    Percent...................        NA       1.0       1.8       1.3      -0.3      -1.0      -1.7         1.1
920 Allowances:                                                                                                 
    Spending..................       0.0      -1.0      -0.8      -0.1      -0.2      -1.7      -2.1        -6.0
    Percent...................        NA   2,143.5   1,710.9     297.8     489.1   3,747.8   4,550.0    12,939.1
950 Offsetting Receipts:                                                                                        
    Spending..................     -41.5     -10.7      -1.1      -0.8      -3.2      -5.5      -8.5       -30.0
    Percent...................        NA      25.8       2.7       2.0       7.8      13.3      20.6        72.2
----------------------------------------------------------------------------------------------------------------



                               appendix 1



         Descriptions of Additional Changes From Current Policy

                              by function

                              ----------                              

    The discussion below provides explanations of various 
additional policy changes--those apart from the priority policy 
reforms--that complete the assumptions underlying this budget. 
The actual policy changes are the discretion of the authorizing 
and appropriating committees with jurisdiction over these 
programs. These proposals, however, reflect the recommendations 
and assumptions of the Committee on the Budget.

                     Function 050: National Defense

    Sell Commodities From the National Defense Stockpile. The 
Department of Defense has identified large amounts of materials 
in the National Defense Stockpile as obsolescent and excess to 
anticipated national defense requirements. This proposal would 
sell selected items from the stockpile in quantities that would 
have minimal or no impact on domestic producers and users. 
Proceeds from the sales would be directed to the Treasury for 
purposes of deficit reduction. Commodities to be sold include 
cobalt, aluminum, columbium, germanium, palladium, platinum, 
and rubber.

                         FUNCTION 050: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Sell commodities from the national defense                                                                      
 stockpile:                                                                                                     
    Budget authority......................  \1\ -150       -79       -79       -79       -80      -166      -166
    Outlays...............................  \1\ -150       -79       -79       -79       -80      -166      -166
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                  Function 150: International Affairs

    Cease Supporting the International Development Association 
[IDA] and Other ``Soft-Loan'' Windows of the Various 
Multilateral Banks. IDA, an affiliate of the World Bank, is 
supposed to make low-interest loans--known as soft loans--to 
the world's poorest nations. Recently, the two largest 
recipients of IDA funds have been the People's Republic of 
China and India.
    In 1946, the Truman administration resolved that 
concessionary loans to foreign governments had no place among 
the techniques of American statecraft. Soft loans vitiate the 
need for hard choices. There is little evidence they have 
special merit in promoting development. Rather, they have 
become a magnet for those proposals that were least justified 
and most likely to waste money. Indeed, soft loans tend to 
promote and maintain economically unsound policies that deter 
private capital investments. If a project is economically 
sound, it should be just as workable under ordinary (near-
market) World Bank lending.
    Opponents of this proposal will argue that underdeveloped 
countries are too poor to save or attract capital. But 
currently developed countries--like the United States--were 
once poor. Where did their capital come from? The real problem 
involves incentives and proper use. Domestic capital can be 
augmented by foreign capital if the economic conditions are 
right. Many low-income countries cannot attract foreign 
capital; in many of these, locally owned capital is invested 
abroad, and for the same reason--there is not a favorable 
economic environment. Under this proposal the United States 
would not replenish IDA funds or the other ``soft'' lending 
programs after 1997. The budget resolution notes that World 
Bank loans increase the fungible funds available to China, 
India, Pakistan, and other countries intent on spending their 
own taxpayers' funds on aggressive nuclear weapons programs.

    Recognize That the Capital Replenishments for Several 
Multilateral Lending Institutions Will Soon Be Completed. The 
International Bank for Reconstruction and Development [IBRD] 
finances development projects in less-developed countries. 
According to the President's budget, full funding of capital 
subscriptions for the U.S. share of a $74.8 billion general 
capital increase was provided by 1989-1996 appropriations. 
Likewise, the outstanding commitments for the International 
Finance Corporation [IFC], the North American Development Bank 
and the Enterprise for the Americas Multilateral Investment 
Fund [MIF] will soon be completed. The banks would continue to 
operate from their reflows, as officials with the European Bank 
for Reconstruction and Development [EBRD] indicated they plan 
to do. Funds, however, are assumed for the proposed Bank for 
Economic Cooperation and Development in the Middle East. 
Finally, despite the election of a new president in August 
1995, the Budget Committee remains concerned about the 
performance of the African Development Bank.

    Accept the Administration's Long-Term Proposals for 
Peacekeeping Operations, Migration and Refugee Assistance, and 
Foreign Military Financing [FMF] Loans. The President has 
recommended reductions in each of these accounts. This proposal 
assumes the President's recommendations for FMF loans in 1997 
and for the other programs beginning in 1998.

    Privatize or Eliminate the United States Information Agency 
[USIA] Educational and Cultural Exchanges, and Significantly 
Reduce Overseas Nonmilitary Broadcasting. USIA was created in 
1953 during the cold war to explain and advocate U.S. policies. 
The USIA oversees television broadcasting services similar to 
the radio broadcasts of Voice of America. Today, USIA also 
administers educational and cultural exchange programs. Funding 
for these exchange programs grew by about 35 percent in real 
terms between 1991 and 1995.
    The recommendation recognizes that the cold war is over, 
and countries such as those in Eastern Europe and the former 
Soviet Union have ready access to world news [for example, 
CNN]. This increased communication and private travel has 
decreased the need for exchange programs. This proposal 
privatizes or eliminates funding for USIA exchange programs by 
1999. Likewise, this proposal would privatize or eliminate most 
radio broadcasts and overseas construction by fiscal year 2000. 
Overseas broadcasting played an important role during the cold 
war, but has become an expensive anachronism with the advent of 
global satellite television broadcasting. Funding is available, 
however, for Radio and TV Marti. As stated previously, it is 
assumed that USIA will be consolidated within the Department of 
State.
    The President's budget recommends a one-time increase in 
funding for USIA's salaries and expenses, broadcasting, and 
educational and cultural exchanges program. Such increases 
would be followed by subsequent reductions. It makes little 
sense to increase funding this year only to reduce it next 
year.

    Reduce Subsidies for International Exports and Investment, 
Including Public Law 480. This proposal assumes major changes 
in the Public Law 480 program. According to the Congressional 
Budget Office:

        * * * [c]hanges in the world over the past 40 years may 
        have rendered the program obsolete. * * * The market 
        development aspect of Public Law 480 is relatively 
        insignificant for two reasons: exports under titles I 
        and III are a small portion of total U.S. agricultural 
        exports, and the countries currently receiving Public 
        Law 480 commodities are unlikely to become commercial 
        customers.

The General Accounting Office was even more critical of the 
program; in a recent report they stated:

          Title I's importance to helping develop long-term 
        U.S. agricultural markets has not been demonstrated. * 
        * * [N]one of the many studies GAO reviewed was able to 
        establish a link between title I assistance and the 
        establishment of a long-term commercial market share 
        for U.S. agricultural products over the 40-year history 
        of the title I program.

This proposal assumes the termination of title III after 1997 
and phases out title I. The budget resolution assumes adequate 
funding for title II, which is used to feed starving people.
    This function also contains three international export/
investment agencies: the Export-Import Bank, the Overseas 
Private Investment Corporation [OPIC], and the U.S. Trade and 
Development Agency. The Export-Import Bank promotes U.S. 
exports by providing subsidized financing to foreign buyers of 
U.S. goods. The bank makes direct loans with below-market 
interest rates and provides guarantees of private lending 
without receiving full compensation for the contingent 
liabilities. Last year, the Committee on Appropriations stated: 
``[T]he Committee will be hard pressed to sustain 
appropriations for the Eximbank at current levels in future 
years.'' The Budget Committee encourages the Bank to continue 
to examine risk-related fees and the concept of ``graduating'' 
companies that are receiving assistance. The budget resolution 
also encourages the committees of jurisdiction to seek ways to 
privatize portions of the bank.
    OPIC is a government corporation that provides financing 
and political risk insurance to U.S. companies investing in 
developing regions. OPIC's new insurance and finance 
commitments have recently increased rapidly. The Budget 
Committee is concerned about these trends. The services OPIC 
offers would be better suited to the private sector than the 
public sector and that a transitional plan providing for 
complete privatization is warranted. Under this proposal, 
OPIC's finance commitments would be phased out. The notion of 
``graduation'' would also be applied to its insurance 
commitments. Finally, the U.S. Trade and Development Agency 
[TDA] provides grants for feasibility studies for major 
development projects in the developing world. The House 
Committee on Appropriations has encouraged TA to cooperate with 
the Congress in developing a method of recouping a portion of 
its costs from American companies that benefit from its 
financial support, thereby reducing TA's future appropriation 
requirements. The budget resolution accepts this recommendation 
and notes that TDA is moving in this direction.

                       FUNCTION 150: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Cease supporting the International                                                                              
 Development Association [IDA] and other                                                                        
 ``soft-loan'' windows of the various                                                                           
 multilateral banks:                                                                                            
    Budget authority......................       800         0      -800      -800      -800      -800      -800
    Outlays...............................     1,380         0       -66      -204      -347      -478      -594
Recognize that the capital relinquishments                                                                      
 for several multilateral lending                                                                               
 institutions will soon be complete:                                                                            
    Budget authority......................       308         3       -37       -95      -173      -256      -308
    Outlays...............................       342        45        23       -57      -150      -172      -240
Accept the administration's long-term                                                                           
 proposals for peacekeeping operations,                                                                         
 migration and refugee assistance and                                                                           
 foreign military financing loans:                                                                              
    Budget authority......................       805       -24       -54       -63       -72       -72       -72
    Outlays...............................       823        -1       -31       -47       -63       -67       -70
Privatize or eliminate the United States                                                                        
 Information Agency [USIA] education and                                                                        
 cultural exchanges, and significantly                                                                          
 reduce overseas non-military                                                                                   
 broadcasting:                                                                                                  
    Budget authority......................     1,059      -175      -303      -452      -582      -682      -712
    Outlays...............................     1,092      -122      -245      -389      -546      -659      -703
Reduce subsidies for international exports                                                                      
 and investment, including public law 480:                                                                      
    Budget authority......................     2,044         0      -161      -398      -405      -411      -418
    Outlays...............................     1,693         0       -67      -238      -351      -389      -404
----------------------------------------------------------------------------------------------------------------

          Function 250: General Science, Space, and Technology

    Allow Private Producers to Build and Operate Cogeneration 
Facilities at Federal Civilian Installations. The Department of 
Defense has entered into agreements with private power 
producers wherein the private investors provide the capital 
needed to upgrade heating and power producing facilities on 
Federal installations at no cost to the Federal Government in 
return for the right to sell excess power and heat off the 
installation commercially in the civilian market. That reduces 
the government's cost of energy and the need for the government 
to upgrade aging power and heating plants. The National 
Aeronautics and Space Administration, the Department of 
Veterans Affairs, and other civilian departments could make 
similar cost-saving arrangements if an amendment were made to 
Title VIII of the Shared Savings Amendment of the National 
Energy Conservation Policy Act of 1978. That title currently 
prohibits this activity at civilian agencies.

                          Function 270: Energy

    Accept the Administration's Funding Levels for the Rural 
Utilities Service. There are potential long-term financial 
problems at the electric and telecommunications portion of the 
Rural Utilities Service [RUS], formerly the Rural 
Electrification Administration. The agency's financial 
statements for the year ended September 30, 1994 stated:

          Economic weakness in the rural electric and telephone 
        market segments, and the effect on REA borrowers of 
        adverse market conditions, may result in certain 
        borrowers experiencing difficulties in meeting their 
        obligations to REA. As a consequence, REA may require 
        additional provisions for loan losses in the future.

    The President has recommended reductions in these programs. 
Given the uncertainty of the RUS's financial needs, the budget 
resolution assumes the President's recommendations.

    Extend Nuclear Regulatory Commission [NRC] Fees. This 
proposal, which was contained in the Balanced Budget Act that 
the President vetoed, would extend the Nuclear Regulatory 
Commission's [NRC] authority to charge fees to offset 100 
percent of its appropriation. Under current law, after 1998, 
the NRC would only be authorized to set fees equal to 33 
percent of the budget.

    Lease Excess Capacity in the Strategic Petroleum Reserve. 
The Balanced Budget Act authorized the Secretary to lease 
unused capacity within the Strategic Petroleum Reserve. The 
Budget Committee again reiterates its support for this 
provision.

                       FUNCTION 270: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Accept the Administration's Fund Levels                                                                         
 for Rural Utilities Service:                                                                                   
    Budget authority......................       125       -54       -57       -61       -64       -61       -55
    Outlays...............................       122        -5       -16       -31       -46       -56       -59
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 270: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Extend Nuclear Regulatory Commission [NRC]                                                                      
 fees:                                                                                                          
    Budget authority......................  \1\ -462         0         0      -306      -306      -306      -306
    Outlays...............................  \1\ -462         0         0      -306      -306      -306      -306
Lease excess capacity in the Strategic                                                                          
 Petroleum Reserve:                                                                                             
    Budget authority......................         0         0        -1        -3        -7       -11       -17
    Outlays...............................         0         0        -1        -3        -7       -11       -17
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

            Function 300: Natural Resources and Environment

    Eliminate Unneeded Bureaucracy in the Department of the 
Interior. This proposal recommends significant changes in the 
Office of the Secretary and construction management. It assumes 
that the layer of management associated with the Assistant 
Secretaries will be eliminated. It calls for significant 
reductions in the Office of the Secretary and a 10-percent 
reduction in construction management. The budget resolution 
recommends that all travel budgets should be closely examined 
and that positions involving congressional liaison and public 
affairs be reduced. The budget resolution also recommends a 15-
percent reduction in the Office of the Solicitor.
    The administration's lack of commitment to consolidating 
the management of adjacent Federal lands is disappointing. In 
1993, the Vice President's National Performance Review 
criticized the existence of ``uncoordinated land actions.'' 
Lands managed by the Department of the Interior and the 
Department of Agriculture often lie ``side by side.'' It noted:

          This dispersed ownership pattern prevents efficient 
        operations and results in fragmented assistance to 
        customers. In many cases, the land administered by the 
        two agencies share the same users, resources, and 
        management problems. The agencies maintain two separate 
        staffs in more than 70 communities, resulting in 
        inefficient use of Federal resources and overall 
        confusion to land users.

    Last year, the General Accounting Office indicated that:

        * * * efficiencies could be derived through a 
        collaborative Federal approach to land management. * * 
        * Savings could be achieved from closing or combining 
        offices and duties with corresponding reductions in 
        overhead and staff. While estimated cost savings would 
        depend on the specific restructuring plan, the 
        potential savings from the elimination of duplication 
        and increased efficiencies is a compelling reason to 
        consider consolidation.

The budget resolution recommends that the House Committee on 
Resources examine the efficiencies that could be achieved 
through consolidation.
    Last year, the budget resolution noted that the Department 
of Interior is the accumulation of 200 years of public land 
history. Many features of the Department no longer make sense. 
This is still true. Like the House Committee on Appropriations, 
the budget resolution recognizes ``the growing concern that 
some of [the BLM] lands can and should be administered 
differently'' and endorses the development of new and 
innovative management techniques that are being considered. But 
the development of management techniques should be reviewed 
before any specific recommendations are made.
    Finally, a consistent theme of this budget resolution is 
that power, influence, and money should be shifted out of 
Washington and closer to the people who use government 
services. This is particularly true for the Department of the 
Interior. The vast majority of the services and functions of 
the Department are located far from the District of Columbia. 
The U.S. Government, for example, owns fully one-third of the 
Nation's land mass, most of that west of the Mississippi.
    There is no reason why, in an age of advanced 
telecommunications, the bureaucracy that administers these 
programs must be located in Washington. Faxes and 
teleconferencing have already become the most common means of 
communications between Washington and the various field 
offices.
    In an attempt to better serve the users of government 
services, the budget resolution recommends that the committee 
of jurisdiction investigate moving the primary operations of 
the Department of the Interior closer to the users of those 
services. The budget resolution assumes this move will 
ultimately improve the efficiency of the Department and save 
taxpayers substantial money over time, while increasing the 
level and quality of service to those most directly affected by 
their decisions.

    Encourage Land Swaps Instead of New Purchases. The budget 
resolution encourages greater use of land swaps when it is 
environmentally appropriate. Most Federal lands are managed by 
the National Park Service, the Forest Service, or the Bureau of 
Land Management. The General Accounting Office recently 
reported that the Federal Government has increased its land 
ownership significantly in the lower 48 States over the last 30 
years. Partly as a result of this, those agencies are finding 
it difficult to maintain and finance operations on their 
existing landholding. Land management agencies should improve 
their stewardship of lands they already own before facing added 
management responsibilities. The budget resolution recognizes, 
however, that emergency and hardship cases do arise annually 
and funds are assumed for this purpose.

    Prioritize Conservation Operations Within the Department of 
Agriculture. Conservation programs are conducted through a 
number of accounts in the Department of Agriculture. Three 
accounts, however, were subsumed in the new mandatory EQUIP 
program--the Agricultural Conservation Program, the Colorado 
River Basin Salinity Control Program, and the Great Plains 
Conservation Program. Within the Natural Resources Conservation 
Service, technical assistance is provided for conservation 
operations through 2,955 conservation districts to land users. 
In addition, the Department of Agriculture cooperates with 
other Federal, State, and local agencies to develop coordinated 
water and land resources programs and in conducting surveys and 
investigations of watersheds. This proposal would terminate the 
watershed surveys and planning program. The President's long-
term funding recommendations significantly reduce funding for 
conservation operations and resource conservation and 
development. This proposal reduces resource conservation and 
development by no more than 10-percent. The budget resolution, 
however, generally accepts the administration's reductions for 
conservation operations. Finally, because the Department is no 
longer engaged in large public works projects, the resolution 
assumes a 50-percent reduction in watershed and flood 
prevention operations.

    Target Funding for Facilities Construction on Projects 
Needed to Protect Life or Safety or Critical or Historic 
Resources. Construction funding in the Departments of 
Agriculture and the Interior has two budgetary effects. The 
first involves the initial cost of the project; the second 
involves the long-term maintenance of any new facility. In the 
case of a new visitor center, for example, new construction 
sometimes increases operational costs if the new facility must 
be staffed. The budget resolution assumes that all new 
construction of facilities would be limited to projects 
required to protect life or safety or the protection of 
critical or historical resources.

    Restructure the Department of the Interior's Minerals-
Related Agencies. For fiscal year 1996, the Congress provided 
$64 million for ``the orderly closure of the Bureau of Mines.'' 
This proposal assumes that no additional funds are required to 
close the Bureau. It also calls for the discontinuation of 
helium production, and assumes that reforms will be enacted 
concerning the collection of royalties associated with mining 
on public lands. It also assumes that the ``royalty fairness'' 
proposal in the Balanced Budget Act will be enacted. This 
proposal would devolve royalty collections, inspections, and 
enforcement to the States. The initiative was first proposed in 
the Vice President's National Performance Review [NPR]. In 
addition to creating a more efficient collection process, this 
proposal will decrease the costs to administer the Minerals 
Management Service [MMS]. The President has proposed a 
reduction in his budget for the MMS, which the budget 
resolution assumes. The President has also proposed reductions 
for regulation and technology and the abandoned mine 
reclamation fund, which the budget resolution generally 
accepts. The U.S. Geological Survey conducts research and 
provides basic scientific information concerning natural 
hazards and environmental issues. Concerning the National 
Mapping Division [NMD], the budget resolution again calls for 
the NMD to aggressively price its products, contract out 
services, and consolidate overlapping mapping efforts. 
Concerning the Water Resources Division [WRD], which performs 
water resources investigations under both Federal programs and 
Federal/State cooperative programs, the budget resolution 
continues to believe that the cooperative program provides 
broader benefits to the taxpayer. Since cost sharing is 
involved, State and local governments must be convinced of the 
need for a particular study. The President has proposed much 
greater reductions in this account starting in fiscal year 
1998.

    Reform the Various Land Management Agencies.

  - Bureau of Land Management. The Bureau of Land Management 
        [BLM] is responsible for carrying out a variety of 
        programs for the conservation, management, development, 
        and protection of both surface and subsurface mineral 
        resources on approximately 270 million acres of public 
        lands in 28 States. This land makes up 13 percent of 
        the total land surface of the United States. The BLM 
        also administers mineral leasing and supervises mineral 
        operations on an additional 300 million acres of 
        Federal mineral estate underlying other Federal, State, 
        and private lands. The President has recommended a 
        reduction in funding for the Automated Land & Mineral 
        Records System [ALMRS]; the budget resolution assumes 
        this recommendation. The budget resolution suggests 
        that the agency undertake steps to reduce its 
        bureauwide fixed costs and administrative support.

  - U.S. Forest Service. The Forest Service manages 156 
        national forests, 20 national grasslands, and 9 land 
        utilization projects located in 44 States, Puerto Rico, 
        and the Virgin Islands. The Service must improve the 
        efficiency of forest management. Studies have shown 
        that State-managed forests adjacent to federally 
        managed forests are managed at a profit, while Federal 
        forests are not. This occurs because the Federal 
        Government's costs exceed those of the States. The 
        Budget Committee has requested a complete and detailed 
        analysis of the Forest Service's revenues and costs by 
        the General Accounting Office [GAO]. This investigation 
        will also examine options for managing the program in a 
        more cost-effective manner. In addition, the budget 
        resolution recommends that all funding for trails be 
        eliminated and urges that the authorizing committees 
        evaluate mechanisms to inject market-based 
        decisionmaking into public land management in the area 
        of multiple use activities, including the timber road 
        programs. In the area of multiple use and recreation 
        use, the budget resolution recommends to the 
        authorizing committees that direct involvement by user 
        groups in management activities could achieve cost 
        reductions while maintaining all existing environmental 
        and natural resource protection standards. Pilot 
        programs could be created to test market-based 
        approaches for such activities. Finally, the President 
        has proposed reductions for both forest research and 
        State and private forestry. This proposal assumes those 
        recommendations.

    Reform the Bureau of Reclamation [BOR]. The BOR is the 
largest supplier and manager of water in the 17 Western States, 
delivering approximately 30-million-acre feet of water annually 
to 28 million people for agricultural, municipal, industrial, 
and domestic uses. The BOR is also the sixth largest producer 
of electric power in the Western States, generating over half-
a-billion dollars in annual power revenues. Its multipurpose 
projects also provide flood control, recreation, and fish and 
wildlife benefits. The Vice President's 1993 National 
Performance Review [NPR] indicated the BOR:

        * * * should develop legislation to sell or transfer 
        title of all distribution and drainage facilities to 
        State or local water organizational entities (such as 
        irrigation districts).

The budget resolution agrees with this proposal, but questions 
why the administration has not implemented it aggressively. The 
Budget Committee is also concerned about the BOR's lack of 
efficiency. The NPR stated:

          The original mission of the Bureau of Reclamation 
        [BOR], to develop water resources and provide for 
        economic development in the West, is almost complete. 
        BOR has completed currently planned capital 
        construction on all major water projects except the 
        central Arizona and Utah projects. It is anticipated 
        that all ongoing construction projects will be 
        completed in the next 5 to 8 years.

    It appears that this is not the case. The budget resolution 
encourages the Committee on Resources to investigate this 
problem. The President has proposed small changes for the BOR's 
construction, loan program account, upper Colorado River Basin 
fund, operations and maintenance, general administrative 
expenses, Central Valley project restoration fund, the Central 
Utah project completion account, and the Utah reclamation 
mitigation and conservation account. The budget resolution 
generally assumes these recommendations. The resolution 
recognizes, however, that the House and Senate Committees on 
Appropriations will ultimately allocate these funds between 
projects.

    Refocus the National Oceanic and Atmospheric Administration 
[NOAA] on Its Core Mission as Part of Terminating the 
Department of Commerce. NOAA, which is in the Department of 
Commerce, consists of the National Ocean Service; the National 
Marine Fisheries Service; the Office of Oceanic and Atmospheric 
Research; the National Weather Service; and the National 
Environmental Satellite, Data, and Information Service.
    In this Function, NOAA also has a construction account that 
funds the construction of new facilities and repairs, 
modifications, and additions to existing facilities. [NOAA also 
has an account for fleet modernization, shipbuilding, and 
conversion in Function 370.] Funding for NOAA continues to 
include congressional add-ons, grant programs for selected 
States and regions, industry assistance, and inefficient 
weather service operations.
    A $55 million reduction from the fiscal year 1996 funding 
level can be achieved by limiting NOAA activities, services, 
and research to its relevant, tightly focused constitutional 
missions of public safety, basic research, and commercial 
regulation. Programs not critical to these missions should be 
terminated including: the National Undersea Research Program 
[NURP]; the VENTS (volcanic ocean heating) program; Global 
Learning and Observation to Benefit the Environment [GLOBE]; 
Southeastern U.S./Caribbean Fisheries Oceanographic Coordinated 
Investigations [FOCI]; National Coastal R&D Research Institute; 
specialized weather specific constituent groups such as 
agriculture which can be privatized; Chesapeake Bay buoys; the 
374 FTE NOAA Corps by the end of fiscal year 1997; unjustified 
or unnecessary State and industry fisheries management 
assistance; and various construction and maintenance projects. 
Priority funding support is given to Weather Service 
modernization and NOAA's basic research programs (climate and 
air quality research at the current level, marine prediction 
research at the President's request, and increases in actual 
sea grant research and the coastal ocean program).
    In light of the enormous growth of coastal populations, the 
committee acknowledges the continued importance of the Coastal 
Zone Management Act in helping States plan for development in 
coastal areas and to reduce conflicts among competing uses of 
the coastal zone. Consequently, the committee assumes funding 
for Coastal Zone Management Act activities consistent with H.R. 
1965, the Coastal Zone Management Reauthorization Act of 1996, 
which recently passed the House by a vote of 407-0.

    Reform the Corps of Engineers. The Corps of Engineers 
currently performs nine missions related to civil works. This 
proposal recognizes the fact that a continued Federal role in 
several of the functions related to these missions may no 
longer be justified, and the termination, transfer, 
privatization, or streamlining of certain functions may be 
necessary.

    Fund EPA Research on Risk-Based Regulation. The EPA Science 
and Technology account should support and justify EPA's 
regulatory mission and decisions with good, objective science 
and best estimated risk; programs not relevent to that mission 
should be terminated, including the Environmental Technologies 
Initiative (corporate welfare), climate change research (not 
regulatory) and indoor air research (an OSHA responsibility).

    Open a Small Portion of the Coastal Plain of ANWR for 
Exploration. This proposal assumes that a small portion of the 
Arctic National Wildlife Refuge [ANWR] in Alaska will be leased 
for oil and gas exploration, development, and production. ANWR 
is the most prospective oil and gas province in North America, 
and is adjacent to the hugely successful Prudhoe Bay field, 
currently supplying 20 percent of domestic oil. Leasing is 
overwhelmingly supported by residents of the State of Alaska 
and the Native people who live in the area proposed for 
leasing. Leasing could provide enormous revenues to the 
Treasury, jobs to the U.S. economy, and a valuable domestic 
energy resource to offset the current transfer of wealth to 
other nations.
    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. This is the Function 300 component of this 
provision, which is principally contained in Function 600. This 
portion applies to NOAA retiree COLA's.

    Reduce Department of Interior Overhead. This proposal calls 
for efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the Department. Reductions have not been assumed 
in those costs that are closely related to the Department's 
central function. The budget resolution recommends that the 
Department head should decide on how to distribute these 
assumed savings among the categories identified above, as well 
as other overhead costs.

    Prepay the Central Utah Water Conservancy District 
Contracts. The Balanced Budget Act amended the existing 
authority of the Secretary to accept prepayment from the 
Central Utah Water Conservancy District. This provision 
reiterates support for that proposal.

                       FUNCTION 300: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate unneeded bureaucracy in the                                                                           
 Department of the Interior:                                                                                    
    Budget authority......................        90       -33       -33       -33       -33       -33       -33
    Outlays...............................        95       -30       -33       -33       -33       -33       -33
Encourage land swaps instead of new                                                                             
 purchases:                                                                                                     
    Budget authority......................       137       -77       -77       -77       -77       -77       -77
    Outlays...............................       183       -17       -50       -71       -76       -76       -76
Prioritize conservation operations within                                                                       
 the Department of Agriculture:                                                                                 
    Budget authority......................       848      -139      -157      -201      -246      -246      -246
    Outlays...............................       995       -80      -138      -199      -239      -243      -243
Target funding of facilities construction                                                                       
 on projects needed to protect life or                                                                          
 safety or crucial historic resources:                                                                          
    Budget authority......................       352      -121      -121      -121      -121      -121      -121
    Outlays...............................       507       -36       -67       -96      -110      -121      -121
Reform the Department of the Interior's                                                                         
 Minerals-Related Agencies:                                                                                     
    Budget authority......................     1,234       -84      -108      -146      -185      -185      -185
    Outlays...............................     1,259       -72       -97      -124      -157      -174      -179
Reform the various land management                                                                              
 agencies:                                                                                                      
    Budget authority......................     1,082       -56       -66       -77       -95       -95       -95
    Outlays...............................     1,145       -43       -60       -74       -89       -95       -95
Reform the Bureau of Reclamation:                                                                               
    Budget authority......................       722       -20       -51      -109      -166      -166      -166
    Outlays...............................       748       -18       -46       -96      -153      -164      -166
Refocus the National Oceanic and                                                                                
 Atmospheric Administration [NOAA] on its                                                                       
 core mission as part of terminating the                                                                        
 Department of Commerce:                                                                                        
    Budget authority......................     1,917       -75      -146      -201      -251      -251      -251
    Outlays...............................     1,921       -38       -98      -168      -222      -242      -248
Reform the Corps Engineers:                                                                                     
    Budget authority......................     2,956       -24      -154      -347      -554      -554      -554
    Outlays...............................     3,161         7      -127      -293      -490      -550      -554
Fund EPA's research on risk-based                                                                               
 regulation:                                                                                                    
    Budget authority......................       525       -38       -38       -38       -38       -38       -38
    Outlays...............................       263       -19       -34       -38       -38       -38       -38
Reduce the Department of Interior                                                                               
 overhead:                                                                                                      
    Budget authority......................        NA      -279      -279      -335      -335      -419      -558
    Outlays...............................        NA      -237      -279      -327      -335      -406      -537
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 300: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reform the department of the interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority.....................  \1\ -1,43                                                            
                                                   8        -7        -7       -41       -41       -39       -38
    Outlays..............................  \1\ -1,48                                                            
                                                   2        -7       -12       -46       -48       -47       -47
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority.....................  \1\ -1,05                                                            
                                                   8         0    -1,150        -1      -800        -1        -1
    Outlays..............................  \1\ -1,05                                                            
                                                   8         0    -1,150        -1      -800        -1        -1
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority.....................          0         0         5         5         5         5         5
    Outlays..............................          0         0         0         2         4         5         5
Maintain current payment date of civilian                                                                       
 retiree cost-of-living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority.....................      1,867     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
    Outlays..............................      1,851     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
Prepayment of central Utah water                                                                                
 conservancy district contracts:                                                                                
    Budget authority.....................          2       -72      -134        13        13       -26        13
    Outlays..............................          4       -72      -134        13        13       -26        13
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow into the Federal Government.                                           
\2\ Less than $1 million.                                                                                       

                       Function 350: Agriculture

    Reform the Foreign Agricultural Service. The Foreign 
Agricultural Service maintains attaches at 63 foreign posts to 
assist overseas development of markets for U.S. farm 
commodities. Annually, the Service files about 5,000 reports. 
This proposal calls for a 30-percent reduction in such attaches 
and a 10-percent reduction in all other activities, except the 
general sales manager.

    Reduce Unnecessary Bureaucracy in the Department of 
Agriculture. This proposal reduces funding to administer the 
Department of Agriculture. It would eliminate all funds for the 
InfoShare program, which has been abandoned by the Office of 
the Secretary. It would fund the Chief Economist at the fiscal 
year 1995 level; it would reduce funding for the National 
Appeals Division and budget and program analysis. Funding for 
the Chief Financial Officer and Departmental Administration 
would be reduced, and all funding for the strategic space plan 
would be eliminated. The Office of Public Affairs would be 
reduced by 80 percent; the Economic Research Service would be 
reduced by 50 percent; the National Agricultural Statistics 
Service would be reduced by 20 percent. Finally, reductions are 
assumed in the Office of the General Counsel.

    Refocus Federal Support for Agricultural Research and 
Extensions. The Department of Agriculture conducts and supports 
agricultural research and education. According to the 
Congressional Budget Office, research undertaken by the 
Agricultural Research Service [ARS] may be replacing funding 
from the private sector. A subsequent analysis by the General 
Accounting Office [GAO] has indicated that a significant 
portion of the budget supports either applied or low priority 
research areas. Requiring the government to refocus this 
research would permit the private sector to finance more of its 
own research. The Budget Committee is also concerned about the 
number of the Department's laboratories. According to the GAO:

        * * * 17 Federal departments and independent agencies 
        identified 515 Federal R&D laboratories that spent a 
        total of $26.6 billion of an estimated $69.4 billion 
        that Federal agencies obligated for R&D in fiscal year 
        1995. * * * In addition, 65 Federal R&D laboratories 
        have a total of 221 satellite facilities. Overall, the 
        Department of Agriculture's 185 R&D laboratories were 
        the most reported by an agency. However, these 
        laboratories were among the smallest in size, with a 
        median operating budget of $2.1 million in fiscal year 
        1995.

    Within the Cooperative State Research, Education, and 
Extension Service [CSREES], this proposal would eliminate all 
special research grants, thereby requiring all grants to be 
awarded competitively. For CSREES Building and Facilities, 
funding would be terminated after fiscal year 1997, as 
discussed in the conference report that accompanied H.R. 1976. 
Finally, this proposal calls for major reforms in the Extension 
Service. No cuts, however, are assumed for the 4-H program.

    Reform Farmers Home Administration. The Farmers Home 
Administration lends money directly to new farmers or farmers 
with limited means who cannot obtain loans elsewhere for 
purchasing land or materials to operate a farm. Nearly 70 
percent of the money spent on direct loans, however, is for 
loans to so-called limited resource borrowers. According to a 
GAO report from 1995, about 47 percent of the direct loan 
program is held by delinquent borrowers; about 4 percent of the 
guaranteed loan program is held by delinquent borrowers. As 
such, the GAO concluded that ``[g]uaranteed loans have 
performed better than direct loans.'' This proposal would 
convert all direct loans to loan guarantees through the private 
sector and reduce personnel costs consistent with this 
conversion. In addition, there is the issue of graduation. 
According to the Congressional Budget Office, Congress and the 
FmHA:

        * * * intended direct loans to be available only 
        temporarily--until those farmers could improve their 
        operations and qualify for commercial credit. But 
        evidence reported by the General Accounting Office 
        suggests that the ``graduation rate'' of current 
        borrowers from direct to graduated loans is low, in 
        part because incentives are lacking to encourage 
        borrowers of FmHA money to shift from below-cost to 
        guaranteed loans.

    Downsize the Farm Service Agency. The Farm Service Agency 
currently administers the various production programs conducted 
by the Department of Agriculture, including the system of 
commodity supply and price controls, acreage allotments, 
production quotas, restrictions on imports, and export 
subsidies. The new direction in farm programs envisioned by the 
Freedom to Farm Act will give farmers the freedom to plant in 
response to market demand, not government programs or what 
government bureaucrats think farmers ought to be planting. 
According to the General Accounting Office [GAO], the adoption 
of the Freedom to Farm provisions could reduce the Department's 
staffing requirements by more than 1,600 staff years between 
fiscal year 1997 and fiscal year 2002, because fewer people 
would be required to ``manage'' the programs. These changes are 
in addition to efforts that are currently under way in the 
Department to reorganize and streamline their administrative 
and delivery functions. The President has recommended 
significant reductions in this account for future years. The 
budget resolution assumes those funding levels.
    Finally, a consistent theme of this budget resolution is 
that power, influence, and money should be shifted out of 
Washington and closer to the people who use government 
services. This is particularly true for the Department of 
Agriculture. The vast majority of the services and functions of 
these departments are located far from the District of 
Columbia.
    There is no reason why, in an age of advanced 
telecommunications the bureaucracy that administers these 
programs must be located in Washington. Faxes and 
teleconferencing have already become the most common means of 
communications between Washington and the various field 
offices.
    In an attempt to better serve the users of government 
services, the budget resolution recommends that the committee 
of jurisdiction investigate moving the primary operations of 
the Department of Agriculture closer to the users of those 
services.
    In order to serve farmers more efficiently and effectively, 
the Farm Service Agency [FSA] and the Natural Resources 
Conservation Service [NRCS] operations in Washington should be 
relocated and headquartered in the Central United States. 
Moving farm support agencies closer to America's farms will 
enhance service to farmers and further promote efforts to 
conserve, improve, and sustain natural resources on private 
lands within the United States. Melding the headquarters of FSA 
and NRCS into preexisting Commodity Credit Corporation [CCC] 
locations in the Heartland will facilitate further 
consolidations of personnel and will provide for long-term 
budget savings. This will allow USDA to consolidate Washington, 
DC, personnel to existing permanent USDA office space.

    Terminate Low-Priority Programs in the Department of 
Agriculture. The Department of Agriculture provides annual 
funding for State mediation grants, outreach for socially 
disadvantaged farmers, and compensation for construction 
defects [Function 370]. State mediation grants are made to 
States that have been certified by the Farm Service Agency. 
Concerning compensation for construction defects, the Secretary 
of Agriculture is currently authorized to pay claims to owners 
arising from defects on newly constructed dwellings purchased 
with Rural Housing Service financial assistance. Given the size 
of the Federal deficit and the need to balance the budget, it 
is essential that Congress reduce or eliminate low-priority 
programs.

    Reduce the Department of Agriculture Overhead. This 
proposal calls for efficiency savings in indirect overhead 
expenses, such as spending on travel and transportation of 
persons and things; shipping; printing and reproduction; and 
operation and maintenance of facilities. These savings will 
result from improved performance, not from any changes to the 
programmatic activities of the Department. Reductions have not 
been assumed in those costs that are closely related to the 
Department's central function. The budget resolution recommends 
that the Department head should decide on how to distribute 
these assumed savings among the categories identified above, as 
well as other overhead costs.

                       FUNCTION 350: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reform the Foreign Agricultural Service:                                                                        
    Budget authority......................       116       -20       -20       -20       -20       -20       -20
    Outlays...............................       119       -13       -18       -20       -20       -20       -20
Reduce unnecessary bureaucracy in the                                                                           
 Department of Agriculture:                                                                                     
    Budget authority......................       442      -116      -126      -129      -129      -129      -129
    Outlays...............................       434       -76      -120      -128      -129      -129      -129
Refocus Federal support for Agricultural                                                                        
 Research and Extensions:                                                                                       
    Budget authority......................     1,618      -215      -273      -273      -273      -273      -273
    Outlays...............................     1,637      -136      -204      -232      -247      -261      -273
Reform the Farmers Home Administration:                                                                         
    Budget authority......................       399       -38       -67       -97      -127      -127      -127
    Outlays...............................       392       -27       -53       -83      -113      -116      -116
Downsize the Farm Service Agency:                                                                               
    Budget authority......................       795         0         0       -46      -121      -121      -121
    Outlays...............................       815         0         0       -43      -117      -121      -121
Terminate low priority programs in the                                                                          
 Department of Agriculture:                                                                                     
    Budget authority......................         3        -3        -3        -3        -3        -3        -3
    Outlays...............................         5        -3        -3        -3        -3        -3        -3
Reduce the Department of Agriculture                                                                            
 overhead:                                                                                                      
    Budget authority......................        NA      -579      -579      -695      -695      -868    -1,158
    Outlays...............................        NA      -492      -579      -677      -695      -842    -1,114
----------------------------------------------------------------------------------------------------------------

               Function 370: Commerce and Housing Credit

    Provide Funding for the Decennial Census. This provision 
allocates the funds necessary to conduct the 2000 Decennial 
Census.

    Shift to the Postal Service the Cost of Transition Payments 
for Workman's Compensation Benefits Paid to Pre-1971 Postal 
Employees. Currently, the Treasury reimburses the Postal 
Service for workman's compensation benefits paid to employees 
of the old U.S. Post Office Department. This proposal would 
shift the cost of those benefits to the Postal Service, where 
they appropriately belong. The proposal was included in the BBA 
and in the President's 1997 budget submission. [Note: In the 
table below, this proposal is reflected in two components.]

    Terminate Fleet Modernization. Rather than building and 
buying new government ships or maintaining existing vessels at 
great cost, the budget resolution assumes that the National 
Oceanic and Atmospheric Administration [NOAA] should sell its 
assets and contract out for the use of vessels to conduct its 
oceanographic research and fisheries management missions. This 
makes a uniformed NOAA Corps unnecessary. Other provisions 
applying to NOAA are described in Function 300.

    Encourage Private Financing of Small Business Development 
Centers. Small Business Development Centers are intended to 
provide management counseling and training to existing and 
prospective small business owners. Current Federal funding 
accounts for 25 to 50 percent of SBDC funding. By contracting 
out, tying funding to locally funded economic development 
programs, leveraging all available resources, and charging the 
clients a small fee, SBDC's can thrive without Federal 
assistance. This proposal would eliminate the Federal share of 
the program, but allow State and private capital to fund 
existing SBDC's.

    Make Multifamily Mortgage Insurance Program Self-Financing. 
Costs of the program should be entirely financed through 
premium income derived from extending the mortgage insurance as 
is the FHA Single Family Mortgage Insurance Program.

    Reform FHA Multifamily Property Disposition. The Federal 
Government can achieve savings by reforming the rules under 
which HUD may sell the property that has come into its 
possession through mortgage default.
    At present, a foreclosed property may stay in the FHA 
inventory for years. During the time it is vacant, the property 
may be vandalized, or used for drug dealing or other criminal 
activities, or it may otherwise contribute to the degradation 
of urban neighborhoods. By giving the FHA more authority and 
flexibility in the way they dispose of these properties, the 
Federal Government can achieve budget savings and protect 
surrounding neighborhoods from deleterious effects generated by 
longstanding vacant houses.

    Consolidate Federal Regulation of Business and Eliminate 
the Federal Trade Commission. The Federal Trade Commission is 
an independent agency that regulates business practices that 
affect competition and consumer information. Its functions may 
be duplicative and may be carried out by other Federal 
agencies. This proposal is intended to reduce overhead. Nothing 
in this proposal is intended to diminish Federal oversight of 
antitrust or consumer protection issues.

    Reform the Federal Housing Administration Assignment 
Program. The budget resolution recommends implementing a reform 
of the FHA Assignment Program to allow the FHA the flexibility 
to pay partial mortgage insurance claims, preventing properties 
from coming into the FHA inventory as the borrower resumes 
mortgage payments to the lender.

    Accept the Administration's Recommendation on the General 
and Special Risk Program Account. The administration projects 
greater activity in the program account for FHA mortgage 
insurance and certain administrative cost reductions. The 
budget resolution accepts these projections and reforms.

    Accept the Administration's Recommendation on the Mutual 
Mortgage Insurance Accounts. The administration recommends 
different projects for activity in the mutual mortgage 
insurance accounts and provides for some administrative 
savings. The budget resolution accepts these recommendations.

    Reform Deposit Insurance to Provide for the Long-Term 
Stability of the Savings Association Insurance Fund. The budget 
resolution recommends a one-time assessment on savings 
associations to provide for the capitalization of the Savings 
Association Insurance Fund. In addition, to provide for the 
long-term stability of financial institutions and deposit 
insurance funds, the resolution recommends the adoption of 
reforms associated with spreading the obligations associated 
with bonds issued by the Finance Corporation to all 
institutions insured by the Federal Deposit Insurance 
Corporation.

    Create a Rural Development Block Grant. This line reflects 
the savings in Function 370 from the block grant, most of which 
is contained in Function 450. This function, however, contains 
the Rural Housing Insurance Fund. The budget resolution assumes 
the reduction for salaries and expenses, as recommended by the 
President, and the elimination of certain direct loan 
subsidies.

    Terminate Low-Priority Programs in the Department of 
Agriculture. This is the Function 370 component of this 
proposal, which is fully described under Function 350. The 
Secretary of Agriculture is currently authorized to pay claims 
to owners arising from defects on newly constructed dwellings 
purchased with Rural Housing Service financial assistance. 
Given the size of the Federal deficit and the need to balance 
the budget, it is essential that Congress reduce or eliminate 
low-priority programs.

    Reduce Department of Housing and Urban Development and 
Small Business Administration Overhead. This proposal calls for 
efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the agencies. Reductions have not been assumed in 
those costs that are closely related to the agencies' central 
function. The budget resolution recommends that each agency's 
head should decide on how to distribute these assumed savings 
among the categories identified above, as well as other 
overhead costs.

                       FUNCTION 370: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Provide funding for Decennial Census:                                                                           
    Budget authority.....................        150        99       208       658     1,979        99        99
    Outlays..............................        144        80       184       562     1,701       493        98
Terminate fleet modernization:                                                                                  
    Budget authority.....................          8        -8        -8        -8        -8        -8        -8
    Outlays..............................         33        -1        -3        -5        -6        -7        -8
Encourage private financing of Small                                                                            
 Business Development Centers:                                                                                  
    Budget authority.....................        219       -66       -73       -73       -73       -73       -73
    Outlays..............................        238       -48       -67       -73       -73       -73       -73
Make Multifamily Mortgage Insurance                                                                             
 Program self-financing:                                                                                        
    Budget authority.....................         85       -85       -85       -85       -85       -85       -85
    Outlays..............................        101       -85       -85       -85       -85       -85       -85
Eliminate redundancies in Federal                                                                               
 regulation of businesses and eliminate                                                                         
 the Federal Trade Commission:                                                                                  
    Budget authority.....................         31       -23       -31       -31       -31       -31       -31
    Outlays..............................         34       -21       -30       -31       -31       -31       -31
Accept the administration's                                                                                     
 recommendation on the general and                                                                              
 special risk program account:                                                                                  
    Budget authority.....................        173      -130       -26       -48       -67       -71       -75
    Outlays..............................        189      -135       -21       -47       -66       -70       -74
Accept the administration's                                                                                     
 recommendation on the Mutual Mortgage                                                                          
 Insurance accounts:                                                                                            
    Budget authority.....................  \1\ -1,06                                                            
                                                   6         0       -28       -57       -87       -87       -87
    Outlays..............................  \1\ -1,06                                                            
                                                   6         0       -28       -57       -87       -87       -87
Create a Rural Development Block Grant                                                                          
 (single-family home loans and S&E):                                                                            
    Budget authority.....................        640      -166      -186      -186      -186      -186      -186
    Outlays..............................        712      -138      -181      -181      -181      -181      -181
Terminate low-priority programs in the                                                                          
 Department of Agriculture:                                                                                     
    Budget authority.....................      (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
    Outlays..............................      (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
Reduce the Department of Housing and                                                                            
 Urban Development and Small Business                                                                           
 Administration Overhead:                                                                                       
    Budget authority.....................         NA       -18       -18       -21       -21       -27       -36
    Outlays..............................         NA       -16       -18       -21       -21       -26       -34
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             
\2\ Less than $1 million.                                                                                       


                         FUNCTION 370: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Shift to the Postal Service the cost of                                                                         
 transition payments for workman's                                                                              
 compensation benefits paid to pre-1971                                                                         
 postal employees (off-budget);                                                                                 
    Budget authority.....................          0        32        31         7         0         0         0
    Outlays..............................          0        32        31         7         0         0         0
Shift to the Postal Service the cost of                                                                         
 transition payments for workman's                                                                              
 compensation benefits paid to pre-1971                                                                         
 postal employees (on-budget):                                                                                  
    Budget authority.....................         34       -32       -31       -29       -28       -26       -24
    Outlays..............................         34       -32       -31       -29       -28       -26       -24
Reform FHA multifamily property                                                                                 
 disposition:                                                                                                   
    Budget authority.....................         41       -80         0         0         0         0         0
    Outlays..............................   \1\ -197       -80         0         0         0         0         0
Reform the Federal Housing Administration                                                                       
 Assignment Program:                                                                                            
    Budget authority.....................         NA      -128      -127      -138      -157      -161      -161
    Outlays..............................   \1\ -920      -128      -127      -138      -157      -161      -161
Reform deposit insurance to provide for                                                                         
 the long-term stability of the Savings                                                                         
 Association Insurance Fund:                                                                                    
    Budget authority.....................         NA         0         0         0         0         0         0
    Outlays..............................  \1\ -3,40                                                            
                                                   0    -3,300       600       500       600       700      100 
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                      Function 400: Transportation

    Eliminate Highway Demonstration Projects. Approximately 95 
percent of highway funds are allocated to the States using 
formulas which, in conjunction with a comprehensive planning 
process outlined in ISTEA, are designed to reconcile the 
competing transportation needs of States. The remainder of the 
funds are allocated by earmarks, also known as demonstration 
projects, in which Members of Congress designate specific 
highway projects in authorizing and appropriations bills. 
Earmarking circumvents the planning process by allocating funds 
on a political, not economic basis, and ignores the process 
that seeks a balance between needs and limited resources. In 
its 1995 Transportation Policy Book, the American Association 
of State Highway and Transportation Officials [AASHTO] stated 
that ``special demonstration projects outside the normal 
authorization should be eliminated.'' According to the General 
Accounting Office:

          In addition to worsening the financial status of the 
        highway account, demonstration projects often provide 
        limited benefits. One reason is that these projects 
        frequently are not aligned with key transportation 
        priorities. For example, in 1991, we found that a 
        majority of the demonstration projects we reviewed did 
        not appear on State or regional transportation plans 
        before they were authorized. Thus, these projects did 
        not receive the same degree of scrutiny as do projects 
        undertaken through established Federal-aid highway 
        plans and programs.
          A second reason why the payoff from demonstration 
        projects is limited is that they often have problems 
        causing them to languish in an early project 
        development stage long after authorization * * *. For 
        example, one proposed highway construction project we 
        reviewed would have cut through a low-income housing 
        project undergoing renovation with Federal funds.

    Make Amtrak More Businesslike: Provide Labor Relief, Phase 
Out Operating and Capital Subsidies Between 1999 and 2002. 
Amtrak was established in 1970 as a for-profit corporation to 
take over the Nation's ailing passenger rail system. But Amtrak 
has been burdened by costly Federal laws and highly subsidized 
to insulate it from market forces.
    The cumulative cost to the taxpayer of this Amtrak 
experiment has been in excess of $17 billion. Recently, Amtrak 
has undertaken an aggressive plan for reducing expenses, 
adjusting routes, retiring its oldest cars, and setting itself 
on a more businesslike footing. Amtrak has also been 
successful, preliminarily, in negotiating to obtain subsidies 
from States where it operates routes at a loss.
    But Amtrak's ability to operate like a commercial 
enterprise remains hamstrung by excessive labor concessions. 
For example, Appendix C-2 of the Rail Passenger Service Act 
requires that Amtrak pay 6 years severance to any employee laid 
off due to a termination of a route. Because of the ``30-mile 
rule,'' an employee can invoke full severance benefits if 
Amtrak seeks to move his work location 30 miles or more. Amtrak 
is also prohibited from contracting out if contracting results 
in the termination of any employees. With relief from these 
provisions (and others), Amtrak will be in a better position to 
continue reducing costs, improving service, and become self-
financing
    This proposal calls for Amtrak to continue its plan of 
strategic downsizing and negotiating with States where it 
operates at a loss. This proposal further calls for a 
significant revision of the laws governing passenger rail labor 
protection, and phasing out Federal subsidies between 1999 and 
2002. Additionally, the proposal calls for a new temporary 
Board of Directors to be appointed by the President in 
consultation with the congressional leadership. Board members 
will be required to have expertise and professional standing in 
the areas of intercity common carrier transportation and 
corporate management.

    Complete Northeast Corridor Improvement Program in 1999. 
According to the Northeast Corridor Transportation Plan, by the 
Department of Transportation, the infrastructure will be ready 
for 3-hour Boston to New York City service on selected trains 
by 1999. This proposal would terminate funding for the 
Northeast Corridor Improvement Program in 1999 to coincide with 
this milestone.

    Reduce Funds for the Office of the Secretary of 
Transportation. This reduction could be achieved by eliminating 
funding for transportation planning, research, and development. 
This account finances systems development and those research 
activities and studies concerned with planning and analysis and 
information development. This function is duplicated in the 
modal agencies within the DOT.

    Extend Vessel Tonnage Fees. The proposal extends vessel 
tonnage charges imposed on users of U.S. ports. Recipients of 
government services such as Coast Guard harbor maintenance 
should share the cost of providing these services rather than 
the general public.

    Focus NASA's Aeronautics on Revolutionary New Concepts. In 
certain areas, such as fundamental scientific research and 
collective risk endeavors, the government does play an 
important role. This proposal assumes that certain aeronautical 
research, especially high-speed research, is an area where the 
collective risks are still high, and where agencies such as the 
National Aeronautics and Space Administration have been able to 
make great technical strides with public funds that have 
resulted in great scientific discovery and new knowledge. 
Indeed, DOD's and NASA's national security and space 
transportation mission-required efforts in aeronautical 
research have resulted in American preeminence in the aerospace 
field. Still, even in aeronautics, policies are advocated that 
encourage faster private technology development as risk becomes 
better understood and more controllable. Finding ways to 
involve industry in space activities should be a major 
priority. Finally, the budget resolution assumes that funding 
for a National Aeronautics Facility is rescinded. [Note: The 
figures above reflect the portion of this provision that occurs 
in Function 400. Another portion appears in Function 250. In 
the table below, this proposal is reflected in two components.]

    Terminate Wooden Bridge Research and Demonstration 
Projects. This program provides funding for research and 
development of bridges constructed out of wood. This proposal 
would terminate that program. This proposal was included in the 
Clinton administration's fiscal year 1997 budget.

    Eliminate Federal Corporate Subsidies for Development of 
``Intelligent Transportation Systems.'' The Intelligent Vehicle 
Highway System Act of 1991 established a Federal program to 
research, develop, and operationally test so-called 
``intelligent'' transportation systems and to promote their 
implementation. The system encompasses technologies, ranging 
from electronic toll collection to fully automated futuristic 
highways. Its Federal advisory committee to the Department of 
Transportation estimates that about $6 billion ($4.7 from 
Federal, State, and local governments) will be needed through 
2011 to complete all research and development projects and 
operational tests and develop a system architecture. This 
architecture is expected to include a massive government-owned 
and operated telecommunication infrastructure. The public 
sector is expected to contribute about 80 percent of the needed 
development funding. Implementing the system once developed is 
estimated to cost an additional $8.5 to $26 billion. In short, 
development costs are high and widespread commercial success is 
uncertain: Federal involvement would be long-term and costly.

    Deregulate Ocean Shipping and Eliminate the Federal 
Maritime Commission. The Federal Maritime Commission is charged 
with regulating a system of steamship conferences that 
establish and publish ocean transportation rates. This proposal 
would deregulate Federal maritime policy, terminate the 
Commission, and transfer critical function to the Department of 
Transportation. On May 1, 1996, the House passed H.R. 2149, the 
Ocean Shipping Reform Act. Enactment of this legislation would 
achieve the goals outlined in this proposal.

    Eliminate Maritime Corporate Subsidy Programs and Terminate 
the Maritime Administration. The Maritime Administration 
[MARAD] was established in 1950 to promote a strong U.S. 
merchant marine. MARAD emphasizes promoting maritime industries 
and ensuring seafaring manpower for peacetime and national 
emergencies. But rather than bolstering the U.S. shipping 
industry, these programs have undermined the competitiveness of 
U.S. shipping and shipbuilding.
    Today, only about 4 percent of waterborne cargoes imported 
and exported from the United States are carried on U.S. flag 
carriers. According to GAO, between 1982 and 1992 the number of 
U.S. privately owned ships decreased by 31 percent. The 
inspector general of the Department of Transportation has 
stated: ``Overall, most of MARAD's mission can readily be 
transferred or eliminated with little, if any, noticeable 
impact to the tax-paying public.''
    This proposal calls for transferring the Maritime Academy 
to the Department of Defense and requiring DOD to charge 
tuition to offset Academy costs, eliminating subsidy programs 
for operation of U.S.-flag operators, selling off the National 
Defense Reserve Fleet, and eliminating loan guarantees.

    Eliminate Funding for Experimental Rail Programs With 
Doubtful Market Potential. The high-speed rail program invests 
in the development of train systems capable of traveling at 150 
mph or faster. The program is intended to ``focus on next 
generation rail service compatible with existing 
infrastructure.'' But according to GAO, existing U.S. rights-
of-way have many curves and carry slow traffic, precluding 
travel at speeds in excess of 150 mph. To accommodate faster 
traffic, new tracks or magnetic guideways would need to be 
installed, at an estimated cost of at least $20 million per 
mile. In short, implementing high-speed rail will require an 
extremely costly, long-term investment by the Federal 
Government, while conventional passenger rail service already 
requires exorbitant Federal, State, and local subsidies. 
According to GAO, ``private investors have avoided [high speed 
rail] projects, considering them unlikely to be profitable.'' 
This proposal would terminate that program.

    Provide Funding for Advanced Train Control Safety Research. 
This proposal would provide $8 million per year to fund 
continued research of advanced train control systems. These 
systems will produce substantial safety benefits for freight 
and passenger operations. This proposal would fund two research 
projects: One for dense urban areas, the other for flexible 
block operations.

    Eliminate Outdated Airline Subsidy Program. The Essential 
Air Service Program was created by the Airline Deregulation Act 
of 1978 to continue air service to communities that had 
received Federally mandated air service prior to deregulation. 
The program provides subsidies to air carriers serving small 
communities that meet certain criteria. The subsidy per 
passenger ranges from $5 to nearly $320. This program was 
established to provide a smooth phaseout of Federal subsidies 
to airlines that service small airports. This proposal would 
end the program.

    Eliminate Funding for the Civil Aeromedical Institute and 
the FAA Management Training Institute. These eliminations were 
recommended by the inspector general of the Department of 
Transportation. These services could be obtained through 
private providers.

    Redefine the Federal Role in Transit. This proposal calls 
for a dramatic downsizing in the Federal role in mass transit. 
The Federal Transit Administration itself has been criticized 
for ineffective oversight and for allowing misuse of millions 
of dollars of Federal funds. Remaining functions not eliminated 
below should be transferred elsewhere in the Department of 
Transportation.

  - Phase Out Federal Mass Transit Operating Subsidies by 2002; 
        Provide Regulatory Relief and Flexibility. Since 1965, 
        the Federal Government has spent over $50 billion on 
        urban mass transit. Yet, during that time, transit's 
        work trip market share has declined by 30 percent. The 
        Federal Government's involvement in transit has led to 
        unwise State and local decisions, while precluding the 
        adoption of cost-effective operating methods. Federal 
        operating subsidies are barely 5 percent of total 
        operating costs. But the Federal ``baggage'' raises 
        transit costs two or three times the amount received by 
        transit agencies from the Federal Government. This is 
        largely the result of expensive Federal mandates. For 
        example, Federal transit labor projections require 
        transit agencies to pay 6 years of severance payments 
        for transit employees dismissed because of efficiency 
        gaining measures. Phasing out operating subsidies and 
        allowing States and localities more flexibility in 
        transportation spending would encourage local 
        authorities to lower operating costs, privatize and 
        contract out, and generally improve local investment 
        choices. In addition, providing relief from Federal 
        regulations such as section 13c labor projections of 
        the 1964 Transit Act and select Clean Air Act 
        provisions, extending bus life requirements and 
        extending ADA compliance deadlines will enable local 
        transit authorities to do more with less.

  - Mass Transit Capital Expenditures. No new starts in fixed 
        guideway mass transit capital grants; phased-in change 
        in matching rate for remaining capital expenditures to 
        50 percent. New urban mass transit systems are not 
        economically justified for at least three reasons: 
        First, urban areas have ``suburbanized'' and sources of 
        employment have spread beyond the traditional downtown 
        area. This limits the customer market for traditional 
        high-capacity transit rail services. Second, transit 
        has experienced cost escalation so extreme that the 
        same services can be provided by the competitive market 
        for savings of up to 50 percent. Finally, a DOT study 
        by Harvard economists indicated that busways can be 
        built and operated for one-fifth the cost of new rail 
        systems. Additionally, according to Census Bureau 
        statistics, no U.S. metropolitan area that built or 
        expanded urban rail systems in the 1980's experienced 
        an increase in transit's market share. Furthermore, 
        there is no evidence from anywhere in the world that 
        building new urban rail systems reduces traffic 
        congestion. Yet by subsidizing 80 percent of transit 
        construction projects, the Federal Government has 
        encouraged expansion of economically unjustifiable mass 
        transit rail systems. Rail systems have become a 
        federally financed mechanism to enhance local civic 
        pride. This proposal would terminate funding for new 
        mass transit systems and phase in over 3 years a 
        reduction in the Federal matching share of remaining 
        capital expenditures to 50 percent. This would 
        encourage local authorities to invest in new transit 
        systems which are likely to be economically viable and 
        could attract private capital.

  - Complete Washington Metro in 1999. This proposal would 
        fully fund the Federal Government's current 
        authorization for development of the final 13.5 miles 
        of the 103 mile system. Current policy assumes that 
        Federal funding would be available indefinitely.

  - Eliminate Transit Planning and Research. This program 
        allows the Federal Government to serve as a catalyst 
        for research and development of transit technologies. 
        It is significant, however, that Federal subsidization 
        and participation in transit planning and research have 
        failed to stem the decline in transit market share and 
        lower transit per-unit operating costs.

    Reduce Duplication in Small and Minority Business Programs 
and Consolidate Functions Within the Small Business 
Administration. This proposal calls for eliminating funding for 
the Department of Transportation's Minority Business Resource 
Center Program, and the Department of Commerce's Minority 
Business Development Administration, and recommends that 
clients of these services utilize Small Business Administration 
programs. Both of these programs duplicate functions already 
performed by the Small Business Administration.

    Eliminate Select Functions and Overhead for Department of 
Transportation Research and Special Programs Administration 
[RSPA]. RSPA serves as a research, analytical, and technical 
development arm of the Department for multimodal research and 
development, as well as special programs. According to the 
inspector general of the Department of Transportation:

          Collection of data [by RSPA] poses significant cost 
        to the airline industry and requires DOT staff 
        resources. In an unregulated environment, much of the 
        data collected is not needed and should be eliminated. 
        For the remaining data that meets essential Federal 
        needs * * * consolidation of the collection process in 
        the Bureau of Transportation statistics or by a private 
        contractor may be more efficient than the current RSPA 
        operations.

Safety and hazardous materials functions should be transferred 
to the FHWA or elsewhere in DOT, the Volpe National 
Transportation Systems Center should be privatized, and 
remaining functions should be closed.

    Encourage Efficient Management of the Federal Aviation 
Administration. The facilities and equipment account is the 
primary source of funding for the modernization of the Air 
Traffic Control system. The research, engineering and 
development account funds longer range scientific efforts. 
These two accounts previously were managed separately at the 
FAA, but they recently were brought under the auspices of a 
single executive--the Associate Administrator for Research and 
Acquisitions. This is projected to result in increased 
efficiencies, coordination, and elimination of duplication. 
This proposal reflects a reduction in outyear funding in the 
Research, Engineering, and Development Account based on these 
projected efficiencies. The proposal is not intended to change 
which committees have jurisdiction over each of these accounts.

    Eliminate the Interstate Commerce Commission From Outyear 
Deficit Projections. This year legislation was enacted 
eliminating the Interstate Commerce Commission and transferring 
remaining functions to a Surface Transportation Board within 
the Department of Transportation. This proposal would correct 
outyear deficit projections to reflect the enactment of this 
legislation.

    Rescind Funds for Discretionary Demonstration Projects Not 
Under Contract. Beginning last year, the Appropriations 
Subcommittee on Transportation discontinued the practice of 
earmarking highway projects in appropriations bills. This 
proposal rescinds funds for demonstration projects that were 
funded prior to 1996 but were never constructed.

    Maintain Current Payment Date of Civilian Retiree Cost-of-
Living Adjustments Through 2002 as Recommended by the 
President. This is the Function 400 component of this 
provision, which sets the COLA payment date for retirees of the 
U.S. Coast Guard. The bulk of policies affecting COLA payment 
dates appear in Function 600.

                       FUNCTION 400: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Make Amtrak more businesslike: provide                                                                          
 labor relief, phase out operating and                                                                          
 capital subsidies between 1999 and 2002:                                                                       
    Budget authority......................       635         0         0      -130      -261      -390      -520
    Outlays...............................       608         0         0      -108      -231      -361      -490
Complete Northeast Corridor Improvement                                                                         
 Program in 1999:                                                                                               
    Budget authority......................       115         0         0         0      -115      -115      -115
    Outlays...............................       163         0         0         0       -23       -81      -115
Reduce funds for the Office of the                                                                              
 Secretary of Transportation:                                                                                   
    Budget authority......................         8        -6        -8        -8        -8        -8        -8
    Outlays...............................         8        -5        -7        -8        -8        -8        -8
Focus NASA's aeronautics on revolutionary                                                                       
 new concepts:                                                                                                  
    Budget authority......................     1,293       -60       -83      -111      -184      -206      -219
    Outlays...............................     1,087       -17       -62      -100      -155      -192      -214
Rescind funding for NASA's national                                                                             
 aeronautics facility:                                                                                          
    Budget authority......................         0      -365      -365      -365      -365      -365      -365
    Outlays...............................         1        -7      -135      -568      -405      -365      -365
Terminate wooden bridge research and                                                                            
 demonstration projects:                                                                                        
    Budget authority......................         0         0         0         0         0         0         0
    Outlays...............................         8        -1        -6        -7        -8        -8        -8
Eliminate corporate subsidies for                                                                               
 development of ``intelligent                                                                                   
 transportation systems'':                                                                                      
    Budget authority......................         0         0         0         0         0         0         0
    Outlays...............................    17,297       -35      -141      -171      -181      -188      -194
Deregulate ocean shipping and eliminate                                                                         
 the Federal Maritime Commission:                                                                               
    Budget authority......................        15       -10       -15       -15       -15       -15       -15
    Outlays...............................        16        -9       -14       -15       -15       -15       -15
Eliminate the maritime corporate subsidy                                                                        
 programs and terminate the Maritime                                                                            
 Administration:                                                                                                
    Budget authority......................       111       -79       -88       -95      -102      -109      -111
    Outlays...............................       124       -63       -60       -76       -88       -99      -105
Eliminate funding for experimental rail                                                                         
 programs with doubtful market potential:                                                                       
    Budget authority......................        23       -19       -19       -19       -19       -19       -19
    Outlays...............................        22       -10       -19       -24       -24       -27       -24
Provide funding for advanced train control                                                                      
 safety research:                                                                                               
    Budget authority......................         8         8         8         8         8         8         8
    Outlays...............................         8         3         6         8         8         8         8
Eliminate outdated airline subsidy                                                                              
 program:                                                                                                       
    Budget authority......................        23       -39       -39       -40       -41       -42       -43
    Outlays...............................        25       -18       -23       -23       -23       -23       -23
Eliminate Civil Aeromedical Institute and                                                                       
 FAA Management Training Institute:                                                                             
    Budget authority......................        21       -17       -21       -21       -21       -21       -21
    Outlays...............................        21       -14       -21       -21       -21       -21       -21
Phase out Federal mass transit operating                                                                        
 subsidies by 2002: \1\                                                                                         
    Budget authority......................       942       -78      -158      -235      -313      -391      -460
    Outlays...............................       812       -41      -107      -182      -259      -338      -411
Mass transit capital expenditures: Phased                                                                       
 in change in matching rate: \1\                                                                                
    Budget authority......................       972       -60      -120      -181      -181      -181      -181
    Outlays...............................     2,755       -22      -114      -292      -510      -714      -847
Mass transit capital expenditures: no mass                                                                      
 transit new starts \1\                                                                                         
    Budget authority......................     1,665         0         0         0         0         0         0
    Outlays...............................     1,943       -33      -180      -326      -460      -566      -600
Complete Washington Metro in 1999: \1\                                                                          
    Budget authority......................       200         0         0         0      -150      -200      -200
    Outlays...............................       181         0         0         0        -3       -19       -54
Eliminate transit planning and research:                                                                        
 \1\                                                                                                            
    Budget authority......................        86       -86       -86       -86       -86       -86       -86
    Outlays...............................        95        -8       -46       -76       -84       -86       -86
Reduce duplication in small and minority                                                                        
 business programs and consolidate                                                                              
 functions within the Small Business                                                                            
 Administration:                                                                                                
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................         5        -4         5        -5        -5        -5        -5
Eliminate select functions and overhead                                                                         
 for Department of Transportation Research                                                                      
 and Special Programs Administration                                                                            
 [RSPA]:                                                                                                        
    Budget authority......................        24       -18       -24       -24       -24       -24       -24
    Outlays...............................        21       -14       -22       -24       -24       -24       -24
Encourage efficient management of the                                                                           
 Federal Aviation Administration:                                                                               
    Budget authority......................       186         0        -6       -26       -26       -26       -26
    Outlays...............................       253         0        -4       -18       -25       -27       -27
Eliminate Interstate Commerce Commission                                                                        
 from outyear deficit projections:                                                                              
    Budget authority......................         6        -6        -6        -6        -6        -6        -6
    Outlays...............................         9        -5        -6        -6        -6        -6        -6
Rescind funds for discretionary                                                                                 
 demonstration projects not under                                                                               
 contract:                                                                                                      
    Budget authority......................        NA       -95      -190         0         0         0         0
    Outlays...............................        NA       -16       -82      -113       -33       -12        -9
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to redefine the Federal role in transit.                                               


                         FUNCTION 400: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate highway demonstration projects:                                                                       
    Budget authority......................     1,605    -1,109         0         0         0         0         0
    Outlays...............................     2,357       -75      -274      -221      -145       -99       -74
Extend vessel tonnage fees:                                                                                     
    Budget authority......................   \1\ -49         0         0       -49       -49       -49       -49
    Outlays...............................   \1\ -49         0         0       -49       -49       -49       -49
Maintain current payment date of civilian                                                                       
 retiree cost-of-living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority......................       520        -3        -4        -4        -4        -4        -4
    Outlays...............................       499        -3        -4        -4        -4        -4        -4
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

            Function 450: Community and Regional Development

    Phased-In Downsizing of the Appalachian Regional Commission 
[ARC]. The Federal Government provides annual funding to the 
ARC for activities that promote economic growth in the 
Appalachian counties. Yet there is little evidence that the ARC 
can be credited with improvements in the economic health of 
Appalachia.
    The programs supported by the ARC duplicate activities 
funded by other Federal agencies, such as the Department of 
Transportation's Federal Highways Program and the Department of 
Housing and Community Development Block Grant Program. ARC 
resources go to poor rural communities that areas are no worse 
off than many others outside the Appalachian region and, 
therefore, no more deserving of special Federal attention.
    This proposal would gradually reduce the size of the 
Appalachian Regional Commission from a $170 million program 
currently to a $100 million program by 2001.

    Focus the Tennessee Valley Authority on Its Power-Related 
Activities. The Tennessee Valley Authority [TVA] is the 
Nation's largest electric utility. It also is responsible for a 
variety of natural resource maintenance and development, 
recreational, community development, and environmental 
activities. In 1995 Congress appropriated $143 million for 
these activities.
    This proposal would end this annual subsidy for TVA. Other 
equally deserving regions of the country fund these activities 
either through higher rates for electric power, local tax 
revenues, or user fees.

    Downsize the Economic Development Administration. This 
proposal, included as part of the elimination of the Department 
of Commerce, includes reforming the criteria for projects and 
reducing the number of communities eligible for Economic 
Development Administration funding, streamlining the agency, 
and transferring the functions to the Small Business 
Administration.

    Reduce by 50 Percent the Flood Insurance Subsidy on Pre-
FIRM Structures. The National Flood Insurance Program [NFIP] 
offers insurance at heavily subsidized rates for buildings 
constructed before January 1, 1975, or the completion of a 
participating community's ``Flood Insurance Rate Map'' [FIRM]. 
Owners of post-FIRM construction pay actuarial rates for their 
insurance. Currently, 18 percent of total flood insurance 
coverage is subsidized. The Federal Emergency Management Agency 
[FEMA], which administers the Flood Insurance Program, reported 
in 1994 that 41 percent of policyholders were paying subsidized 
rates for some or all of their coverage. The program subsidizes 
only the first $45,000 of coverage for a single-family or two- 
to four-family dwelling, and the first $130,000 of a larger 
residential, nonresidential, or small business building. 
Coverage in the subsidized tier is currently priced at about 
one-third of its actuarial value. Under this proposal, the 
subsidy would be reduced by 50 percent.

    Accept Administration's Proposed Funding for the Federal 
Emergency Management and Planning Assistance Program. The 
administration recommends savings in the FEMA Management and 
Planning Assistance account. The budget resolution accepts 
these recommendations.

    Restore Equity in Unemployment Benefits. This is the 
Function 450 component of this proposal, which applies to 
technical assistance to firms affected by foreign competition. 
The remaining portion of the proposal is contained in Function 
600.

                       FUNCTION 450: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase in downsizing of the Appalachian                                                                          
 Regional Commission [ARC]:                                                                                     
    Budget authority......................       170         0       -15       -35       -50       -70       -70
    Outlays...............................       180         0        -1        -6       -16       -29       -41
Focus the Tennessee Valley Authority on                                                                         
 its power-related activities:                                                                                  
    Budget authority......................       109       -89      -109      -109      -109      -109      -109
    Outlays...............................       112       -24      -104      -109      -109      -109      -109
Downsize the Economic Development                                                                               
 Administration: \1\                                                                                            
    Budget authority......................       367       -14       -27       -27       -27      -367      -367
    Outlays...............................       414       -11       -26       -29       -30       -45      -120
Accept Administration's proposed funding                                                                        
 for the Federal Emergency Management and                                                                       
 Planning Assistance Program:                                                                                   
    Budget authority......................       179         5       -10       -25       -40       -21         1
    Outlays...............................       190         3        -4       -15       -29       -26       -10
Restore equity in unemployment assistance:                                                                      
    Budget authority......................         9        -9        -9        -9        -9        -9        -9
    Outlays...............................        10         0        -2        -4        -7        -9        -9
----------------------------------------------------------------------------------------------------------------
\1\ Part of the proposal to terminate the Department of Commerce.                                               


                         FUNCTION 450: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                            1996 est -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Reduce by 50 percent the flood insurance                                                                        
 subsidy on prefirm structures:                                                                                 
    Budget authority......................       331         0         0         0         0         0         0
    Outlays...............................       398       -72      -192      -193      -199      -205      -209
----------------------------------------------------------------------------------------------------------------

   Function 500: Education, Training, Employment, and Social Services

    Maintain Current Level of Funding for Head Start. The 
budget resolution recommends that Head Start be funded at the 
current level and the appropriate investigation and evaluation 
on long-term effects be carried out. [Note: Because this 
proposal has no fiscal impact compared with current 
projections, it is not reflected in the table below.]

    Phase Out the National Endowment for the Arts and 
Humanities Along With Several Other Smaller Programs. Under 
this proposal, funding for the National Capital Arts and 
Cultural Affairs would be terminated. Funding for the National 
Endowment for the Arts would be terminated after fiscal year 
1997 and funding for the National Endowment for the Humanities 
would be terminated after fiscal year 1998. In addition, 
funding for National Telecommunications and Information 
Administration's [NTIA] information infrastructure grants would 
be terminated. With the user explosion of the Internet and 
other information technologies and networks, there is more than 
sufficient economic incentive for the private sector to 
develop, demonstrate, and offer virtually every conceivable 
telecommunications service. The Federal Government does not 
need to subsidize these technology application demonstrations. 
As noted in their Views and Estimates, the Committees on 
Commerce and Science have approved actions to terminate all of 
NTIA's grantmaking programs, including the assistance programs 
for public telecommunications facilities, Endowment for 
Children's Educational Television, and Information 
Infrastructure Grants.

    Restore Equity in Unemployment Assistance. Trade Adjustment 
Assistance provides additional unemployment benefits and 
training assistance to workers who lose their jobs as a result 
of foreign competition, including workers affected by NAFTA. 
There is no justification, however, for providing more 
assistance to an unemployed worker who lost a job because of 
foreign competition than for a worker whose unemployment 
resulted from domestic competition. Trade Adjustment Assistance 
provides 78 weeks of unemployment benefits while the majority 
of other Americans qualify for only 26 weeks of unemployment 
benefits. Moreover, a 1993 evaluation of the training 
components of the program by the Department of Labor inspector 
general determined that neither the Department nor the States 
could demonstrate that the program was effective helping 
unemployed workers find suitable employment. The inspector 
general's audit found that only 1 in 10 of former program 
participants surveyed found new training-related employment 
that paid suitable wages. The IG also noted that although the 
program requires participants to enroll in approved training 
courses, participants who did not wish to attend training were 
almost always granted waivers to continue receiving the income 
support allowance. (Please note: other components of this 
proposal appear in Function 450 and 600.)

    Eliminate Funds for Politicized Activities Under the Name 
of ``Community Service.'' The Corporation for National and 
Community Service was supposed to be an example of ``reinvented 
government'' and a model enterprise, not only for government, 
but also for private industry. The Corporation has failed to 
live up to any reasonable standard of accountability. Based on 
the reports of two independent accounting firms, six areas of 
accounting and financial irregularities have been identified. 
Because the budget resolution seeks to ensure the integrity and 
accountability in all expenditures of taxpayers' funds, it 
calls for correcting these irregularities.
    In 1993-94, AmeriCorps employed about 20,000 ``volunteers'' 
all over America. A significant number of these paid volunteers 
worked in Federal or State bureaucracies, government-funded 
programs, or political action organizations. Ignoring the 
Corporation's mission statement to address the Nation's 
problems through direct community service, several AmeriCorps 
programs have actively engaged in direct partisan politics and 
advocacy activities at the expense of the taxpayers. The 
President declared AmeriCorps to be America at its best. Like 
many other government programs, however, AmeriCorps has failed 
to live up to its promises.

    Restore State and Local Authority Over Education Standards 
(Goals 2000). Education reform will be achieved by encouraging 
innovation and rewarding results. Goals 2000 increases funding 
for bureaucracy and imposes new regulations on States and 
localities--exactly the wrong approach. To receive Goals 2000 
funding, States must complete an education reform plan in 
compliance with Goals 2000 Federal mandates. This represents a 
new and unwarranted intrusion into State and local education 
decisionmaking. Goals 2000 should be eliminated.

    Support the President's Program Terminations. The 
President's 1997 budget eliminates funding for Migrant 
Education, College Assistance Migrant Program, Innovative 
Education Program Strategies State Grants, Instruction in 
Civics, Dropout Prevention Demonstrations, Ellender 
Fellowships, Telecommunications Demo for Math, National 
Diffusion Network, 21st Century Community Learning Centers, and 
National Writing Project.

    Free Local School Districts to Promote English Proficiency. 
The Bilingual Instructional Services Program requires that 
schools spend 75 percent of their Federal funding on 
transitional bilingual education instructional methods, where 
students are taught both in English and their native language. 
Numerous studies have shown that heavy reliance on the pupil's 
native language can delay English proficiency. Eliminating 
Federal funding for bilingual education could free local school 
districts to offer the most effective programs for their 
students. Usage of title 1 funds for English immersion or 
English as a second language instruction could be increased. 
Currently, 34.7 percent of all limited English language 
proficient students are served by title 1, while only 9.6 
percent are served by bilingual education. The largest number 
of limited English students--72 percent--are served by special 
State funds.

    Maintain Funding for Pell Grants. The Omnibus 
Appropriations bill carried forward Pell grant funding from 
previous years, offsetting $1.3 billion in new spending. The 
budget resolution does not assume this one-time savings in 
future years, thus allowing Pell grants to be continued at the 
program level assumed in the Omnibus Appropriations bill. 
[Note: Because this proposal has no fiscal impact compared with 
current projections, it is not reflected in the table below.]

    Discontinue Unneeded Capital Subsidies, as Proposed in the 
President's 1995 Budget. The President's fiscal year 1995 
budget recommended discontinuing funding for Capital 
contributions for Perkins loans, saying:

          Federal direct student loans and Federal family 
        education loans, together with new Perkins loans funded 
        from $6 billion in existing institutional revolving 
        funds, will provide adequate sources of capital for new 
        student borrowing.

This proposal would not affect the two other campus-based 
programs, the work-study program and supplemental education 
opportunity grants. This proposal also would not reduce the 
Perkins loan cancellation payments, nor would it eliminate the 
$6 billion loan revolving fund.

    Eliminate Duplicative Postsecondary Education Grant 
Programs, as Recommended in the President's Fiscal Year 1997 
Budget. The State Incentive Grant Program was set up in 1972 to 
encourage States to offer scholarships to postsecondary 
students in financial need. Today, all 50 States and the 
District of Columbia offer this kind of assistance. For this 
reason, the National Performance Review and the President have 
recommended terminating this program. The State Postsecondary 
Review [SPRE] Program reimburses States for activities that 
supplement existing institutional licensing and review 
functions conducted by States to enable institutions to 
participate in the student loan program. Critics have argued 
that the program is poorly focused and overly burdensome. This 
proposal would eliminate funding for the program.

    Eliminate Burdensome Categorical Grant Programs, as Called 
for in the Careers Bill and the President's Budget. The 
President proposed eliminating 15 postsecondary scholarship and 
fellowship programs, explaining that he intended to eliminate 
``a number of smaller, categorical programs that are 
administratively burdensome and duplicative of the broader 
student financial aid programs.'' In addition, this budget 
resolution notes that numerous merit scholarships already are 
provided by private groups, State governments, and 
universities.

    Accept the President's Fiscal Year 1996 Proposal Concerning 
Aid to Institutions. The purpose of these programs is to help 
institutions of higher education with limited financial 
resources become financially self-sufficient. Although the goal 
is worthy, the resolution concurs with the administration's 
view that the best way to support these institutions is through 
investing in student financial assistance. According to the 
administration:

          Tuition revenues from a student receiving financial 
        aid may be used for ``developmental'' purposes, such as 
        those currently supported by part A, as well as the 
        endowment-building activities currently supported by 
        part C.

    Phase Out Duplicative Robert C. Byrd Scholarships. This 
proposal would eliminate new awards from the Robert C. Byrd 
Scholarship Program. This program duplicates the numerous merit 
scholarships available from private groups, State governments, 
and universities.

    Increase Funding for Historically Black and Hispanic 
Colleges by Eliminating Earmarked Funding for Howard 
University. Howard University funds 55 percent of its education 
and general expenses through its Federal appropriation. At the 
same time, Howard's privately raised funds trail those of its 
peer institutions. Howard's alumni response rate of 8 percent 
is far below that of other institutions. It is difficult to 
justify continuing a Federal subsidy of more than $15,000 per 
enrolled Howard University student when the funding needs at 
other Historically Black Colleges are so great. This proposal 
would eliminate Howard University's earmarked funding and 
redirect half the savings to the Strengthening Historically 
Black Colleges Fund.

    Eliminate Nonperforming Job Corps Centers. The Senate Job 
Training Consolidation bill would close 10 Job Corps centers 
that are not effectively training participants. The 
administration supports this provision, but only if a review 
indicates that such closings are warranted.

    Eliminate the Obsolete Office of the American Workplace. 
The primary function of the Office of the American Workplace is 
to promote ``progressive'' labor-management relationships. 
Under current budgetary pressures, this is clearly a service 
the Department of Labor can no longer afford to provide. The 
Office also administers and enforces provisions of the Labor-
Management Reporting and Disclosure Act. These duties have been 
transferred to the Employment Standards Administration.

    Maintain Funding for Title 1 and Drug-Free Schools at 
Current level. This budget assumes Title 1, Aid to 
Disadvantaged Children, and the Drug-Free Schools will be 
funded at the level in the 1996 Omnibus Appropriations bill. As 
the Budget Committee noted in last year's report, the title 1 
program has done little to help the education performance of 
disadvantaged children. The recent reauthorization of 
elementary and secondary education programs, Improving 
America's Schools Act, contained a number of reforms to title 
1. The budget resolution hopes that the program will be 
reexamined to see if the reforms have improved the program. If 
not, funding for the program should be redirected toward 
education programs with a proven track record of helping 
children. [Note: Because this proposal has no fiscal impact 
compared with current projections, it is not reflected in the 
table below.]

    Reduce Department of Education Administration Account. As 
funding and responsibility for education is returned to local 
communities, the size and scope of the Washington education 
bureaucracy should be reduced.

    Fund the Employment Standards Administration at a Level 
That Reflects the Repeal of Davis-Bacon. Funding for the 
Employment Standards Administration can be reduced since this 
budget repeals Davis-Bacon and the Service Contract Act.

    Reduce Department of Labor Management Account. As the size 
and scope of the Department of Labor is reduced through 
consolidation and program elimination, the costs of running the 
Department can be significantly decreased. Within this account, 
several programs that duplicate existing activities or are 
simply unneeded could be eliminated. Possible targets for 
elimination include the Bureau of International Affairs and the 
Women's Bureau.

    Maintain Funding for National Labor Relations Board at 
Level in House-Passed Labor/HHS Appropriations Bill. This 
agency receives, investigates, and prosecutes unfair labor 
practice charges filed by labor unions, individuals, and 
businesses. [Note: Because this proposal has no fiscal impact 
compared with current projections, it is not reflected in the 
table below.]

    Provide Funding Increase to Bureau of Labor Statistics for 
the Consumer Price Index Revision. The budget resolution 
provides $5 million to the Bureau of Labor Statistics in fiscal 
years 1997 and 1998 to update the measurement of the Consumer 
Price Index [CPI]. The CPI update includes new market baskets 
of goods and services, as well as improvements in collecting 
and processing data for the CPI and for surveys that support 
the CPI. This revision is critical to the Nation's economy and 
to the Federal budget. The Bureau is expected to give this 
matter the highest priority.

    Create a New Native American Block Grant. The education 
portion of the new Native American Block Grant appears in this 
Function; portions also appear in Function 450 and Function 
550. It is assumed that this portion will be included in the 
block grant in fiscal year 2000.

    Welfare Reform-Related Provisions. The following three 
provisions of the welfare reform plan have their spending 
impact in Function 500:

  - Replace the AFDC JOBS Program Under Welfare Reform's Block 
        Grant to the States. The welfare reform framework 
        envisioned in this budget would establish a single cash 
        welfare block grant to the States. The Aid to Families 
        With Dependent Children [AFDC] Programs are terminated, 
        including AFDC JOBS, which falls within Function 500. 
        Savings from these terminations are channeled to the 
        Temporary Assistance to Needy Families block grant 
        which appears under Function 600.

  - Establish Two Child Protection Block Grants. The welfare 
        reform framework envisioned in this budget would create 
        a child protection program consisting of three major 
        elements: open-ended entitlements to foster care 
        maintenance and adoption assistance payments, a Child 
        Protection block grant consolidating programs 
        authorized under the Social Security Act, and a Child 
        and Family Services block grant consisting of programs 
        authorized under the Child Abuse Prevention and 
        Treatment Act and other laws authorizing both services 
        and funding for research and training in the area of 
        child protection. Creation of the block grants permits 
        consolidation of 20 separate child protection programs, 
        providing States with greater flexibility to respond to 
        incidences of child neglect and abuse.

  - Reduce Funding for the Title XX Social Services Block 
        Grant.

    Reform the Federal Employees Compensation Act. This is the 
Function 500 component of this provision, which principally 
appears in Function 600. This portion represents the cost of 
employing caseworkers to conduct roll management.

    Reduce Unneeded Surplus Funding for the Department of 
Labor's Alien Labor Certification Program. Funding for the 
Alien Labor Certification Program within the Department of 
Labor would be reduced by 50 percent. The program funds efforts 
by State Unemployment Insurance offices to research claims by 
companies seeking authority from the Department of Labor to 
bring foreign workers into the United States on the grounds 
that no qualified American workers are available to fill job 
openings. State UI offices report that the money they receive 
for this dedicated activity is more than sufficient for their 
needs, and as a result balances are building up in their trust 
funds.

    Eliminate Social Services Research Funding at 
Administration for Children and Families. The budget resolution 
assumes discontinuation of earmarked social services research 
funding within the Administration for Children and Families at 
the Department of Health and Human Services. As noted in the 
committee report accompanying H.R. 2127, the Labor/HHS 
appropriations bill for fiscal year 1996, research and 
demonstration activities can be centralized at HHS in the 
Secretary's office under the Assistant Secretary for Planning 
and Evaluation. That office has an extensive research program, 
and thus providing additional funding for research elsewhere in 
the Department is unnecessary and duplicative.

    Accept the Administration's Fiscal Year 1998 Proposal for 
Smithsonian Institution Salaries and Expenses. The budget 
resolution maintains 1997 costs for salaries and expenses at 
the Smithsonian at the 1996 level and accepts the 
administration's proposed levels for fiscal years 1998 and 
1999, then maintains the administration's proposed fiscal year 
2000 level through 2002.

    Accept the Administration's Fiscal Year 1997 Proposal for 
Construction. The budget resolution accepts the 
administration's proposed funding levels for construction 
through 1999, and then maintains level funding starting in 
2000.

    Accept the Administration's Fiscal Year 1998 Proposed 
Funding Level for Salaries and Expenses for the National 
Gallery of Art. The budget resolution maintains 1997 costs for 
salaries and expenses at the 1996 level, then accepts the 
administration's funding levels for fiscal years 1998 and 1999, 
and then maintains the administration's proposed fiscal year 
2000 level through 2002.

    Accept the Administration's Fiscal Year 1998 Proposed 
Funding Level for the John F. Kennedy Center for the Performing 
Arts. The budget resolution maintains 1997 funding for the 
center at the 1996 level, funds the center at the 
administration's proposed levels for 1998 and 1999, and then 
maintains the administration's proposed fiscal year 2000 level 
through 2002.

    Accept the Administration's Proposed Funding Level 
Beginning in 1998 for the Institute of Museum Services. The 
budget resolution maintains 1997 funding at the 1996 level, 
then accepts the administration's proposes level for fiscal 
years 1998 through 1999, and maintains the administration's 
proposed 2000 level through 2002.

                       FUNCTION 500: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase out the National Endowment for the                                                                        
 Arts and Humanities along with several                                                                         
 other smaller programs:                                                                                        
    Budget authority......................       260       -62      -210      -260      -260      -260      -260
    Outlays...............................       359       -19       -94      -195      -238      -258      -260
Eliminate funds for politicized activities                                                                      
 under the name of ``community service'':                                                                       
    Budget authority......................       353      -353      -353      -353      -353      -353      -353
    Outlays...............................       380       -34      -208      -300      -331      -340      -344
Restore local and State authority over                                                                          
 education standards (Goals 2000):                                                                              
    Budget authority......................       530      -350      -350      -350      -350      -350      -350
    Outlays...............................       432       -42      -280      -343      -350      -350      -350
Support the President's program                                                                                 
 terminations:                                                                                                  
    Budget authority......................     7,566      -299      -299      -299      -299      -299      -299
    Outlays...............................     8,658       -36      -238      -292      -297      -299      -299
Free local school districts to promote                                                                          
 English proficiency:                                                                                           
    Budget authority......................       178      -178      -178      -178      -178      -178      -178
    Outlays...............................       209       -21      -142      -174      -177      -178      -178
Discontinue unneeded capital subsidies, as                                                                      
 proposed in the President's 1995 budget:                                                                       
 \1\                                                                                                            
    Budget authority......................     7,065      -119      -119      -119      -119      -119      -119
    Outlays...............................     6,943       -12      -115      -119      -119      -119      -119
Eliminate duplicative post-secondary                                                                            
 education grant programs, as recommended                                                                       
 in the President's 1997 budget: \1\                                                                            
    Budget authority......................     7,065       -31       -31       -31       -31       -31       -31
    Outlays...............................     6,943        -6       -31       -31       -31       -31       -31
Eliminate burdensome categorical grant                                                                          
 programs, as called for in the careers                                                                         
 bill and the President's budget: \2\                                                                           
    Budget authority......................       842       -39       -39       -39       -39       -39       -39
    Outlays...............................       905        -5       -31       -38       -38       -39       -39
Accept the President's fiscal year 1996                                                                         
 proposal concerning aid to institutions:                                                                       
 \2\                                                                                                            
    Budget authority......................       842       -46       -46       -46       -46       -46       -46
    Outlays...............................       905        -6       -37       -45       -46       -46       -46
Phase-out duplicative Robert C. Byrd                                                                            
 scholarships: \2\                                                                                              
    Budget authority......................       842        -9       -19       -22       -22       -22       -21
    Outlays...............................       905        -1        -9       -17       -21       -21       -22
Increase funding for Historically Black                                                                         
 and Hispanic Colleges by eliminating the                                                                       
 earmarked funding for Howard University                                                                        
    Budget authority......................     1,022       -90       -90       -90       -90       -90       -90
    Outlays...............................     1,081      -158      -108       -92       -90       -90       -90
Eliminate nonperforming Job Corps centers:                                                                      
    Budget authority......................       972       -88       -88       -88       -88       -88       -88
    Outlays...............................       958       -11       -87       -88       -88       -88       -88
Eliminate the obsolete Office of the                                                                            
 American Workplace:                                                                                            
    Budget authority......................        23       -23       -23       -23       -23       -23       -23
    Outlays...............................        24       -20       -22       -22       -23       -23       -23
Reduce Department of Education                                                                                  
 administration account:                                                                                        
    Budget authority......................       327       -78       -78       -78       -78       -78       -78
    Outlays...............................       336       -52       -74       -78       -78       -78       -78
Fund the Employment Standards                                                                                   
 Administration at a level that reflects                                                                        
 the repeal of Davis-Bacon:                                                                                     
    Budget authority......................       225       -20       -20       -20       -20       -20       -20
    Outlays...............................       230       -17       -20       -20       -20       -20       -20
Reduce Department of Labor management                                                                           
 account:                                                                                                       
    Budget authority......................       134       -11       -11       -11       -11       -11       -11
    Outlays...............................       137        -9       -10       -10       -11       -11       -11
Provide funding increase to Bureau of                                                                           
 Labor Statistics for consumer price index                                                                      
 revision:                                                                                                      
    Budget authority......................       297         5         5         0         0         0         0
    Outlays...............................       297         4         5         1         0         0         0
Create a new native American block grant:                                                                       
    Budget authority......................       569         0         0         0       -31       -31       -31
    Outlays...............................       584         0         0         0        -5       -26       -31
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................       225         4         4         4         4         4         4
    Outlays...............................       230         3         4         4         4         4         4
Reduce unneeded surplus funding for the                                                                         
 Department of Labor's Alien Labor                                                                              
 Certification Program:                                                                                         
    Budget authority......................     1,167       -23       -23       -23       -23       -23       -23
    Outlays...............................     1,128       -23       -23       -23       -23       -23       -23
Eliminate social services research funding                                                                      
 at Administration for Children and                                                                             
 Families:                                                                                                      
    Budget authority......................     4,571       -11       -11       -11       -11       -11       -11
    Outlays...............................     4,740        -2       -10       -11       -11       -11       -11
Accept the administration's fiscal year                                                                         
 1998 proposal for Smithsonian Institution                                                                      
 salaries and expenses:                                                                                         
    Budget authority......................       308         0        -5       -33       -60       -60       -60
    Outlays...............................       309         0        -4       -30       -57       -60       -60
Accept the administration's fiscal year                                                                         
 1997 proposal for construction:                                                                                
    Budget authority......................        13         0        -1        -2        -3        -3        -3
    Outlays...............................        15         0         0        -1        -2        -3        -3
Accept the administration's fiscal year                                                                         
 1998 proposal for salaries and expenses                                                                        
 for the National Gallery of Art:                                                                               
    Budget authority......................        51         0        -1        -6       -10       -10       -10
    Outlays...............................        52         0        -1        -5       -10       -10       -10
Accept the administration's fiscal year                                                                         
 1998 proposal for the John F. Kennedy                                                                          
 Center for the Performing Arts:                                                                                
    Budget authority......................        10         0         0        -1        -2        -2        -2
    Outlays...............................        10         0         0        -1        -2        -2        -2
Accept the administration's fiscal year                                                                         
 1998 proposal for the Institute of Museum                                                                      
 Services:                                                                                                      
    Budget authority......................        22         0        -1        -3        -5        -5        -5
    Outlays...............................        26         0        -1        -3        -5        -5        -5
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the Student Financial Assistance account.                                             
\2\ This proposal impacts the Higher Education account.                                                         


                         FUNCTION 500: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Restore equity in unemployment assistance:                                                                      
    Budget authority......................       126      -105      -121       -97       -97       -97       -97
    Outlays...............................       118       -33       -92      -112      -101       -97       -97
Welfare reform:                                                                                                 
    Budget authority......................     7,221    -1,221    -1,215    -1,204    -1,194    -1,233    -1,207
    Outlays...............................     7,159      -851    -1,113    -1,169    -1,149    -1,236    -1,231
----------------------------------------------------------------------------------------------------------------

                         Function 550: Health0

    Accept Administration's Funding for the Health Resources 
and Services Administration [HRSA]. For HRSA, the budget 
resolution assumes the policy reforms detailed below and 
accepts the administration's spending levels for fiscal year 
1999, and maintains that level through 2002. The resolution 
does not assume the additional $156 million HRSA spending cut 
in the President's budget for fiscal year 2000.

  - Continue Funding for Community Health Centers. The budget 
        resolution recommends continued support for community 
        health centers. Funding should be prioritized according 
        to needs in both rural and urban areas.

  - Eliminate Unauthorized Rural Outreach Grants that Duplicate 
        Other Federally Supported Services. Reforms contained 
        in H.R. 3160, the Health Coverage Availability and 
        Affordability Act of 1996, and Medicare and Medicaid 
        reform will drive the private sector to develop rural 
        health networks. The Rural Outreach Grants funded by 
        the Health Resources and Services Administration fund 
        local consortia of rural health care providers to 
        coordinate and enhance the availability of health 
        services. But the administration's justification 
        correctly states:

          Locally developed health care plans are more likely 
        to succeed over a period of years in providing 
        appropriate, cost-effective health care in rural 
        communities.

The program has never been specifically authorized, and the 
funds were terminated in the fiscal year 1995 rescission bill. 
Services can be supported through community health centers, the 
Maternal and Child Health Block Grant, Medicaid, and other 
programs.

  - Eliminate Funding Intended to Establish State Offices of 
        Rural Health. All 50 States have received grants to 
        establish State Offices of Rural Health, thus the 
        purpose of the program has been accomplished. The 
        program was intended to help States establish, not 
        maintain, offices. None of the funding goes for the 
        direct provision of care to patients. Therefore States 
        can continue these offices if they believe they are 
        useful. These funds were terminated in the fiscal year 
        1995 rescission bill.

  - Eliminate Duplicative Grants to State Bureaucracies for 
        Administering State Trauma Care Systems. This program 
        provides grants to States to develop statewide trauma 
        care and emergency medical service systems, but none of 
        the funding goes for the direct care of patients; 
        rather it funds State bureaucracies. Services are 
        duplicative of those provided through the Preventive 
        Health Services Block Grants. These funds were 
        terminated in the fiscal year 1995 rescission bill.

  - Eliminate Special Funding for Native Hawaiian Health Care 
        Made Obsolete by Employer and State Insurance Reforms. 
        This program was created to provide primary care 
        services and disease prevention services for Native 
        Hawaiians. Hawaii has a highly developed employer-based 
        health service system which provides coverage to 
        residents not insured through the employer mandate. 
        These funds were terminated in the fiscal year 1995 
        rescission bill.

  - Eliminate Funding for Pacific Basin Initiative That 
        Duplicates Other Federal Funding Sources. This program 
        provides funds to build health preventive services 
        capacity in Pacific territories and to train health 
        professionals. The territories receive funding under 
        the Preventive Health Services Block Grant. These funds 
        were terminated in the fiscal year 1995 rescission 
        bill.

  - Reprioritize Ineffective Funding for the National Health 
        Services Corps. The NHSC attempts to alleviate the 
        shortage of health care professionals by recruiting 
        physicians and other health care professionals to 
        provide primary care services in what are designated as 
        ``Health Professional Shortage Areas.'' The NHSC is 
        fraught with waste and abuse. The program spends 
        $41,290 per health professional recruited with no 
        discernible affect on staffing rural areas with 
        physicians. GAO testified that the Department of HHS 
        has no long-term retention data to judge the impact of 
        the program. These funds were terminated in the fiscal 
        year 1995 rescission bill. This proposal would reduce 
        the funds by 50 percent.

  - Terminate Narrowly Targeted Chiropractic Demonstration 
        Grants. The Chiropractic Demonstration Grants funds the 
        Palmer Chiropractic School to conduct chiropractic 
        demonstrations. This is not a national priority.

  - Remove Duplicative Funding for Centers of Excellence. This 
        program was established to fund institutions that train 
        minority health professionals. The administration has 
        called for consolidating the program with other health 
        professions programs and reducing funding in response 
        to the Gore task force concerns over reducing the 
        number of title VII programs. Institutional aid for 
        postsecondary study is available under several other 
        programs in HHS and the Department of Education.

  - Consolidate Bureaucracy by Ending Department of Health and 
        Human Services' Funding for the Office of Rural Health 
        Policy. HHS's Office of Rural Health Policy was 
        established to improve the delivery of health services 
        to rural communities and populations. The 
        administration request is $42,000 below last year's 
        spending and $1.5 million below fiscal year 1995. The 
        funds, terminated in the fiscal year 1995 rescission 
        bill, support State bureaucracies. Similar research is 
        conducted at HCFA, and market reforms continue to 
        improve rural health services delivery.

  - Eliminate Federal Funding for Nonessential Health 
        Facilities Construction. The 1995 appropriation 
        provided funding for two projects, one in Pennsylvania 
        and one in West Virginia. It is not appropriate to 
        award special funding for these localities, and the 
        funds were terminated in the fiscal year 1995 
        rescission bill.

  - Eliminate Subsidies to Health Professions Education 
        Institutions That Do Not Go Directly to Students. This 
        proposal eliminates subsidies for various health 
        professions education. Subsidies go mainly to 
        institutions and do not go directly to students. Also, 
        market forces with high and rising wages provide strong 
        incentives for individuals to seek training and jobs in 
        health professions.

  - Streamline Administrative Costs for Health Resources and 
        Services Administration. Salaries and expense accounts 
        should be reduced as programs and functions are 
        consolidated and reformed. This proposal reduces S&E 
        expenditures 5 percent for HRSA.

    Incorporate Indian Health Care Services and Facilities Into 
New Native American Block Grant. Savings from this provision 
are in conjunction with the Native American Block Grant 
described in Function 450. In the year 2000, Indian health care 
services and facilities will be covered under self-
determination and will be incorporated in the new Native 
American Block Grant.

    Reject the Administration's Proposed 25-Percent Cut in 
Centers for Disease Control and Prevention. The budget 
resolution rejects the administration's 25-percent cut in 
Centers for Disease Control and Prevention, which funds 
childhood immunizations, breast and cervical cancer screening, 
HIV prevention programs, among other efforts to control the 
spread of infectious diseases and reduce chronic diseases. The 
cuts proposed in the President's budget display questionable 
priorities in light of increased instances of cancer in women 
and unrelenting spread of sexually transmitted diseases. The 
resolution recommends maintaining sufficient funding for CDC, 
reprioritizing spending for increased disease-prevention 
efforts, and the policy recommendation below. [Note: Because 
this proposal has no fiscal impact compared with current 
projections, it is not reflected in the table below.]

    Terminate the National Institute for Occupational Safety 
and Health [NIOSH]. The Institute is responsible for 
``conducting research and making recommendations for the 
prevention of work related illnesses and injuries.'' It is 
questionable whether this constitutes a ``disease'' and hence 
its CDC location. The program duplicates stated functions of 
the Occupational Safety and Health Administration [OSHA].

    Consolidate Health Data Collection and Analysis Functions 
in HHS. The budget resolution recommends consolidation of 
health data collection and analysis activities, and elimination 
of duplicative and unnecessary functions. The committee does 
not support funding for the Agency for Health Care Policy and 
Research [AHCPR] outcomes guidelines research and distribution. 
The budget resolution recognizes, however, a certain limited 
role for AHCPR data analysis. These functions, along with all 
data collection activities should be consolidated and 
streamlined across the Department, including those in CDC, NIH, 
and HCFA.

    Eliminate Unnecessary Funding in the Office of the 
Secretary and Accept Administration's Funding for Departmental 
Management. The budget resolution recommendation includes the 
policy reforms detailed below, accepts the administration's 
spending levels for fiscal year 1999, and maintains that level 
through 2002. The resolution does not accept the additional $14 
million spending cut in the President's budget for fiscal year 
2000.

  - Reduce Bureaucracy and Unnecessary Spending by Eliminating 
        the Office of the Surgeon General. The administration 
        has not nominated a new appointee, and the office's 
        function is not essential to the Nation's health.

  - Terminate Ineffectual Federal Funding for Physical Fitness 
        and Sports. The council has demonstrated no notable 
        impact on the Nation's health. The Appropriations 
        Committee eliminated funding in the fiscal year 1996 
        House-passed bill.

  - Eliminate Data Analysis Funding for the President's Failed 
        Health Plan. These are funds appropriated to assist the 
        President with the failed Health Security Act, which 
        the administration has abandoned. The act was not 
        passed, and the funds are no longer needed. These funds 
        were cut in the fiscal year 1995 rescission bill.

  - Streamline Administrative Costs for the Office of the 
        Secretary. Salaries and expense accounts should be 
        reduced as programs and functions are consolidated and 
        reformed. This proposal reduces S&E expenditures for 
        the Office of the Assistant Secretary for Health.

    Consolidate Duplicative Bureaucracy by Transferring the 
Mine Safety and Health Administration to the Occupational 
Safety and Health Administration, and Reduce the Combined 
Agency. The Mine Safety and Health Administration protects the 
safety and health of miners. The Occupational Safety and Health 
Administration performs much the same role in promulgating 
health and safety standards for nonmining industries. According 
to a recent report by the Heritage Foundation, this separate 
treatment is unnecessary. ``Of the 6,271 job-related 
fatalities, only 80, or 1.3 percent, occurred in the coal/
metal-nonmetal mining industry,'' the report said. ``In 
contrast, 15 percent of the fatalities took place in 
construction, 14 percent in agriculture, and 12 percent in 
manufacturing.'' Yet none of these industries has a separate 
agency to oversee safety and health.

    Maintain Current Payment Date for Civilian Retiree Cost-of-
Living Adjustment Through 2002. As recommended by the 
President, this is the Function 550 component of this provision 
setting COLA receipt dates for Public Health Service retirees. 
The primary portion of the policy setting COLA receipt dates is 
contained in Function 600.

    Reduce Department of Health and Human Services Overhead. 
This proposal calls for efficiency savings in indirect overhead 
expenses, such as spending on travel and transportation of 
persons and things; shipping; printing and reproduction; and 
operation and maintenance of facilities. These savings will 
result from improved performance, not from any changes to the 
programmatic activities of the Department. Reductions have not 
been assumed in those costs that are closely related to the 
Department's central function. The budget resolution recommends 
that the Department head should decide on how to distribute 
these assumed savings among the categories identified above, as 
well as other overhead costs.

                       FUNCTION 550: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Accept the administration's funding for                                                                         
 the Health Resources and Services                                                                              
 Administration:                                                                                                
    Budget authority......................     3,087      -215      -215      -250      -250      -250      -250
    Outlays...............................     3,054       -32      -114      -226      -238      -249      -249
Incorporate Indian health care services                                                                         
 and facilities into a new native American                                                                      
 block grant:                                                                                                   
    Budget authority......................     1,987         0         0         0      -112      -112      -112
    Outlays...............................     2,032         0         0         0       -96      -104      -109
Terminate the National Institute for                                                                            
 Occupational Safety and Health:                                                                                
    Budget authority......................       129      -169      -169      -169      -169      -169      -169
    Outlays...............................       117       -49      -101      -126      -126      -126      -126
Consolidate health data collection and                                                                          
 analysis function in the department of                                                                         
 Health and Human Services:                                                                                     
    Budget authority......................        65       -68       -68       -68       -68       -68       -68
    Outlays...............................       123       -12       -51       -68       -68       -68       -68
Eliminate unnecessary funding in Office of                                                                      
 the Secretary, accept administration's                                                                         
 funding level for departmental                                                                                 
 management:                                                                                                    
    Budget authority......................       160        -3        -8       -22       -22       -22       -22
    Outlays...............................       121        -2        -6       -17       -20       -22       -22
Consolidate duplicative bureaucracy by                                                                          
 transferring the Mine Safety and Health                                                                        
 Administration to the Occupational Safety                                                                      
 and Health Administration, and reduce the                                                                      
 combined agency:                                                                                               
    Budget authority......................       449       -90       -90       -90       -90       -90       -90
    Outlays...............................       455       -81       -90       -90       -90       -90       -90
Reduce Department of Health and Human                                                                           
 Services overhead:                                                                                             
    Budget authority......................        NA      -398      -398      -478      -478      -597      -797
    Outlays...............................        NA      -339      -398      -466      -478      -580      -767
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 550: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Maintain the current date of civilian                                                                           
 retiree cost of living adjustments                                                                             
 through 2002 as recommended by the                                                                             
 President:                                                                                                     
    Budget authority......................       167        -1        -1        -1        -1        -1        -1
    Outlays...............................       167        -1        -1        -1        -1        -1        -1
----------------------------------------------------------------------------------------------------------------

                     Function 600: Income Security

    Treat Persons Who Voluntarily Leave Military Service the 
Same as Civilians With Regard to Unemployment Insurance 
Benefits. Currently, only members of the Armed Forces can file 
for and receive unemployment insurance benefits when they 
voluntarily leave their jobs. Providing these benefits to 
persons who have chosen to quit their jobs can lead to 
prolonging their period of unemployment. All persons who choose 
to leave their current jobs should be treated equally under 
unemployment insurance.

    Reform the Earned Income Credit. President Clinton has 
proposed several reforms to the Earned Income Credit [EIC] to 
reduce fraud and limit payment of the credit to persons with 
substantial sources of unearned income. The budget assumes 
adoption of these recommendations, including requiring a valid 
taxpayer identification number on all returns seeking EIC 
payments and limiting the amount of investment income persons 
can receive while qualifying for the EIC. In addition to these 
proposals from the President, the budget assumes eliminating 
EIC eligibility to persons with no qualifying children. The 
expansion of the EIC to childless workers in 1993 included a 
class of part-time workers who were specifically excluded from 
EIC eligibility when the credit was created in the 1970's. Only 
persons who work part time qualify for the maximum EIC 
childless workers benefit, and persons who work full time year-
round at the minimum wage qualify for a benefit worth about $40 
in 1996. This represents less than 2 cents per hour of earned 
income. We should not increase taxes on families with children 
whose breadwinners work full time or on two jobs to provide a 
wage subsidy for childless part-time workers. The budget also 
assumes a faster phaseout of EIC benefits to take into account 
the effect of the $500 per-child family tax credit policy 
contained in the revenues section.

    Reform the Federal Employees Compensation Act [FECA]. 
Currently, there is no permanent system for reviewing workers 
compensation claims from Federal employees periodically to 
ensure that they remain disabled and eligible for benefits. 
FECA beneficiaries currently receive a nontaxable benefit worth 
up to 80 percent of their salary for as long as they remain 
disabled. This proposal establishes a permanent system of roll 
management for FECA beneficiaries, which reviews the status of 
persons whose conditions are likely to improve every 3 years.

    Fund Commodity Assistance Program at President's Level 
Through 2000. The budget resolution assumes adoption of the 
President's recommended outyear policy change for this program 
through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Fund Food Program Administration at President's Level 
Through 2000. The budget resolution assumes adoption of the 
President's recommended outyear policy change for this program 
through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Accept President's Reduction in Outyear Funding for the 
Child Care and Development Block Grant. The budget resolution 
assumes adoption of the President's recommended outyear policy 
change for this program through fiscal year 2000, with funding 
frozen at the President's recommended level for that year 
through fiscal year 2002.

    Accept President's Proposal for Railroad Retirement 
Windfall Benefits. The budget resolution assumes adoption of 
the President's recommended outyear policy change for this 
program through fiscal year 2000, with funding frozen at the 
President's recommended level for that year through fiscal year 
2002.

    Restore Equity in Unemployment Assistance. This is the 
Function 600 component of the provision affecting benefit 
payments. The remainder of the proposal appears in Function 
500.

    Create a Rural Development Block Grant. The rental 
assistance portion of the rural development block grant appears 
in this Function; other portions of the grant also appear in 
Functions 300, 370, and 450. The President has recommended 
reductions in this program; the budget resolution assumes his 
recommendation.

    Technical Adjustment for Railroad Unemployment Reforms. 
This represents the Function 600 portion of this adjustment. 
See ``Revenues'' for the revenue associated with these reforms. 
These reforms are intended to be deficit neutral over time and 
will allow the Railroad Unemployment System to mirror State 
unemployment systems.

    Accept the Administration's Proposal for Refugee 
Assistance. The budget resolution accepts the administration's 
proposed levels for refugee assistance through 2000, then 
maintains that level through 2002.

                       FUNCTION 600: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Fund Commodity Assistance Program at                                                                            
 President's level through 2000:                                                                                
    Budget authority......................       166         0        -8       -22       -37       -37       -37
    Outlays...............................       168         0        -7       -21       -36       -37       -37
Fund Food Program Administration at                                                                             
 President's level through 2000:                                                                                
    Budget authority......................       108         0        -6       -15       -23       -23       -23
    Outlays...............................       107         0        -5       -14       -22       -23       -23
Accept President's reduction in out year                                                                        
 funding for child care and development                                                                         
 block grant:                                                                                                   
    Budget authority......................       935         0         0       -57      -145      -145      -145
    Outlays...............................     1,030         0         0       -37      -111      -141      -145
Accept President's proposal for railroad                                                                        
 retirement windfall benefits:                                                                                  
    Budget authority......................     4,558        -8       -29       -46       -64       -64       -64
    Outlays...............................     4,536        -8       -29       -46       -64       -64       -64
Create a rural development block grant:                                                                         
    Budget authority......................       541         0       -43       -88      -133      -133      -133
    Outlays...............................       489         0       -11       -26       -45       -64       -83
Reduce refugee assistance:                                                                                      
    Budget authority......................       405       -23       -54       -85      -117      -117      -117
    Outlays...............................       405       -13       -37       -67       -98      -111      -116
----------------------------------------------------------------------------------------------------------------


                         FUNCTION 600: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Treat persons who voluntarily leave                                                                             
 military service the same as civilians                                                                         
 with regard to unemployment insurance                                                                          
 benefits:                                                                                                      
    Budget authority......................       317      -210      -201      -203      -207      -213      -221
    Outlays...............................       317      -210      -201      -203      -207      -213      -221
Reform the earned income credit:                                                                                
    Budget authority......................    20,397    -1,712    -1,752    -1,779    -1,847    -1,901    -2,009
    Outlays...............................    20,397    -1,712    -1,752    -1,779    -1,847    -1,901    -2,009
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................       163        -4       -20       -15        -5        -6        -7
    Outlays...............................       163        -4       -20       -15        -5        -6        -7
Restore equity in unemployment benefits:                                                                        
    Budget authority......................       214      -112      -208      -185      -184      -187      -190
    Outlays...............................       214      -112      -208      -185      -184      -187      -190
Technical adjustment for railroad                                                                               
 unemployment reforms:                                                                                          
    Budget authority......................        NA        12        12        10        12        10        12
    Outlays...............................        NA        12        12        10        12        10        12
Reduce annual adjustment factors to cover                                                                       
 operating costs only: \1\                                                                                      
    Budget authority......................    10,156         0         0         0         0         0         0
    Outlays...............................    19,642       -26       -83      -124      -147      -151      -153
Reduction of section 8 annual adjustment                                                                        
 factors (AAF) for units without tenant                                                                         
 turnover: \1\                                                                                                  
    Budget authority......................    10,156       -18      -159      -209      -358      -360      -545
    Outlays...............................    19,642       -81      -229      -350      -448      -526      -589
----------------------------------------------------------------------------------------------------------------
\1\ These two components are part of the overall reform of assisted housing.                                    

             Function 700: Veterans' Benefits and Services

    Round Down Fiscal Year 1997 Compensation COLA. The VA pays 
monthly cash benefits to veterans who have service-connected 
disabilities. The basic amounts of compensation paid are based 
on percentage-of-disability ratings (multiples of 10 percentage 
points) assigned to the veteran. A veteran whose disability is 
rated 30 percent or more disability also receives additional 
compensation for a spouse, children, and dependents. OBRA 1993 
provided that the COLA would be rounded down to the next lower 
whole percentage point. This proposal would permanently extend 
this provision.

    Apply New DIC COLA Rate to all DIC Recipients. The VA pays 
dependency and indemnity compensation [DIC] to the survivors of 
service members or veterans who died from a disease or injury 
incurred or aggravated during military service. For deaths on 
or after January 1, 1993, surviving spouses are paid $810 per 
month and, if the deceased veteran was totally disabled for a 
continuous period of at least 8 years immediately prior to 
death, an additional $177 per month. For deaths prior to 
January 1, 1993, surviving spouses may receive the higher of 
DIC under the new system or the old system determined by the 
pay grade of the deceased veteran. OBRA 1993 limited the fiscal 
year 1994 COLA for DIC paid under the older determination 
process to one-half the COLA applying to DIC paid for deaths 
after January 1, 1993.

    Lift Prohibition on Home Loan Debt Collections. This 
proposal authorizes the VA to refer a veteran's home loan debt 
to the Internal Revenue Service for offset against income tax 
refunds or, in the case of debtors who are Federal employees, 
to the debtor's employing agency for offset against salary or 
wages.

    Extend Real Estate Mortgage Investment Conduits. This 
recommendation authorizes the VA to guarantee the timely 
payment of principal and interest to purchasers of real estate 
mortgage investment conduits [REMIC's]. REMIC's are used to 
bundle and market home loan mortgages.

    Repeal the Davenport Decision. This proposal would restrict 
vocational rehabilitation benefits to only those veterans who 
have service-connected disabilities that are substantially 
linked to their employment handicaps. Since 1917, when the 
first vocational rehabilitation law was passed, a causal nexus 
between a veteran's service-connected disability and an 
employment handicap has been included in the authorizing 
legislation as a precondition to entitlement to vocational 
rehabilitation benefits for service-disabled veterans. When 
this legislation was rewritten in 1980 this express language 
was omitted, inadvertently the VA believes. In March 1995, the 
Court of Veterans Appeals invalidated VA regulations that based 
a veteran's entitlement to vocational rehabilitation services 
under chapter 31 on a requirement that the veteran's service-
connected disability materially contributed to employment 
handicap (Davenport v. Brown). As a result, Mr. Davenport, who 
has a 10-percent disability rating based on a fungus infection 
on one of his toes, was eligible for the considerable VA 
rehabilitation benefits. Indeed, as a result of the Court of 
Veterans Appeals ruling in Davenport, almost any veteran who 
has at least a service-connected disability of 10 percent is 
eligible for vocational rehabilitation benefits as long as that 
veteran also has a disabling condition, service-connected or 
nonservice-connected, that causes an impairment to employment 
which has not been overcome by prior developed skills.

    Permanently Extend Authority to Collect Copayments for 
Prescription Medications. The VA is currently authorized to 
collect a $2 copayment for each 30-day supply of outpatient 
prescription drugs prescribed for conditions which are not 
related to the treatment of a service-connected disability. 
(Veterans with a service-connected condition rated 50 percent 
or more and low-income veterans are exempted.) This proposal 
would permanently extend this authority, which has already been 
approved by Congress on a temporary basis on three separate 
times.

    Permanently Extend Authority to Recover Costs From Health 
Insurers of Veterans for Nonservice-Related Conditions. The VA 
has permanent authority to collect payment from private health 
insurance companies for medical care given to veterans with no 
service-related disabilities. The VA also has temporary 
authority, through fiscal year 1998, to recover from private 
health insurance companies the medical costs of veterans who do 
have service-related disabilities, when such veterans receive 
care for conditions not related to their service-related 
disabilities. This OBRA-1993 provision would be made permanent 
under this proposal.

    Permanently Extend Income Verification for Medical Care 
Cost Recovery. This recommendation would extend permanently 
VA's authority to check the income of veterans using Social 
Security numbers/internal revenue service records to determine 
eligibility of veterans for means-tested medical care.

    Permanently Extend Income Verification for Pension 
Eligibility. The VA currently is able to access IRS data to 
verify incomes reported by beneficiaries for establishing 
eligibility for pensions. This OBRA-1990 provision, extended 
through fiscal year 1998 by OBRA 1993, would be made permanent 
under this proposal.

    Permanently Extend Pension Limit to Persons in Medicaid 
Nursing Home. OBRA 1990 placed a $90 monthly limit on VA needs-
based pension benefits paid to veterans or survivors without 
dependents receiving care in a Medicaid-approved nursing home. 
This limit of $90 is effective through fiscal year 1998. This 
proposal would permanently extend the limit.

    Permanently Extend 0.75-Percent Loan Fee for Housing Loans 
and Extend Authority for Higher No-Bid Rate in Housing 
Programs. The VA's mortgage guarantee program makes it possible 
for veterans to buy homes with little or no downpayment, and at 
favorable rates. The primary cost of the program comes from 
defaults and subsequent property foreclosures. The VA charges 
veterans who do not have a service-connected disability a basic 
fee to use the VA Home Loan Guarantee Program. OBRA 1993 
increased these fees by 0.75 percent of the loan amount for 
loans closed between October 1, 1993 and September 30, 1998. 
This proposal would permanently extend this 0.75-percent 
addition to the basic fees.
    The VA uses a ``no-bid'' formula to determine the least 
expensive alternative to dispose of foreclosed property. This 
proposal would make permanent a modification to the no-bid 
formula which requires VA to consider its ``losses sustained on 
the resale of the property'' when establishing the rate.
    OBRA 1993 established a fee of 3 percent of the amount of 
the loan, with less than 5-percent downpayment, for a veteran 
who previously obtained a VA-guaranteed home loan. The 
increased fee applies in the case of second and subsequent 
loans closed between October 1, 1993 and September 30, 1998. 
This provision would make this higher rate permanent.

    Repeal the Gardner Decision. In 1994, the Supreme Court 
issued the Gardner decision which extended disability 
compensation to veterans in cases where no liability was found 
on the part of the VA hospital. This provision clarifies 
statutory intent that compensation is only available when VA is 
found at fault.

                         FUNCTION 700: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                              1996                                                              
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Round down fiscal year 1997 compensation                                                                        
 COLA: \1\                                                                                                      
    Budget authority......................    14,979       -17       -38       -58       -77      -105      -139
    Outlays...............................    13,794       -16       -36       -56       -81       -98      -136
Apply new DIC COLA rate to all DIC                                                                              
 recipients: \1\                                                                                                
    Budget authority......................    14,979        -7       -14       -22       -31       -38       -44
    Outlays...............................    13,794        -6       -14       -22       -33       -34       -43
Lift prohibition on home loan debt                                                                              
 collections:                                                                                                   
    Budget authority......................        61       -90         0         0         0         0         0
    Outlays...............................        61       -90         0         0         0         0         0
Extend real estate mortgage investment                                                                          
 conduits:                                                                                                      
    Budget authority......................        89        -5        -5        -5        -5        -5        -5
    Outlays...............................        89        -5        -5        -5        -5        -5        -5
Repeal the Davenport Decision:                                                                                  
    Budget authority......................     1,360       -20       -39       -56       -56       -56       -57
    Outlays...............................     1,360       -20       -39       -56       -56       -56       -57
Permanently extend authority to collect co-                                                                     
 payments for prescription medications:                                                                         
    Budget authority......................   \2\ -32         0         0       -38       -40       -42       -44
    Outlays...............................   \2\ -32         0         0       -38       -40       -42       -44
Permanently extend authority to recover                                                                         
 costs from health insurers of veterans                                                                         
 for non-service related conditions:                                                                            
    Budget authority......................  \2\ -196         0         0      -220      -229      -238      -247
    Outlays...............................  \2\ -196         0         0      -220      -229      -238      -247
Permanently extend income verficaition for                                                                      
 medical care cost recovery:                                                                                    
    Budget authority......................    \2\ -6         0         0        -7        -7        -8        -8
    Outlays...............................    \2\ -6         0         0        -7        -7        -8        -8
Permanently extend income verification for                                                                      
 pension eligibility:                                                                                           
    Budget authority......................     3,012         0         0       -10       -20       -30       -40
    Outlays...............................     2,771         0         0       -10       -20       -30       -40
Permanently extend pensino limit to                                                                             
 persons in medicaid nursing homes:                                                                             
    Budget authority......................     3,012         0         0      -462      -513      -452      -504
    Outlays...............................     2,771         0         0      -462      -513      -452      -504
Permanently extend 0.75-percent loan fee                                                                        
 for housing loans and etend authority for                                                                      
 higher no-bid rate in housing programs:                                                                        
    Budget authority......................        89         0         0      -164      -160      -156      -153
    Outlays...............................        89         0         0      -164      -160      -156      -153
Repeal the Gardner Decisison: \1\                                                                               
    Budget authority......................    14,979       -24       -63      -103      -144      -187      -223
    Outlays...............................    13,794       -22       -60      -100      -152      -173      -220
----------------------------------------------------------------------------------------------------------------
\1\ This proposal impacts the compensation account.                                                             
\2\ Negative number denotes cash in-flow to the federal government.                                             

                Function 750: Administration of Justice

    Phase Out Federal Funding for the Legal Services 
Corporation. The Legal Services Corporation [LSC] is one of 
several organizations intended to provide the poor with access 
to free legal aid in civil matters. Too often, however, lawyers 
funded through Federal LSC grants have focused on political 
causes and class action lawsuits rather than helping poor 
Americans solve their legal problems. Lawyers have used the LSC 
grants to file lawsuits against welfare reform. A phaseout of 
Federal funding for the LSC will not eliminate free legal aid 
to the poor. State and local governments, bar associations, and 
other organizations already provide substantial legal aid to 
the poor. The phaseout of Federal funding would just end the 
most controversial and counterproductive legal representations. 
This proposal continues the 3-year Federal funding phaseout 
proposed in the fiscal year 1996 budget resolution.

    Eliminate the Associate Attorney General Position and 
Office. The Presidentially appointed Associate Attorney General 
position is an unneeded level of bureaucracy, which should be 
eliminated. This position is not part of the formal Department 
of Justice structure and is unnecessary to implement 
Departmental policies. Instead, this position has been used to 
reward politically connected friends of the President.

    Restore Local and State Authority in Community Relations. 
The Federal Community Relations Service [CRS] provides 
assistance to communities in preventing and resolving disputes 
and difficulties between ethnic and racial groups. These 
laudable goals, however, can be far better addressed by local, 
State, and nongovernmental institutions ``on the ground,'' 
where potential problems exist, than by a centralized, ``one-
size-fits-all'' approach.

    Terminate Ineffective Funding for the State Justice 
Institute [SJI]. The State Justice Institute funds research and 
demonstration projects and distributes information about ways 
to administer justice. The Institute provides no actual 
services and has not improved the administration of justice at 
the Federal or State level, and should be eliminated.

    Terminate the U.S. Parole Commission. The Comprehensive 
Crime Control Act of 1984 abolished the U.S. Parole Commission 
and instituted mandatory sentencing for all offenders whose 
crimes were committed after November 1, 1987. Although the 
Commission is to be abolished on November 1, 1997, 10 years 
after the implementation of the U.S. Sentencing Guidelines, 
there is a proposal to extend its life. This proposal opposes 
the extension of the U.S. Parole Commission. Abolishing the 
Commission and distributing its current workload to other 
offices will have little or no effect on pending cases.

    Accept Administration Savings Proposals. This proposal 
adopts the President's funding reduction in such programs as 
the Department of Justice--general administration; U.S. Secret 
Service--salaries and expenses; Equal Employment Opportunity 
Commission--salaries and expenses; and HUD, Management and 
Administration--salaries and expenses.

                       FUNCTION 750: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Phase out Federal funding for the legal                                                                         
 Services Corporation:                                                                                          
    Budget authority......................       278      -183      -278      -278      -278      -278      -278
    Outlays...............................       293      -161      -267      -278      -278      -278      -278
Eliminate the Associate Attorney General                                                                        
 position and office:                                                                                           
    Budget authority......................         2        -2        -2        -2        -2        -2        -2
    Outlays...............................         2        -2        -2        -2        -2        -2        -2
Restore local and State authority in                                                                            
 community relations:                                                                                           
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................         8        -3        -5        -5        -5        -5        -5
Terminate ineffective funding for the                                                                           
 State Justice Institute:                                                                                       
    Budget authority......................         5        -4        -5        -5        -5        -5        -5
    Outlays...............................        11        -1        -3        -4        -5        -5        -5
Terminate the U.S. Parole Commission:                                                                           
    Budget authority......................         5        -3        -5        -5        -5        -5        -5
    Outlays...............................         6        -3        -5        -5        -5        -5        -5
Accept the Administration's savings                                                                             
 proposals:                                                                                                     
    Budget authority......................       892       -16       -56       -84      -125      -125      -125
    Outlays...............................       797       -14       -51       -81      -120      -125      -125
----------------------------------------------------------------------------------------------------------------

                    Function 800: General Government

    Repeal Title V of the McKinney Act. This proposal repeals a 
provision of the McKinney Homeless Assistance Act that gives 
right of first refusal in the disposal of surplus Federal 
properties to groups providing aid to the homeless. These 
groups would retain eligibility to obtain these properties, but 
would lose preferential treatment. The proposal saves funds 
primarily by limiting the Federal Government's exposure to 
litigation and increasing the appraisal value of surplus 
Federal property.

    Eliminate the Council of Economic Advisers. The Council of 
Economic Advisers was established to advise the President on 
the economy and policies for economic growth. The is a 
duplicative program since the President already has at his 
disposal numerous experts on economic matters located 
throughout the administration.

    Eliminate the Joint Committees on Printing and Library. 
With reduced responsibilities for the Government Printing 
Office [GPO], Congress can eliminate the Joint Committees on 
Printing and the Joint Committee on the Library of Congress. 
Oversight of a smaller GPO would be performed by the Senate 
Committee on Rules and Administration and the House Committee 
on Oversight.

    Reduce Funding for the Executive Office of the President by 
15 Percent. When he took office, the President promised major 
reductions in executive branch staff, especially in the White 
House. This proposal would carry out the President's pledge.

    Reduce Funding for the General Accounting Office. The 
General Accounting Office is undergoing a 25-percent staff 
reduction that started in 1992. This reduction would absorb 
savings that should result from these reductions.

    Restructure the Department of the Interior's Territorial 
and International Affairs. The Department of the Interior is 
responsible for promoting the economic and political 
development of insular areas under the jurisdiction of the 
United States. The Secretary originates and implements Federal 
policy for the territories; coordinates certain operating and 
construction projects; and provides information services and 
technical assistance. This proposal would eliminate all 
territorial assistance and funding, except funding for the 
brown tree snake. It would terminate grants to the Northern 
Mariana Islands, but fund American Somoa.

    Open a Small Portion of the Coastal Plain of ANWR for 
Exploration. This is the Function 800 component of the proposal 
that appears in Function 300. In this function, payments are 
made to the State of Alaska.

    Accept Administration Savings Proposals. This proposal 
adopts the President's funding reduction in such programs as 
Treasury Buildings and Annex Repair and Restoration; Library 
Buildings and Grounds; Administering the Public Debt; Senate 
Office Building; White House Repair and Restoration; Capitol 
Power Plant; GSA--Policy and Operations; OPM--Salaries and 
Expenses; National Archives and Records Administration--
Operating Expenses; and JFK Assassination Review Board. This 
recommendation also eliminates the Office of Technology 
Assessment, which was included in the fiscal year 1996 budget 
resolution to be eliminated.

    Impose a 6-Year Moratorium on Construction and Acquisition 
of New Federal Buildings. This recommendation places a hold on 
General Services Administration's acquisition and construction 
of all new office spaces and courthouses. This proposal allows 
an exemption in the cases of Federal buildings destroyed by 
unforeseen disasters or acts of God.

    Reduce the Department of Treasury Overhead. This proposal 
calls for efficiency savings in indirect overhead expenses, 
such as spending on travel and transportation of persons and 
things; shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of the Department. Reductions have not been assumed 
in those costs that are closely related to the Department's 
central function. The budget resolution recommends that the 
Department head should decide on how to distribute these 
assumed savings among the categories identified above, as well 
as other overhead costs.

    Reform the Department of Interior's Minerals-Related 
Agencies. The budget resolution assumes reforms in Function 300 
that will lead to a more efficient royalty collection process. 
These reforms will lead to higher rents and royalties derived 
from the Outer Continental Shelf [OCS] [Function 950], and also 
higher mineral leasing payments being paid to the States 
[Function 800].

                       FUNCTION 800: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Eliminate the Council of Economic                                                                               
 Advisers:                                                                                                      
    Budget authority......................         3        -2        -3        -3        -3        -3        -3
    Outlays...............................         3        -2        -3        -3        -3        -3        -3
Eliminate the Joint Committee on Printing                                                                       
 and Library:                                                                                                   
    Budget authority......................         1        -1        -1        -1        -1        -1        -1
    Outlays...............................         1        -1        -1        -1        -1        -1        -1
Reduce funding for the Executive Office of                                                                      
 the President by 15 percent:                                                                                   
    Budget authority......................       201       -30       -30       -30       -30       -30       -30
    Outlays...............................       191       -30       -30       -30       -30       -30       -30
Reduce funding for the General Accounting                                                                       
 Office:                                                                                                        
    Budget authority......................       374       -30       -30       -30       -30       -30       -30
    Outlays...............................       363       -26       -27       -29       -30       -30       -30
Restructure the Department of the                                                                               
 Interior's Territorial and International                                                                       
 Affairs:                                                                                                       
    Budget authority......................        25       -16       -16       -16       -16       -16       -16
    Outlays...............................        46       -10       -16       -16       -16       -16       -16
Accept the Administration's savings                                                                             
 proposals:                                                                                                     
    Budget authority......................       696       -44       -90      -138      -186      -186      -186
    Outlays...............................       740       -32       -81      -129      -176      -183      -184
Impose a 6-year moratorium on construction                                                                      
 and acquisition of new Federal buildings:                                                                      
    Budget authority......................        66      -545      -545      -545      -545      -545        -0
    Outlays...............................       151       -16       -71      -186      -354      -491      -512
Reduce Department of Treasury overhead:                                                                         
    Budget authority......................        NA      -271      -271      -325      -325      -406      -541
    Outlays...............................        NA      -230      -271      -317      -325      -394      -521
----------------------------------------------------------------------------------------------------------------


                                                                                                                
                          FUNCTION 800: ADDITIONAL MADATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Repeal title V of the McKinney Act:                                                                             
    Budget authority......................   \1\ -10        -3        -3        -3        -3        -3        -3
    Outlays...............................   \1\ -10        -3        -3        -3        -3        -3        -3
Restructure the Department of the                                                                               
 Interior's Territorial and International                                                                       
 Affairs:                                                                                                       
    Budget authority......................        28         7         7         7         7         7         7
    Outlays...............................        46        15        20        16        11         4        -1
Open a small portion of the coastal plain                                                                       
 of ANWR for exploration:                                                                                       
    Budget authority......................       508         0       575         0       400         1         1
    Outlays...............................       508         0       575         0       400         1         1
Reform the Department of the Interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority......................       508         3         4         2         1         0         0
    Outlays...............................       508         3         4         2         1         0         0
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                       Function 920: Allowances0

    Allow an Open Season for CSRS Participants to Convert to 
FERS. An open season would permit current employees who are 
participants in CSRS to convert to FERS. This will reduce the 
unfunded liability in CSRS to the degree that the option is 
exercised, and move people from a system that costs the 
government 25.4 percent of payroll to one that costs 12.4 
percent of payroll. An advantage for employees is that they 
could fully participate in TSP, gaining the 5-percent employer 
match and qualifying for the tax deferral of up to 10 percent. 
The open season that CSRS participants were granted when FERS 
was created resulted in 5 percent of CSRS participants 
selecting the new system. At that time, there was no C or F 
funds in TSP, and no 10-year track record of TSP performance 
such as we now have for the C fund, which has earned an average 
annual return of 13 percent in that time period. Portions of 
this option also appear in Function 950 and Revenues.

    Reform the Federal Employees Compensation Act. This is the 
Function 920 component of this proposal, which involves savings 
from agency reimbursements for FECA payments as a result of 
ongoing roll management. Other components of this policy appear 
in Functions 500 and 600.

    Contract Out Government Printing Orders of Less than 
$1,000. This proposal calls for savings governmentwide by 
contracting out printing services and requiring that all 
Federal agencies use a credit card to purchase small printing 
jobs of less than $1,000.

    Reduce the Number of Political Appointees. This proposal 
would cap the number of political appointees at 2,300. The term 
``political appointee'' refers to employees of the Federal 
Government who are appointed by the President and certain 
policy advisors. Some political appointees must have Senate 
confirmation. This proposal would not only eliminate about 500 
positions, but it would also save time in the Senate used for 
confirmation.

    Reduce Independent Agencies' Overhead. This proposal calls 
for efficiency savings in indirect overhead expenses, such as 
spending on travel and transportation of persons and things; 
shipping; printing and reproduction; and operation and 
maintenance of facilities. These savings will result from 
improved performance, not from any changes to the programmatic 
activities of agencies. Reductions have not been assumed in 
those costs that are closely related to each agencies' central 
function. The budget resolution recommends that the department 
head should decide on how to distribute these assumed savings 
among the categories identified above, as well as other 
overhead costs. This recommendation does not assume overhead 
reduction in Environmental Protection Agencies and National 
Aeronautics and Space Administration.

    Provide Contingency and Emergency Funds. This proposal 
provides more than $4.5 billion in contingency and emergency 
funds. The Conference Report to H.R. 3019, the Balanced Budget 
Down Payment Act, II, rescinded $1 billion of disaster relief 
funds that were provided in the disaster relief and disaster 
relief contingency accounts in Public Law 104-19. The conferees 
indicated that the rescission:

        * * * will leave the Federal Emergency Management 
        Agency approximately $1,300,000,000 short of known or 
        expected requirements by the end of fiscal year 1997. 
        As such, it is expected that FEMA will request an 
        approximate supplemental budget request to meet 
        necessary requirements at an early point during fiscal 
        year 1997.

This proposal provides for the anticipated request by FEMA. In 
addition, eight subcommittees of the House Committee on 
Appropriations--Agriculture; Commerce, Justice, State; Defense; 
Energy and Water; Foreign Operations; Interior; Military 
Construction; and Transportation--provided emergency 
appropriations as part of H.R. 3019. For fiscal year 1997, the 
budget resolution provides for $3.2 billion to pay for 
emergencies that may occur.

                       FUNCTION 920: ADDITIONAL DISCRETIONARY CHANGES FROM CURRENT POLICY                       
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                              est.   -----------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS participants                                                                      
 to convert to FERS:                                                                                            
    Budget authority......................         0        50        50        50        50        60        60
    Outlays...............................         0        50        50        50        50        60        60
Reform the Federal Employees Compensation                                                                       
 Act:                                                                                                           
    Budget authority......................        NA         0        -2       -10       -23       -25       -28
    Outlays...............................        NA         0        -2       -10       -23       -25       -28
Contract out Government printing orders of                                                                      
 less than $1,000:                                                                                              
    Budget authority......................        NA       -40       -55       -55       -55       -55       -55
    Outlays...............................        NA       -38       -54       -55       -55       -55       -55
Reduce the number of political appointees:                                                                      
    Budget authority......................       318        -3       -39       -80       -81        -7       -45
    Outlays...............................       318        -3       -38       -78       -81       -10       -43
Reduce independent agencies' overhead:                                                                          
    Budget authority......................        NA      -230      -230      -276      -276      -345      -460
    Outlays...............................        NA      -195      -230      -269      -276      -334      -442
Provide contingency and emergency funds:                                                                        
    Budget authority......................        NA     4,562         0         0         0         0         0
    Outlays...............................        NA       200       800     1,681     1,681       200         0
----------------------------------------------------------------------------------------------------------------

            Function 950: Undistributed Offsetting Receipts

    Allow an Open Season for CSRS Participants to Convert to 
FERS. This is the Function 950 component of the proposal, which 
is fully described in the Function 920 discussion in this 
appendix. This portion of the proposal includes agency 
employers share Social Security tax payments and agency 
contributions to the CSRDF for employees who choose to switch 
from CSRS to FERS.

    0Increase Agency Contributions to Retirement Trust Funds by 
1.5 Percentage Points for CSRS Employees Beginning in Fiscal 
Year 1997. Under the Federal Retirement System, the government 
is required to contribute the full normal cost of accruing 
pension benefits for its employees in the Civil Service 
Retirement and Disability Trust Fund. The full normal cost for 
a CSRS employee is 25.4 percent of payroll. Currently, those 
costs are distributed 7 percent to the employee, 7 percent to 
the agency, and 11.4 percent to the Treasury. This proposal 
shifts 1.5 percent of that contribution from the Treasury to 
the employee's agency, thus making the cost of that employee to 
the agency closer to the true cost of his future retirement 
benefits. This results in a mandatory savings of $3.867 billion 
since the additional cost is transferred from the Treasury to 
the agencies without raising the discretionary spending caps. 
This proposal was included in the Conference Report for the 
Balanced Budget Act.

    Broaden and Extend Spectrum Auctions. The Omnibus Budget 
Reconciliation Act of 1993 granted the Federal Communications 
Commission [FCC] limited authority to auction new licenses to 
use the radio spectrum. The authority, however, was limited to 
a 5-year period ending on September 30, 1998, and did not 
extend to many classes of new licenses. The law excluded 
licenses issued to profitmaking businesses that did not charge 
a subscription fee for telecommunications services. This 
proposal, which was also contained in the Balanced Budget Act 
that President Clinton vetoed, broadens and extends spectrum 
auctions, requires the Federal Communications Commission to 
auction 100 megahertz of spectrum located below 3 gigahertz and 
requires the Department of Commerce to reallocate from Federal 
to non-Federal use a single frequency band of at least 20 
megahertz.

    Sell the Alaska Power Administration [APA]. As provided for 
in the Balanced Budget Act [BBA], the committee again 
reiterates its support for the sale of APA. The 
administration's National Performance Review stated that: 
``[t]he Federal Government should divest its interest in the 
Alaska Power Administration.'' There is no need for Federal 
involvement in this issue since it deals solely with assets 
located within one State. This proposal sells the APA in 
accordance with the terms of the purchase agreements negotiated 
in 1989 between the Department of Energy and the proposed 
purchasers. [Note: This Function includes only the proceeds 
from the asset sale; the remaining transactions appear in 
Function 270.]

    Privatize the Naval Petroleum and Oil Shale Reserves and 
Sell Additional Assets. This reflects the asset sale component 
of this proposal.The remaining transactions appear in Function 
270.] In addition, the President has recommended selling 
additional assets. The budget resolution assumes the sale of 
additional assets. It recognizes, however, that the committees 
of jurisdiction will select the specific assets.

    Reform the Department of Interior's Minerals-Related 
Agencies. The budget resolution assumes reforms in Function 300 
that will lead to a more efficient royalty collection process. 
These reforms will lead to higher rents and royalties derived 
from the Outer Continental Shelf [OCS] (Function 950), and also 
higher mineral leasing payments being paid to the States 
(Function 800).

    Sell Governors Island. Governors Island, situated in New 
York harbor, houses the largest Coast Guard facility in the 
world. To reduce its operating costs, the Coast Guard has 
developed a streamlining plan that includes closing and 
relocating the Coast Guard facilities on Governors Island.
    This proposal would require the Administrator of the 
General Services Administration to sell Governors Island at 
fair market value. It also would give the State of New York and 
the City of New York a right of first refusal to purchase the 
property. The sale would be exempt from the law and regulations 
that currently apply to the disposal of real property by the 
Federal Government.

    Sell Air Rights Adjacent to Union Station. This provision 
directs the Administrator of the General Services 
Administration to sell approximately 16.5 acres of air rights 
adjacent to Union Station at fair market value, in a manner to 
be determined by the Administrator.

                         FUNCTION 950: ADDITIONAL MANDATORY CHANGES FROM CURRENT POLICY                         
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                            Spending change                     
                                           1996 est. -----------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS                                                                                   
 participants to convert to FERS:                                                                               
    Budget authority.....................     21,684       -40       -40       -40       -40       -50       -50
    Outlays..............................     21,684       -40       -40       -40       -40       -50       -50
Increase Agency contributions to                                                                                
 retirement trust funds by 1.5 percentage                                                                       
 points for CSRS employees:                                                                                     
    Budget authority.....................     15,702      -566      -536      -525      -514      -501      -489
    Outlays..............................     15,702      -566      -536      -525      -514      -501      -489
Broaden and extend spectrum auctions:                                                                           
    Budget authority.....................  \1\ -4,90                                                            
                                                   0         0    -1,400    -2,600    -4,400    -5,200    -5,600
    Outlays..............................  \1\ -4,90                                                            
                                                   0         0    -1,400    -2,600    -4,400    -5,200    -5,600
Sell Alaska Power Administration:                                                                               
    Budget authority.....................          0         0       -70         0         0         0         0
    Outlays..............................          0         0       -70         0         0         0         0
Privitize the Naval petroleum and oil                                                                           
 shale reserves and sell additional                                                                             
 assets:                                                                                                        
    Budget authority.....................          0    -1,500         0         0         0         0      -600
    Outlays..............................          0    -1,500         0         0         0         0      -600
Reform the Department of the Interior's                                                                         
 minerals-related agencies:                                                                                     
    Budget authority.....................  \1\ -2,70                                                            
                                                   0         0        -5        -7        -7        -7        -7
    Outlays..............................  \1\ -2,70                                                            
                                                   0         0        -5        -7        -7        -7        -7
Sale of Governors island:                                                                                       
    Budget authority.....................          0         0         0      -500         0         0         0
    Outlays..............................          0         0         0      -500         0         0         0
Sell air rights adjacent to Union                                                                               
 Station:                                                                                                       
    Budget authority.....................          0         0       -40         0         0         0         0
    Outlays..............................          0         0       -40         0         0         0         0
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes cash in-flow to the Federal Government.                                             

                     Additional Revenue Provisions

    Allow an Open Season for CSRS Participants to Convert to 
FERS. An open season would permit current employees who are 
participants in CSRS to convert to FERS. This will reduce the 
unfunded liability in CSRS to the degree that the option is 
exercised, and move people from a system that costs the 
government 25 percent of payroll to one that costs 12 percent 
of payroll. An advantage for employees is that they could fully 
participate in TSP, gaining the 5 percent employer match and 
qualifying for the tax deferral of up to 10 percent. The open 
season that CSRS participants were granted when FERS was 
created resulted in 5 percent of CSRS participants selecting 
the new system. At that time, there was no C or F funds in TSP, 
and no 10-year track record of TSP performance such as we now 
have for the C fund, which has earned an average annual return 
of 15 percent in that time period. Portions of this proposal 
also appear in Functions 920 and 950.

    Increase Employee Contributions to Retirement by One-Half 
Percentage Point for CSRS, FERS and Postal Service Employees as 
Proposed by the President. When the Federal Retirement System 
was created in 1920, costs of maintaining the system were 
expected to be shared 50-50 between Federal employees and the 
government. Historically, as system costs grew, the employee 
contribution was increased. Employee contributions were 
increased in 1929, 1939, 1949, 1959, & 1969. However, the 
employees share has not been raised since 1969, even though 
benefits have increased substantially as a result of 
significant levels of inflation and frequent COLA adjustments 
in the 1970's and 1980's. In contrast, Social Security payroll 
taxes (the ``employees share'' of Social Security) have risen 
59 percent since 1970. Employees currently contribute 28 
percent of the resources needed to finance Federal retirement 
benefits, while taxpayers contribute 72 percent of the needed 
funds. By increasing the contributions current employees make 
by half of a percentage point phased in over the next 3 years, 
we can narrow the amount of Federal bailout needed to make good 
on future retirement benefits for Federal employees. Civil 
Service Retirement System employees will see their 
contributions increase from 7 percent of pay to 7.5 percent of 
pay, while FERS employees will see their contributions 
increased from .8 percent to 1.3 percent. This proposal was in 
the Balanced Budget Act and the President's 1997 budget 
submission.

    Improve Federal Debt Collection Procedures. Among the debt 
collection proposals which are assumed in this function is 
enactment of a continuous levy authority for the Internal 
Revenue Service to enhance collection of delinquent tax debt. A 
nonrevenue debt collection enhancement proposal is assumed in 
Function 950.

    Technical Adjustment for Railroad Unemployment Reforms. 
This represents the revenue portion of this adjustment. See 
Function 600 for the benefit change associated with these 
reforms. These reforms are intended to be deficit neutral over 
time and will allow the Railroad Unemployment System to mirror 
State unemployment systems.

    Replace the One-Dollar Bill with a New Dollar Coin. Dollar 
bills constitute approximately 45 percent to 50 percent of all 
notes produced annually by the Bureau of Engraving and 
Printing. One-dollar notes circulate on average only 18 months 
and must be frequently printed and purchased. By contrast, the 
costs of coins are substantially lower because coins have lower 
handling expenses and remain in circulation for up to 30 years. 
The savings for this recommendation stem from reductions in the 
costs of producing and maintaining the Nation's supply of 
currency at the Federal Reserve. [In addition to the above 
savings, replacing one-dollar notes with one-dollar coins would 
produce indirect effects on the Federal budget. These indirect 
effects save $1.1 billion over 6 years. Consequently, the 
savings are reflected in two components in the table below.]

    Reform the Earned Income Credit. This is the revenue 
portion of the proposal to reform the Earned Income Credit. The 
proposal is described fully in Function 600.

                                           ADDITIONAL REVENUE CHANGES                                           
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                          Revenue change \1\                    
                                              1996   -----------------------------------------------------------
                                              est.      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Allow an open season for CSRS participants                                                                      
 to convert to FERS.......................  ........       -10       -10       -10       -10       -10       -10
Increase employee contributions to                                                                              
 retirement by one-half percentage point                                                                        
 for CSRS, FERS, and Postal Service                                                                             
 employees................................  ........       265       427       543       558       568       585
Improve Federal debt collection procedures  ........       301       302       302       202       103       105
Technical adjustment for railroad                                                                               
 unemployment reforms.....................  ........         0         3        10        23        22        -2
Replace the one-dollar bill with a new one-                                                                     
 dollar coin..............................  ........         0         0         0        80       110       115
Replace the one-dollar bill with a new one-                                                                     
 dollar coin (seniorage)..................  ........         0         0       -77      -224      -343      -418
Reform the earned income credit...........  ........     1,400     1,434     1,456     1,511     1,555     1,645
Sell Alaska Power Administration..........  ........         0        -1        -1        -1        -1        -1
----------------------------------------------------------------------------------------------------------------
\1\ Negative number denotes revenue losses.                                                                     

    Sell the Alaska Power Administration. The budget resolution 
assumes that this transaction will go forward using tax-free 
financing.


                               appendix 2



                     Mandate and Regulatory Reform

                              ----------                              


               Unfunded Mandate and Regulatory Budgeting

    The fiscal budget reflects only one part of the Federal 
Government's impact on the nation and the economy. Government 
also extends its size and scope through its power to issue 
regulations on private businesses and families and to 
promulgate mandates on State and local governments. The 
enactment of the Unfunded Mandates Reform Act of 1995 (Public 
Law 104-44) is a strong step toward controlling the number and 
magnitude of future unfunded mandates by ensuring greater 
congressional accountability about the actual costs of mandates 
on State and local governments in the legislative process. The 
104th Congress also has made significant progress in repealing 
or reforming a variety of mandates that have been particularly 
onerous for States and localities. These reforms, which were 
recommended in the report accompanying the House Budget 
Resolution for Fiscal Year 1996 (H. Con. Res. 67) are described 
below. In the current budget resolution report, the Budget 
Committee offers further recommendations for reform of unfunded 
Federal mandates. Congress's achievements in mandate and 
regulatory reform could be made a regular practice through the 
budget process itself--by reflecting the costs of regulations 
and mandates should be reflected in the Federal budget, with an 
eye toward reducing their impact on the economy (as indicated 
by the costs measured as a percentage of Gross Domestic Product 
[GDP]), and subjected to annual votes in the Congress.
    Federal regulations and mandates represent indirect 
government spending. They divert monies away from private 
families, businesses, neighborhoods, and communities, and 
toward governmentally mandated objectives. Regulations and 
mandates transfer power and decisionmaking from neighborhoods, 
local communities, and States to Washington, DC. In short, 
regulations and mandates represent hidden taxes and spending.
    Federal regulations have skyrocketed over the past 25 
years, exploding at the same unsustainable rate as government 
spending. An estimated 10 percent to 20 percent of national 
output is consumed and controlled by government regulation. 
According to the Clinton administration's own estimates, annual 
regulatory costs have reached $647 billion, or $6,565 to $8,869 
per family. When the costs of regulations and mandates are 
added to the costs of taxes, the average American must work 
until July 13 each year to pay the costs of government.
    Other indicators of regulatory costs confirm the explosion 
in Federal regulations. The Federal Register, the annual 
compilation of new regulations, climbed from 12,000 pages in 
1950 to 70,000 pages in 1993 to about 90,000 now. The number of 
Federal regulators--government officials paid to enforce 
regulations--increased from 70,000 in 1970 to 130,000 in 1995. 
The budgets of Federal regulatory agencies has ballooned by 
nearly 200 percent over this same period.
    Just as Federal spending raises taxes and deficits, which 
slow economic growth and limit opportunity, government 
regulations and mandates often slow the improvement of living 
standards. Regulations add an estimated 33 percent to the cost 
of building an airplane engine, 95 percent to the costs of a 
new vaccine, and $3,000 to the costs of a new car. Regulations 
impede job creation. Private-sector job growth has been 
inversely proportional to the proliferation Federal regulators. 
Job creation grew during the 1980's, when the number of 
regulators and regulations were reduced, and it shrank during 
the regulatory heydays of the 1970's, the late 1980's, and the 
Clinton years.
    What's worse, many regulations are issued without public 
accountability. Too often, past Congresses have passed 
legislation authorizing private sector regulatory mandates 
without regard for the cost. Instead, unelected, unaccountable 
government officials at agencies have been provided with 
unchecked, unlimited power to impose regulatory mandates. In 
other situations, Congress has considered regulatory costs, 
carefully balancing proposed legislation to achieve maximum 
governmental objectives at minimum private sector costs. But 
Congress has not incorporated this balance in law. Accordingly, 
agencies are provided unlimited power to issue regulations, 
regardless of the pricetag, even when Congress has carefully 
crafted legislation to minimize costs. Because regulations are 
not subject to cost caps or the budget process, there current 
system produces regulation without representation.
    If the budget is to reflect an accurate and complete 
blueprint of the costs and expenses of the Federal Government, 
the budget must also include the costs imposed by government 
regulations and mandates. A full and complete accounting of the 
government's size and scope requires a statement of the costs 
of government regulations and mandates. The costs of 
regulations and mandates should be determined as part of--and 
should be reflected in--the Federal budget process.
    One kind of Federal regulatory budget proposal would 
allocate to congressional authorizing committees fixed amounts 
of ``regulatory authority.'' The allocations would be capped so 
that the total regulatory costs on the economy would be reduced 
from their current level of 9 percent of Gross Domestic Product 
to 5 percent of GDP over 7 years. Such discipline could reduce 
the regulatory burden on the economy, while simultaneously 
permitting important health, safety, and environmental 
objectives to be met.
    A regulatory budget also would make government regulations 
and mandates accountable to the American people through the 
democratic process. Just as the president is required to 
submit, and the Congress is required to vote on, the level of 
taxes and Federal spending, Congress should vote on the level 
of regulations and mandates, which have the same effect as 
taxes and spending. The American people should be told--and 
their elected officials should be held accountable for--the 
level of hidden taxing and spending which regulations 
represent.
    In the 104th Congress, Budget Committee member Lamar S. 
Smith has introduced the Regulatory Accountability Act. This 
legislation provides the first step to establishing a 
regulatory budget. It restores accountability to the rulemaking 
process. It also provides agencies with appropriate flexibility 
to ensure that regulations can be improved to better improve 
public health, safety, and the environment. The Budget 
Committee will work over the coming months to consider this 
proposal, and other ideas to restore public accountability by 
providing a full accounting of the activities of the Federal 
Government.

                  Accomplishments in Regulatory Reform

    Last year, the report on the House Budget Resolution 
provided a list of the most expensive and onerous unfunded 
Federal mandates and Federal regulations that the committee on 
the Budget recommended for repeal or reform. In the year since 
then, the 104th Congress has successful acted on a number of 
these regulations. Below is a summary of the key repeals or 
reforms:

    Repeal of the Crumb Rubber Mandate, Section 1038(b) 
[ISTEA]. The Intermodal Surface Transportation Efficiency Act 
of 1991 included a Federal mandate on States that required 
crumb rubber from scrap tires be used in an annual fixed 
percentage of asphalt. This unprecedented mandate was opposed 
by State transportation departments, county officials, and the 
highway construction industry due to its added cost and mixed 
performance, and because of unanswered questions regarding the 
environmental and health consequences and recyclability. By 
1997, the additional costs due to the crumb rubber mandate 
could have been as high as $1 billion, according to the U.S. 
Department of Transportation. This mandate was repealed in the 
National Highway System Designation Act (H.R. 2274, Public Law 
104-59).

    Repeal of the National Maximum Speed Limit Mandate. Title 
23 of the U.S. Code, section 154, prohibited States from 
establishing speed limits beyond 55 miles an hour on specified 
highways, even if higher speed limits were appropriate and 
safe. Some routes fitting certain population and other criteria 
were allowed to post maximum limits of 65 miles an hour. States 
carrying maximum limits higher than allowed by the mandate were 
subject to termination of Federal highway funding. Because of 
the mandate, States had to divert significant resources that 
could have been used for crime prevention and law enforcement, 
additional motorist services, DUI enforcement, and a variety of 
other public services. This mandate also was repealed under the 
National Highway System Designation Act (H.R. 2274, Public Law 
104-59).

    Repeal of the Motorcycle Helmets Mandate. Under the 
mandate, States that failed to have mandatory front seat belt 
and motorcycle helmet laws in place by October 1, 1993, were 
notified by the Federal Highway Administration that 1.5 percent 
of their highway construction funds would be transferred to 
their highway safety program. This mandate also was repealed 
under H.R. 2274 (Public Law 104-59).

    Restoration of State Authority in Meeting Certain Clean Air 
Act Mandates. Under H.R. 2274 (Public Law 104-59) and H.R. 325 
(Public Law 104-70), States are now allowed to meet ambient air 
quality standards without being required to implement either 
centralized test-only inspection and maintenance programs or 
the Employee Commute Option Program. The Employee Commute 
Option Program required private companies to undertake 
aggressive, affirmative efforts to reduce the number of work-
related vehicle trips.

    Repeal of the California Clean Air Federal Implementation 
Plan [FIP]. Under the mandate, the EPA was required to put 
three areas of California--Los Angeles, Sacramento, and 
Ventura--in compliance with the air quality requirements in the 
1977 Clean Air Act. The 1,700-page draft plan would have 
imposed draconian limits on emissions, ranging from factories 
to automobiles and trucks and even to lawnmowers. The EPA 
estimated that the FIP could have cost Californians between $4 
billion and $6 billion annually. According to the State of 
California, when fully implemented in 2010, the loss would have 
totaled ``at least $8.4 billion in direct costs, $17.2 billion 
in output, and 165,000 jobs.'' The estimate did not include the 
impact on transportation companies in the rest of the State 
that would have been affected by the rule. This mandate was 
repealed under H.R. 889 (Public Law 104-6).

    Withdrawal of the Enhanced Monitoring Rule. The Enhanced 
Monitoring Rule was proposed by EPA to establish uniform 
pollution monitoring, recordkeeping, and reporting requirements 
for ``major sources'' of air pollution. Existing regulations 
have been highly effective in controlling air pollution, and 
EPA's own studies documented the likely massive costs of this 
new regulation. The EPA withdrew the rule.

    Prohibition on Development of OSHA Ergonomics Rule. The 
Occupational Safety and Health Administration was working on a 
rule that would require employers to take a number of actions 
to address repetitive motion injuries. These are injuries due 
to repeated hand, wrist, or other physical motions that cause 
or aggravate musculoskeletal disorders. Employers would have 
been required to write plans to prevent these injuries and to 
redesign work areas, modify work processes as needed. Private 
industry estimated that a similar rule proposed by California 
OSHA would cost $3.1 billion annually in that State alone. 
Other sources estimated the Federal rule would cost $21 
billion. OSHA announced in June 1995 that it would not issue 
any regulation, but that it would continue to study the matter. 
Public Law 104-134, the Omnibus Appropriations Act passed in 
Apri 1996, includes language prohibiting OSHA from developing 
an ergonomics rule.

    Modification of the Teenage Cardboard Bailer Rule. As 
currently implemented, this regulation prevents teenagers from 
certain kinds of safe and gainful employment. The 40-year-old 
regulation prohibits teenagers from loading paper bailers or 
compactors even when the machines are turned off, despite the 
fact that new technology and advanced features make the 
machines safe. The committee recommended that Hazardous 
Occupation Order No. 12 be modified to allow 16- and 17-year-
olds to load bailers that meet current American National Safety 
Institute worker safety standards. The House passed legislation 
making this needed change on October 24, 1995. The Labor-HHS 
appropriations bill for fiscal year 1996 also included language 
to prevent the use of funds to enforce this regulation. The 
committee hopes for a final resolution of this matter during 
this session.

    Repeal of the Boren Amendment Regulating Medicaid Payment 
Levels. The Boren amendment provides that Medicaid payment 
rates for hospitals and nursing facilities must be ``reasonable 
and adequate'' to meet the costs of ``efficiently and 
economically operated'' facilities in providing care that meets 
Federal and State quality and safety standards. Although the 
goal is laudable, it is disruptive to States' management of 
Medicaid for two reasons. First, the language is ambiguous and 
therefore has been the subject of numerous costly lawsuits 
against States by providers seeking higher payment levels. 
Second, the requirements of Boren do not make the payment 
levels dependent on the ability of the State to pay providers 
at this level. For example, it does not take into account the 
number of Medicaid recipients or the fiscal capacity of the 
State. The State is better able to determine the health care 
circumstances and needs prevailing in the State and the payment 
levels that would provide appropriate care. The Balanced Budget 
Act of 1995 included language repealing this amendment. In 
addition, the President Clinton's Medicaid proposal and the 
National Governors Association's proposal would also repeal the 
Boren amendment.

    Withdrawal of Sunglass Labeling Regulation. The FDA 
prepared a proposal that would have required sunglasses to meet 
certain ultraviolet transmittance characteristics in order to 
be exempt from current medical device premarket notification 
requirements. The FDA has withdrawn its proposed regulation.

    Termination of the FDA Reference List. Since April 1992, 
the Food and Drug Administration had been executing what the 
agency called the Medical Device Reference List. The reference 
list was a set of programs that the FDA's Center for Devices 
and Radiological Health used to link current good manufacturing 
practices [GMP] inspections to the agency's normal scientific 
review of premarket notification (510(k)) submissions. From 
April 1992 until the publication of a Public Notice in the 
Federal Register in October 1993, the existence of a reference 
list program had been kept secret from the medical device 
community and the public. Medical device manufacturers were 
placed on the reference list by being in violation of one or 
more of the FDA's good manufacturing practices regulations. 
Whether or not a medical manufacturer was placed on the 
reference list because of an alleged violation was completely 
at the discretion of the agency. The list was solely an 
internal FDA document, and no company was sure when, or even 
if, it had been placed on the list. Placement on this ``black 
list'' meant that the FDA would immediately halt work on any of 
the company's pending 510(k) applications. The FDA announced in 
June 1995 that it would no longer maintain this list, and it 
released the names of companies that previously had been on the 
list.

Recommended Reforms of Mandates on State, Local, and Tribal Governments

    The following recommendations were compiled after a review 
of various sources, including Governors, State legislators, 
local officials, and the Advisory Commission on 
Intergovernmental Relations' report titled ``The Role of 
Federal Mandates in Intergovernmental Relations.'' The specific 
recommendations, offered to the authorizing committees with 
jurisdiction over the mandates and regulations involved, are 
those of the majority members of the House Committee on the 
Budget.

 labor and employment mandates on state, local, and tribal governments

    Restore State and Local Authority over Labor Standards for 
State and Local Government Employees. Fair Labor Standards Act 
[FLSA]. The Federal Fair Labor Standards Act [FLSA] establishes 
minimum standards for wages, overtime compensation, equal pay, 
record keeping, and child labor for nearly every workplace in 
the United States. In 1974 FLSA was extended to the public 
sector and treated State and local governments the same as the 
private sector. FLSA overtime pay provisions have resulted in 
substantial litigation, with may State and local employees 
winning retroactive pay for work deemed by courts as overtime. 
The liability for many States is in the millions of dollars. 
The provisions of the FLSA applying to State and local 
government employees should be repealed. These are sovereign 
government units; their authority to determine labor standards 
for their own employees should not be usurped. The public 
accountability of elected officials and collective bargaining 
powers of employee unions provides adequate protection for 
workers.

    Restore State and Local Authority over Leave Policies for 
State and Local Government Employees. The Family and Medical 
Leave Act of 1993 requires State and local governments to 
provide eligible employees with up to 12 weeks of unpaid leave 
each year to care for a newborn, adopted or foster child. Leave 
also must be granted to care for a seriously ill child, parent, 
or spouse. In addition, employees may use unpaid family leave 
for serious personal illnesses. Medical insurance benefits must 
also be continued during the leave and employees must be 
reinstated into the same or an equivalent position after leave. 
The law forced State and local governments to revise 
longstanding personnel policies and created unfunded costs 
related to extending medical insurance coverage to employees on 
family and medical leave, to temporary hiring of replacement 
workers, and to additional training and personnel counseling 
activities. The provisions of the FMLA applying to State and 
local government employees should be repealed. These are 
sovereign government units; their authority to determine leave 
policies for their own employees should not be usurped. The 
public accountability of elected officials and collective 
bargaining powers of employee unions provides adequate 
protection for workers.

    Restore State and Local Authority over Occupational Safety 
and Health Standards for State and Local Employees. The 
Occupational Safety and Health Act [OSHA] of 1970 establishes 
standards for safe, healthy and productive work environments. 
State government and their political subdivisions are 
specifically excluded from the definition of ``an employer'' 
under the act. In the case of State governments and their 
political subdivisions, OSHA has no requirements unless a State 
volunteers to participate in the Federal program. States that 
volunteer to administer the Federal OSHA program within their 
jurisdictions are required to extend Federal requirements to 
all public employees in the State; 23 States have assumed 
responsibility for operating the Federal OSHA program. Two 
additional States have federally approved OSHA plans only for 
State and local government employees. Even in the remaining 
States, however, there many be an impact, or a perception of an 
impact, because some OHSA requirements are replicated in State 
laws or are perceived as mandatory even though they are not. 
Numerous complaints expressed about OSHA policies in both 
participating and nonparticipating States attest to the 
widespread misunderstanding about the law's coverage and 
substantial compliance costs. All States, not just the 
nonparticipating States, should be exempt from OSHA with regard 
to their own employees. This would allow all States to set 
there own health and safety standards, taking into 
consideration their priorities and budgetary constraints.

    Provide Local Flexibility in Overtime Pay for the Off-Duty 
Home Care of Canine and Rescue Unit Dogs. Under the Fair Labor 
Standards Act, local governments must treat time spent by 
officers in the care of canine and rescue unit dogs as 
compensable time and as part of their regular work hours. In 
the majority of cases the local governments already pick up the 
cost of the dogs' veterinary care and feeding and the upkeep of 
the canine units. The Federal requirement that officers be paid 
overtime for keeping the dogs in their homes has forced the 
closure of canine unit in many local communities. Therefore, 
local governments should have flexibility in determining 
overtime pay for these officers. Local governments are fully 
capable of reaching fair compensation agreements with the 
officers while keeping the canine units on the job.

    Restore State and Local Authority in Drug and Alcohol 
Testing of Government-Employed Commercial Drivers Drug and 
Alcohol Testing of Commercial Drivers. The Omnibus 
Transportation Employee Testing Act of 1991 (Public Law 102-
142, Title V) directs the Department of Transportation [DOT] to 
issue regulations establishing a program which ``requires motor 
carriers to conduct reemployment, reasonable suspicion, random, 
and post-accident testing of the operators of commercial motor 
vehicles for use * * * of alcohol or a controlled substance.'' 
The motor carrier requirements cover a substantial number of 
State and local government employees who have commercial 
drivers' licenses, and require them to undergo random drug and 
alcohol testing by certain deadlines. The law is inconsistent 
in that it includes some employer such as public works drivers, 
but excludes law enforcement and emergency workers from testing 
requirements. Strict drug and alcohol testing requirements for 
small rural communities and transportation systems with few 
employees create situations where cost of compliance are 
disproportionately high relative to potential findings. State 
and local governments are concerned about drug and alcohol 
problems and will take their own measures to insure that there 
drivers are not a threat to public safety. Therefore, the 
provisions of Public Law 102-142 making some State and local 
employees subject to Federal drug and alcohol testing 
requirements for commercial drivers should be repealed on the 
understanding that State and local governments will pursue 
appropriate testing on their own authority.

    Repeal the Davis-Bacon Act. Davis Bacon only applies to 
Federal Government contracts over $2,000 for construction, 
alteration, and/or repair work. The law requires such contracts 
to specify the minimum wages to be paid to various classes of 
laborers and mechanics employed under the contract. The minimum 
wages must be based on the wages determined by the Secretary of 
labor to be prevailing for the corresponding classes of 
laborers and mechanics employed on similar contacts in the 
city, town and village, or other civil subdivision of the State 
in which the work is to be performed. The Davis-Bacon 
regulation represents a hidden tax on construction jobs, 
inflates the costs of Federal construction, and destroys 
employment opportunities for minorities, small companies, and 
less skilled workers. The Act also has a serious impact on 
State, local, and tribal governments. Approximately 60 related 
Federal laws make compliance with Davis-Bacon provisions a 
condition-of-aid for grants to State and local governments 
(e.g., construction programs related to low-income housing, 
highways and waste water treatment facilities). Some of the 
Davis-Bacon related laws contain special exceptions concerning 
the way in which a grantee must comply with Davis-Bacon 
requirements, but most of them apply the law without 
modification. Compliance with the provisions is generally 
required even if the dollar amount of the Federal grant is a 
minimal share of the total project costs. State, local, and 
tribal governments should be able to manage their construction 
projects cost without Davis-Bacon preconditioned when the major 
share of the project is being funded by the State or local 
government. Besides potentially increasing cost, Davis-Bacon 
requirements impose extensive reporting and record keeping that 
may be especially burdensome for small projects, and may make 
it difficult for small local; businesses to compete.

    Repeal the Service Contracts Act. The McNamara Service 
Contract Act of 1965 is a tax on jobs similar to Davis-Bacon, 
except that it applies to service, rather than construction, 
contracts. The Act requires covered contractors and their 
successors to provide inflated wages and benefits at least 
equal to a locality's prevailing standards of those in a 
collective bargaining agreement of a previous contractor. As 
with Davis-Bacon, the inflated labor costs resulting from the 
Service Contract Act tends to deny employment opportunities for 
small companies, minorities, and less skilled workers.

     environmental mandates on state, local, and tribal governments

    Restore State and Local Authority in Developing Control 
Methods and Timetables for Implementing Federal Clean Water Act 
Standards. The Clean Water Act requires States to designate the 
uses of water, to develop water quality criteria to protect 
those uses, to monitor the condition of water, and to report on 
water quality every 2 years. States may administer a permit 
program for industrial and municipal pollution discharges and 
develop programs for the control of pollution from diffuse or 
nonpoint sources. Local governments are required, either 
directly by the Federal Government or indirectly through State 
implementation of Federal laws, to treat sewage to national 
standards and to control discharges from combined sewers and 
storm water drains. In the Federal Water Pollution Control Act 
Amendments of 1972, Congress provided for a comprehensive 
national program to protect water quality. Key provisions 
included national minimum standards for control of pollutants 
from industrial and municipal sources, additional controls in 
permits as needed to meet State standards, and significant 
grant assistance to support construction of municipal sewage 
treatment facilities. In effect, State and local governments 
ceded responsibility for water pollution controls to the 
Federal Government in return for substantial Federal financial 
aid. In 1987, the Federal Government changed the arrangement by 
making a transition from direct grants to capitalization of 
State loan funds. Loan funds reduce total costs for some 
projects, but they still require local government to pay 
virtually the entire costs of future pollution control projects 
since loans must be repaid to States, while grants were not 
repaid. In addition, the 1987 amendments required 
municipalities to remove harmful amounts of toxins from their 
sewage and to establish storm water management programs. 
Consequently, a national program originally supported and 
encouraged by State and local governments is no longer a 
balanced partnership to clean up the Nation's waterways. 
Federal requirements, especially those dealing with storm water 
drainage, have become increasingly stringent and expensive to 
implement. At the same time, the Federal funding to aid in the 
cleanup has virtually disappeared. Fully restoring the 
successful partnership requires a relaxation of inflexible 
standards and deadlines on State and local governments. State 
and local governments should be able to use the least costly 
alternatives and to work within their fiscal constraints. State 
and local governments traditionally have been concerned about 
reducing pollution, and they should be given authority to work 
constructively with Federal officials to design realistic 
programs that can be completed within technical and budgetary 
constraints.

    Enact Legislation Toward a Long-Term Goal of Returning to 
States the Full Responsibility for Safe Drinking Water. The 
Federal Safe Drinking Water Act regulates drinking water 
standards for the 58,530 waterworks serving 25 or more persons 
year-round, and for the nearly 140,000 additional public water 
systems that serve 25 or more persons on a less regular basis 
(schools, hospitals, restaurants). It establishes maximum 
levels for contaminants known or anticipated to occur in public 
water systems, establishes wellhead protection programs, 
certifies and identifies appropriate analytical and treatment 
techniques, and establishes public notification procedures. It 
requires drinking water suppliers to assume a wide range of 
responsibilities, including monitoring of the water supply. The 
safety of drinking water is a public health issue. Prior to 
1974, States had responsibility for the safety of drinking 
water, but they generally relied on standards set by the Public 
Health Service. Because drinking water endangers not only 
residents of a local community and State but also those 
traveling interstate, the regulation of drinking water may be 
justified as a national concern. It should be recognized, 
however, that other vital public health concerns, such as 
restaurant inspections, are the responsibility of State and 
local governments. Over the long term, this State and local 
authority should apply, once again, to drinking water as well. 
State and local concerns over the Safe Drinking Water Act hinge 
on what constitutes safe drinking water and how to achieve it 
in the most cost-effective way. These governments do not object 
to assuming the costs of providing safe drinking water, but 
some do object to incurring costs that in their opinion do not 
improve water quality. The existing law overreached in the 
standards and compliance requirements it imposed on local water 
systems. Amendments recently approved by the Senate will repeal 
some of the most onerous provisions, including mandatory 
additional tests for contaminants that are not a threat in 
local areas, and eased provisions for treatment of surface 
water supplies.

    Restore States' Role in Developing Measures for Meeting 
Federal Clean Air Standards. The Clean Air Act of 1977 requires 
States to submit for Federal approval plans for meeting air 
quality standards established by the Federal Government. The 
government will prepare a plan for any State that fails to 
comply. The Act spells out how to measure different types of 
pollution, the standards that must be met for each type of 
pollution, the specific compliance measures that may be taken, 
and the deadlines for those actions. Some Federal financial 
assistance for planning and implementation is authorized in the 
law, but each State must provide assurances that ``the state of 
general purpose local governments will have adequate personnel, 
funding, and authority under State and, as appropriate, local 
law to carry out such implementation plan.'' The initial demand 
for Federal help in controlling air pollution came from cities 
that were unable to act effectively on an individual basis. 
Because the Federal Government recognized the need to act on 
regional bases, and in recognition of the Federal system as 
viewed at that time, the States were encouraged by the Federal 
Government to assume responsibility for controlling air 
pollution and were given Federal grants to assist in 
implementing such controls. By 1970, only 21 States had 
submitted implementation plans, and the Federal Government 
decided it was necessary to set standards (including vehicle 
emissions) and to enforce State implementation. In 1990, 
amendments to the law targeted smaller pollution sources, 
including facilities owned by local governments. Governments in 
areas with moderate carbon monoxide pollution were required to 
adopt vehicle inspection and maintenance programs; areas with 
serious carbon monoxide pollution must use cleaner oxygenated 
fuels. Areas with moderate ozone pollution were required to set 
up inspection and maintenance programs and to require use of 
gasoline-pump devices to capture vapors. Failure to implement 
these programs can result in the loss of Federal highway funds. 
As the requirements have become increasingly detailed and 
specific, States have become implementers of Federal laws, and 
have increasingly lost discretion over how to implement them. 
As a result, the requirements often do not reflect conditions 
in a particular State or the preferences of the State's 
citizens. At the same time, States have received less Federal 
financial assistance for the administration of these laws. 
[Please Note: This recommendation assumes that any legal 
actions concerning Clear Air Act violations that are currently 
under way will not be affected.]

    Restore Local-State-Federal Partnership in Addressing 
Endangered Species. The Endangered Species Act of 1973 requires 
every Federal agency to ensure that any action it authorizes, 
funds, or carries out is not likely to jeopardize the continued 
existence of listed threatened and endangered species or the 
destruction or adverse modification of critical habitat. Under 
the law, State, local and tribal governments would also risk 
citizen lawsuits if the Fish and Wildlife Service (or the 
National Marine Fisheries Service) finds that the issuance of a 
Federal permit, license, or grant would lead to jeopardy of the 
listed species. There is an exemption process allowing 
consideration of economic factors, but these provisions are 
rarely used. State and local governments have an inadequate 
share of the decisionmaking authority in the management and 
planning decisions affecting threatened and endangered species. 
The listing process is rigid and limits State and local 
flexibility to apply the Act's provisions in their 
jurisdictions to meet local conditions. There is concern that 
valuable economic development activities within their 
boundaries, both public and private, are being impaired by 
strict Federal regulation. State, local and tribal governments 
should be full partners with the Federal Government in the 
preservation of threatened and endangered species. These 
governments should have shared authority for species 
protection, as well as flexibility to implement conservation 
plans for specific species within their boundaries. In 
addition, exemptions to ESA should be applied more extensively 
to minimize social and economic impact on State, local and 
tribal governments of recovery planning and listing procedures. 
Broader participation by State, local, and tribal governments 
will improve the data collection process and will allow 
biological science, economic constraints, and available 
management resources to be taken in account on a regional 
basis.

       education mandates on state, local, and tribal governments

    Of all government activities, education is the one that 
most clearly should fall under the jurisdiction of State and 
local governments and, above all, parents. Hence, the Committee 
on the Budget makes the following recommendations:

    Allow Local Communities to Educate Their Children by 
Eliminating the Goals 2000 Mandates. Education reform will be 
achieved by encouraging innovation and rewarding results of 
those educators at the local level. Goals 2000 increases 
funding for bureaucracy and imposes new regulations on States 
and localities. Public Law 104-134, the Omnibus Appropriations 
Act passed in April 1996, removes the requirement that the 
Secretary of Education must approve a plan before a State may 
continue to receive Goals 2000 funding, if the plan is approved 
by the Governor and State education director. Meanwhile, many 
States have already chosen to reject the Federal Goals 2000 
program because of its intrusiveness in local education.

    Eliminate the Bilingual Education Mandates and Allow Local 
Communities to Determine Haw to Best Educate Their Children. 
The bilingual instructional services program requires that the 
Secretary of Education award at least 75 percent of the funds 
provided to bilingual education programs, where students are 
taught both English and their native language. Numerous studies 
have shown that heavy reliance on the pupil's native language 
can delay English proficiency. Eliminating the mandate for 
bilingual education would free local school districts to offer 
the most effective programs for their students.

    Promote Swifter and Less Costly Resolution of Disputes 
Under the Individuals with Disabilities Education Act. The 
Individuals with Disabilities Education Act [IDEA] as amended, 
requires local school systems to provide a free appropriate 
education for children with disabilities. The law provides that 
Federal aid to States for elementary and high school education 
will be available only after a State has a Federally approved 
plan for educating children with disabilities. In addition, 
IDEA requires participating States to establish specific 
administrative procedures by which parents or legal guardians 
may challenge the identification, evaluation, or educational 
placement of the children. Requirements of the law are 
conditions of Federal assistance or duties arising from 
participation in this voluntary program. IDEA has provided 
millions of students with disabilities access to a free and 
appropriate education, but the law imposes significant cost and 
administrative burdens on State and local governments. The law 
also limits the flexibility of States and local governments to 
combine IDEA funds with other funding streams to meet the 
unique need of their children. The resolution of disputes under 
the Act also has become overly litigious and has added to 
implementation cost. Currently, local agency decisions may be 
challenged in either State or Federal court after the 
exhaustion of administrative appeals, and, in some cases, 
parents bringing actions on behalf of their children may be 
entitled to reimbursement for their costs, including attorney 
and court fees. The publication titled ``Federal Court Rulings 
Involving State, Local and Tribal Government: Calendar Years 
1994,'' by the Advisory Commission on Intergovernmental 
Relations, emphasizes the litigious nature of this law. The 
appropriate reform would relieve States from prescriptive and 
costly administrative mandates. It also would require 
alternative dispute resolutions practices and that any court 
challenge based on the Federal law should be brought by State 
agencies, not by individuals. The 104th Congress is currently 
considering amendments to the IDEA that include some of these 
reforms.

    Reform the Individuals with Disabilities Education Act 
[IDEA] Mandates. Inflexibility of Federal mandates dealing with 
behavior disorder students, often purposefully violent, have 
tied the hands of school officials trying to create a safe 
structured atmosphere for the education of all students. Steps 
need to be taken to reform the Individuals with Disabilities 
Education Act [IDEA] and the ``Stay-Put'' provision which 
impairs and often stops local education officials from 
disciplining students that endanger the safety other students 
and the faculty. Similar mandates on the local education 
officials regarding the education of attention deficit disorder 
students have impaired local educators from maintaining the 
attention of other students while the attention disordered 
students have free rain to purposefully disrupt the educational 
atmosphere necessary for other students to learn. Currently, 
local challenges to dangerous and disruptive behavior at the 
local level have failed in may cases because of the costs and 
fear of a lawsuits based on the Federal law. Provisions should 
be made for voluntary mediation for parents and school 
officials with legal dispute regarding discipline of such 
students. Behaviorally disabled students must also not be 
exempted from the same punishments as other disabled students 
with disciplinary problems in such areas as mandatory 
suspensions for bringing drugs, weapons and firearms to school 
or assaulting students and teachers. This current variation 
sends the wrong message. Parents, States, and local school 
officials should adjust the disciplinary terms so that they are 
equally applied to all students. The 104th Congress is 
currently considering amendments to the IDEA that include some 
of these reforms.

    Restore Original Congressional Intent Regarding Athletic 
Opportunities Under Title IX. A policy interpretation 
clarifying regulation implementing Title IX of the Education 
Amendments of 1972 has resulted in the elimination of some 
athletic opportunity, primarily as a result of heavy reliance 
on the proportionality rule. The rule is supposed to be one 
option under a three-pronged test of accommodation of interests 
and abilities, but has been given undue deference. 
Proportionality has caused many colleges and universities to 
respond with the elimination of entire athletic teams. As the 
original intent of Congress was to eliminate discrimination, 
not athletic opportunity, Congress should move to clarify that 
implementation of Title IX should not allow for the elimination 
of athletic opportunities for anyone.

    transportation mandates on state, local, and tribal governments

    Provide Flexibility and Relief from Federal Mass Transit 
Mandates on Local Public Agencies. The Federal Government's 
involvement in transit has led to unwise State and local 
decisions, while precluding the adoption of cost effective 
operating methods. This is largely the result of expensive 
Federal mandates. Federal transit labor protections require 
transit agencies to pay up to 6 years of severance payments for 
some laid-off transit employees.

    Repeal Requirements That State and Local Governments 
Convert to Metric on a Federal Timetable as a Condition of 
Receiving Federal Aid. The Omnibus Trade and Competitiveness 
Act of 1988 requires that each Federal agency use the metric 
system of measurement in its procurement, grants, and other 
business-related activities, except to the extent that such use 
is impractical. The act permits the continued use of 
traditional weights and measure in nonbusiness activities. 
Based on this law, the Department of Transportation [DOT] had 
required State and local governments to covert to metric for 
local construction plans and specification by October 1, 1996. 
Public Law 104-59, the National Highway Designation Act of 
1995, extends this deadline to October 1, 2000.
    The Unfunded Mandates Reform Act of 1995 specifically 
requires the Advisory Commission on Intergovernmental Relations 
to consider requirements that State, local, and tribal 
governments use metric system measurements. The principal 
concern, expressed primarily by local governments, is the 
requirement to use metric measurements in the design and 
construction of Federally aided projects. Although most local 
governments may be technically able to prepare plans and 
specification in metric by the deadline, they cite several 
problems, including substantial costs. Another problem is that 
local contractors and suppliers are not used to working with 
metric measurements. As a result, the potential for mistakes in 
the bidding and construction process is significantly 
increased. In addition, metric measures will create problems 
for right-of-way acquisitions with property owners, surveyors, 
and local deed registries. States have made considerable 
progress in the transition to metric, but more than 2,200 
waivers have been necessary to relieve hardship situations. 
Despite the waivers, the deadline for conversions will create 
substantial problems for many local governments without 
corresponding benefits. Rather than require all States to 
implement metric requirements on the same timetable, a better 
approach is to encourage States that are well along on their 
conversions to continue assisting their local governments with 
the process. Successful implementation in these States will 
provide support for others to complete the conversions 
voluntarily.

    Cancel Implementation of Mandate on Minimum Reflectivity 
for Traffic Signs and Pavement Markings. The FHWA is currently 
developing minimum standards for the retroreflectivity of 
pavement markings (striping) and signs, which all States are to 
follow. The States are capable of making their own judgments 
about the visibility of their signs and road markings. A 
Federal mandate is not required.

    Restore State Authority Over Outdoor Advertising. ISTEA 
prohibits erection of new signs on designated scenic highways. 
If States fail to prohibit such signs, 10 percent of major 
highway apportionments would be withheld.

    Repeal Highway Program Administrative Costs Mandate. Title 
23 of the U.S. Code requires State transportation departments 
to maintain administrative staff beyond the minimum level 
necessary to deliver highway projects.

    Additional Transportation Mandates. The Intermodal Surface 
Transportation Efficiency Act of 1991 [ISTEA] amendments to the 
Highway Transit Act contain more than 100 mandates on State and 
local governments. In addition, Federal law contains 
approximately 50 mandates on State and local governments. One 
requires the payment of up to 6 years severance pay to some 
transit employees laid off. Other mandates discourage more 
efficient methods of operation. All these mandates should be 
reviewed for possible repeal.

         Additional Recommended Regulatory and Mandate Reforms

    Repeal the Motor Voter Act Mandate. This unfunded mandate 
on States increases the likelihood of electoral fraud and is 
unnecessary for effective civic participation. Many States have 
complained about this program and its costs. It is a well-known 
mandate that should be eliminated.

    Restore State Authority in Dealing with Problem Drivers. 
The Problem Drivers Pointer System [PDPS] creates a national 
registry for records on all problem drivers. States must check 
this system before issuing licenses. Under a threat of losing 
10 percent of their Federal highway funds, States were required 
to complete a link to the system by April 30, 1995. The 
National Highway Traffic Safety Administration has granted 
extensions to this deadline and has yet to apply any sanctions. 
The Federal Government does cover implementation costs. But the 
system may be unnecessary as long as States require drivers to 
be insured, which clearly would require insurers to do 
background checks. If a national system is warranted, it could 
be handled by a private-sector agency.

    Repeal Mandated Membership in the International Fuel Tax 
Agreement Mandate. States are required to become members of the 
International Fuel Tax Agreement by no later than October 1996. 
Failure to comply could cost them some of their Federal highway 
funds. States should not be required, at their own cost, to 
participate in such international agreements.

    Restore State and Local Responsibility in Implementing the 
Americans with Disabilities Act of 1990. The Americans with 
Disabilities Act prohibits discrimination against individuals 
with disabilities in employment, public services, and public 
accommodations. Any State or local government policies found to 
be inconsistent with ADA provisions are to be modified as soon 
as feasible. Each government program is to be examined for 
physical barriers to access and for remedial measures that need 
to be taken, but States and localities do not have to make 
facilities or programs accessible if it would constitute a 
``fundamental alteration'' or an ``undue burden.'' Structural 
changes are not required if there are other ways of providing 
access. The ADA takes important and warranted steps toward 
removing barriers to persons with disabilities. Yet despite the 
apparent flexibility allowed for its application, it has 
created implementation problems for State and local governments 
because of expensive retrofitting and service delivery 
requirements, confusing and ambiguous statutory language, and 
insufficient technical assistance provided by the Federal 
Government. With tight budgets and limited time to correct 
structural obstacles to improve public accommodations, it has 
been difficult for many governments to implement the extensive 
changes required. Structural changes to existing buildings to 
meet ``program accessibility'' requirements were to be made by 
January 26, 1995, a deadline not met by many State and local 
governments. Also, the use of terms ``reasonable 
accommodation,'' ``undue hardship,'' ``readily achievable,'' 
and countless other broad expressions in the law have subjected 
State and local governments to numerous lawsuits over legal 
interpretations of ADA. The penalties for noncompliance are 
severe, and legal costs can be substantial. Therefore, 
deadlines and requirements under the ADA should be modified to 
allow State and local governments to meet its goals in a manner 
that recognizes technical and budget constraints without 
abridging the national commitment to assuring access and 
opportunity for individuals with disabilities.

    Repeal the Public Utility Regulatory Policies Act [PURPA]. 
This act mandates that public utilities purchase power from 
cogeneration and small power (renewable energy) facilities at a 
price set by the States which may not exceed the utility's cost 
of producing or obtaining the power from alternative sources. 
This mandate, enacted during the government-created energy 
scare of the late 1970's, is based on the notion that 
insufficient energy resources caused the energy shortage. Today 
it forces companies into inefficient and ``politically 
correct'' resources.


                               appendix 3



              Who's Really Working to Balance the Budget?

                              ----------                              


            Congress Versus the Administration--a Chronology

      

------------------------------------------------------------------------
                     104th Congress            Clinton Administration   
------------------------------------------------------------------------
  .........                                                             
(1)JANUARY                                                              
 1995                                                                   
            ------------------------------------------------------------
19-........    House Speaker Newt Gingrich                              
              commits Congress to writing                               
              a comprehensive plan to                                   
              achieve a balanced budget by                              
              2002.                                                     
            ------------------------------------------------------------
26-........    House passes Balanced          Administration officials  
              Budget Amendment (H.J. Res.    publicly oppose balanced   
              1) by a vote of 300-132.       budget amendment.          
========================================================================
  .........                                                             
(1)FEBRUARY                                                             
 1995                                                                   
            ------------------------------------------------------------
1-.........    Congress begins work on                                  
              Contract With America tax                                 
              cuts and 7-year balanced                                  
              budget plan.                                              
            ------------------------------------------------------------
6-.........    House passes Line-Item Veto    President's Budget--      
              bill (H.R. 2) by a vote of     President submits 5-year   
              294-134.                       budget request that        
                                             maintains deficits of $200 
                                             billion a year by his own  
                                             administration's estimates.
                                             CBO estimates it would have
                                             deficit of $276 billion in 
                                             2000. Administration       
                                             officials insist that      
                                             balancing the budget is not
                                             necessary.                 
            ------------------------------------------------------------
22-........    House passes DOD Emergency                               
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              262-165.                                                  
========================================================================
                                                                        
                                                                        
  .........                                                             
(1)MARCH                                                                
 1995                                                                   
            ------------------------------------------------------------
16-........    Senate passes DOD Emergency                              
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              97-3.                                                     
                                                                        
            ------------------------------------------------------------
23-........    Senate passes Line-Item                                  
              Veto bill (S. 4) by a vote                                
              of 69-29.                                                 
            ------------------------------------------------------------
24-........    House passes Welfare Reform                              
              (H.R. 4) by a vote of 234-                                
              199 to restore the American                               
              family, reduce illegitimacy,                              
              control welfare spending,                                 
              and reduce welfare                                        
              dependence.                                               
========================================================================
  .........                                                             
(1)APRIL                                                                
 1995                                                                   
            ------------------------------------------------------------
5-.........    House passes Contract With                               
              America tax cuts, fully                                   
              offset with spending cuts                                 
              (H.R. 1215) by a vote of 246-                             
              188.                                                      
            ------------------------------------------------------------
6-.........    House passes conference                                  
              report on DOD Emergency                                   
              Supplemental/Rescissions                                  
              bill (H.R. 889) by a vote of                              
              343-80.                                                   
                                                                        
                                                                        
            ------------------------------------------------------------
10-........                                   President signs into law  
                                             DOD Emergency Supplemental/
                                             Rescissions bill (H.R. 889)
                                             (Public Law 104-6).        
========================================================================
                                                                        
  .........                                                             
(1)MAY 1995                                                             
            ------------------------------------------------------------
18-........    House passes conference                                  
              report on first Rescissions/                              
              Disaster Relief Emergency                                 
              Supplemental (H.R. 1158) by                               
              235-189.                                                  
                                                                        
            ------------------------------------------------------------
19-........    Senate defeats the                                       
              President's budget request                                
              by a vote of 0-99.                                        
            ------------------------------------------------------------
25-........    By a vote of 57-42, Senate                               
              passes budget resolution (H.                              
              Con. Res. 67), which lays                                 
              out a detailed plan for                                   
              balancing the budget by the                               
              year 2002 and provides tax                                
              relief to American families.                              
                                                                        
========================================================================
  .........                                                             
(1)JUNE                                                                 
 1995                                                                   
            ------------------------------------------------------------
7-.........                                   President vetoes first    
                                             Rescissions/Disaster Relief
                                             Emergency Supplemental     
                                             (H.R. 1158).               
            ------------------------------------------------------------
13-........                                   ``Plan'' Two--President   
                                             submits a 10-year budget   
                                             ``outline'' that           
                                             administration claims will 
                                             balance budget by 2005. CBO
                                             estimates more than $200   
                                             billion in deficits in each
                                             year of the ``plan.''      
------------------------------------------------------------------------
21-........    House passes Military                                    
              Construction appropriations                               
              bill (H.R. 1817) by a vote                                
              of 319-105.                                               
            ------------------------------------------------------------
22-........    House passes first                                       
              Legislative Branch                                        
              appropriations bill (H.R.                                 
              1854) by a vote of 337-87.                                
            ------------------------------------------------------------
29-........    House passes second                                      
              Rescissions/ Disaster Relief                              
              Emergency Supplemental (H.R.                              
              1944) by a vote of 276-151.                               
                                                                        
                                                                        
========================================================================
  .........                                                             
(1)JULY                                                                 
 1995                                                                   
            ------------------------------------------------------------
11-........    House passes Foreign                                     
              Assistance appropriations                                 
              bill (H.R. 1868) by a vote                                
              of 333-89.                                                
            ------------------------------------------------------------
12-........    House passes Energy and                                  
              Water appropriations bill                                 
              (H.R. 1905) by a vote of 400-                             
              27.                                                       
            ------------------------------------------------------------
18-........    House passes Interior                                    
              appropriations bill (H.R.                                 
              1977) by a vote of 244-181.                               
            ------------------------------------------------------------
19-........    House passes Treasury-                                   
              Postal appropriations bill                                
              (H.R. 2020) by a vote of 216-                             
              211.                                                      
------------------------------------------------------------------------
20-........    Senate passes first                                      
              Legislative Branch                                        
              appropriations bill (H.R.                                 
              1854) by voice vote.                                      
            ------------------------------------------------------------
21-........    Senate passes and clears                                 
              the second Rescissions/                                   
              Disaster Relief Emergency                                 
              Supplemental (H.R. 1944) by                               
              a vote of 90-7.                                           
                                                                        
                                                                        
            ------------------------------------------------------------
25-........    House passes Transportation                              
              appropriations bill (H.R.                                 
              2002) by a vote of 361-61.                                
            ------------------------------------------------------------
26-........    House passes Commerce-                                   
              Justice-State appropriations                              
              bill (H.R. 2076) by a vote                                
              of 272-151.                                               
            ------------------------------------------------------------
27-........  .............................    President signs into law  
                                             the second Rescissions/    
                                             Disaster Relief Emergency  
                                             Supplemental (H.R. 1944)   
                                             (Public Law 104-19).       
            ------------------------------------------------------------
31-........    House passes VA-HUD                                      
              appropriations bill (H.R.                                 
              2099) by a vote of 228-193.                               
========================================================================
  .........                                                             
(1)AUGUST                                                               
 1995                                                                   
            ------------------------------------------------------------
1-.........    Senate passes Energy and                                 
              Water appropriations bill                                 
              (H.R. 1905) by voice vote.                                
            ------------------------------------------------------------
4-.........    House passes Labor-HHS                                   
              appropriations bill (H.R.                                 
              2127) by a vote of 219-208.                               
            ------------------------------------------------------------
5-.........    Senate passes Treasury-                                  
              Postal appropriations bill                                
              (H.R. 2020) by voice vote.                                
------------------------------------------------------------------------
9-.........    Senate passes Interior                                   
              appropriations bill (H.R.                                 
              1977) by a vote of 92-6.                                  
            ------------------------------------------------------------
10-........    Senate passes                                            
              Transportation                                            
              appropriations bill (H.R.                                 
              2002) by a vote of 98-1.                                  
========================================================================
  .........                                                             
(1)SEPTEMBE                                                             
 R 1995                                                                 
            ------------------------------------------------------------
6-.........    House passes conference                                  
              report on first Legislative                               
              Branch appropriations bill                                
              (H.R. 1854) by a vote of 305-                             
              101.                                                      
            ------------------------------------------------------------
7-.........    House passes Defense                                     
              appropriations bill (H.R.                                 
              2126) by a vote of 294-125.                               
            ------------------------------------------------------------
8-.........    Senate passes Defense                                    
              appropriations bill (H.R.                                 
              2126) by voice vote.                                      
            ------------------------------------------------------------
19-........    Senate passes Welfare                                    
              Reform (H.R. 4) by a vote of                              
              87-12.                                                    
            ------------------------------------------------------------
20-........    Senate passes Agriculture                                
              appropriations bill (H.R.                                 
              1976) by a vote of 95-3.                                  
                                                                        
            ------------------------------------------------------------
21-........    Senate passes Foreign                                    
              Assistance appropriations                                 
              bill (H.R. 1868) by 91-9.                                 
            ------------------------------------------------------------
22-........    Senate passes conference                                 
              report on Military                                        
              Construction appropriations                               
              bill (H.R. 1817) by a vote                                
              of 86-14. Cleared for                                     
              President.                                                
                                                                        
------------------------------------------------------------------------
27-........    Senate passes VA-HUD                                     
              appropriations bill (H.R.                                 
              2099) by a vote of 55-45.                                 
            ------------------------------------------------------------
28-........    Senate attempts to end                                   
              Democrat filibuster of the                                
              Labor-HHS appropriations                                  
              bill (H.R. 2127), but fails                               
              by a vote of 54-46.                                       
                                                                        
            ------------------------------------------------------------
29-........    Senate passes Commerce-                                  
              Justice-State appropriations                              
              bill (H.R. 2076) by voice                                 
              vote.                                                     
                                                                        
            ------------------------------------------------------------
30-........  .............................    President signs into law  
                                             the first continuing       
                                             resolution (H.J. Res. 108) 
                                             (Public Law 104-31).       
========================================================================
  .........                                                             
(1)OCTOBER                                                              
 1995                                                                   
            ------------------------------------------------------------
3-.........  .............................    President vetoes the first
                                             Legislative Branch         
                                             appropriations bill (H.R.  
                                             1854), signs the Military  
                                             Construction appropriations
                                             bill (H.R. 1817) (Public   
                                             Law 104-32).               
            ------------------------------------------------------------
12-........    House passes conference                                  
              report on Agriculture                                     
              appropriations bill (H.R.                                 
              1976) by a vote of 288-132.                               
                                                                        
            ------------------------------------------------------------
19-........    By a vote of 231-201, House                              
              passes comprehensive                                      
              legislation (H.R. 2425) to                                
              preserve and protect                                      
              Medicare.                                                 
------------------------------------------------------------------------
21-........  .............................    President signs into law  
                                             the Agriculture            
                                             appropriations bill (H.R.  
                                             1976) (Public Law 104-37). 
            ------------------------------------------------------------
25-........    House passes the conference                              
              report on Transportation                                  
              appropriations bill (H.R.                                 
              2002) by a vote of 393-29.                                
            ------------------------------------------------------------
26-........    By a vote of 227-203, House                              
              passes Balanced Budget Act                                
              (H.R. 2491), providing tax                                
              cuts of $245 billion over 7                               
              years and achieving a                                     
              balanced budget by 2002.                                  
            ------------------------------------------------------------
28-........    By 52-47, Senate passes                                  
              Balanced Budget Act (H.R.                                 
              2491)                                                     
            ------------------------------------------------------------
31-........    House passes conference                                  
              report on Energy and Water                                
              appropriations bill (H.R.                                 
              1905) by a vote of 402-24.                                
                                                                        
                                                                        
                                                                        
========================================================================
  .........                                                             
(1)NOVEMBER                                                             
 1995                                                                   
            ------------------------------------------------------------
2-.........    Senate passes and clears                                 
              second Legislative Branch                                 
              appropriations bill (H.R.                                 
              2492) by voice vote.                                      
                                                                        
                                                                        
------------------------------------------------------------------------
8-.........    House passes second                                      
              continuing resolution (H.J.                               
              Res. 115) by a vote of 230-                               
              197.                                                      
            ------------------------------------------------------------
9-.........    Senate passes second                                     
              continuing resolution (H.J.                               
              Res. 115) by a vote of 50-                                
              46.                                                       
                                                                        
                                                                        
            ------------------------------------------------------------
10-........    House agrees to the Senate                               
              amendment to the temporary                                
              increase in the public debt                               
              bill (H.R. 2586) by a vote                                
              of 219-185. Cleared for                                   
              President.                                                
            ------------------------------------------------------------
13-........  .............................    President vetoes second   
                                             continuing resolution (H.J.
                                             Res. 115).                 
                                                                        
                                                                        
            ------------------------------------------------------------
15-........    House passes conference                                  
              report on Treasury-Postal                                 
              appropriations bill (H.R.                                 
              2020) by a vote of 374-52.                                
                                              Administration raids      
                                                                        
------------------------------------------------------------------------
16-........    House passes conference                                  
              report on Defense                                         
              appropriations bill (H.R.                                 
              2126) by a vote of 270-158.                               
                                                                        
            ------------------------------------------------------------
17-........    By a vote of 237-189, House                              
              passes conference report on                               
              Balanced Budget Act (H.R.                                 
              2491) which provides tax                                  
              cuts of $245 billion over 7                               
              years and makes policy                                    
              changes to achieve a                                      
              balanced budget by 2002.                                  
                                                                        
            ------------------------------------------------------------
18-........    House passes continuing                                  
              resolution (H.J. Res. 123)                                
              for Medicare and Social                                   
              Security administrative                                   
              funds, and VA benefits by a                               
              vote of 416-0.                                            
            ------------------------------------------------------------
19-........    Senate passes and clears                                 
              continuing resolution for                                 
              Medicare, Social Security,                                
              and VA (H.J. Res. 123) by                                 
              unanimous consent.                                        
                                              President signs into law  
                                                                        
                                                                        
------------------------------------------------------------------------
20-........    House passes further                                     
              continuing resolution (H.J.                               
              Res. 122) incorporating                                   
              language--agreed to by the                                
              President--saying Congress                                
              and the administration                                    
              ``shall enact'' legislation                               
              balancing the budget by not                               
              later than 2002 ``as                                      
              estimated by the                                          
              Congressional Budget                                      
              Office,'' by 421-4.                                       
                                              President signs continuing
                                                                        
            ------------------------------------------------------------
28-........                                                             
(1)  Budget                                                             
 negotiatio                                                             
 ns between                                                             
 administra                                                             
 tion                                                                   
 officials                                                              
 and                                                                    
 bicameral,                                                             
 bipartisan                                                             
 congressio                                                             
 nal                                                                    
 leadership                                                             
 begin.                                                                 
 Administra                                                             
 tion                                                                   
 refuses to                                                             
 lay down a                                                             
 plan by                                                                
 the                                                                    
 President                                                              
 balancing                                                              
 the budget                                                             
 in 7 years                                                             
 using CBO                                                              
 economics.                                                             
            ------------------------------------------------------------
29-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
30-........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
========================================================================
  .........                                                             
(1)DECEMBER                                                             
 1995                                                                   
            ------------------------------------------------------------
1-.........  .............................    President fails to sign or
                                             veto the Defense           
                                             appropriations bill (H.R.  
                                             2126). Hence, the bill     
                                             becomes law (Public Law 104-
                                             61).                       
            ------------------------------------------------------------
5-.........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan                                                                   
 balancing                                                              
 the budget                                                             
 with CBO                                                               
 numbers.                                                               
            ------------------------------------------------------------
6-.........    House passes conference        President vetoes the      
              report on Commerce-Justice-    Balanced Budget Act (H.R.  
              State appropriations bill      2491).                     
              (H.R. 2076) by a vote of 256-                             
              166.                                                      
------------------------------------------------------------------------
7-.........    Senate passes conference                                 
              report on Commerce-Justice-                               
              State appropriations bill                                 
              (H.R. 2076) by a vote of 50-                              
              48. Cleared for President.                                
                                              ``Plan'' Three--White     
                                                                        
  .........                                                             
(1)  Negoti                                                             
 ations                                                                 
 continue,                                                              
 but                                                                    
 impasse                                                                
 remains                                                                
 over                                                                   
 President'                                                             
 s refusal                                                              
 to lay                                                                 
 down his                                                               
 plan